Cidara Therapeutics, Inc. (Form: 10-Q, Received: 11/08/2019 06:07:46)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2019



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: 001-36912

CIDARA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)



Delaware		46-1537286
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

6310 Nancy Ridge Drive, Suite 101 San Diego, CA 92121		(858) 752-6170
(Address of Principal Executive Offices)		(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.0001 Per Share	CDTX	The Nasdaq Global Market

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 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	x

		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 13(a) of the Exchange Act. o

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 31, 2019, the registrant had 33,040,295 shares of Common Stock ($0.0001 par value) outstanding.

CIDARA THERAPEUTICS, INC.

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)	5
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4. Controls and Procedures	32
PART II. OTHER INFORMATION		32
	Item 1. Legal Proceedings	33
	Item 1A. Risk Factors	33
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64
	Item 3. Defaults Upon Senior Securities	65
	Item 4. Mine Safety Disclosure	65
	Item 5. Other Information	65
	Item 6. Exhibits	65
SIGNATURES		66

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CIDARA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets



	September 30, 2019			December 31, 2018
(In thousands, except share and per share data)	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	73,824		$	74,562
Prepaid expenses and other current assets	3,664			2,567
Total current assets	77,488			77,129
Property and equipment, net	496			712
Operating lease right-of-use asset	1,810			—
Other assets	1,902			1,271
Total assets	$	81,696		$	79,112

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,679		$	2,846
Accrued liabilities	4,320			3,883
Accrued compensation and benefits	2,932			2,824
Deferred revenue	10,900			—
Current portion of lease liability	790			—
Contingent forward purchase obligations	—			411
Current portion of term loan	9,958			9,928
Total current liabilities	31,579			19,892
Lease liability	1,155			—
Other long-term liabilities	—			81
Total liabilities	32,734			19,973
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2019 and December 31, 2018:
Series X Convertible Preferred stock, $0.0001 par value; 5,000,000 shares authorized at September 30, 2019 and December 31, 2018; 565,231 and 445,231 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30, 2019 and December 31, 2018; 33,006,280 shares issued and outstanding at September 30, 2019 and 27,816,014 shares issued and outstanding at December 31, 2018	3			3
Additional paid-in capital	294,763			277,871
Accumulated deficit	(245,804		)	(218,735		)
Total stockholders' equity	48,962			59,139
Total liabilities and stockholders' equity	$	81,696		$	79,112

See accompanying notes.

CIDARA THERAPEUTICS, INC.

Condensed 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)	2019			2018			2019			2018
Revenues:
Collaboration Revenue	$	19,100		$	—		$	19,100		$	—
Total revenues	19,100			—			19,100			—
Operating expenses:
Research and development	11,499			11,278			34,911			36,096
General and administrative	4,573			3,447			11,833			10,591
Total operating expenses	16,072			14,725			46,744			46,687
Income (loss) from operations	3,028			(14,725		)	(27,644		)	(46,687		)
Other income (expense):
Change in fair value of contingent forward purchase obligations	—			888			411			(224		)
Interest income, net	11			222			164			447
Other income (expense)	—			(4		)	—			(210		)
Total other income	11			1,106			575			13
Net income (loss)	$	3,039		$	(13,619	)	$	(27,069	)	$	(46,674	)
Allocation of earnings to participating securities	(444		)	—			—			—
Recognition of beneficial conversion feature	—			—			—			(10,329		)
Net income (loss) attributable to common shareholders	$	2,595		$	(13,619	)	$	(27,069	)	$	(57,003	)
Basic earnings (loss) per common share	$	0.08		$	(0.49	)	$	(1.08	)	$	(2.35	)
Diluted earnings (loss) per common share	$	0.08		$	(0.49	)	$	(1.08	)	$	(2.35	)

Shares used to compute basic net income (loss) per common share	33,006,280			27,705,472			25,011,576			24,254,254
Shares used to compute diluted net income (loss) per common share	38,687,937			27,705,472			25,011,576			24,254,254

Net income (loss)	$	3,039		$	(13,619	)	$	(27,069	)	$	(46,674	)
Unrealized gain on short-term investments	—			2			—			7
Comprehensive income (loss)	$	3,039		$	(13,617	)	$	(27,069	)	$	(46,667	)

See accompanying notes.

CIDARA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)



	Nine Months Ended September 30,
(In thousands)	2019			2018
Operating activities:
Net loss	$	(27,069	)	$	(46,674	)
Adjustments to reconcile net loss to net cash used in operating activities:
Operating lease right-of-use assets and liabilities, net	53			—
Depreciation and amortization	251			412
Stock-based compensation	4,050			4,346
Non-cash interest expense	22			—
Amortization of discount or premium on short-term investments	—			36
Amortization of debt issuance costs	7			47
Deferred rent	—			11
Change in fair value of contingent forward purchase obligations	(411		)	224
Contingent forward purchase obligations offering costs	—			210
Changes in assets and liabilities:
Accounts receivable	—			321
Prepaid expenses and other current assets	(1,096		)	(1,652		)
Accounts payable and accrued liabilities	270			(967		)
Accrued compensation and benefits	319			388
Deferred revenue	10,900			—
Other assets	(631		)	259
Net cash used in operating activities	(13,335		)	(43,039		)

Investing activities:
Purchases of short-term investments	—			(14,548		)
Maturities of short-term investments	—			24,526
Purchases of property and equipment	(35		)	(137		)
Net cash (used in) provided by investing activities	(35		)	9,841

Financing activities:
Proceeds from May 2018 Registered Direct Offering, net of offering costs	—			49,521
Proceeds from issuance of common stock pursuant to Stock Purchase Agreement	9,008			—
Proceeds from issuance of common stock under equity sales agreement, net of issuance costs	3,624			6,440
Proceeds from exercise of stock options	—			204
Net cash provided by financing activities	12,632			56,165
Net (decrease) increase in cash and cash equivalents	(738		)	22,967
Cash and cash equivalents at beginning of period	74,562			60,813
Cash and cash equivalents at end of period	$	73,824		$	83,780

Supplemental disclosure of cash flows:
Interest paid	$	472		$	432
Non-cash investing activities:
Right-of-use asset obtained in exchange for lease liability	$	2,295		$	—
Property and equipment acquired but not yet paid	$	—		$	17
Non-cash financing activities:
Purchase of shares pursuant to Employee Stock Purchase Plan	$	210		$	374
Vesting of early exercised stock options	$	—		$	21

See accompanying notes.

CIDARA THERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity

(unaudited)



	Three and Nine Months Ended September 30, 2019
	Series X Convertible Preferred Stock			Common Stock				Additional Paid-In Capital		Accumulated Deficit			Other Comprehensive Loss		Total Stockholders' Equity
(In thousands, except share data)	Shares	Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Other Comprehensive Loss		Total Stockholders' Equity
Balance, December 31, 2018	445,231	$	—	27,816,014		$	3	$	277,871	$	(218,735	)	$	—	$	59,139
Stock-based compensation	—	—		—		—		1,284		—			—		1,284
Vesting of restricted stock units	—	—		25,837		—		—		—			—		—
Issuance of Series X Convertible Preferred Stock in exchange for common stock	120,000	—		(1,200,000	)	—		—		—			—		—
Net loss	—	—		—		—		—		(16,561		)	—		(16,561		)
Balance, March 31, 2019	565,231	$	—	26,641,851		$	3	$	279,155	$	(235,296	)	$	—	$	43,862
Stock-based compensation	—	—		—		—		1,257		—			—		1,257
Issuance of common stock under Employee Stock Purchase Plan	—	—		126,138		—		210		—			—		210
Net loss	—	—		—		—		—		(13,547		)	—		(13,547		)
Balance, June 30, 2019	565,231	$	—	26,767,989		$	3	$	280,622	$	(248,843	)	$	—	$	31,782
Stock-based compensation	—	—		—		—		1,509		—			—		1,509
Vesting of restricted stock units	—	—		39,852		—		—		—			—		—
Issuance of common stock pursuant to Stock Purchase Agreement	—	—		4,781,408		—		9,008		—			—		9,008
Sale of common stock, net of issuance costs	—	—		1,417,031		—		3,624		—			—		3,624
Net income	—	—		—		—		—		3,039			—		3,039
Balance, September 30, 2019	565,231	$	—	33,006,280		$	3	$	294,763	$	(245,804	)	$	—	$	48,962



	Three and Nine Months Ended September 30, 2018
	Series X Convertible Preferred Stock			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Other Comprehensive Loss			Total Stockholders' Equity
(In thousands, except share data)	Shares	Amount		Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Other Comprehensive Loss			Total Stockholders' Equity
Balance, December 31, 2017	—	$	—	20,525,688	$	2	$	209,140		$	(149,390	)	$	(8	)	$	59,744
Public offering of common stock, net of issuance costs	—	—		847,937	—		6,435			—			—			6,435
Vesting of restricted shares	—	—		3,964	—		9			—			—			9
Issuance of common stock for exercise of options	—	—		12,147	—		28			—			—			28
Stock-based compensation	—	—		—	—		1,461			—			—			1,461
Unrealized loss on marketable securities	—	—		—	—		—			—			(10		)	(10		)
Net loss	—	—		—	—		—			(16,749		)	—			(16,749		)
Balance, March 31, 2018	—	$	—	21,389,736	$	2	$	217,073		$	(166,139	)	$	(18	)	$	50,918
Registered Direct Offering, net of offering costs	445,231	$	—	6,185,987	$	1	$	45,517		$	—		$	—		$	45,518
Beneficial conversion feature of Series X Convertible Preferred Stock	—	—		—	—		10,329			(10,329		)	—			—
Vesting of restricted shares	—	—		3,964	—		9			—			—			9
Issuance of common stock for exercise of options	—	—		5,000	—		10			—			—			10
Issuance of common stock under Employee Stock Purchase Plan	—	—		93,483	—		374			—			—			374
Stock-based compensation	—	—		—	—		1,600			—			—			1,600
Unrealized gain on marketable securities	—	—		—	—		—			—			15			15
Net loss	—	—		—	—		—			(16,306		)	—			(16,306		)
Balance, June 30, 2018	445,231	$	—	27,678,170	$	3	$	274,912		$	(192,774	)	$	(3	)	$	82,138
Offering costs on registered direct offering	—	—		—	—		(42		)	—			—			(42		)
Vesting of restricted shares	—	—		1,359	—		3			—			—			3
Issuance of common stock for exercise of options	—	—		71,884	—		165			—			—			165
Stock-based compensation	—	—		—	—		1,285			—			—			1,285
Unrealized gain on marketable securities	—	—		—	—		—			—			2			2
Net loss	—	—		—	—		—			(13,619		)	—			(13,619		)
Balance, September 30, 2018	445,231	$	—	27,751,413	$	3	$	276,323		$	(206,393	)	$	(1	)	$	69,932

See accompanying notes.

CIDARA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. THE COMPANY AND BASIS OF PRESENTATION

Description of Business

Cidara Therapeutics, Inc., or the Company, was originally incorporated in Delaware in December 2012 as K2 Therapeutics, Inc., and its name was changed to Cidara Therapeutics, Inc. in July 2014. The Company is a biotechnology company focused on the discovery, development and commercialization of novel anti-infectives. The Company’s portfolio is comprised of a proprietary product candidate for the treatment and prevention of serious fungal infections. The Company is also conducting research in bacterial and viral infections. The Company formed wholly-owned subsidiaries, Cidara Therapeutics UK Limited, in England, and Cidara Therapeutics (Ireland) Limited, in Ireland, in March 2016 and October 2018, respectively, for the purpose of developing its product candidates in Europe.

Basis of Presentation

The Company has a limited operating history and the sales and income potential of the Company’s business and market are unproven. The Company has experienced net losses and negative cash flows from operating activities since its inception. At September 30, 2019, the Company had an accumulated deficit of $245.8 million. The Company expects to continue to incur net losses into the foreseeable future. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure.

At September 30, 2019, the Company had cash and cash equivalents of $73.8 million. Based on the Company’s current business plan, management believes that existing cash and cash equivalents will not be sufficient to fund the Company’s obligations for twelve months from the issuance of these financial statements. The Company’s ability to execute its operating plan depends on its ability to obtain additional funding through equity offerings, debt financings or potential licensing and collaboration arrangements. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. However, the Company’s current working capital, anticipated operating expenses and net losses and the uncertainties surrounding its ability to raise additional capital as needed, as discussed below, raise substantial doubt about its ability to continue as a going concern for a period of one year following the date that these financial statements are issued. The consolidated financial statements do not include any adjustments for the recovery and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company plans to continue to fund its losses from operations through cash and cash equivalents on hand, as well as through future equity offerings, debt financings, other third party funding, and potential licensing or collaboration arrangements. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to the Company. Even if the Company raises additional capital, it may also be required to modify, delay or abandon some of its plans which could have a material adverse effect on the Company’s business, operating results and financial condition and the Company’s ability to achieve its intended business objectives. Any of these actions could materially harm the Company’s business, results of operations and future prospects.

Unaudited Interim Financial Data

The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with U.S. generally accepted accounting principles, or GAAP, as found in the Accounting Standards Codification, or ASC, of the Financial Accounting Standards Board, or FASB. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods ended September 30, 2019 and 2018.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all short-term investments purchased with a maturity of three months or less when acquired to be cash equivalents.

Concentration of Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Periodically, the Company maintains deposits in government insured financial institutions in excess of government insured limits. The Company invests its cash balances in financial institutions that it believes have high credit quality, has not experienced any losses on such accounts and does not believe it is exposed to significant credit risk.

Patent Costs

The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications), and such costs are included in general and administrative expenses in the accompanying statements of operations.

Income Taxes

The Company follows the FASB's ASC 740, Income Taxes, in reporting deferred income taxes. ASC 740 requires a company to recognize deferred tax assets and liabilities for expected future income tax consequences of events that have been recognized in the Company’s consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in the years in which the temporary differences are expected to reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions pursuant to ASC 740, which prescribes a recognition threshold and measurement process for financial statement recognition of uncertain tax positions taken or expected to be taken in a tax return. If the tax position meets this threshold, the benefit to be recognized is measured as the tax benefit having the highest likelihood of being realized upon ultimate settlement with the taxing authority. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in the provision for income taxes.

Revenue Recognition

The Company recognizes revenue is accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, which applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

In a contract with multiple performance obligations, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from the allocated transaction price. The Company evaluates the measure of progress at each reporting period and, if necessary, adjusts the measure of performance and related revenue or expense recognition as a change in estimate.

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or a collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or a collaboration partner’s control, such as operational developmental milestones and any related constraint, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which will affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price may also result in negative collaboration revenues and earnings in the period of adjustment.

For arrangements that include sales-based royalties, including commercial milestone payments based on the level of sales, and a license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied. To date, the Company has not recognized any royalty revenue from collaborative arrangements.

In September 2019, the Company entered into a Collaboration and License Agreement (the Collaboration Agreement) with Mundipharma Medical Company (Mundipharma). The Company concluded that there were three significant performance obligations under the Collaboration Agreement: the license, the research and development services, and the clinical supply services, and that the obligations are distinct from each other. Revenue associated with the license was recognized upon delivery in September 2019.

The Company concluded that progress towards completion of the research and development and clinical supply performance obligations related to the Collaboration Agreement is best measured in an amount proportional to the collaboration expenses incurred and the total estimated collaboration expenses. The Company periodically reviews and updates the estimated collaboration expenses, when appropriate, which may adjust revenue recognized for the period. While such changes to the Company’s estimates have no impact on the Company’s reported cash flows, the amount of revenue recorded in the period could be materially impacted. The transaction price to be recognized as revenue under the Collaboration Agreement consists of the upfront payment and estimated reimbursable research and development and clinical supply costs.

Potential future payments for variable consideration, such as clinical, regulatory or commercial milestones, will be recognized when it is probable that, if recorded, a significant reversal will not take place. Potential future royalty payments will be recorded as revenue when the associated sales occur.

See Note 7 - Significant Agreements and Contracts for more information.

Grant Funding

The Company has evaluated the terms of the research and development grants to assess its obligations and the classification of funding received. Amounts billable for funded research and development are recognized in the statement of operations as a reduction to research and development expense over the grant period as the related costs are incurred to meet the Company's obligations.

Research and Development Costs

Research and development expenses consist of wages, benefits and stock-based compensation charges for research and development employees, scientific consultant fees, facilities and overhead expenses, laboratory supplies, manufacturing expenses, and nonclinical and clinical trial costs. Nonclinical and clinical trial expenses are accrued based on work performed, which relies on the Company's estimates and/or representations from third party service providers regarding total costs incurred, including patient enrollment, completion of studies, and other events. The Company accounts for nonrefundable advance payments for goods and services that will be used or rendered for future research and development activities as deferred. Such amounts are recognized as expense as the related goods are delivered or the related services are performed.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and/or circumstances from non-owner sources. The Company’s only component of other comprehensive income (loss) is unrealized gains on short-term investments. Comprehensive income (losses) have been reflected in the condensed consolidated statements of operations and comprehensive income (loss) for all periods presented.

Stock-based Compensation

The Company accounts for stock-based compensation expense related to stock options and employee stock purchase plan rights by estimating the fair value on the date of grant using the Black-Scholes option pricing model. The fair value of Restricted Stock Units (RSUs) and Performance-based RSUs (PRSUs) is estimated based on the closing price of the Company's common stock on the date of grant. For awards subject to time-based vesting conditions, stock-based compensation expense is recognized ratably over the requisite service period of the awards. For awards subject to performance-based vesting conditions, the Company assesses the probability of achievement of the individual milestones under the stock-based awards and recognizes stock-based compensation expense over the implicit service period commencing once the Company believes the performance criteria is probable of achievement. The Company recognizes forfeitures related to stock-based compensation as they occur.

Net Income (Loss) Per Share

The Company follows the authoritative guidance which establishes standards regarding the computation of earnings per share (EPS) by companies that have issued securities other than common stock that contractually entitle the holder to participate in dividends and earnings of a company. The guidance requires earnings to be hypothetically allocated between the common, preferred, and other participating shareholders based on their respective rights to receive non-forfeitable dividends, whether or not declared. Participating securities include Series X Preferred stock (see Note 5). Basic net income per share is then calculated by dividing income allocable to common shareholders (after the reduction for any preferred stock and assuming current income for the period had been distributed) by the number of shares of common stock outstanding during the period. The Company calculates diluted net income per share using the more dilutive of the 1) treasury stock method, if-converted method, or contingently issuable share method, as applicable, or 2) the two-class method.

The following table sets forth the computation of basic and diluted earnings (loss) per common share:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator:
Net income (loss)	$	3,039		$	(13,619	)	$	(27,069	)	$	(46,674	)
Allocation of earnings to participating securities	(444		)	—			—			—
Recognition of beneficial conversion feature	—			—			—			(10,329		)
Numerator for basic earnings (loss) per share - income available to common stockholders	$	2,595		$	(13,619	)	$	(27,069	)	$	(57,003	)

Effect of participating securities:
Add back allocation of earnings to participating securities	444			—			—			—
Numerator of diluted earnings (loss) per share - income available to common stockholders after assumed conversions	$	3,039		$	(13,619	)	$	(27,069	)	$	(57,003	)

Denominator:
Denominator for basic earnings (loss) per share - common shares outstanding	33,006,280			27,705,472			25,011,576			24,254,254
Effect of dilutive securities:
Series X Preferred stock, as converted	5,652,310			—			—			—
RSUs and PRSUs	29,347			—			—			—
Denominator for diluted earnings (loss) per share - adjusted weighted average shares outstanding	38,687,937			27,705,472			25,011,576			24,254,254

Basic earnings (loss) per common share	$	0.08		$	(0.49	)	$	(1.08	)	$	(2.35	)
Diluted earnings (loss) per common share	$	0.08		$	(0.49	)	$	(1.08	)	$	(2.35	)

Basic loss per share is calculated by dividing the net loss allocable to common shares by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss allocable to common shares by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Dilutive common stock equivalents are comprised of warrants, Series X Convertible Preferred Stock, unvested restricted common stock subject to repurchase, and options, RSUs, and PRSUs outstanding under the Company’s stock option plans. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net income (loss) per share because to do so would be anti-dilutive (in common stock equivalent shares):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Common stock warrants	12,517,328	12,517,328	12,517,328	12,517,328
Series X Convertible Preferred stock	—	4,452,310	5,652,310	4,452,310
Common stock options, RSUs and PRSUs issued and outstanding	5,590,883	4,083,233	5,606,057	4,083,233
Common stock subject to repurchase	—	18	—	18
Total	18,108,211	21,052,889	23,775,695	21,052,889

Fair Value of Financial Instruments

The Company follows ASC 820-10 issued by the FASB with respect to fair value reporting for financial assets and liabilities. The guidance defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

The Company’s financial instruments consist of cash and cash equivalents, a contingent forward purchase obligation, and long-term debt. Fair value estimates of these instruments are made at a specific point in time based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The carrying amount of cash and cash equivalents, prepaid expenses, accounts payable, and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The fair value of short-term investments is based upon market prices quoted on the last day of the fiscal period or other observable market inputs. The fair value of contingent forward purchase obligations is based on a probability-weighted valuation approach (See Note 3). The Company believes that the fair value of long-term debt approximates its carrying value.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis. The most significant estimates in the Company’s consolidated financial statements relate to estimating the fair value of the Company’s stock options, estimated collaboration expenses and incurred expenses related to the Mundipharma Collaboration Agreement, and certain accruals, including those related to nonclinical and clinical activities. Although the estimates are based on the Company’s knowledge of current events, comparable companies, and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

During 2018, the FASB issued ASU 2018-13, "Changes to the Disclosure Requirements for Fair Value Measurement," which modifies certain disclosure requirements on fair value measurements. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The Company does not expect the standard to have a material impact on its financial statements upon adoption.

Recently Adopted Accounting Standards

In March 2019, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2019-01, "Leases (Topic 842): Codification Improvements." In July 2018, the FASB issued Accounting Standards Update No. 2018-11, "Leases (Topic 842): Targeted Improvements" and Accounting Standards Update No. 2018-10, "Codification

Improvements to Topic 842, Leases." These updates provide additional clarification, an optional transition method, a practical expedient and implementation guidance on the previously issued Accounting Standards Update No. 2016-02, "Leases (Topic 842)." Collectively, these updates supersede the lease guidance in Accounting Standards Codification, or ASC, Topic 840 and require lessees to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees are required to recognize a right of use asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company adopted this standard on January 1, 2019 by applying the optional transition method on the adoption date and did not adjust comparative periods. The Company also elected the package of practical expedients permitted, which among other things, allowed the Company to carry forward the lease classification for the Company's existing leases. The adoption of this standard impacted the Company's 2019 opening consolidated balance sheet as the Company recorded operating lease liabilities of $2.5 million and right of use assets of $2.3 million, which equals the lease liabilities net of accrued rent. The adoption of this standard did not have a material impact on the Company's consolidated statements of operations or cash flows.

During 2018, the FASB issued ASU 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting," which expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. These updates align the guidance for share-based payments to nonemployees with the guidance for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 effective January 1, 2019. The adoption of this standard did not have a material impact on the Company's financial statements.

3. FAIR VALUE MEASUREMENTS

The Company follows ASC 820-10, Fair Value Measurements and Disclosures, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. The carrying amounts of accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Based on the borrowing rates available to the Company for loans with similar terms, which is considered a Level 2 input as described below, the Company believes that the fair value of long-term debt approximates its carrying value.

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.

The Company classifies investments in money market funds within Level 1 as the prices are available from quoted prices in active markets. Investments in commercial paper, corporate debt and reverse repurchase agreements are classified within Level 2 as these instruments are valued using observable market inputs including reported trades, broker/dealer quotes, bids and/or offers.

As discussed in Note 5, on May 21, 2018, the Company entered into a subscription agreement with certain investors providing for the purchase and sale of up to an aggregate of $120.0 million of its common stock and preferred stock in three closings. The second and optional third closings and warrants related to the optional third closing, which are triggered by the Company's announcement of topline data of Part B of its STRIVE Phase 2 clinical trial of rezafungin, contain features for subsequent closings that are not solely within the control of the Company and that embody an obligation that the Company must settle by issuing a variable number of shares when the obligation is based predominantly on having a fixed value at inception. In accordance with ASC 480, "Distinguishing Liabilities from Equity," the Company determined that these closings are classified as liabilities and represent contingent forward purchase obligations. These liabilities are required to be recorded at their estimated fair value initially and on a recurring basis. The contingent forward purchase obligations are classified within Level 3 of the fair value hierarchy as the Company is using a probability-weighted valuation approach, utilizing significant unobservable inputs including the probability and estimated timing of achieving positive or negative results associated with Part B of the STRIVE Phase 2 clinical trial and estimated discount rates related to the risk of achievement of the expected equity issuances. The liability was initially recorded at $4.3 million on May 21, 2018. Fair value adjustments resulting in a gain of $0.4 million were recorded during the nine month period ended September 30, 2019. The contingent forward purchase obligation had no value as of September 30, 2019, and was valued at $0.4 million as of December 31, 2018.

None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis (in thousands):



	TOTAL		LEVEL 1		LEVEL 2		LEVEL 3
September 30, 2019
Assets:
Money market funds	$	73,169	$	73,169	$	—	$	—
Total assets at fair value	$	73,169	$	73,169	$	—	$	—

December 31, 2018
Assets:
Money market funds	$	74,077	$	74,077	$	—	$	—
Total assets at fair value	$	74,077	$	74,077	$	—	$	—

Liabilities:
Contingent forward purchase obligations	$	411	$	—	$	—	$	411
Total liabilities at fair value	$	411	$	—	$	—	$	411

4. DEBT

Term Loans— On October 3, 2016, the Company entered into a loan and security agreement, (the "Loan Agreement"), with Pacific Western Bank, as the collateral agent and a lender (the "Lender"), pursuant to which the Lender agreed to lend to the Company up to $20.0 million in a series of term loans. Contemporaneously, the Company borrowed $10.0 million from the Lender (the "Term A Loan"). Under the terms of the Loan Agreement, because the Company achieved positive results from the STRIVE Phase 2 clinical trial of rezafungin by March 31, 2018 (the "Milestone"), the Company had the option to borrow, at its sole discretion, until October 3, 2018, from the Lender up to an additional $10.0 million (the "Term B Loan"). The Company did not borrow any funds available under the Term B Loan before the draw period ended.

The Company’s obligations under the Loan Agreement are secured by a first priority security interest in substantially all of the Company’s current and future assets, other than its intellectual property, which is subject to a double negative pledge.

The Company may prepay the borrowed amounts, provided that the Company will be obligated to pay a prepayment fee equal to (i) 2.0% of the applicable principal amount of the Term Loan if the prepayment occurs before the first anniversary of the applicable funding date, and (ii) 1.0% of the applicable principal amount of the Term Loan if the prepayment occurs after the first anniversary of the funding date of such Term Loan but on or prior to the second anniversary of the funding date of such Term Loan.

While any amounts are outstanding under the Loan Agreement, the Company is subject to a number of affirmative and restrictive covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurring additional indebtedness and transactions with affiliates, among other customary covenants. The Company is also restricted from paying dividends or making other distributions or payments on its capital stock, subject to limited exceptions.

Pursuant to the Loan Agreement, on October 3, 2016, the Company issued to the Lender a warrant to purchase an aggregate of up to 17,331 shares of the Company’s common stock at an exercise price of $11.54 per share. If the Company borrows additional amounts under the Loan Agreement, it will, in connection with any such borrowing, issue the Lender an additional warrant to purchase that number of shares of the Company’s common stock as is equal to 2.0% of the additional principal amount borrowed divided by the exercise price. The exercise price shall be equal to the 30-day average closing price of the Company’s common stock, calculated as of the date immediately prior to the date of such additional borrowing. The warrants are immediately exercisable and will expire ten years from the date of the grant.

On June 13, 2018, the Company and the Lender entered into a First Amendment to the Loan Agreement, which reset the operating covenant to require the Company to achieve positive data from Part B of the STRIVE Phase 2 clinical trial of rezafungin on or prior to July 31, 2019 (the "Milestone").

On July 27, 2018, the Company and the Lender entered into a Second Amendment to the Loan Agreement, which amended, among other things, the interest-only period, the date of maturity (the "Maturity Date") and the interest rate.

On July 29, 2019, the Company announced positive data from Part B of the STRIVE clinical trial, which satisfied the Milestone. Within 30 days of satisfying the Milestone, the Company was required to agree with the Lender on an amendment to the Loan Agreement to define a new financial covenant and/or milestone for fiscal year 2019 and all subsequent fiscal years during the term of the Loan Agreement. On August 27, 2019, the Lender extended the deadline to execute this amendment to October 15, 2019, and on October 11, 2019, the Lender further extended this deadline until November 7, 2019.

On November 5, 2019, the Company and the Lender entered into a Third Amendment to the Loan Agreement, which reset the operating covenant to require the Company to maintain cash equal to or greater than the Company's outstanding indebtedness to the Lender. The amendment also extended the interest-only period through April 3, 2020 and the maturity date through July 3, 2022.

The interest-only period will be followed by equal monthly payments of principal and interest. The Term Loans will bear interest at a variable annual rate equal to the greater of (i) 4.5% or (ii) the Lender’s prime interest rate plus 0.75%. At September 30, 2019, the Term A Loan bears interest at 5.75%.

The Company evaluated the First and Second Amendments to determine whether the amendments represented modifications or extinguishment of debt. The Company determined that the amendments did not represent a substantial change from the original Loan Agreement and accounted for the amendments as debt modifications. Costs previously deferred under the original terms of the Loan Agreement are amortized into interest expense over the new term of the Second Amendment.

Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Loan Agreement, the breach of certain of its other covenants under the Loan Agreement, including the requirement to maintain cash equal to or greater than the outstanding indebtedness, or the occurrence of a material adverse change, the collateral agent will have the right, among other remedies, to declare all principal and interest and other amounts due to the Lender under the Loan Agreement immediately due and payable. The principal payments due under the Loan Agreement have been classified as a current liability at September 30, 2019 and December 31, 2018 due to the considerations discussed in Note 1 and the assessment that the material adverse change clause under the Loan Agreement is not within the Company's control. The Company has not been notified of an event of default by the Lenders as of the date of the filing of this Form 10-Q.

As of September 30, 2019, future principal payments due under the Third Amendment of the Term A Loan are as follows (in thousands):



Year ended:
December 31, 2019	$	—
December 31, 2020	2,963
December 31, 2021	4,444
December 31, 2022	2,593
Total future principal payments due under the Term A Loan	$	10,000

5. STOCKHOLDERS’ EQUITY

Mundipharma Stock Purchase Agreement

On September 3, 2019, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Mundipharma AG (the “Purchaser”), pursuant to which the Company issued to the Purchaser 4,781,408 shares of its common stock (the “Shares”) in a private placement at a price per share of $1.884 (a 20% premium to the volume weighted average price of the Company’s common stock for the 10 trading days prior to September 3, 2019) for an aggregate purchase price of approximately $9.0 million.

Under the Purchase Agreement, until September 3, 2020 (the “Lock-Up Period”), the Purchaser may not transfer or sell the Shares without the prior written consent of the Company. In addition, the Company agreed to (i) no later than 90 days prior to the expiration of the Lock-Up Period, file a registration statement with the U.S. Securities and Exchange Commission covering the resale by the Purchaser of the Shares, (ii) cause such registration statement to become effective as soon as practicable following the filing thereof and (iii) take all other actions as may be necessary to keep such registration statement continuously effective during the timeframes set forth in the Purchase

Agreement. If the Company fails to comply with certain obligations with respect to filing and securing effectiveness of such registration statement, the Company would be obligated to pay liquidated damages to the Purchaser in the amount of 1% of the total purchase price of the Shares for each applicable 30-day period, up to an aggregate maximum of 6% of the purchase price, so long as the event giving rise to the damages remains uncured.

May 2018 Registered Direct Offering

On May 21, 2018, the Company entered into a subscription agreement with certain investors providing for the purchase and sale, in a registered direct offering, of up to an aggregate of $120.0 million of its common stock and preferred stock in three closings. On May 23, 2018, the Company completed the first closing, which was comprised of 6,185,987 shares of common stock at an offering price of $4.70 per share, 445,231 shares of Series X Convertible Preferred Stock at an offering price of $47.00 per share, and an option fee relating to the third closing paid by the investors for a total of $0.5 million. In a private placement concurrent with the first closing (the “First Private Placement”), the Company also sold warrants, at $0.125 per warrant share, to purchase an aggregate of 12,499,997 shares of common stock. Net proceeds for the first closing and the First Private Placement were $49.5 million.

The Company performed an analysis to allocate the proceeds from the May 2018 registered direct offering to the offering's various components on a relative fair value basis, including the contingent forward purchase obligations (discussed further in Note 3) as well as the common stock, Series X Convertible Preferred Stock, warrants, and option fee. With respect to the Series X Convertible Preferred Stock, because the adjusted conversion price on the commitment date (following the allocation of proceeds on a fair value basis) was below the fair value of the common stock at the date of issuance, a beneficial conversion feature with a calculated fair value of $10.3 million existed at the issuance date. The beneficial conversion feature is amortized as a deemed dividend to the preferred holders. As the Series X Convertible Preferred Stock is fully convertible at issuance, the full amortization of the $10.3 million was recorded at issuance as a one-time, non-cash deemed dividend on May 23, 2018.

The second closing of the registered direct offering was contingent on the Company’s announcement of topline data from Part B of its STRIVE global randomized Phase 2 clinical trial of rezafungin provided that the Company would not be obligated to complete the second closing if the purchase price was less than $4.70 per share, and the third closing of the registered direct offering was to occur after the second closing, but at the Company’s option. On July 29, 2019, the Company announced positive data from Part B of its STRIVE clinical trial. Because the volume weighted average price of the Company's common stock for the five trading days following the public release of topline data from Part B of the STRIVE clinical trial of rezafungin was below $6.27, the resulting purchase price for the second and third closings of the May 2018 registered direct offering would have been less than $4.70 per share. Accordingly, the Company was unable to complete the second and third closings without first obtaining the approval of its stockholders.

On August 7, 2019, the Company notified the purchasers in the May 2018 registered direct offering that it had elected not to consummate the second closing of the offering. Accordingly, the obligations of the parties to the registered direct offering terminated and are of no further force or effect, and the second closing will not be held. As a result of this election, the optional third closing of the offering and the related concurrent private placement of warrants will not be held.

Preferred Stock

Under the amended and restated certificate of incorporation, the Company’s board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding. The Company had 10,000,000 shares of preferred stock authorized at September 30, 2019.

In May 2018, the Company designated 5,000,000 shares of preferred stock as Series X Convertible Preferred Stock with a par value of $0.0001 per share. As of September 30, 2019, 565,231 shares of Series X Convertible Preferred Stock were issued and outstanding.

On March 22, 2019, the Company entered into an Exchange Agreement with Biotechnology Value Fund, L.P., and certain of its affiliated entities (collectively, “BVF”), pursuant to which BVF, without monetary consideration, agreed to exchange an aggregate of 1,200,000 shares of the Company’s common stock for an aggregate of 120,000 shares of the Company’s Series X Convertible Preferred Stock.

The specific terms of the Series X Convertible Preferred Stock are as follows:

Conversion: Each share of Series X Convertible Preferred Stock is convertible at the option of the holder into 10 shares of common stock. Holders are not permitted to convert Series X Convertible Preferred Stock into common stock if, after conversion, the holder, its affiliates, and any other person whose beneficial ownership of

common stock would be aggregated with the holder's for purposes of Section 13(d) or Section 16 of the Exchange Act, would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after the conversion.

Dividends: Holders of Series X Convertible Preferred Stock are not entitled to receive any dividends except to the extent that dividends are paid on the Company's common stock. If dividends are paid on shares of common stock, holders of Series X Convertible Preferred Stock are entitled to participate in such dividends on an as-converted basis.

Liquidation: Upon the liquidation, dissolution, or winding up of the company, each holder of Series X Convertible Preferred Stock will participate pari passu with any distribution of proceeds to holders of common stock.

Voting: Shares of Series X Convertible Preferred Stock will generally have no voting rights, except as required by law and except that the consent of the holders of a majority of the outstanding Series X Convertible Preferred Stock will be required to amend the terms of the Series X Convertible Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Convertible Preferred Stock, or to increase or decrease (other than by conversion) the number of authorized shares of Series X Convertible Preferred Stock.

The Company evaluated the Series X Convertible Preferred Stock for liability or equity classification under ASC 480, "Distinguishing Liabilities from Equity," and determined that equity treatment was appropriate because the Series X Convertible Preferred Stock did not meet the definition of the liability instruments defined thereunder as convertible instruments. Specifically, the Series X Convertible Preferred Stock does not meet the criteria for classification as an ASC 480 liability. As such, the Series X Convertible Preferred Stock should be recorded as permanent equity. Additionally, the Series X Convertible Preferred Stock is not redeemable for cash or other assets (i) on a fixed or determinable date, (ii) at the option of the holder, and (iii) upon the occurrence of an event that is not solely within control of the Company.

Common Stock

The Company had 200,000,000 shares of common stock authorized as of September 30, 2019. Holders of outstanding shares of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of common stock. Subject to the rights of the holders of any class of the Company’s capital stock having any preference or priority over common stock, the holders of common stock are entitled to receive dividends that are declared by the Company’s board of directors out of legally available funds. In the event of a liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in the net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. The common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends in arrears or default. All shares of common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights.

In September 2019, the Company began to sell shares of common stock under a controlled equity sales agreement with Cantor Fitzgerald & Co. During the three months ended September 30, 2019, the company sold 1.4 million shares for net proceeds of approximately $3.6 million, after deducting placement agent fees.

Common Stock Warrants

As of September 30, 2019 and December 31, 2018, warrants to purchase 12,517,328 shares of common stock were outstanding at a weighted average exercise price of $6.82 per share.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance is as follows (in common stock equivalent shares):



	September 30, 2019	December 31, 2018
Common stock warrants	12,517,328	12,517,328
Stock options, RSUs and PRSUs issued and outstanding	5,606,057	4,392,671
Series X Convertible Preferred Stock	5,652,310	4,452,310
Authorized for future issuance under the ESPP	580,104	706,242
Authorized for future stock awards under the Company's option plans	471,923	669,873
Total	24,827,722	22,738,424

6. EQUITY INCENTIVE PLANS

2015 Equity Incentive Plan

In March 2015, the Company’s board of directors and stockholders approved and adopted the 2015 Equity Incentive Plan (“2015 EIP”). Under the 2015 EIP, the Company may grant stock options, stock appreciation rights, restricted stock, RSUs, and other awards to individuals who are employees, officers, directors, or consultants of the Company. The number of shares of stock available for issuance under the 2015 EIP will be automatically increased each January 1 by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number as determined by the Company’s board of directors.

Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2015 EIP. Stock options granted by the Company generally vest over a three- or four-year period. Certain stock options are subject to acceleration of vesting in the event of certain change of control transactions. The stock options may be granted for a term of up to 10 years from the date of grant. The exercise price for stock options granted under the 2015 EIP must be at a price no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided that for an incentive stock option granted to an employee who at the time of grant owns stock representing more than 10% of the voting power of all classes of stock of the Company, the exercise price shall be no less than 110% of the estimated value on the date of grant.

2015 Employee Stock Purchase Plan

In March 2015, the Company’s board of directors and stockholders approved and adopted the 2015 Employee Stock Purchase Plan ("ESPP"). The number of shares of stock available for issuance under the ESPP will be automatically increased each January 1 by the lesser of (i) 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31, (ii) 490,336 shares, or (iii) such lesser number as determined by the Company’s board of directors.

The ESPP allows substantially all employees to purchase the Company’s common stock through a payroll deduction at a price equal to 85% of the lower of the fair market value of the stock as of the beginning or the end of each purchase period. An employee’s payroll deductions under the ESPP are limited to 15% of the employee’s eligible compensation. During the nine months ended September 30, 2019, 126,138 shares were issued pursuant to the ESPP.

Restricted Stock Units

The following table summarizes RSU and PRSU activity during the nine months ended September 30, 2019:



	Number of RSUs and PRSUs
Outstanding at December 31, 2018	260,000
RSUs and PRSUs granted	259,520
RSUs and PRSUs vested	(97,204	)
RSUs and PRSUs canceled	(7,281	)
Outstanding at September 30, 2019	415,035

For the nine months ended September 30, 2019, stock-based compensation expense related to RSUs and PRSUs was approximately $0.6 million. At September 30, 2019, estimated unrecognized compensation expense related to RSUs and PRSUs grants was approximately $1.7 million.

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2019:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Total Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018	4,132,671		$	6.58	7.41	$	25
Options granted	1,154,150		2.54
Options exercised	—		—
Options canceled	(95,799	)	7.93
Outstanding at September 30, 2019	5,191,022		$	5.66	7.65	$	31
Vested and expected to vest at September 30, 2019	5,191,022		$	5.66	7.65	$	31
Exercisable at September 30, 2019	3,221,051		$	6.79	6.85	$	—

The intrinsic value of a stock option is the difference between the market price of the common stock at the measurement date and the exercise price of the option.

Stock-based compensation expense recognized for restricted shares, RSUs, PRSUs, stock options, and the ESPP has been reported in the statements of operations as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Research and development	$	683	$	623	$	1,980	$	1,992
General and administrative	826		662		2,070		2,354
Total	$	1,509	$	1,285	$	4,050	$	4,346

The weighted-average grant date fair value of stock options granted by the Company during the nine months ended September 30, 2019 was $1.76 per share. The total grant date fair value of stock options that vested during the nine months ended September 30, 2019 was $3.1 million. As of September 30, 2019, total unrecognized share-based compensation expense related to unvested stock options of the Company was approximately $4.8 million. This unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.97 years.

As of September 30, 2019, total unrecognized compensation expense related to the ESPP was approximately $0.5 million. This unrecognized compensation cost is expected to be recognized over approximately 0.6 years.

7. SIGNIFICANT AGREEMENTS AND CONTRACTS

Mundipharma Collaboration Agreement

On September 3, 2019, the Company entered into a Collaboration and License Agreement (the “Collaboration Agreement”) with Mundipharma Medical Company (“Mundipharma”), a related party, for a strategic collaboration to develop and commercialize rezafungin in an intravenous formulation (the “Licensed Product”) for the treatment and prevention of invasive fungal infections.

Under the Collaboration Agreement, the Company will be responsible for leading the conduct of an agreed global development plan (the “Global Development Plan”) that includes the Company’s ongoing Phase 3 pivotal clinical trial of the Licensed Product for the treatment of candidemia and/or invasive candidiasis (the “ReSTORE Trial”) and the Company’s planned Phase 3 pivotal clinical trial of the Licensed Product for the prophylaxis of invasive fungal infections in adult allogeneic blood and marrow transplant recipients (the “ReSPECT Trial”), as well as specified GLP-compliant non‑clinical studies and chemistry, manufacturing and controls (“CMC”) development activities for the Licensed Product. Mundipharma will be responsible for performing all development activities, other than Global Development Plan activities, that may be necessary to obtain and maintain regulatory approvals for the Licensed Product in the Mundipharma Territory, at Mundipharma’s sole cost.

Pursuant to the Collaboration Agreement, the Company granted Mundipharma an exclusive, royalty‑bearing license to develop, register and commercialize the Licensed Product outside of the United States and Japan (the “Mundipharma Territory”), subject to the Company’s retained right to lead a global development program for the Licensed Product in both the Mundipharma Territory and in the United States and Japan (the “Company Territory”) as described below.

The Company also granted Mundipharma an option to obtain exclusive licenses to develop, register and commercialize rezafungin in a formulation for subcutaneous administration (“Subcutaneous Product”) and in formulations for other modes of administration (“Other Products”) in the Mundipharma Territory, subject to similar retained rights of the Company to conduct mutually agreed global development activities for such products. In addition, the Company granted Mundipharma a co‑exclusive, worldwide license to manufacture the Licensed Product and rezafungin.

Until the seventh anniversary of the first commercial sale of the Licensed Product in the Mundipharma Territory, each party has granted the other party an exclusive, time-limited right of first negotiation to obtain a license to any anti-fungal product (other than Licensed Product, Subcutaneous Product and Other Products) that such party proposes to out-license in the other party’s territory. However, in the event of the acquisition of a party by a third party, this right of first negotiation will not apply to any such anti‑fungal product of the acquiring third party prior to consummation of the acquisition of such party, acquired by such acquiring third party from another third party after consummation of the acquisition of such party, or developed internally by the acquiring third party, either before or after consummation of the acquisition of such party, without the use of, reliance upon or reference to any technology of the acquired party that is licensed to the other party under the Collaboration Agreement, any technology of the other party that is licensed to the acquired party under the Collaboration Agreement, or any technology jointly developed by the parties pursuant to the Collaboration Agreement.

The Company retains the exclusive right to develop, register and commercialize the Licensed Product, Subcutaneous Product and Other Products in the Company Territory, and Mundipharma has granted the Company certain licenses under Mundipharma-controlled technology and jointly-developed technology to develop, register and commercialize Licensed Product, Subcutaneous Product and Other Products in the Company Territory and to manufacture such products and rezafungin worldwide.

The parties have agreed to share equally (50/50) the costs of Global Development Plan activities (“Global Development Costs”), subject to a cap on Mundipharma’s Global Development Cost share of $31.2 million. The Company would receive additional financial support for Global Development Plan activities through a near-term milestone payment by Mundipharma of $11.1 million. Mundipharma is entitled to credit the full amount of this milestone payment toward future royalties payable to the Company, subject to a limit on the amount by which royalty payments to the Company may be reduced in any quarter. If Mundipharma has not fully credited the amount of such milestone payment toward royalties payable to the Company before the earlier of (i) December 31, 2024 and (ii) termination of the Collaboration Agreement by Mundipharma, the Company will be obligated to refund the uncredited portion of such milestone payment to Mundipharma on the earlier of such dates.

The total potential transaction value is $568 million, including an equity investment (see Note 5), an up-front payment, global development funding, and certain development, regulatory, and commercial milestones. The Company is also eligible for double-digit royalties in the teens on tiers of annual net sales.

Either party may terminate the Collaboration Agreement for uncured material breach by the other party. After September 3, 2020, Mundipharma may terminate the Collaboration Agreement at will, provided that if Mundipharma terminates the Collaboration Agreement in its entirety prior to the last visit of the last patient in both the ReSPECT Trial and the ReSTORE Trial, Mundipharma will continue to be liable for its share of Global Development Costs as described above. The Company may terminate the Agreement if Mundipharma or any of its affiliates or sublicensees, directly or indirectly through any third party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any of the Company's patent rights licensed to Mundipharma, or upon an insolvency event of Mundipharma.

Revenue Recognition

The Company determined the transaction price is equal to the up-front fee of $30.0 million plus the research and development funding of $31.2 million. The price paid for the common stock was determined to be at fair market value after applying a lack of marketability discount as Mundipharma received restricted shares. Therefore, no additional premium or discount was allocated to the transaction price of the Agreement for the share issuance. The transaction price was allocated to the performance obligations on the basis of the relative stand-alone selling price estimated for each performance obligation. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines,

discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies. A description of the distinct performance obligations identified under the Agreement, as well as the amount of revenue allocated to each distinct significant performance obligation, is as follows:

Licenses of Intellectual Property. The license to the Company’s intellectual property, bundled with the associated know-how, represents a distinct performance obligation. The license and associated know-how was transferred to Mundipharma during the three months ended September 30, 2019, therefore the Company recognized the full revenue related to this performance obligation in the amount of $17.9 million during the quarter as license revenue in its condensed consolidated statements of operations and comprehensive income.

Research and Development Services. The Company and Mundipharma share equally in the costs of ongoing rezafungin clinical development in the Licensed Territory up to the specified cap. The Company records these cost-sharing payments due from Mundipharma as collaboration revenue. The Company concluded that progress towards completion of the performance obligation related to the research and development services is best measured in an amount proportional to the research and development expenses incurred and the total estimated research and development expenses. The Company recognized $1.0 million for this performance obligation for the three months ended September 30, 2019.

Clinical Supply Services. The Company's initial obligation to supply rezafungin for ongoing clinical development in the Licensed Territory represents a distinct performance obligation. The Company concluded that progress towards completion of the performance obligations related to the clinical supply services is best measured in an amount proportional to the clinical supply services expenses incurred and the total estimated clinical supply services. The Company recognized $0.3 million for this performance obligation for the three months ended September 30, 2019.

Milestone Payments. The Company determined that as of September 30, 2019, all the potential milestone payments are probable of significant revenue reversal as their achievement is highly dependent on factors outside the Company's control or are otherwise constrained under the variable consideration guidance. Therefore, these payments have been fully constrained and are therefore not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint.

Royalties. As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three months ended September 30, 2019.

The following table presents a summary of the activity in the Company's contract liabilities (recorded as deferred revenue on the balance sheet) during the three months ended September 30, 2019 (in thousands):



Opening balance, July 1, 2019	$	—
Payments received in advance	30,000
Revenue from performance obligations satisfied during reporting period	(19,100		)
Closing balance, September 30, 2019	$	10,900

The closing balance as of September 30, 2019 are classified as a current liability since the rights to consideration are expected to be satisfied within one year.

The following table presents our contract revenues disaggregated by timing of revenue recognition and excludes royalty revenue (in thousands):



	Three and Nine Months Ended September 30, 2019
	Point in Time		Over Time
Revenue from Mundipharma Collaboration Agreement:
License of Intellectual Property	$	17,861	$	—
Research and Development Services	—		988
Clinical Supply Services	—		251
Total revenue from Mundipharma Collaboration Agreement	$	17,861	$	1,239

Combating Antibiotic Resistant Bacteria Accelerator (CARB-X) Subaward Agreement

On March 30, 2017, the Company entered into a Cost Reimbursement Research Subaward Agreement (the "Subaward Agreement") with the Trustees of Boston University. Under the Subaward Agreement, the Company is a subawardee

under the CARB-X program. CARB-X is a public-private partnership focused on antibacterials, created by the U.S. Department of Health and Human Services (HHS), Biomedical Advanced Research and Development Authority (BARDA), the NIAID. CARB-X is funded by BARDA and the London-based Wellcome Trust, a global charitable foundation (Wellcome), and administered by the Boston University School of Law.

The subaward was intended to support development of the Company's CD201 product candidate. Under the Subaward Agreement, during an initial phase that began on April 1, 2017 and ends upon acceptance by the U.S. Food and Drug Administration of an initial new drug application, CARB-X would reimburse up to $3.9 million of qualifying development expenses. If all of the milestones in such initial phase are met, the CARB-X Joint Oversight Committee will evaluate the progress made in such initial phase and determine whether to exercise its option to fund a second stage. During the second stage, CARB-X would reimburse up to $3.0 million of qualifying development expenses through a Phase 1 clinical trial. Such second stage would be subject to a new subaward agreement.

The Subaward Agreement can be terminated upon the delivery of 30 days written notice to the Company for default or convenience. Upon receipt of a notice of termination, the Company must discontinue contract activities and CARB-X must pay the Company a final settlement based on eligible expenses incurred under the Subaward Agreement.

Based on preclinical studies of CD201 as well as preclinical studies of antibody-drug conjugates (ADCs) from the Cloudbreak program, the Company decided in February 2018 to cease development of CD201 to focus on the more promising ADCs for the same indication. Based on the decision to focus efforts on the ADCs, the Company will no longer be seeking funding under the Subaward Agreement relating to CD201.

8. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may be involved in various lawsuits, legal proceedings, or claims that arise in the ordinary course of business. Management believes there are no claims or actions pending against the Company as of September 30, 2019 which will have, individually or in the aggregate, a material adverse effect on its business, liquidity, financial position, or results of operations. Litigation, however, is subject to inherent uncertainties, and an adverse result in such matters may arise from time to time that may harm the Company’s business.

Lease Obligations

The Company adopted ASU 2016-02, "Leases," on January 1, 2019, which resulted in the recognition of operating leases on the balance sheet. See Note 2 for more information on the adoption of the ASU. The Company determines if a contract contains a lease at inception and recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As the Company's leases do not provide an implicit rate, management develops incremental borrowing rates based on the information available at the commencement date in determining the present value of future payments. Lease agreements that have lease and non-lease components are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

The Company's single lease upon adoption is for laboratory and office space in San Diego, California and was entered into in June 2015. Amendments for additional space were entered into in February 2015, March 2015, and August 2015. On June 29, 2018 the Company entered into a Fourth Amendment to its lease which extended the term of the lease by an additional 36 months and increased base rent to $70,000 per month effective January 1, 2019. The Company has also been granted an option, exercisable prior to September 30, 2019, to expand its leased premises on the same terms as the current lease, subject to compliance with specified conditions. The lease expires in December 2021 with options for two individual two-year extensions. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to 3% annual increases every January. The adjusted incremental borrowing rate used in measuring the Company's lease liability was 10.8%.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company's operating lease as of September 30, 2019 (in thousands):



2019	$	235
2020	969
2021	998
Total undiscounted operating lease payments	$	2,202
Less: Imputed interest	(257		)
Present value of lease payments	$	1,945

The balance sheet classification of the Company's operating lease is as follows (in thousands):



Balance Sheet Classification:
Operating lease right-of-use asset	$	1,810

Current lease liability	$	790
Lease liability	1,155
Total operating lease liability	$	1,945

As of September 30, 2019, the weighted average remaining lease term was 2.3 years.

Cash paid for amounts included in the present value of operating lease liabilities was $0.7 million for the nine months ended September 30, 2019.

Operating lease costs were $0.8 million for the nine months ended September 30, 2019. These costs are primarily related to the Company's long-term operating lease, but also include immaterial amounts for variable leases and short-term leases with terms greater than 30 days.

Contractual Obligations

The Company enters into contracts in the normal course of business with vendors for research and development activities, manufacturing, and professional services. These contracts generally provide for termination either on notice or within 30 days of notice.

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

You should read the following discussion and analysis together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report, and our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2018, filed with the Securities and Exchange Commission, or the SEC, on February 27, 2019.

Forward-Looking Statements

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, clinical and nonclinical data, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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 that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made and we do not assume any obligation to update any forward-looking statements.

Overview

We are a biotechnology company focused on the discovery, development and commercialization of novel anti-infectives for the treatment of diseases that are inadequately addressed by current standard of care therapies. We are developing a pipeline of product and development candidates, with a focus on serious fungal and viral infections. Our lead product candidate is rezafungin acetate, an intravenous formulation of a novel echinocandin. Rezafungin is being developed as a once-weekly, high-exposure therapy for the first-line treatment and prevention of serious, invasive fungal infections. In addition, our proprietary Cloudbreak® platform is designed to discover compounds that counter infections in two ways, by directly targeting and destroying invading pathogens and by focusing the immune system at the site of infection. We are using our Cloudbreak platform to develop Antiviral Fc-Conjugates, or AVCs, for the treatment and prevention of influenza and other viruses.

Rezafungin

Rezafungin is a novel molecule in the echinocandin class of antifungals. We are developing rezafungin for the first-line treatment and prevention of serious, invasive fungal infections. These infections include candidemia and invasive candidiasis, which are fungal infections associated with high mortality rates.

STRIVE Phase 2 clinical trial

In July 2019, we reported topline results from Part B of our global, randomized Phase 2 STRIVE clinical trial of rezafungin. We previously reported topline results from Part A of the STRIVE clinical trial in March 2018. References to our STRIVE clinical trial below include results from both Parts A and B collectively of the STRIVE clinical trial.

STRIVE was an international, multicenter, double-blind clinical trial evaluating the safety, tolerability and efficacy of once-weekly dosing of rezafungin acetate compared to once-daily dosing of caspofungin in patients with candidemia and/or invasive candidiasis.

STRIVE enrolled 183 patients in the microbiological intent-to-treat, or mITT, population. Patients were randomized to receive either 400 mg of rezafungin administered intravenously once weekly for two to four weeks, 400 mg of rezafungin for the first week followed by 200mg of rezafungin once weekly for an additional one to three weeks, or daily caspofungin administered intravenously according to the approved prescribing information, with an optional step down to oral fluconazole.

In the STRIVE trial, rezafungin met all of its objectives for efficacy, safety and tolerability in the treatment of patients with candidemia and/or invasive candidiasis.

The trial results show that patients treated with rezafungin had numerically improved outcomes as compared to caspofungin across all efficacy measures at the 400 mg/200 mg dosing regimen. Data from the trial indicated that a 400mg/200mg dosing regimen of rezafungin had lower All Cause Mortality at Day 30 (4.4%), higher Clinical Response at Day 14 (80.4%), and a higher Overall Success at Day 14 (76.1%) when compared with once daily caspofungin (13.1%, 70.5%, and 67.2%, respectively).

In addition, a post-hoc analysis evaluated the STRIVE Phase 2 trial endpoints of Day 30 All-Cause Mortality and Day 14 Clinical Response, which represent the FDA and EMA primary endpoints, respectively, for the ReSTORE Phase 3 trial. For the two cohorts considered, the 400 mg/200 mg rezafungin dosing regimen (Phase 3 ReSTORE trial regimen) and the combined 400 mg/200 mg and 400 mg/400 mg dosing regimens, the results from the post hoc analysis of STRIVE showed that, for both primary endpoints, the limits of the 95% confidence intervals for both cohorts were within the 20% noninferiority margins that will be applied to evaluate the data generated by the ReSTORE trial.

Phase 3 clinical trials

Our Phase 3 clinical development plans for rezafungin are as follows:

•

Phase 3 ReSTORE Treatment Trial: A single, global, randomized, double-blind, controlled Phase 3 pivotal clinical trial in patients with candidemia and/or invasive candidiasis. The ReSTORE trial protocol is modeled after our STRIVE trial and began enrolling patients in the fourth quarter of 2018 and is continuing to enroll subjects. Based on our current assumptions about required patient enrollment levels and statistical powering, we expect to produce topline results in mid-2020.

•

Phase 3 ReSPECT Prophylaxis (Prevention) Trial: A single, global, randomized, double-blind, controlled Phase 3 pivotal clinical trial in patients undergoing allogeneic blood and marrow transplant to assess rezafungin in a 90-day prophylaxis regimen to prevent infections due to Candida, Aspergillus and Pneumocystis. Based on feedback from the EMA, we expect to commence the ReSPECT trial initially in Europe and / or Canada in the first quarter of 2020. Commencement of the ReSPECT trial in the US is contingent upon obtaining agreement with the FDA.

Mundipharma Collaboration

On September 3, 2019, we announced a strategic partnership with Mundipharma Medical Company to develop and commercialize rezafungin in an intravenous formulation for the treatment and prevention of invasive fungal infections. Under the terms of the collaboration agreement, we granted Mundipharma exclusive commercialization rights to rezafungin outside the U.S. and Japan. Mundipharma AG also made a concurrent $9 million equity investment in Cidara. The total potential transaction value is $568 million, including the equity investment, an up-front payment, global development funding, and certain development, regulatory, and commercial milestones. Cidara is also eligible for double-digit royalties in the teens on tiers of annual net sales.

Cloudbreak Platform

We believe our Cloudbreak platform is a fundamentally new approach in the fight against life-threatening infectious disease that provides potent antimicrobial activity and immune system engagement in a single molecule. The Cloudbreak platform recognizes that infectious disease often results when a microbial pathogen is able to evade or overcome the host immune system. Our Cloudbreak candidates are designed to counter infection in two ways, by directly targeting and destroying invading pathogens and by focusing the immune system at the site of infection. We believe this is a potentially transformative approach, distinct from current therapies.

We have generated preclinical, in vivo proof of concept data for our Cloudbreak influenza program. Our lead development candidate, CD377 for influenza, is structurally similar to the previously announced development candidates. Studies in support of a future IND began in July 2019.

Liquidity Overview

Since our inception, we have devoted substantially all of our financial resources and efforts to research and development and have incurred significant operating losses. As of September 30, 2019, we had an accumulated deficit of $245.8 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.

In connection with the preparation of our financial statements for the nine month period ended September 30, 2019, we performed an analysis of our ability to continue as a going concern. We believe, based on our current business plan, that our existing cash and cash equivalents will not be sufficient to fund our obligations for twelve months from the issuance of these financial statements. Our ability to execute our current business plan depends on our ability to obtain additional funding through equity offerings, debt financings or potential licensing and collaboration arrangements. We may not be able to raise additional funding on terms acceptable to us, or at all, and any failure to raise funds as and when needed will compromise our ability to execute on our business plan.

FINANCIAL OPERATIONS OVERVIEW

Revenues

Our revenues generally consist of upfront payments for licenses, milestone payments and payments for other research activities under our collaboration agreement.

In the future, we may generate revenue from a combination of license fees and other upfront payments, other funded research and development agreements, milestone payments, product sales, government and other third-party funding and royalties in connection with strategic alliances. We expect that any revenue we generate will fluctuate from quarter-to-quarter as a result of the timing of our achievement of nonclinical, clinical, regulatory and commercialization milestones, the timing and amount of payments relating to such milestones and the extent to which any of our products are approved and successfully commercialized. If we are unable to fund our development costs or we are unable to develop product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Research and development expenses

To date, our research and development expenses have related primarily to nonclinical development of our rezafungin candidate and our Cloudbreak platform, as well as clinical development of rezafungin acetate. Research and development expenses consist of wages, benefits and stock-based compensation for research and development employees, as well as the cost of scientific consultants, facilities and overhead expenses, laboratory supplies, manufacturing expenses and nonclinical and clinical trial costs. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the services have been performed or when the goods have been received. We accrue clinical trial expenses based on third party vendor confirmations and estimates of total costs incurred based on patient enrollment, completion of studies, and other events.

Research and development costs are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed. We accrue for costs incurred as the services are being provided by monitoring the status of the study or project and the invoices received from our external service providers. We adjust our accruals as actual costs become known.

We have received potential research and development funding through a grant from CARB-X and a partnership grant from the NIAID. We have evaluated the terms of the grants to assess our obligations and the classification of funding received. Amounts received for funded research and development are recognized in the statement of operations as a

reduction to research and development expense over the grant period as the related costs are incurred to meet our obligations.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase over the next several years as we continue to conduct nonclinical and clinical studies, expand our research and development pipeline and progress our product candidates through clinical trials. However, it is difficult to determine with certainty the duration, costs and timing to complete our current or future nonclinical programs and clinical trials of our product candidates.

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include, but are not limited to, the following:


•	per patient trial costs;


•	the number of patients that participate in the trials;


•	the number of sites included in the trials;


•	the countries in which the trials are conducted;


•	the length of time required to enroll eligible patients;


•	the number of doses that patients receive;


•	the drop-out or discontinuation rates of patients;


•	potential additional safety monitoring or other studies requested by regulatory authorities;


•	the duration of patient follow-up;


•	the phase of development of the product candidates; and


•	the efficacy and safety profile of the product candidates.

Research and development expenses by major program or category were as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Rezafungin	$	6,946	$	6,650	$	20,836	$	22,025
Cloudbreak platform	776		977		2,031		2,219
Personnel costs	3,209		2,857		10,279		9,354
Other research and development expenses	568		794		1,765		2,498
Total research and development expenses	$	11,499	$	11,278	$	34,911	$	36,096

We typically deploy our employees, consultants and infrastructure resources across our programs. Thus, some of our research and development expenses are not attributable to an individual program but are included in other research and development expenses as shown above.

In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, legal, business development, commercial planning, and support functions. Other general and administrative expenses include facility and overhead costs not otherwise included in research and development expenses, consultant expenses, travel expenses and professional fees for auditing, tax, legal, and other services. We expect that general and administrative expenses will increase in the future as we expand our operating activities and incur additional costs associated with operating as a publicly traded company. These increases will likely include legal fees, accounting fees, directors’ and officers’ liability insurance premiums and costs associated with investor relations.

Other income (expense)

Other income (expense) consists primarily of the change in the fair value of the contingent forward purchase obligation and related issuance costs, interest income and expense, and various income or expense items of a non-recurring nature.

We earn interest income from interest-bearing accounts and money market funds for cash and cash equivalents. Interest expense represents interest payable related to term loans and the amortization of debt issuance costs.

Contingent forward purchase obligation

On May 21, 2018, we entered into a subscription agreement with certain investors providing for the purchase and sale of up to an aggregate of $120.0 million of common stock and preferred stock in three closings. The second and optional third closings and warrants related to the optional third closing are triggered by our announcement of topline data from our STRIVE Part B Phase 2 clinical trial of rezafungin. We determined that these closings are classified as liabilities and represent contingent forward purchase obligations. The liability was initially recorded at $4.3 million on May 21, 2018. Fair value adjustments resulting in a loss of $0.4 million were recorded during the nine month period ended September 30, 2019. Because we elected not to consummate the second closing of the offering in August 2019, the contingent forward purchase obligation had no value as of September 30, 2019. The contingent forward purchase obligation was valued at $0.4 million as of December 31, 2018.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our unaudited financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the revenues and expenses incurred during the reported periods. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and under Note 2 to our financial statements contained in our Annual Report have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. Other than our accounting for those items discussed below, there were no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2019.

Revenue Recognition

We recognize revenue is accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, which applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for contracts with customers, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. We utilize key assumptions to determine a stand-alone selling price for performance obligations, which may include revenue forecasts, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies. Because the amount of revenue recognized for each performance obligation is determined based upon its relative stand-alone selling price, an increase or decrease of 10% in the estimated fair value of each performance obligation would not have a significant impact on the amount of revenue recognized.

Subaward Agreement and Partnership Grants

We reflect these costs reimbursed under research and development grants as a reduction of our research and development expenses. See Note 2 to our financial statements for additional information.

Restricted Stock Units

In 2018 and 2019, we granted Restricted Stock Units (RSUs) and Performance-based RSUs (PRSUs). We estimate the fair value of RSUs and PRSUs based on the closing price of our common stock on the date of grant. For awards subject

to time-based vesting conditions, stock-based compensation expense is recognized ratably over the requisite service period of the awards. For awards subject to performance-based vesting conditions, we assess the probability of achievement of the individual milestones under the stock-based awards and recognize stock-based compensation expense over the implicit service period commencing once we believe the performance criteria is probable of achievement.

Stockholders' Equity

On May 21, 2018, we entered into a securities purchase agreement with certain investors providing for the purchase and sale, in a registered direct offering, of up to an aggregate of $120.0 million of our common stock and preferred stock in three closings. On May 23, 2018, we completed the first closing, which was comprised of 6,185,987 shares of common stock at an offering price of $4.70 per share, 445,231 shares of Series X Convertible Preferred Stock at an offering price of $47.00 per share, and an option fee relating to the third closing paid by the investors for a total of $0.5 million. In a private placement concurrent with the first closing, we also sold warrants to purchase an aggregate of 12,499,997 shares of common stock at $0.125 per warrant share. Net proceeds for the first closing and the concurrent private placement were $49.5 million. We determined that warrants and future closings represented derivative instruments requiring bifurcation under ASC 815. Accordingly, we determined a fair value for each component of the securities purchase agreement and allocated the expected proceeds across each component on a relative fair value basis. Key estimates within the valuation include the expected timing for completion and estimated probability of success of our STRIVE Part B study. See Note 3 of the Notes to the Financial Statements for additional information.

In September 2019, we sold 4,781,408 shares of common stock to Mundipharma AG at a price per share of $1.884 (a 20% premium to the volume weighted average price of our common stock for the 10 trading days prior to September 3, 2019) for net proceeds of approximately $9.0 million.

In September 2019, we sold shares of common stock under a controlled equity sales agreement with Cantor Fitzgerald & Co. During the three months ended September 30, 2019, we sold 1.4 million shares for net proceeds of approximately $3.6 million, after deducting placement agent fees.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2019 and 2018

The following table summarizes our results of operations for the three months ended September 30, 2019 and 2018 (in thousands):



	Three Months Ended September 30,
	2019		2018		Change
Collaboration revenue	$	19,100	$	—	$	19,100
Research and development expense	11,499		11,278		221
General and administrative expense	4,573		3,447		1,126
Other income, net	11		1,106		(1,095		)

Collaboration revenue

Collaboration revenue was $19.1 million for the three months ended September 30, 2019. Our collaboration revenue is generated from our ongoing collaboration with Mundipharma, and generally consists of an upfront payment for the license and reimbursements for global development expenses.

Research and development expenses

Research and development expenses were $11.5 million for the three months ended September 30, 2019, compared to $11.3 million for the three months ended September 30, 2018. The increase in research and development expenses is primarily due to higher clinical expenses associated with the rezafungin clinical trials.

General and administrative expenses

General and administrative expenses were $4.6 million for the three months ended September 30, 2019 and $3.4 million for the three months ended September 30, 2018. The increase in general and administrative expenses is primarily due to higher personnel costs.

Other income (expense)

Other income during the three month period ended September 30, 2018 related primarily to the $0.9 million change in the fair value of the contingent forward purchase obligations. Other income during the three month periods ended September 30, 2019 and 2018 also included income generated from cash held in interest-bearing investments and interest expense incurred in connection with our loan from Pacific Western Bank.

Comparison of the nine months ended September 30, 2019 and 2018

The following table summarizes our results of operations for the nine months ended September 30, 2019 and 2018 (in thousands):



	Nine Months Ended September 30,
	2019		2018		Change
Collaboration revenue	$	19,100	$	—	$	19,100
Research and development	34,911		36,096		(1,185		)
General and administrative	11,833		10,591		1,242
Other income (expense), net	575		13		562

Collaboration revenue

Collaboration revenue was $19.1 million for the nine months ended September 30, 2019. Our collaboration revenue is generated from our ongoing collaboration with Mundipharma, and generally consists of an upfront payment for the license and reimbursements for global development expenses.

Research and development expenses

Research and development expenses were $34.9 million for the nine months ended September 30, 2019, compared to $36.1 million for the nine months ended September 30, 2018. The decrease in research and development expenses is primarily due to lower clinical expenses associated with the rezafungin clinical trials.

General and administrative expenses

General and administrative expenses were $11.8 million for the nine months ended September 30, 2019 and $10.6 million for the nine months ended September 30, 2018. The increase in general and administrative expenses is primarily due to higher personnel costs.

Other income (expense)

Other income during the nine month period ended September 30, 2019 included income generated from cash held in interest-bearing investments and interest expense incurred in connection with our loan from Pacific Western Bank. Other income for the nine month period ended September 30, 2018 related primarily to income generated from cash held in interest-bearing investments partially offset by interest expense in connection with our loan from Pacific Western Bank, the change in the fair value of the contingent forward purchase obligation and related issuance costs.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception through September 30, 2019, our operations have been financed primarily by proceeds of approximately $278.4 million in gross proceeds received from equity and debt financings, grant funding and our collaboration agreement with Mundipharma.

As of September 30, 2019, we had $73.8 million in cash and cash equivalents. The following table shows a summary of our cash flows for the nine months ended September 30, 2019 and 2018 (in thousands):



	Nine Months Ended September 30,
	2019			2018
Net cash provided by (used in):
Operating activities	$	(13,335	)	$	(43,039	)
Investing activities	(35		)	9,841
Financing activities	12,632			56,165
Net decrease in cash, cash equivalents, and restricted cash	$	(738	)	$	22,967

Operating activities

Net cash used in operating activities was $13.3 million for the nine months ended September 30, 2019, compared to $43.0 million for the nine months ended September 30, 2018. Cash used in operating activities was primarily attributable to a net loss of $27.1 million for the nine months ended September 30, 2019 and $46.7 million for the nine months ended September 30, 2018. For all periods presented, the primary use of cash was to fund research and development activities for our product candidates, which activities and uses of cash we expect to continue to increase for the foreseeable future.

Investing activities

Our primary investing activities during the nine months ended September 30, 2019 consisted of purchases and sales of property and equipment. For the nine months ended September 30, 2018, our primary investment activities consisted of proceeds and purchases of short-term investments. We received proceeds of $24.5 million from the maturity of short-term investments, partially offset by purchases of approximately $14.5 million of short-term investments.

Financing activities

Net cash provided by financing activities during the nine months ended September 30, 2019 primarily consisted of net proceeds from the sale of common stock. Net cash provided by financing activities during the nine months ended September 30, 2018 primarily consisted of net proceeds from the sale of common stock, Series X Convertible Preferred Stock, and warrants.

Operating Capital Requirements

To continue to fund operations, we will need to raise additional capital. We may obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, through government funding or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan. 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 future commercialization efforts, make reductions in spending, extend payment terms with suppliers, liquidate or grant rights to assets where possible or suspend or curtail planned programs. Any of these actions could materially harm our business, results of operations and future prospects.

Management performed an analysis of our ability to continue as a going concern. We believe, based on our current operating plans, that our existing cash, cash equivalents and marketable securities, access to capital under our Loan Agreement with Pacific Western Bank, and anticipated interest income will not be sufficient to fund our operating expenses and capital expenditure requirements through at least the next twelve months.

We have developed a plan to implement cost cutting measures to reduce our working capital requirements if an adequate level of financing is not secured. The plan includes the delay of certain development activities, a delay in hiring and a reduction of other discretionary expenditures that are within our control. Any of the actions contemplated by the implementation of this plan, if required, could have an adverse impact on our ability to achieve certain of our planned objectives during 2020, and thus, materially harm our business. Furthermore, successful implementation of the plan does not alleviate the conditions surrounding management’s assessment of the existence of substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year following the date that these financial statements are issued. Our ability to successfully transition to profitability will be dependent upon achieving a level of product sales adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Off-Balance Sheet Arrangements

As of September 30, 2019, we did not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide information typically disclosed under this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of September 30, 2019, we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2019.

Changes in Internal Control over Financial Reporting

An evaluation was also performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that occurred during our latest fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

You should carefully consider the following risk factors, as well as the other information in this report, before deciding whether to purchase, hold or sell shares of our common stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. When evaluating our business, you should consider all of the factors described as well as the other information in our Annual Report, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The risk factors set forth below that are marked with an asterisk (*) contain changes to the similarly titled risk factors included in Item 1A of our Annual Report. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Risks Related to Drug Discovery, Development and Commercialization

*We depend heavily on the success of rezafungin, currently in Phase 3 clinical development, and we also are very early in our development efforts from our Cloudbreak programs, neither of which may be successful.

We have completed four Phase 1 clinical trials of rezafungin, as well as the STRIVE Phase 2 clinical trial of rezafungin for the treatment of candidemia and invasive candidiasis. We are currently conducting two additional Phase 1 clinical trials of rezafungin and the ReSTORE Phase 3 clinical trial of rezafungin for treatment of candidemia and invasive candidiasis. Based on feedback from the EMA, we expect to commence the ReSPECT trial initially in Europe and / or Canada in the first quarter of 2020. Commencement of the ReSPECT trial in the US is contingent upon obtaining agreement with the FDA. Completion of both the ReSTORE and ReSPECT Phase 3 trials are contingent on our ability to secure adequate additional funding. We are also conducting preclinical studies of AVCs in our Cloudbreak programs for viral infections. Our assumptions about why rezafungin is worthy of future development, as well as our assumptions about the market for rezafungin or any potential products from our Cloudbreak programs, are based on data primarily collected by other companies. The timing and costs of our preclinical and clinical development programs, and the regulatory paths for marketing approvals for our products remain uncertain. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates. The success of rezafungin and any other product candidates we may develop will depend on many factors, including the following:


•	our ability to secure adequate additional funding;


•	agreement with regulatory authorities on study design and other requirements for study initiation;


•	successful completion of preclinical studies;


•	successful enrollment in, and completion of, clinical trials;


•	demonstrating safety and efficacy;


•	receipt of marketing approvals from applicable regulatory authorities;


•	establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers;


•	obtaining and maintaining patent and trade secret protection and non-patent exclusivity for our product candidates and technologies;


•	launching commercial sales of the product candidates if and when approved;


•	acceptance of the product candidates, if and when approved, by patients, the medical community and third-party payors;


•	effectively competing with other therapies;


•	a continued acceptable safety profile of the products following approval; and


•	enforcing and defending intellectual property rights and claims.

If we do not secure additional funding, we will not be able to continue the Phase 3 clinical development plans for rezafungin. If we do not accomplish one or more of any of the other goals in a timely manner, or at all, we could experience significant delays or an inability to successfully complete the development of and commercialize our product candidates, which would harm our business.

*If clinical trials for rezafungin or any other product candidates are delayed, terminated or suspended, or fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities, we may incur additional costs, or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must complete preclinical development and then conduct extensive 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 delay in starting or completing our clinical trials would materially impact our timelines and our ability to complete development of our product candidates in a timely manner or at all. For example, our ability to complete our Phase 3 clinical trials is dependent on our ability to secure adequate additional funding, and our ability to commence the ReSPECT Phase 3 clinical trial is also subject to the approval of the regulatory authorities.

A failure of one or more clinical trials could 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 particular clinical trial do not necessarily predict final results of that trial. For example, although the STRIVE Phase 2 clinical trial met its primary objectives related to tolerability and safety of rezafungin in the treatment of candidemia and invasive candidiasis, this does not guarantee success in our ReSTORE Phase 3 clinical trial for treatment, nor does it indicate whether our planned ReSPECT Phase 3 clinical trial for prophylaxis will be successful.

Moreover, preclinical and clinical data are often susceptible to multiple interpretations and analyses. 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. For example, the historically observed high rate of correlation for clinical efficacy for anti-infectives based on preclinical data may not apply for our current or future product candidates, and any of the potential benefits that we anticipate for human clinical use may not be realized.

We do not know whether our ReSPECT Phase 3 clinical trial for prophylaxis will begin on time or at all, or whether either ReSTORE or ReSPECT will be completed on schedule, or at all. We may experience numerous unforeseen events that could delay or prevent our ability to commence or complete our clinical trials, which could then delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:


•	regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial on our expected timeline, or at all, or conduct a clinical trial at a prospective trial site or in a given country;


•	regulators may disagree with our interpretation of preclinical data, which may impact our ability to commence our trials on our expected timeline or at all;


•	regulators may require that trials or studies be conducted, or sized or otherwise designed in ways, that were unforeseen in order to begin planned studies or to obtain marketing authorization;


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


•	clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, modify planned clinical trial designs or abandon product development programs;


•	the number of patients required for clinical trials of our product candidates may be larger than we anticipate;


•	enrollment in these clinical trials may be slower than we anticipate, clinical sites may drop out of our clinical trials 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 the data safety monitoring board assembled by us to oversee our rezafungin clinical trials 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 due to serious and unexpected side effects;


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


•	the FDA or comparable foreign regulatory authorities could require that we perform more studies than, or evaluate clinical endpoints other than, those that we currently expect;


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


•	we may be required to delay or terminate studies due to financial constraints.

We plan to conduct an interim futility analysis for our ReSPECT Phase 3 clinical trial for prophylaxis after primary endpoint data is available for approximately 50% of the total subjects we intend to enroll. The futility analysis will be conducted based on conditional power. If the conditional power is below a pre-specified cutoff for both primary endpoints, the study may be stopped for futility.

We are also in discussions with regulatory authorities about the final trial design of, and other matters related to, our ReSPECT Phase 3 clinical trial for prophylaxis. These discussions and potential design changes could lead to delays in the commencement and completion of the ReSPECT trial, or may result in the trial not proceeding at all.

If we are required to conduct additional clinical trials, or other tests of our product candidates beyond those that we currently contemplate, if we are unable to complete clinical trials of our product candidates or other tests successfully or in a timely manner, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:


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


•	not obtain marketing approval at all;


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


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


•	be subject to additional post-marketing testing requirements;


•	be subject to significant restrictions on reimbursement from public and/or private payors; or


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

Product development costs will also increase if we experience delays in testing or in receiving marketing approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates, could allow our competitors to bring products to market before we do, could increase competition from generics of the same class, and could impair our ability to successfully commercialize our product candidates, any of which may harm our business and results of operations.

*If we experience delays or difficulties in enrolling patients in clinical trials, our timing to complete our trials, and therefore our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to complete clinical trials for our product candidates if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials, as required by the FDA or analogous regulatory authorities outside the United States, or if we do not believe that the number of patients required by such regulatory authorities in any clinical trial can be enrolled in a reasonable timeframe. In addition, some of our competitors may have ongoing or new clinical trials for product candidates that would treat the same indications as our product candidates, or be used in the same patients and, therefore, patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Patient enrollment is also affected by other factors, including:


•	severity of the disease under investigation;


•	availability, safety and efficacy of approved medications or other investigational medications being studied clinically for the disease under investigation;


•	eligibility criteria for the trial in question;


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


•	efforts to facilitate timely enrollment in clinical trials;


•	reluctance of physicians to encourage patient participation in clinical trials;


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


•	the proximity and availability of clinical trial sites for prospective patients;


•	delays or failures in maintaining an adequate supply of quality drug product for use in clinical trials; and


•	changing treatment patterns that may reduce the burden of disease which our product candidates address.

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

*If serious adverse effects or unexpected characteristics of our product candidates are identified during development, we may need to abandon or limit our development of some or all of our product candidates.

Because 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, the risk of each of our programs is high. 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. For example, the pharmacokinetic properties, such as a longer half-life or less frequent dosing regimen, that differentiate rezafungin from other echinocandins could have side effects that we have not anticipated and the consequences of such side effects could be more severe than have been seen with other echinocandins that have shorter half-lives or more frequent dosing regimens, or are dosed at lower concentrations than we expect for rezafungin.

Further, the treatment advantages that we are predicting for rezafungin, such as lower healthcare costs resulting from an ability to administer rezafungin once-weekly or the predicted ability of rezafungin to be effective against resistant strains of fungal pathogens, may not be realized. For our AVCs, the bispecific mechanism of action, including the use of the immune system, may lead to side effects that are not anticipated based on the preclinical work we have conducted to date.

In the biotechnology industry, many agents that initially show promise in early stage testing may later be found to cause side effects that prevent further development of the agents. In addition, infections can occur in patients with co-morbidities and weakened immune systems, and there may be adverse events and deaths in our clinical trials that are attributable to factors other than investigational use of our product candidates.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

We have limited financial resources. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential than opportunities we pursue. For example, because we believe that an NDA filing for rezafungin for prophylaxis can be supported by one Phase 3 trial in prophylaxis, together with the data from our Phase 3 clinical trial in the treatment of candidemia and invasive candidiasis and the remainder of our rezafungin treatment program, if financial constraints require us to choose between our planned rezafungin treatment and prophylaxis programs, we may be required to choose our treatment program and forego or delay our prophylaxis program.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target markets for a particular product candidate or opportunity, we may relinquish valuable rights to that product candidate or opportunity through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate or opportunity.

Even if any of our product candidates receive marketing approval, they 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.

If any of our product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community for us to achieve commercial success. If our product candidates do not achieve an adequate level of acceptance, we may not generate sufficient product revenue to become profitable. 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 therapies;


•	the size of the markets in the countries in which approvals are obtained;


•	terms, limitations or warnings contained in any labeling approved by the FDA or other regulatory authority;


•	our ability to offer any approved products for sale at competitive prices;


•	convenience and ease of administration compared to alternative treatments;


•	the willingness of the target patient population to try new therapies or dosing regimens;


•	the willingness of physicians to prescribe these therapies and, in the case of rezafungin, transition to a once-weekly dosing regimen from traditional once-daily dosing;


•	the strength of marketing and distribution support;


•	the success of competing products and the marketing efforts of our competitors;


•	sufficient third-party payor coverage and adequate reimbursement; and


•	the prevalence and severity of any side effects.

*If, in the future, we are unable to establish sales and marketing capabilities or to selectively enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates, if and when they are approved.

We do not have a sales or marketing infrastructure. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource these functions to third parties.

There are risks involved both with establishing our own sales and marketing capabilities and with entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing 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 reposition our sales and marketing personnel.

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


•	our inability to recruit and retain adequate numbers of effective sales and marketing personnel;


•	the inability of sales personnel to obtain access to physicians or to achieve adequate numbers of prescriptions for any future products; and


•	costs and expenses associated with creating an independent sales and marketing organization.

If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the profitability of these product revenues to us may be lower than if we were to market and sell any products that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so on terms that are favorable to us. We may have little control over such third parties and any of them may fail to market and sell our products effectively, including by failing to devote the necessary resources and attention. If we do not establish sales and marketing 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 our current product candidates, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Regulatory incentives to develop drugs for treatment of infectious diseases have increased interest and activity in this area and will lead to increased competition for clinical investigators and clinical trial subjects, as well as for future prescriptions, if any of our product candidates are successfully developed and approved. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the indications on which we are focusing our product development efforts. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach and others are based on entirely different approaches. 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.

We expect that rezafungin will primarily compete with certain antifungal classes of drugs, which include polyenes, azoles and echinocandins. Approved branded echinocandin antifungal therapies include Cancidas (caspofungin, marketed by Merck & Co.), Eraxis (anidulafungin, marketed by Pfizer, Inc.), and Mycamine (micafungin, marketed by Astellas Pharma US, Inc.). We expect that there will be generics of all of the current echinocandins available at the time of rezafungin market approval, which will create added competition. In addition, there are other generic products approved for candidemia, marketed by companies such as Baxter Healthcare Corporation, Mylan Inc. and Glenmark Generics Inc., among others. In addition to approved therapies, we expect that rezafungin will compete with product candidates that we are aware of in clinical development by third parties, such as SCY-078, being developed by Scynexis, Inc.

We expect that any influenza product candidates developed through our Cloudbreak antiviral program will compete against approved and investigational agents for the treatment of viral influenza infections, including neurominidase inhibitors such as Tamiflu, Relenza and Peramivir, and endonuclease inhibitors such as Xofluza. We may develop other product candidates through our Cloudbreak platform for the treatment of other invasive infections. We are aware of a number of approved and investigational therapies in these areas.

Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete or non-competitive. Our competitors may also obtain marketing approval from the FDA or other regulatory authorities for their products sooner 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.

Many of our competitors have significantly greater name recognition, financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals 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 same competitors may invent technology that competes with our rezafungin program or our Cloudbreak platform.

These third parties may compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

*Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, preliminary or topline data from our clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analysis of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. For example, we reported topline data from Part B of our STRIVE Phase 2 clinical trial in July 2019. The topline data was reported as positive, however, if the final data materially differs in an adverse manner from the topline data, we may have unnecessarily expended or continued to commit substantial resources to the Phase 3 clinical trials, which costs we may not be able to recover. From time to time, we may also disclose interim data from our clinical studies. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. For example, we plan to conduct an interim futility analysis after primary endpoint data is available for approximately 50% of the subjects that we intend to enroll in the ReSPECT Phase 3 clinical trial. There can be no guarantee that a favorable futility analysis will result in a favorable final result at the completion of the clinical trial.

Further, others, including regulatory authorities, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the

material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or our business. If the topline data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Even if we are able to commercialize any product candidates, these products 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 drugs vary widely from country to country. In the United States, new 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 marketing approval is granted. As a result, we might obtain marketing approval for a drug in a particular country but then be subject to price regulations that delay its commercial launch, possibly for lengthy time periods, and negatively impact the revenue we are able to generate from the sale of the drug in that country. Adverse pricing limitations may hinder our ability to commercialize and generate revenue from one or more product candidates, even if our product candidates obtain marketing approval.

Our ability to commercialize any product candidates 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 programs, private health insurers, integrated delivery networks and other third-party payors. Third-party payors decide which medications they will pay for and establish reimbursement levels. A significant trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of payment for particular medications. Increasingly, third-party payors are requiring that drug companies provide predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for any product that we commercialize and, if reimbursement is available, the level of reimbursement may not be sufficient for commercial success. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.

There may be significant delays in obtaining coverage and adequate reimbursement for newly approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for coverage and reimbursement does not imply that any product 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. Coverage and reimbursement rates may vary according to the use of the drug and the medical circumstances under which it is used may be based on reimbursement levels already set for lower cost products or procedures or 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. Commercial third-party payors often rely upon Medicare coverage policies and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from both government-funded programs 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 our approved products and our overall financial condition.

Product liability lawsuits against us could cause us to incur substantial liabilities and could limit the commercialization of any product candidates we may develop.

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


•	decreased demand for any product candidates that we may develop;


•	injury to our reputation and significant negative media attention;


•	withdrawal of clinical trial participants;


•	significant costs and distraction of management to defend any related litigation;


•	the initiation of investigations by regulatory bodies;


•	substantial monetary awards to trial participants or patients;


•	loss of revenue;


•	product recalls, withdrawals or labeling, marketing or promotional restrictions; and


•	the inability to commercialize any products we may develop.

Although we have product liability insurance for our clinical trials, such insurance may not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage as we continue or expand our clinical trials and if we successfully commercialize any products. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm 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 involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. Our operations also produce hazardous waste products. We generally 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, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees in our workplace, including those resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, chemical, hazardous or radioactive materials.

In addition, we may incur substantial costs in order 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.

*We may not be successful in our efforts to identify, discover, and develop potential product candidates through our Cloudbreak platform or otherwise.

Through our Cloudbreak platform, we are developing AVCs for the treatment of viral infections. We have nominated the AVC CD377 as our lead Cloudbreak development candidate for influenza. It is structurally similar to previously announced development candidates. Our Cloudbreak platform may not be successful in identifying additional molecules that could be developed as drug therapies. In addition, our Cloudbreak platform may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons. In particular, our research methodology used may not be successful in identifying compounds with sufficient potency, bioavailability or efficacy to be potential product candidates. In addition, our potential product candidates may, on further study, be shown to have harmful side effects or other negative characteristics.

Research programs to identify new product candidates require substantial technical expertise and human resources. For example, we have limited experience with the use of the Cloudbreak platform applied to viral pathogens. A failure to optimize our expertise using the Cloudbreak platform for the development of our Cloudbreak antiviral program may limit our ability to successfully advance this program and identify future product candidates. Research programs to identify new product candidates also require substantial financial resources. We may choose to expend our financial resources on potential product candidates that ultimately prove to be unsuccessful. If we are unable to develop successful product candidates from our Cloudbreak platform for preclinical and clinical development, we will not be able to generate product revenue, which would harm our financial position and adversely impact our stock price.

Risks Related to Our Financial Position and Need for Additional Capital

*We need substantial additional funding to complete the development of rezafungin and to advance our Cloudbreak program.

In connection with the preparation of our financial statements for the period ended September 30, 2019, we performed an analysis of our ability to continue as a going concern. We believe, based on our current business plan, that our existing cash and cash equivalents will not be sufficient to fund our obligations for the next twelve months. Our ability to continue to fund the development of rezafungin through completion of our planned Phase 3 trials depends on our ability to obtain additional funding. Our ability to advance our Cloudbreak program is also dependent on our ability to obtain additional funding.

On September 3, 2019, we entered into a collaboration and development agreement for rezafungin with Mundipharma Medical Company, the Mundipharma Collaboration, pursuant to which we granted Mundipharma exclusive commercialization rights to rezafungin outside the U.S. and Japan in exchange for a $30 million upfront payment, near-term funding to support the global Phase 3 ReSTORE and ReSPECT trials, and the potential to receive development, regulatory and commercial milestone payments and double-digit royalties on product net sales. The Mundipharma Collaboration requires, among other things, that we complete the rezafungin development program. Our ability to meet our development obligations under the rezafungin collaboration depends on our ability to obtain additional funding.

There can be no assurance that additional funds will be available from any source or, if available, will be available on terms that are acceptable to us. There can also be no assurance that additional funds will be available to us without first obtaining the approval of our stockholders, which can be a difficult and lengthy process with an uncertain outcome.

Even if we raise additional capital, our expenses may increase in connection with our ongoing activities beyond what is currently expected. Our future capital requirements will depend on many factors, including:


•	the costs and timing to complete our Phase 3 ReSTORE and Phase 3 ReSPECT clinical trials;


•	the costs, timing and outcome of any regulatory review of rezafungin or future development candidates;


•	our ability to establish and maintain collaborations, when and if necessary, on favorable terms, if at all;


•	the costs and timing of commercialization activities, including manufacturing, marketing, sales and distribution, for rezafungin or any future product candidates that receive marketing approval;


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


•	the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates, for the Cloudbreak platform; and


•	the extent to which we acquire or in-license other product candidates and technologies.

Identifying potential development candidates and conducting preclinical studies and clinical trials are time consuming, expensive and uncertain processes that take years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales for any of our current or future product candidates. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenue, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.

Accordingly, we need substantial additional funding in connection with our continuing operations and to achieve our goals. Since December 6, 2012 (inception) through September 30, 2019, our operations have been financed primarily by gross proceeds of approximately $278.4 million from equity and debt financings, grant funding and the Mundipharma collaboration agreement. As of September 30, 2019, we had cash and cash equivalents of $73.8 million.

If we are unable to raise additional capital on attractive terms or at all, we may be forced to delay, reduce or eliminate our development programs, including our Cloudbreak program, be unable to continue the development of rezafungin and meet our development obligations under the Mundipharma Collaboration and/or be forced to make reductions in spending, extend payment terms with suppliers, and/or liquidate or grant rights to assets where possible. Any of these actions could materially harm our business, results of operations and future prospects.

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

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity, debt or other financing structures, receipt of payments under the Mundipharma collaboration

agreement, as well as potentially entering into other collaborations, strategic alliances or licensing arrangements with third parties or receiving government and/or charitable grants or contracts. In November 2018, we entered into a new controlled equity offering sales agreement with Cantor Fitzgerald & Co. with an aggregate offering price of up to $35 million and, other than the Mundipharma collaboration, it is our only current committed external source of funds, subject to the fulfillment of specified conditions.

In September 2019, we issued $9.0 million of our common stock to Mundipharma AG in connection with entering into the Mundipharma Collaboration. To the extent that we raise additional capital through the sale of equity or convertible debt securities, like the sale of our common stock to Mundipharma AG, 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 common stockholder. 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 and may be secured by all or a portion of our assets..

If we raise funds by entering into collaborations, strategic alliances 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. On September 3, 2019, we licensed all rights to rezafungin outside of the United States and Japan to Mundipharma Medical Company in exchange for certain payments and royalties on net sales. We may need to enter into similar agreements with other third parties for the development and commercialization of rezafungin outside of the Mundipharma territory, or for the development of our Cloudbreak program, which may require we relinquish valuable rights to these products.

If we raise funds through government grants and contracts, we may be subject to restrictions on our operations or certain unfavorable terms. United States government grants and contracts, if available, typically contain unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which will subject us to additional risks. If we receive a United States government grant or contract, we would be required to comply with numerous laws and regulations relating to the formation, administration and performance of the grant or contract, which can make it more difficult for us to retain our rights under such grant or contract and result in increased costs.

If we are unable to raise additional funds through equity, debt or other financing structures, or through collaborations, strategic alliances or licensing arrangements with third parties, or through receiving government and/or charitable grants or contracts, we may be required to delay, reduce or terminate our rezafungin development program and be unable to meet our development obligations under the Mundipharma Collaboration, and be unable to continue advancing the Cloudbreak program or be forced to grant rights in the Cloudbreak program that we would otherwise prefer to retain for ourselves.

*The terms of our term loan facility place restrictions on our operating and financial flexibility, and failure to comply with covenants or to satisfy certain conditions of the agreement governing the debt facility may result in acceleration of our repayment obligations and foreclosure on our pledged assets, which could significantly harm our liquidity, financial condition, operating results, business and prospects and cause the price of our common stock to decline.

In October 2016, we entered into a loan and security agreement with Pacific Western, or the Loan Agreement, as amended in June 2018, July 2018 and November 2019 under which we borrowed $10.0 million, subject to certain terms and conditions set forth therein.

The outstanding principal balance under the Loan Agreement is secured by a security interest in substantially all of our assets, other than intellectual property, which is subject to a double negative pledge. The Loan Agreement requires us to comply with a number of customary affirmative and restrictive covenants, including covenants that limit our ability to, among other things: transfer any part of our business or property; merge or consolidate with another entity or otherwise experience a change in control, incur additional indebtedness, encumber the collateral securing the loan, declare or pay any cash dividend or make distributions on our capital stock, repurchase or redeem any class of stock or other equity interest, acquire, own or make investments, and make certain capitalized expenditures over a specified threshold, in each case subject to exceptions.

The Loan Agreement also includes standard events of default, including a provision that Pacific Western could declare an event of default upon the occurrence of any event that it interprets as having a material adverse effect on (i) our operations, business or financial condition and subsidiaries taken as a whole; (ii) our ability to perform or pay the secured obligations under the Loan Agreement and related agreements; or (iii) the collateral pledged to Pacific Western under the Loan Agreement. Upon such determination, Pacific Western could declare all obligations under the Loan Agreement immediately due and payable. In November 2019, we entered into an amendment to the Loan Agreement that requires we maintain the cash value of the amounts borrowed on hand in our bank account, and a failure to comply with this obligation will also constitute an event of default and allow Pacific Western to declare all obligations immediately due and payable.

In connection with the audit of our 2018 financial statements, we received an unqualified auditor opinion with a going concern explanatory paragraph. Pacific Western provided written confirmation that it has not and will not deem the inclusion of the going concern explanatory paragraph to constitute an event of default under the Loan Agreement as a material adverse effect; however, Pacific Western also specified that it has not made and is not making any determination with respect to the underlying circumstances that prompted the inclusion of such a paragraph in the opinion. In the future, Pacific Western may determine that the underlying circumstances resulting in the receipt of a going concern explanatory note in the auditor opinion for our 2018 financial statements either on their own, or together with contemporaneous events or circumstances, such as a failure to timely secure additional funding, constitute a material adverse effect upon our business, operations, properties, assets, or financial condition or upon our ability to perform or pay the secured obligations under the Loan Agreement.

Additionally, Pacific Western may determine that the occurrence of adverse results or delays in any clinical study or the denial, delay or limitation of approval of or taking of any other regulatory action by the FDA or another governmental entity may also constitute a material adverse effect upon our business, operations, properties, assets, or financial condition or upon our ability to perform or pay the secured obligations under the Loan Agreement, either on its own or together with contemporaneous events or circumstances, such as our status regarding going concern or a failure to timely secure additional funding.

The Loan Agreement also requires us to timely deliver certain financial statements, reports, and certificates including a requirement to provide audited annual financial statements together with an unqualified audit opinion or a qualified opinion only for going concern so long as our investors provide additional equity as needed or if Pacific Western otherwise provides its consent in writing. In connection with the audit of our 2018 financial statements, we received an unqualified auditor opinion with a going concern explanatory paragraph. Pacific Western provided us with a written acknowledgment that inclusion of the going concern explanatory paragraph in the auditor opinion for our 2018 financial statements satisfies our requirements regarding delivery of an auditor opinion under the Loan Agreement; however, should we in the future receive either a qualified or unqualified opinion with a going concern explanatory paragraph without satisfaction of the additional equity criteria or the consent of Pacific Western required by the Loan Agreement, this may also constitute a default under the facility.

If we default under the facility, Pacific Western may accelerate all of our repayment obligations. At such time, we may not have enough available cash or be able to raise additional funds on satisfactory terms, if at all, through equity or debt financings to repay our indebtedness at the time any such repayment is required. If we are unable to access funds to meet those obligations or to renegotiate the Loan Agreement, Pacific Western could take control of and may sell our pledged assets. In such an event, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. If our assets were liquidated, Pacific Western’s right to repayment would be senior to the rights of our stockholders to receive any proceeds from the liquidation. Any declaration by Pacific Western of an event of default could significantly harm our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.

We may incur additional indebtedness in the future. The debt instruments governing such indebtedness may contain provisions that are as, or more, restrictive than the provisions governing our existing indebtedness under the Loan Agreement. If we are unable to repay, refinance or restructure our indebtedness when payment is due, the lenders could proceed against the collateral or force us into bankruptcy or liquidation.

*We have incurred significant operating losses since our inception, and we anticipate that we will continue to incur substantial operating losses for the foreseeable future. We may never achieve or maintain profitability.

Since our inception, we have incurred significant operating losses. Our net loss was $27.1 million and $46.7 million for the nine month periods ended September 30, 2019 and 2018, respectively. As of September 30, 2019, we had an accumulated deficit of $245.8 million. To date, we have financed our operations primarily through private placements of convertible preferred stock and convertible notes, our initial public offering of our common stock, or our IPO, our October 2016 term loan facility with Pacific Western Bank, or Pacific Western, our October 2016 follow-on public offering of common stock, our October 2017 private placement of common stock, sales of common stock during the fourth quarter of 2017 and the first quarter of 2018 under our controlled equity sales agreement with Cantor Fitzgerald & Co., which has since been terminated, our May 2018 registered direct offering of common stock, the payments received in connection with the Mundipharma Collaboration, the sale of our common stock to Mundipharma AG, and sales of our common stock during the fourth quarter of 2019 under our controlled equity sales agreement with Cantor Fitzgerald & Co. We have devoted substantially all of our financial resources and efforts to research and development. We have completed the STRIVE Phase 2 clinical trial of rezafungin, and are currently conducting the ReSTORE Phase 3 clinical trial of rezafungin, Phase 1 and non-clinical studies of rezafungin, and preclinical studies of our AVCs, and we are planning to conduct the ReSPECT Phase 3 clinical trial of rezafungin for prophylaxis. We expect that it will be many years, if ever, before we receive regulatory approval and have a product candidate available for commercialization. We expect to

continue to incur significant expenses and increasing operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially if and as we:


•	submit INDs to the FDA and equivalent filings to other regulatory authorities, and seek approval of our clinical protocols by institutional review boards, or IRBs, at clinical trial sites;


•	continue to advance rezafungin through clinical development;


•	continue the preclinical development of our AVCs from our Cloudbreak platform or otherwise, and advance one or more of such product candidates into clinical trials;


•	seek marketing approvals for rezafungin and other product candidates;


•	establish or contract for a sales, marketing and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval;


•	maintain, expand and enforce our intellectual property portfolio;


•	hire additional manufacturing, clinical, regulatory, quality assurance and scientific personnel;


•	add operational, financial and management systems and personnel, including personnel to support product development; and


•	acquire or in-license other product candidates and technologies.

To become and remain profitable, we must develop and eventually commercialize one or more products with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements. We may never succeed in these activities and, even if we do, may never generate revenue that is significant or large enough to achieve profitability. Our failure to become and remain profitable would decrease our value and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, such as the recent global financial crisis, could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all. This is particularly true in Europe, which is undergoing a continued severe economic crisis. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

The United Kingdom’s referendum to leave the European Union or “Brexit,” has and may continue to cause disruptions to capital and currency markets worldwide. The full impact of the Brexit decision, however, remains uncertain. A process of negotiation will determine the future terms of the United Kingdom’s relationship with the European Union. During this period of negotiation, our results of operations and access to capital may be negatively affected by interest rate, exchange rate and other market and economic volatility, as well as regulatory and political uncertainty. Brexit may also have a detrimental effect on our customers, distributors and suppliers, which would, in turn, adversely affect our financial condition.

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

We were founded in December 2012 and our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential development and product candidates, undertaking preclinical studies and conducting clinical trials. We have not yet demonstrated our ability to successfully complete large-scale, pivotal clinical trials required for regulatory approval of our product candidates, 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 commercialization. Typically, it takes many years to develop one new product from the time it is discovered to when it is commercially available. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a longer operating history or if we had product candidates in advanced clinical trials.

In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors that may alter or delay our plans. We will need to continue to transition from a company with a research focus to a company capable of supporting late-stage development activities and, if a product candidate is approved, a company with commercial activities. We may not be successful in any step of such a transition.

Risks Related to Our Dependence on Third Parties

*We are dependent on our collaboration partner to provide funding to continue the development of rezafungin, and for the commercialization of rezafungin outside of the United States and Japan. If the collaboration is not successful, we may not be able to complete the development of rezafungin or capitalize on the full market potential for rezafungin.

On September 3, 2019, we licensed the rights to rezafungin outside of the U.S. and Japan to Mundipharma Medical Company, a large international pharmaceutical company. Our ability to complete the development of rezafungin is dependent, in part, on funds provided by Mundipharma. Additionally, our ability to receive payments from this arrangement will depend on Mundipharma’s ability to successfully commercialize rezafungin in its territory.

The Mundipharma Collaboration poses many risks to us, including that our collaborator, Mundipharma:


•	has significant discretion in determining the efforts and resources it will apply to commercializing rezafungin in its territory, and may not commit sufficient resources to the marketing and distribution of rezafungin;


•	may terminate the collaboration agreement at will;


•	may be subject to changes in key personnel or strategic focus, have limited available funding or be subject to other external factors diverting resources or creates competing priorities, all of which could negatively impact the commercialization of rezafungin in its territory;


•	may independently develop, or develop with third parties, products that compete directly or indirectly with rezafungin 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;


•	may use our intellectual property or proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential litigation;


•	may not agree with certain development decisions resulting in the delay or termination of the program, or that result in costly litigation or arbitration that diverts management attention and resources; and


•	could be involved in a business combination and the continued pursuit and emphasis on rezafungin could be delayed, diminished or terminated.

If our ability to generate revenue under the Mundipharma Collaboration is adversely impacted these or any other risks, our right to receive additional payments from the Mundipharma Collaboration, including our share of the revenues generated by net sales of rezafungin, if approved, could be insufficient to allow us to achieve or maintain profitability or may result in rezafungin being less valuable to us than if we had not entered into the Collaboration.

*We may seek to selectively establish other collaborations and, if we are unable to establish them on commercially reasonable terms or at all, we may have to alter our research, clinical development and commercialization plans.

We may seek to collaborate with other pharmaceutical and biotechnology companies to advance the Cloudbreak program, or for the completion of development and commercialization of rezafungin in the U.S. and Japan. We may also seek funding from government grants or contracts to advance the Cloudbreak program. We cannot be certain that we would be successful in completing any such collaboration or obtaining any such government grants or contracts, or completing any of them on commercially reasonable terms.

We face significant competition in seeking appropriate pharmaceutical or biotech collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, on 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 preclinical studies, CMC development activities or clinical trials;


•	the likelihood of approval by the FDA or similar regulatory authorities outside the United States;


•	the potential market for the product candidate in the territories that are the subject of the collaboration;


•	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 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 also face significant competition for government grants and contracts for the Cloudbreak program, and there can be no assurances that such funding would be available to us if and when needed, or at all. For instance, government funding may be available only at certain phases of research and development, such as only after Phase 1 clinical trials have been completed. In order to advance the Cloudbreak Program, we will need to obtain significant funding to complete IND-enabling studies and Phase 1 clinical trials. Government grants and contracts may not be available to fund our activities at this earlier phase of the research and development process.

We intend to continue to rely on third parties to conduct our clinical trials and to conduct some aspects of our research and preclinical testing and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.

We currently rely and expect to continue to rely on third parties, such as contract research organizations, contract manufacturers of clinical supplies, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials and to conduct some aspects of our research and preclinical testing. Any of these third parties may terminate their engagements with us at any time. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies 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. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If we need to enter into alternative arrangements, it would delay our product development activities.

Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will 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 and other international regulatory authorities require us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, available at www.clinicaltrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

We have no experience manufacturing product candidates on a clinical or commercial scale and will be dependent on third parties for the manufacture of our product candidates. If we experience problems with any of these third parties, they could delay clinical development or marketing approval of our product candidates or our ability to sell any approved products.

We do not have any manufacturing facilities. We currently rely, and expect to continue to rely, on third-party manufacturers for the manufacture of our product candidates for preclinical studies and clinical trials and for commercial supply of any of these product candidates for which we obtain marketing approval.

We may be unable to establish agreements with third-party manufacturers for preclinical, clinical or commercial supply on terms favorable to us, or at all. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:


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


•	the possible breach of the manufacturing agreement by the third party, including the inability to supply sufficient quantities or to meet quality standards or timelines; 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 U.S. Good Manufacturing Practice requirements, or cGMPs, or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with cGMPs or other applicable regulations, even if such failures do not relate specifically to our product candidates or approved products, could result in sanctions being imposed on us or the manufacturers, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could adversely affect supplies of our product candidates and harm our business and results of operations.

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

Any performance failure on the part of our existing or future manufacturers, including a failure that may not relate specifically to our product candidate or approved product, could delay clinical development or marketing approval or adversely impact our ability to generate commercial sales. If any one of our current contract manufacturers cannot perform as agreed, we may be required to replace that manufacturer.

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

We currently rely, and expect to continue to rely, on third parties to release, label, store and distribute drug supplies for our clinical trials. Any performance failure on the part of these third parties, including a failure that may not relate specifically to our product candidate or approved product, could delay or otherwise adversely impact clinical development or marketing approval of our product candidates or commercialization of our drugs, producing additional losses and depriving us of potential revenue.

Moreover, our manufacturers and suppliers may experience difficulties related to their overall businesses and financial stability, which could result in delays or interruptions of supply of our product candidates or approved products.

We do not have alternate manufacturing plans in place at this time. If we need to change to other manufacturers, the FDA and comparable foreign regulators may have to approve these manufacturers’ facilities and processes prior to our use, which would require new testing and compliance inspections. In addition, the new manufacturers would have to be educated in or independently develop the processes necessary for production. This would result in delays and costs, and in the case of approved products, the potential loss of revenue.

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

If we are unable to take full advantage of regulatory programs designed to expedite drug development or provide other incentives, our development programs may be adversely impacted.

There are a number of incentive programs administered by the FDA and other regulatory bodies to facilitate development of drugs in areas of unmet medical need. Rezafungin received the designations as a Qualified Infectious Disease Product, or QIDP, a fast track product, and an orphan drug in the U.S. for the treatment of candidemia and invasive candidiasis. Rezafungin also received QIPD and Fast Track designation in the U.S. for the prevention of invasive fungal infections in adults undergoing allogeneic bone marrow transplantation. We plan to seek designation as an orphan drug in the U.S. and Europe for the prophylaxis indication and we also plan to seek orphan drug designation for rezafungin for treatment in Europe. Our product candidates may not qualify for or maintain designations under these or other incentive programs under any of the FDA’s existing or future programs to expedite drug development in areas of unmet medical need. Our inability to fully take advantage of these incentive programs may require us to run larger trials, incur delays, lose opportunities that may not otherwise be available to us, lose marketing exclusivity for which we would otherwise be eligible and incur greater expense in the development of our product candidates.

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize, or will be delayed in commercializing, our product candidates and our ability to generate revenue will be impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, release, safety, efficacy, regulatory filings, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in other countries. For example, in order to commence clinical trials of our product candidates in the United States, we must file an IND and obtain FDA agreement to proceed. The FDA may

place our development program on clinical hold and require further preclinical testing prior to allowing our clinical trials to proceed.

We must obtain marketing approval in each jurisdiction in which we market our products. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have not submitted a marketing application or received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process, testing and release and inspection of manufacturing facilities and personnel by the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

The process of obtaining marketing approvals, both in the United States and elsewhere, is expensive, may take many years and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. We cannot assure you that we will ever obtain any marketing approvals in any jurisdiction. 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. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical or other studies, changes in the manufacturing process or facilities or clinical trials. Moreover, approval by the FDA or an equivalent foreign authority does not ensure approval by regulatory authorities in any other countries or jurisdictions, but a failure to obtain marketing approval in one jurisdiction may adversely impact the likelihood of approval in other jurisdictions. In addition, varying interpretations of the data obtained from preclinical testing, manufacturing and product testing and clinical trials could delay, limit or prevent marketing approval of a product candidate. Additionally, 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.

Any product candidate for which we obtain marketing approval could be subject to marketing restrictions or withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes and facilities, 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 submissions of promotional materials and safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements for product facilities, quality assurance and corresponding maintenance of records and documents and requirements regarding the distribution of samples to physicians and related recordkeeping. 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 or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the medicine. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved labeling. However, companies may share truthful and not misleading information that is otherwise consistent with the product’s FDA approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we do not comply with these restrictions, we may be subject to enforcement actions.

In addition, later discovery of previously unknown problems with our products, manufacturers or manufacturing processes and facilities or failure to comply with regulatory requirements, may result in, among other things:


•	restrictions on such products, manufacturers or manufacturing processes or facilities;


•	restrictions on the labeling, marketing, distribution or use of a product;


•	requirements to conduct post-approval clinical trials, other studies or other post-approval commitments;


•	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 revenue;


•	suspension or withdrawal of marketing approvals;


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


•	product seizure; and


•	injunctions or the imposition of civil or criminal penalties.

Our relationships with customers, health care professionals and third-party payors may be subject to applicable healthcare laws, which could expose us to penalties, including administrative, civil or criminal penalties, damages, fines, imprisonment, exclusion from participation in federal healthcare programs such as Medicare and Medicaid, reputational harm, the curtailment or restructuring of our operations and diminished future profits and earnings.

Healthcare professionals and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with customers, healthcare professionals 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 conduct research, market, sell and distribute our medicines for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following, among others:

•

the federal healthcare anti-kickback statute, which prohibits persons and entities from, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;

•

the federal false claims laws, which impose criminal and civil penalties, including civil whistleblower or qui tam actions under the federal civil False Claims Act, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;


•	HIPAA, as amended by HITECH, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;


•	the federal false statements statute enacted under HIPAA, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;


•	the federal transparency requirements under the Affordable Care Act, which require, among other things, certain manufacturers of drugs, devices, biologics and medical supplies to report annually to CMS information related to physician payments and other transfers of value and physician ownership and investment interests; and

•

analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business activities, including sales or marketing arrangements and claims involving healthcare items or services including, in some states, those reimbursed by non-governmental third-party payors, including private insurers, some state laws which require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments or other transfers of value provided to physicians and other health care providers and entities, marketing expenditures, or drug pricing, state and local laws that require the registration of pharmaceutical sales representatives, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

As of May 25, 2018, the EU General Data Protection Regulation 2016/679, or GDPR replaced the EU General Data Protection Regulation with respect to the processing of personal data in the European Union. The GDPR imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third-party processors in connection with the processing of the personal data. The GDPR allows EU member states to make additional laws and regulations further limiting the processing of genetic, biometric or

health data. Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties. The GDPR includes more stringent operational requirements for processors and controllers of personal data and creates additional rights for data subjects. Additionally, in June 2016, United Kingdom voters approved an exit from the EU, commonly referred to as “Brexit,” which could also lead to further legislative and regulatory changes. In March 2017, the United Kingdom began the process to leave the EU by April 2019. While the Data Protection Act of 2018, that “implements” and complements the GDPR has achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under GDPR. We may incur liabilities, expenses, costs, and other operational losses under GDPR and applicable EU Member States and the United Kingdom privacy laws in connection with any measures we take to comply with them.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. Interpretations of standards of compliance under these laws and regulations are rapidly changing and subject to varying interpretations and 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 laws that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, reputational harm, imprisonment, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws and the curtailment or restructuring of our operations, any of which could diminish our future profits or earnings. If any of the physicians or other providers or entities with whom we expect to do business are 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.

We are dependent on information technology systems, infrastructure and data, which exposes us to data security risks.

We are dependent upon our own or third-party information technology systems, infrastructure and data, including mobile technologies, to operate our business. The multitude and complexity of our computer systems may make them vulnerable to service interruption or destruction, disruption of data integrity, malicious intrusion, or random attacks. Likewise, data privacy or security incidents or breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, patients, customers or other business partners may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity. Cyber-attacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similar risks and any security breach of their systems could adversely affect our security posture. A security breach or privacy violation that leads to disclosure or modification of or prevents access to patient information, including personally identifiable information or protected health information, could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to litigation or other liability under laws and regulations that protect personal data, any of which could disrupt our business and/or result in increased costs or loss of revenue. Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property. While we have invested, and continue to invest, in the protection of our data and information technology infrastructure, there can be no assurance that our efforts will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches.

We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.

We are subject to laws and regulations governing data privacy and the protection of personal information. These laws and regulations govern our processing of personal data, including the collection, access, use, analysis, modification, storage, transfer, security breach notification, destruction and disposal of personal data. There are foreign and state law versions of these laws and regulations to which we are currently and/or may in the future, be subject. For example, the collection and use of personal health data in the EU is governed by the GDPR. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of

personal data out of the EU to the United States, provides an enforcement authority and imposes large monetary penalties for noncompliance. The GDPR requirements apply not only to third-party transactions, but also to transfers of information within our company, including employee information. The GDPR and similar data privacy laws of other jurisdictions place significant responsibilities on us and create potential liability in relation to personal data that we or our third party service providers process, including in clinical trials conducted in the United States and EU. In addition, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the United States, the EU and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business.

We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic and international markets. We can face criminal liability and other serious consequences for violations, which can harm our business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties for clinical trials outside of the United States, to sell our products abroad once we enter a commercialization phase and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we 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, including cost-containment measures, that could reduce or limit coverage and reimbursement for newly approved drugs, prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

For example, in March 2010, President Obama signed into law the Affordable Care Act, a sweeping law intended to, among other things, broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The Affordable Care Act and subsequent regulations revised the definition of “average manufacturer price” for reporting purposes, which could increase the amount of Medicaid drug rebates to states. Further, the law imposed a significant annual fee on companies that manufacture or import branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with healthcare practitioners. Since its enactment there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, as well as recent efforts by the Trump administration to repeal and replace certain aspects of the Affordable Care Act and we expect such challenges to continue. Since January 2017, President Trump has signed two Executive Orders and other directives designed to delay the implementation of certain provisions of the Affordable Care Act or otherwise circumvent some of the requirements for health insurance mandated by the Affordable Care Act. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the Affordable Care Act. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the Affordable Care Act have been enacted. The Tax Act includes a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain fees mandated by the Affordable Care Act, 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. The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans and also

increased, effective January 1, 2019, the percentage that a drug manufacturer must discount the cost of prescription drugs from 50 percent to 70 percent. In July 2018, CMS published a final rule permitting further collections and payments to and from certain Affordable Care Act qualified health plans and health insurance issuers under the Affordable Care Act risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. On December 14, 2018, a Texas U.S. District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the "individual mandate" was repealed by Congress as part of the Tax Act. While the Texas U.S. District Court Judge, as well as the Trump administration and CMS, have stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent appeals, and other efforts to repeal and replace the Affordable Care Act will impact the Affordable Care Act and our business.

Although the full effect of the Affordable Care Act remains uncertain, the law appears likely to continue the pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products.

Further, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. In August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments, including the BBA, will remain in effect through 2027 unless additional congressional action is taken. Additionally, in January 2013, the President signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

In addition, there have been several recent 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 and reform government program reimbursement methodologies for drug products. At the federal level, the Trump administration’s budget proposal for fiscal year 2019 contains additional 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. Further, the Trump administration released a “Blueprint,” or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. HHS, has already started the process of soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existing authority. For example, in September 2018, CMS announced that it will allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2019, and in October 2018, CMS proposed a new rule that would require direct-to-consumer television advertisements of prescription drugs and biological products, for which payment is available through or under Medicare or Medicaid, to include in the advertisement the Wholesale Acquisition Cost, or list price, of that drug or biological product. On January 31, 2019, the HHS Office of Inspector General, proposed modifications to the federal healthcare program anti-kickback statute discount safe harbor for the purpose of reducing the cost of drug products to consumers which, among other things, if finalized, will affect discounts paid by manufacturers to Medicare Part D plans, Medicaid managed care organizations and pharmacy benefit managers working with these organizations. While some of these and other proposed measures may 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, legislatures have increasingly passed legislation and implemented 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. 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 product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or Right to Try Act, was signed into law. The law, among other things, provides a federal framework for certain patients with life-threatening diseases or conditions to access certain investigational new drug products that have

completed a Phase 1 clinical trial. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA approval under the FDA expanded access program. There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act.

We expect that additional healthcare reform measures will be adopted within and outside the United States in the future, any of which could add difficulty to the regulatory approval processes for our product candidates or limit the amounts that governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures. The continuing efforts of third-party payors to contain or reduce costs of healthcare may adversely affect the demand for any drug products for which we may obtain regulatory approval, our ability to set a price that we believe is fair for our products, our ability to obtain coverage and reimbursement approval for a product, our ability to generate revenues and achieve or maintain profitability and the level of taxes that we are required to pay.

Risks Related to Our Intellectual Property

*If our efforts to protect the proprietary nature of the intellectual property related to rezafungin, our Cloudbreak compounds or our other product candidates or compounds are not adequate, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trademarks, trade secret protection and confidentiality agreements to protect the intellectual property related to rezafungin and our other product candidates and compounds. Any involuntary disclosure to or misappropriation by third parties of our proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our markets.

The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain and our commercial success will depend on our ability to obtain patents and maintain adequate protection for rezafungin, our AVCs and other compounds and product candidates in the United States and other countries. We currently hold issued U.S. utility and foreign patents and multiple pending U.S. utility patent applications, pending U.S. provisional patent applications and pending international, foreign national and regional counterpart patent applications covering various aspects of rezafungin and our AVCs. The patent applications may fail to result in issued patents in the United States or in foreign countries or jurisdictions. Even if the applications do successfully issue, third parties may challenge the patents.

Further, the existing and/or future patents, if any, may be too narrow to prevent third parties from developing or designing around these patents. If the sufficiency of the breadth or strength of protection provided by the patent and patent applications we own with respect to rezafungin or our AVCs or the patents we pursue related to any of our other product candidates or compounds is threatened, it could dissuade companies from collaborating with us to develop and threaten our ability to commercialize the product candidates or compounds. Further, if we encounter delays in our clinical trials, the period of time during which we could market our product candidates under patent protection would be reduced, although a patent term extension or supplementary protection certificate having varied scope may be available in certain jurisdictions to compensate for some of the lost patent term. In addition, we do not know whether:


•	we were the first to make the inventions covered by each of our pending patent applications or our issued patents;


•	we were the first to file patent applications for these inventions;


•	others will independently develop similar or alternative technologies or duplicate any of our technologies;


•	any of our pending patent applications will result in issued patents;


•	any of our patents, once issued, will be valid or enforceable or will issue with claims sufficient to protect our products, or will be challenged by third parties;


•	any patents issued to us will provide us with any competitive advantages;


•	we will develop additional proprietary technologies that are patentable; or


•	the patents of others will have an adverse effect on our business.

In addition, patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In September 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The United States Patent and Trademark Office, or USPTO, developed new regulations and procedures to govern administration of the Leahy-Smith Act and many of the substantive changes to patent law associated with the

Leahy-Smith Act and, in particular, the first to file provisions, only became effective in March 2013. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition and prospects.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable in one or more jurisdictions, inventions for which patents are difficult to enforce and any other elements of our drug discovery program that involve proprietary know-how, information and technology that is not covered by patents. Although we require all of our employees, consultants, advisers and third parties who have access to our proprietary know-how, information and technology to enter into confidentiality agreements, we cannot be certain that this know-how, information and technology will not be disclosed or used in an unauthorized manner or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

There also may be challenges or other disputes concerning the inventorship, ownership or right to use our intellectual property. For example, our consultants and advisors may have obligations to assign certain inventions and/or know-how that they develop to third-party entities in certain instances, and these third parties may challenge our ownership or other rights to our intellectual property, which would adversely affect our business.

An inability to obtain, enforce and defend patents covering our proprietary technologies would materially and adversely affect our business prospects and financial condition. Further, the laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States. We may encounter significant problems in protecting, enforcing and defending our intellectual property both in the United States and abroad. If we are unable to prevent unauthorized material disclosure of the intellectual property related to our technologies to third parties or are otherwise unable to protect, enforce or defend our intellectual property, we will not be able to establish or, if established, maintain a competitive advantage in our markets, which could materially adversely affect our business, operating results and financial condition.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various foreign or jurisdictional governmental patent agencies in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm to pay these fees due to foreign patent agencies. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process.

We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. Such noncompliance events are outside of our direct control for (1) non-U.S. patents and patent applications owned by us and, (2) if applicable in the future, patents and patent applications licensed to us by another entity. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.

*Third-party claims of intellectual property infringement may prevent or delay our drug discovery and development efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents with claims to materials, methods of manufacture or methods of treatment related to the use or manufacture of rezafungin, our AVCs and/or our other product candidates or compounds. If any third-party patents were held by a court of competent jurisdiction to cover the rezafungin or AVC manufacturing process, any molecules formed during these processes or the final products or any use thereof, the holders of any such patents may be able to block our ability to commercialize the product unless we obtained a license under the applicable patent or patents or until such patents expire. These same issues and risks arise in connection with any other product candidates we develop as well. We cannot predict whether we would be able to obtain a license on commercially reasonable terms, or at all. Any inability to obtain such a license under the applicable patents on commercially reasonable terms, or at all, would have a material adverse effect on our ability to commercialize the affected product until such patents expire.

In addition, third parties may obtain patents in the future and claim that our product candidates and/or the use of our technologies infringes upon these patents. Furthermore, parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees in the case of willful infringement, obtain one or more licenses from third parties, pay royalties and/or redesign our infringing products, which may be impossible and/or require substantial time and monetary expenditure. In addition, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of one or more of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, or at all. In that event, we would not be able to further develop and commercialize such product candidates, which could harm our business significantly.

We may be required to file lawsuits or take other actions to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our current or future patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of our asserted patents is not valid or is unenforceable 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. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly and could put our patent applications at risk of not issuing. Pursuit of these claims would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business.

Interference proceedings or derivative proceedings provoked by third parties or brought by the USPTO may be necessary to determine the entitlement to patent protection with respect to our patents or patent applications. An unfavorable outcome could result in a loss of our patent rights and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, or at all. Litigation or patent office proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent misappropriation of our trade secrets or confidential information, particularly in countries where the laws or legal process may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. 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 common stock.

Issued patents covering our product candidates and technologies could be found invalid or unenforceable if challenged in court or the USPTO.

If we initiate legal proceedings against a third party to enforce a patent covering one of our product candidates or our technologies, the defendant could counterclaim that the patent covering our product candidate or our technology, as applicable, is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product candidates or our technologies. The outcome following legal assertions of invalidity and/or unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art or that prior art that was cited during prosecution, but not relied on by the patent examiner, will not be revisited. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection directed to our product candidates or technologies. Such a loss of patent rights could have a material adverse impact on our business.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the pharmaceutical industry involve both technological and legal complexity, and are therefore costly, time-consuming and inherently uncertain. In addition, the United States has implemented wide-ranging patent reform legislation, including patent office administrative proceedings that offer broad opportunities to third parties to challenge issued patents. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, the USPTO and foreign governmental bodies and tribunals, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in Assoc. for Molecular Pathology v. Myriad Genetics, Inc., the U.S. Supreme Court held in 2013 that certain claims to DNA molecules are not patentable and lower courts have since been applying this case in the context of other types of biological subject matter. We cannot predict how future decisions by the courts, the U.S. Congress, the USPTO or foreign governmental bodies or tribunals may impact the value of our patent rights.

We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world.

We have limited intellectual property rights outside the United States. Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws and legal processes of some foreign countries do not protect intellectual property to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patents to develop their own products and further, may export otherwise infringing products to territories where we have patents but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property in foreign jurisdictions. The legal systems of certain countries, particularly China and certain other developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property, particularly those relating to pharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put any of our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. The requirements for patentability may differ in certain countries, particularly developing countries. Furthermore, generic drug manufacturers or other competitors may challenge the scope, validity or enforceability of any of our current or future patents, requiring us to engage in complex, lengthy and costly litigation or other proceedings. Certain countries in Europe and developing countries, including China and India, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we may have limited remedies if any of our patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors, and academic or research institutions. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of these third parties or our employees’ former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

Risks Related to U.S. Government Contracts and Grants

*If we are unable to generate revenues from partnerships, government funding or other sources of funding, we may be forced to suspend or terminate one or more of our Cloudbreak programs.

In order to continue our Cloudbreak programs, we will need to seek funding from partnerships, the government or other sources of funding. There can be no assurances that we will be able to obtain funding from partnerships, or enter into new contracts with the United States government or obtain other sources of funding to support any program resulting from our Cloudbreak platform. The process of completing a partnership or obtaining government contracts is lengthy and uncertain and we will have to compete with other companies and institutions in each instance. Further, with respect to government contracting, changes in government budgets and agendas may result in a decreased and de-prioritized emphasis on supporting the discovery and development of anti-infective products. If we cannot obtain or maintain government or other funding for our Cloudbreak programs, we may be forced to discontinue those programs.

Our use of government funding adds uncertainty to our research and commercialization efforts and may impose requirements that increase our costs.

Contracts funded by the U.S. government and its agencies include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:


•	terminate agreements, in whole or in part, for any reason or no reason;


•	reduce or modify the government’s obligations under such agreements without the consent of the other party;


•	claim rights, including intellectual property rights, in products and data developed under such agreements;


•	audit contract-related costs and fees, including allocated indirect costs;


•	suspend the contractor from receiving new contracts pending resolution of alleged violations of procurement laws or regulations;


•	impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements;


•	suspend or debar the contractor from doing future business with the government;


•	control and potentially prohibit the export of products; and


•	pursue criminal or civil remedies under the Federal Civil Monetary Penalties Act and the federal civil False Claims Act and similar remedy provisions specific to government agreements.

In addition, government contracts contain additional requirements that may increase our costs of doing business, reduce our profits and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example:


•	specialized accounting systems unique to government contracts;


•	mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent;


•	public disclosures of certain contract information, which may enable competitors to gain insights into our research program; and


•	mandatory socioeconomic compliance requirements, including labor standards, anti-human-trafficking, non-discrimination, and affirmative action programs and environmental compliance requirements.

If we fail to maintain compliance with these requirements, we may be subject to potential liability and to termination of our contracts.

Changes in funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including beginning on December 22, 2018 and ending on January 25, 2019, the U.S. government has shut down several times and certain regulatory authorities, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If repeated or prolonged government shutdowns occur, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Our business is subject to audit by the U.S. government and a negative audit could adversely affect our business.

United States government agencies routinely audit and investigate government contractors and recipients of Federal grants. These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards. BU also has the right to audit our activities under our CARB-X Subaward Agreement.

Government agencies also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed, while such costs already reimbursed must be refunded.

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including:


•	termination of contracts;


•	forfeiture of profits;


•	suspension of payments;


•	fines; and


•	suspension or prohibition from conducting business with the United States government.

In addition, we could suffer serious reputational harm if allegations of impropriety were made against us, which could cause our stock price to decrease.

Laws and regulations affecting government contracts make it more expensive and difficult for us to successfully conduct our business.

We must comply with numerous laws and regulations relating to the formation, administration and performance of government contracts, which can make it more difficult for us to retain our rights under our government grant contracts. These laws and regulations affect how we conduct business with government agencies. Among the most significant government contracting regulations that affect our business are:


•	the Federal Acquisition Regulations, or FAR, and agency-specific regulations supplemental to the FAR, which comprehensively regulate the procurement, formation, administration and performance of government contracts;


•	business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and include other requirements such as the Anti-Kickback Statute and Foreign Corrupt Practices Act;


•	export and import control laws and regulations; and


•	laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

Any changes in applicable laws and regulations could restrict our ability to maintain our existing CARB-X Subaward Agreement and obtain new contracts, which could limit our ability to conduct our business and materially adversely affect our results of operations.

Risks Related to Employee Matters and Managing Growth

*Our future success depends on our ability to retain our senior management team and to attract, retain and motivate qualified personnel.

We are highly dependent upon our senior management team, as well as the other principal members of our research and development teams. All of our executive officers are employed “at will,” meaning we or they may terminate the employment relationship at any time. We do not maintain “key person” insurance for any of our executives or employees. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives.

Recruiting and retaining qualified scientific, clinical, manufacturing, regulatory, quality assurance and sales and marketing personnel 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 advisers, including scientific, regulatory, quality assurance and clinical advisers, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisers 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.

We expect to expand our operations, and may encounter difficulties in managing our growth, which could disrupt our business.

We expect to expand the scope of our operations, particularly in the areas of drug development, manufacturing, clinical, regulatory affairs, quality assurance and 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. We may not be able to effectively manage the expected expansion of our operations or recruit and train additional qualified personnel. Moreover, the expected 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.

We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.

In the future, we may enter into transactions to acquire other businesses, products or technologies and our ability to do so successfully is unproven. If we do identify suitable candidates, we may not be able to make such acquisitions on favorable terms, or at all. Any acquisitions we make may fail to strengthen our competitive position and these transactions may be viewed negatively by customers or investors. We may decide to incur debt in connection with an acquisition or issue our common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders. We could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by the indemnification we may obtain from the seller. In addition, we may not be able to successfully integrate the acquired personnel, technologies and operations into our existing business in an effective, timely and non-disruptive manner. Acquisitions may also divert management attention from day-to-day responsibilities, increase our expenses and reduce our cash available for operations and other uses. We cannot predict the number, timing or size of future acquisitions or the effect that any such transactions might have on our operating results.

Risks Related to Ownership of our Common Stock

*The price of our stock may be volatile, and you could lose all or part of your investment.

The trading price of our common stock is highly volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include:


•	changes in the market valuations of similar companies;


•	the commencement, timing, enrollment or results of the current and planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;


•	any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter, "complete response" letter, or a request for additional information;


•	adverse results, suspensions, terminations or delays in pre-clinical or clinical trials;


•	our decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial or development program;


•	adverse regulatory decisions, including failure to receive regulatory approval of our product candidates;


•	changes in laws or regulations applicable to our products, including but not limited to requirements for approvals;


•	changes in the structure of healthcare payment systems or limitations on the ability of hospitals and outpatient treatment centers to receive adequate reimbursement for the purchase and use of our products;


•	adverse developments concerning our contract manufacturers;


•	our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices or acceptable quality;


•	our inability to establish collaborations, if needed;


•	our failure to commercialize our product candidates successfully, or at all;


•	additions or departures of key scientific or management personnel;


•	unanticipated serious safety concerns related to the use of our product candidates;


•	the introduction of new products or services offered by us or our competitors;


•	announcements of significant acquisitions, strategic partnerships, joint ventures, government grants or contracts or capital commitments by us or our competitors;


•	our ability to effectively manage our growth;


•	the size and growth of our fungal infection, bacterial infection or other target markets;


•	our ability to successfully enter new markets or develop additional product candidates;


•	actual or anticipated variations in quarterly operating results;


•	our cash position and our ability to raise additional capital and the manner and terms on which we raise it, and the expectation of future fundraising activities by us;


•	our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;


•	publication of research reports or other media coverage about us or our industry or our therapeutic approaches in particular or positive or negative recommendations or withdrawal of research coverage by securities analysts;


•	overall performance of the equity markets;


•	sales of our common stock by us or our stockholders in the future or the expectation of such sales;


•	the trading volume of our common stock;


•	changes in accounting practices;


•	ineffectiveness of our internal controls;


•	disputes or other developments relating to proprietary rights, including patent rights, litigation matters and our ability to obtain patent protection for our technologies;


•	significant lawsuits, including patent or stockholder litigation;


•	general political and economic conditions; and


•	other events or factors, many of which are beyond our control.

In addition, the stock market in general, and The Nasdaq Global Market, pharmaceutical companies and companies in the anti-infective sector in particular, have experienced extreme price and volume fluctuations that may or may not have been related or proportionate to the operating performance of these companies or their product potential. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. You may not realize any return on your investment in us and may lose some or all of your investment. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.

We do not intend to pay dividends on our common stock, so any returns will be limited to the value of our stock.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.

Our principal stockholders and management own a significant percentage of our stock and are able to exert significant control over matters subject to stockholder approval.

Our executive officers, directors and 5% stockholders and their affiliates currently beneficially own a significant percentage of our outstanding voting stock. These stockholders have the ability to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

We are an emerging growth company and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company through 2020, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (a) December 31, 2020, (b) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (c) the last day of the fiscal year in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700 million as of the prior June 30th and (d) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, changes in rules of U.S. generally accepted accounting principles or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could significantly affect our financial position and results of operations.

We incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Securities Exchange Act of 1934, which require, among

other things, that we file with the Securities and Exchange Commission, or the SEC, annual, quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The Nasdaq Global Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as “say on pay” and proxy access. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five years from the pricing of our IPO. We intend to take advantage of this legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Stockholder activism, the political environment and the level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

We expect the rules and regulations applicable to public companies to continue to result in substantial legal and financial compliance costs and to make some activities more time-consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. These costs could decrease our net income or increase our net loss and may require us to reduce costs in other areas of our business or increase the prices of our products or services. For example, these rules and regulations could make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

*Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline. We had 33,040,295 shares of common stock outstanding as of September 30, 2019. We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Sales of our common stock by current stockholders may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate and may make it more difficult for you to sell shares of our common stock. In addition, shares of common stock that are either issuable upon the exercise of outstanding options or warrants or reserved for future issuance under our employee benefit plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Certain holders of our securities are entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates, as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

*Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

We believe, based on our current business plan, that our existing cash and cash equivalents will not be sufficient to fund our obligations past the fourth quarter of 2019. Significant additional capital will be needed to continue our operations as currently planned, beyond the fourth quarter of 2019, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating as a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities, new investors could gain rights, preferences and privileges senior to our existing stockholders and our existing stockholders may be materially diluted by such subsequent sales.

Pursuant to our 2015 Equity Incentive Plan, or the 2015 EIP, our management is authorized to grant stock options to our employees, directors and consultants. The number of shares of our common stock reserved for issuance under the 2015

EIP will automatically increase on January 1 of each year through and including January 1, 2025, by 4% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors. Additionally, the number of shares of our common stock reserved for issuance under our 2015 Employee Stock Purchase Plan, or the ESPP, will automatically increase on January 1 of each year through and including January 1, 2025, by the lesser of 1% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year or 490,336 shares. Unless our board of directors elects not to increase the number of shares available for future grant each year under the 2015 EIP and the ESPP, our stockholders may experience additional dilution, which could cause our stock price to fall.

We have broad discretion in the use of working capital and may not use it effectively.

Our management will have broad discretion in the application of our working capital. Because of the number and variability of factors that will determine our use of our working capital, its ultimate use may vary substantially from its currently intended use. Our management might not apply our working capital in ways that ultimately increase the value of your investment. We expect to use our working capital to fund research and development activities and general operating expenses. The failure by our management to apply this working capital effectively could harm our business. Pending its use, we may invest our working capital in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our working capital in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include:


•	a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;


•	a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders;


•	a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer or by a majority of the total number of authorized directors;


•	advance notice requirements for stockholder proposals and nominations for election to our board of directors;


•	a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors;


•	a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and


•	the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.

Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. As a result of capital raising and other transactions that have occurred since our inception in 2012, we may or may not have experienced an “ownership change.” We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As of December 31, 2018, we had U.S. net operating loss carryforwards of approximately $179.1 million, which begin to expire in 2033, which could be limited if we experience an “ownership change.”

Our business and operations would suffer in the event of system failures.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and we may incur substantial costs to attempt to recover or reproduce the data. If any disruption or security breach resulted in a loss of or damage to our data or applications or inappropriate disclosure of confidential or proprietary information, we could incur liability and/or the further development of our product candidates could be delayed.

Our operations are vulnerable to interruption by natural disasters, power loss, terrorist activity and other events beyond our control, the occurrence of which could materially harm our business.

Businesses located in California have, in the past, been subject to electrical blackouts as a result of a shortage of available electrical power and any future blackouts could disrupt our operations. We are vulnerable to a major earthquake, wildfire, inclement weather and other natural and man-made disasters and we have not undertaken a systematic analysis of the potential consequences to our business as a result of any such natural disaster and do not have an applicable recovery plan in place. We carry only limited business interruption insurance that would compensate us for actual losses from interruption of our business that may occur and any losses or damages incurred by us in excess of insured amounts could cause our business to materially suffer.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

On November 5, 2019, we entered into a Third Amendment, or the Third Amendment, to the Loan Agreement with Pacific Western. Under the Third Amendment, we are required to maintain a minimum cash balance that is not less than our outstanding indebtedness to Pacific Western, the maturity date is extended to July 3, 2022 and the interest-only period is extended through April 3, 2020.

ITEM 6. EXHIBITS



Exhibit		Description

3.1(1)		Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect.

3.2(1)		Amended and Restated Bylaws of the Registrant, as currently in effect.

3.3(4)		Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock.

4.1(2)		Form of Common Stock Certificate of the Registrant.

4.2(3)		Form of Warrant to Purchase Common Stock issued to Pacific Western Bank.

4.3(4)		Form of Common Stock Purchase Warrant for First Private Placement.

4.4(4)		Form of Common Stock Purchase Warrant for Second Private Placement.

10.1*		Collaboration and License Agreement, dated September 3, 2019, by and between the Registrant and Mundipharma Medical Company.

10.2		Stock Purchase Agreement, dated September 3, 2019, by and between the Registrant and Mundipharma AG.

31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14(A) promulgated under the Securities Exchange Act of 1934.

31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(A) promulgated under the Securities Exchange Act of 1934.

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(B) promulgated under the Securities Exchange Act of 1934.

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(B) promulgated under the Securities Exchange Act of 1934.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.



(1)	Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on April 24, 2015.
(2)	Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-202740), as amended, originally filed with the SEC on March 13, 2015.
(3)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed on October 3, 2016.
(4)	Incorporated by reference to the Registrant's Current Report on Form 8-K, filed on May 21, 2018.
*	Certain portions of this exhibit (indicated by “[***]”) have been omitted as the Registrant has determined (i) the omitted information is not material and (ii) the omitted information would likely cause harm to the Registrant if publicly disclosed.

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.



	Cidara Therapeutics, Inc.

Date: November 7, 2019	By:	/s/ Jeffrey Stein, Ph.D.
		Jeffrey Stein, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: November 7, 2019	By:	/s/ James Levine
		James Levine
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

CERTAIN CONFIDENTIAL PORTIONS HAVE BEEN REDACTED FROM THIS EXHIBIT BECAUSE THEY ARE BOTH (i) NOT MATERIAL AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. INFORMATION THAT HAS BEEN OMITTED HAS BEEN IDENTIFIED IN THIS DOCUMENT WITH A PLACEHOLDER IDENTIFIED BY THE MARK “[***]”.

COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AND LICENSE AGREEMENT (“Agreement”) is entered into as of September 3, 2019 (the “Effective Date”), by and between MUNDIPHARMA MEDICAL COMPANY, a general exempted partnership established and existing under the laws of Bermuda, and having its principal place of business at Par La Ville Place, 14 Par La Ville Road, Hamilton HM08, Bermuda (“Mundipharma”), and CIDARA THERAPEUTICS, INC., a corporation organized under the laws of the State of Delaware, USA, having its principal offices at 6310 Nancy Ridge Drive, Suite 101, San Diego, California 92121, USA (“Cidara”).

RECITALS

WHEREAS, Mundipharma is engaged in the research, development and commercialization of pharmaceutical products;

WHEREAS, Cidara is developing, and possesses intellectual property rights and other proprietary information related to, its proprietary drug candidate known as rezafungin; and

WHEREAS, Mundipharma desires to obtain, and Cidara is willing to grant to Mundipharma, (a) a license to develop, register and commercialize rezafungin in an intravenous formulation in the Field in the Mundipharma Territory, (b) a worldwide license to manufacture rezafungin in an intravenous formulation, and (c) an option to obtain a license to develop, register and commercialize rezafungin in a formulation for subcutaneous administration and other formulations in the Field in the Mundipharma Territory; in each case, on the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1.	DEFINITIONS

1.1 “Acceptance for Filing” or “Accepted for Filing” shall mean, with respect to an MAA filed: (a) in a Major European Country, the receipt of written notice of acceptance for filing of such MAA from (i) the EMA or (ii) the applicable Regulatory Authority in the applicable Major European Country (as applicable); or (b) in China, the receipt of written notice of acceptance of filing of such MAA from the NMPA.

1.2 “Accounting Standards” shall mean (a) U.S. generally accepted accounting principles or (b) International Financial Reporting Standards; in each case, as applicable, consistently applied throughout the organization of a particular Entity and its Affiliates.

1.3 “Act” shall mean, as applicable, the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§301 et seq., and all related rules, regulations and guidelines, as any of the foregoing may be amended from time to time.

1.4 “Actual Combination Product Net Sales” shall have the meaning provided in Section 1.110.

1.5 “Affiliate” shall mean, with respect to any Entity (including a party to this Agreement), any other Entity controlled by, controlling, or under common control with such Entity; provided, however, that with respect to Mundipharma, “Affiliate” shall not include any Entity that is incorporated or otherwise legally established in the US or in Japan. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) shall mean direct or indirect ownership, including ownership by one or more trusts with substantially the same beneficial interests, of 50% or more of the outstanding voting and equity rights of such Entity, or possession of the power to direct the management and policies of such Entity.

1.6 “Anti-Corruption Laws” shall mean the U.S. Foreign Corrupt Practices Act (15 U.S.C. §§78dd-1, et. seq.), as amended, the Organization for Economic Co-operation and Development (OECD) Convention on combating bribery of foreign public officials in international business transactions, the UK Bribery Act 2010, as amended, and any other applicable anti-corruption laws.

1.7 “Anti-Fungal Product” shall mean any anti-fungal product targeted for the treatment of fungal infections, but excluding any Product.

1.8 “Anti-Fungal ROFN” shall have the meaning provided in Section 4.6.

1.9 “Anti-Fungal ROFN Exercise Period” shall have the meaning provided in Section 4.6.

1.10 “Anti-Fungal ROFN Term” shall have the meaning provided in Section 4.6.

1.11 “Applicable Laws” shall mean the applicable provisions of any and all national, supranational, regional, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidances, ordinances, judgments, decrees, directives, injunctions, orders, permits of or from any court, arbitrator, Regulatory Authority or governmental agency or authority having jurisdiction over or related to the subject item, including the Act, Anti-Corruption Laws, data privacy laws and Export Control Laws.

1.12 “Business Day” shall mean any day except a Saturday, Sunday or any other day on which commercial banks in New York, New York, U.S. are authorized or required by law to remain closed.

1.13 “Business Information” shall mean any confidential, proprietary, strategic or other information or data, regardless of whether it is in tangible form, including reports and information related to or regarding a party or its Affiliate’s business plans, business methodologies, strategies, specifications, customers, prospective customers, partners, suppliers, billing records, finance or capitalization, litigation matters, marketing information, forecasts, trade secrets, products or services.

1.14 “C.F.R.” shall mean the United States Code of Federal Regulations.

1.15 “China” shall mean the People’s Republic of China, excluding the special administrative regions of Hong Kong and Macau.

1.16 “Cidara” shall have the meaning first set out above.

1.17 “Cidara-Controlled Affiliate” shall mean any Entity that is controlled (as such term is defined in Section 1.5) by Cidara.

1.18 “Cidara General Manufacturing/Formulation Patents” shall mean any Cidara Patent in the Mundipharma Territory that claims inventions that are necessary or useful for the manufacture or formulation of both (a) Compound or Licensed Product and (b) any compound that is not a Compound or any product that is not a Licensed Product.

1.19 “Cidara Invention” shall mean any Invention made solely by one or more employees, consultants or contractors of Cidara and/or Cidara-Controlled Affiliates.

1.20 “Cidara Know-How” shall mean all Information and Data Controlled by Cidara and/or Cidara-Controlled Affiliates as of the Effective Date or during the Term that is necessary or useful for the development, registration, manufacture, use or commercialization of Compound or Licensed Product in the Field, including Cidara Inventions; but excluding: (a) any such Information or Cidara Inventions directed to manufacturing or formulation technology that is not actually used by or on behalf of Cidara or Cidara-Controlled Affiliates in the development, registration, manufacture, use or commercialization of Compound or Licensed Product; (b) Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Cidara or Cidara-Controlled Affiliates unless the parties have executed an Expanded Licensed Product Amendment with respect to the applicable Expanded Licensed Product; (c) Cidara Patents; and (d) Joint Technology.

1.21 “Cidara Loan and Security Agreement” shall mean the Loan and Security Agreement between Pacific Western Bank and Cidara dated October 3, 2016, as amended.

1.22 “Cidara Patents” shall mean all Patents Controlled by Cidara and/or Cidara-Controlled Affiliates as of the Effective Date or during the Term that claim inventions that are necessary or useful for (a) the development, registration, use or commercialization of Compound or Licensed Product in the Mundipharma Territory, or (b) the manufacture of Compound or Licensed Product worldwide; but, in each case, excluding: (i) any such Patents that claim manufacturing or formulation technology that is not actually used by or on behalf of Cidara or Cidara-Controlled Affiliates in the development, registration, manufacture, use or commercialization of Compound or Licensed Product; and (ii) the Joint Patents. The Cidara Patents as of the Effective Date are set forth on Exhibit A.

1.23 “Cidara Peak Incremental Net Sales Forecast” shall have the meaning provided in Section 4.3(a)(i).

1.24 “Cidara Product Marks” shall have the meaning provided in Section 8.8(a).

1.25 “Cidara Subcutaneous Peak Net Sales Forecast” shall have the meaning provided in Section 4.4(c)(ii).

1.26 “Cidara Technology” shall mean the Cidara Patents, Cidara Inventions and Cidara Know-How.

1.27 “Cidara Territory” shall mean: (a) the U.S.; and (b) Japan.

1.28 “CMC” shall mean chemistry, manufacturing and controls information and data required as part of an IND, NDA, MAA or other Product Filing.

1.29 “CMC Development Plan” shall have the meaning provided in Section 4.10(a).

1.30 “CMO” means a Third Party contract manufacturing organization.

1.31 “Combination Product” shall mean a Licensed Product comprising a fixed-dose combination of Compound and at least one Other Active in an intravenous formulation.

1.32 “Commercially Reasonable Efforts” shall mean, with respect to the efforts to be expended by a party with respect to any objective, the level of reasonable, diligent, good faith efforts that biotechnology or pharmaceutical companies typically devote to product candidates or products owned by them that are at a similar stage in their development or product life, taking into account efficacy, safety, anticipated and approved labeling, the competitiveness of alternative products in the marketplace, the patent, regulatory and other market exclusivity position of the product, the likelihood of regulatory approval (including pricing and reimbursement approval), the profitability of the product, pricing and reimbursement, and other relevant technical, legal, scientific and medical factors. As used in this Section 1.32, “biotechnology or pharmaceutical companies” shall mean companies in the biotechnology or pharmaceutical industry (as applicable) of a size and stage of development similar to that of such party, including having human pharmaceutical product candidates or products in a similar stage of development or product life to Compound or Licensed Product. Commercially Reasonable Efforts shall be determined on a country-by-country and Licensed Product-by-Licensed Product basis, and it is anticipated that the level of efforts constituting Commercially Reasonable Efforts in one country may differ from the level of efforts constituting Commercially Reasonable Efforts in another country, reflecting changes in the status of the Licensed Product and the country(ies) involved.

1.33 “Compound” shall mean: (a) rezafungin; (b) the Lead Compound; (c) […***…]; or (d) […***…].

1.34 “Confidential Information” shall have the meaning provided in Section 7.1.

1.35 “Control” or “Controlled by” shall mean, with respect to any Information, Patents or other intellectual property rights, possession by a party of the ability (whether by ownership, license or other right, other than pursuant to a license granted to such party under this Agreement) to grant access to, to grant use of, or to grant a license or a sublicense to, such Information, Patents

or other intellectual property rights without violating the terms of any agreement or other arrangement with any Third Party.

1.36 “Cost of Goods” shall mean, with respect to Licensed Product supplied by or on behalf of Cidara hereunder:

(a) in the case of Licensed Product manufactured by a Third Party, payments made to such Third Party for such Licensed Product, […***…], in each case, determined in accordance with Accounting Standards. […***…]; and

(b) in the case of Licensed Product manufactured by Cidara or its Affiliate, the actual, reasonable fully-allocated cost of manufacturing such Licensed Product (in accordance with GMP, if applicable), determined in accordance with Accounting Standards, consistently applied, and which will comprise […***…], in accordance with the normal accounting practices for all other products manufactured in the applicable facility.

As of the Effective Date, Cidara does not anticipate that Cidara or any of its Affiliates […***…]. However, […***…].

1.37 “Data” shall mean any and all results of research, preclinical and non-clinical studies, including in vitro, in vivo, and ex vivo studies, clinical trials and other testing of Compound or Licensed Product, and any and all other data generated by or on behalf of a party related to the development, manufacture or commercialization of Compound or Licensed Product, including biological, chemical, pharmacological, toxicological, safety, pharmacokinetic, clinical, CMC, analytical, quality control, mechanical, software, electronic and other data, results and descriptions.

1.38 “Disclosing Party” shall have the meaning provided in Section 7.1.

1.39 “Distributor” shall mean: (a) a Third Party distributor of Licensed Product that has no royalty or other payment obligations to Mundipharma or any of its Affiliates that are calculated based on amounts invoiced or received by such Third Party for sales of Licensed Product; or (b) a Third Party distributor of Licensed Product that (i) does not take title to Licensed Product, (ii) does not invoice Licensed Product sales to Third Party customers and (iii) is responsible only for inventory management and distribution with respect to Licensed Product on behalf of Mundipharma or its Affiliate.

1.40 “Effective Date” shall have the meaning first set out above.

1.41 “EMA” shall mean the European Medicines Agency or any successor agency thereto in the EU having substantially the same function.

1.42 “Entity” shall mean any 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 or entity.

1.43 “EU” shall mean the European Union or any successor union of European states thereto having a substantially similar function.

1.44 “Excluded Validation Batch” shall have the meaning provided in Section 1.59.

1.45 “Exclusive License” shall have the meaning provided in Section 2.1(a).

1.46 “Existing Patents” shall have the meaning provided in Section 9.2(a).

1.47 “Expanded Licensed Product” shall mean (A) a Licensed Product for one or more indications in the Field in addition to the Lead Indications (each, a “New Indication”), such as […***…]; (B) a Licensed Product containing the Lead Compound other than the Lead Indication Product to the extent not managed entirely through the change control procedure agreed pursuant to Section 4.10(d); (C) a Licensed Product containing any Compound other than the Lead Compound; or (D) a Combination Product. For clarity, Expanded Licensed Product excludes the Pediatric Licensed Product.

1.48 “Expanded Licensed Product Amendment” shall have the meaning provided in Section 4.3(a)(ii).

1.49 “Expanded Licensed Product Buy-In Fee” shall have the meaning provided in Section 4.3(c).

1.50 “Expanded Licensed Product Clinical Efficacy Data” shall mean clinical efficacy data generated in a clinical trial of an Expanded Licensed Product conducted by or on behalf of a party as permitted by (a) the first paragraph of Section 4.3(a) in the case of Cidara or (b) Section 4.3(b) in the case of an Independent Development Party.

1.51 “Expanded Licensed Product Global Development Plan” shall mean, on an Expanded Licensed Product-by-Expanded Licensed Product basis, a written plan for the conduct of Cidara-sponsored clinical trial(s), GLP Study(ies) and CMC development activities of an Expanded Licensed Product to be conducted by or on behalf of Cidara (which may include activities in or for the Mundipharma Territory that will be performed by Mundipharma and/or its Affiliates) in support of the clinical development of, and filing of MAAs for, such Expanded Licensed Product in the Major Markets.

1.52 “Expanded Licensed Product Mundipharma Territory Plan” shall mean, on an Expanded Licensed Product-by-Expanded Licensed Product basis, a written plan setting forth the Mundipharma Territory-Specific (mutatis mutandis) clinical trials and GLP Studies of an Expanded Licensed Product to be conducted by or on behalf of Mundipharma in the Mundipharma Territory that are required to support MAA filing and Regulatory Approval (excluding pricing and reimbursement approval) for such Expanded Licensed Product in the Mundipharma Territory but are not included in the Expanded Licensed Product Global Development Plan.

1.53 “Export Control Laws” shall mean: (a) all applicable U.S. laws and regulations relating to sanctions and embargoes imposed by U.S. Department of Treasury’s Office of Foreign Assets Control (or its successor office or other body having substantially the same function); (b) all applicable U.S. export control laws, including the Arms Export Controls Act (22 U.S.C. Ch. 39), 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.), the Export Administration Act of 1979 (50 U.S.C. app. §§ 2401 et seq.), International Boycott Provisions of Section 999 of the U.S. Internal Revenue Code of 1986, and all rules, regulations and executive orders relating to any of the foregoing, including but not limited to the International Traffic in Arms Regulations (22 C.F.R. §§ 120 et seq.), the Export Administration Regulations (15 C.F.R. §§ 730 et. seq.), and the regulations administered by the Office of Foreign Assets Controls of the United States Department of the Treasury; and (c) all export controls imposed on any Licensed Product by any country or organization or nation within the jurisdiction of which either party operates or does business.

1.54 “FDA” shall mean the United States Food and Drug Administration, or any successor agency thereto in the U.S.

1.55 “Field” shall mean all uses in humans and non‑human animals.

1.56 “First Commercial Sale” shall mean, with respect to a Licensed Product in a country, the first commercial transfer or disposition for value of such Licensed Product by a Selling Party to a Third Party in such country after the applicable Regulatory Authority of such country has granted Regulatory Approval of such Licensed Product for any indication in the Field (whichever indication is the first indication for which such Licensed Product receives Regulatory Approval in such country). For clarity, there shall only be one “First Commercial Sale” of a particular Licensed Product in a country, regardless of the number of indications for which the applicable Regulatory Authority of such country grants Regulatory Approval of such Licensed Product.

1.57 “GCP” shall mean current good clinical practices for the clinical development of a pharmaceutical products investigated in clinical trials as set forth in ICH E6 Guideline and implemented in applicable EU legislations.

1.58 “Generic Product” shall mean, with respect to Licensed Product that has received Regulatory Approval in a regulatory jurisdiction in the Mundipharma Territory and is being marketed and sold by Mundipharma or any of its Affiliates or Sublicensees in such jurisdiction, any pharmaceutical product that: (a) is sold in such jurisdiction by a Third Party that is not a Sublicensee of Mundipharma or its Affiliates and did not purchase or acquire such product in a chain of distribution that included Mundipharma or any of its Affiliates or Sublicensees; and (b) has received Regulatory Approval in such jurisdiction, for at least one of the same indications as such Licensed Product, as a “generic drug,” “generic medicinal product,” “bioequivalent” or similar designation of interchangeability by the applicable Regulatory Authority in such jurisdiction, pursuant to an expedited, abbreviated or bibliographic approval process in accordance with the then-current rules and regulations in such jurisdiction, where (i) such Licensed Product is the “reference medicinal product,” “reference listed product” or similar designation in such jurisdiction, and (ii) such approval referred to or relied on (x) the approved MAA for such Licensed Product held by Mundipharma, its Affiliate or a Sublicensee in such jurisdiction or (y) the data contained or incorporated by reference in such approved MAA for such Licensed Product in such jurisdiction.

1.59 “Global Development Costs” shall mean the reasonable and documented external costs and expenses incurred by Cidara and/or Cidara-Controlled Affiliates and, if applicable, by Mundipharma and/or its Affiliates, after the Effective Date in connection with (a) the performance

of Global Development Plan activities, or (b) preparing, applying for, obtaining or maintaining any IND or other Product Filings specific to any Global Development Plan activity (for clarity, excluding any NDA, MAA or Regulatory Approval). Specifically, Global Development Costs of a particular activity shall comprise the following: (i) all reasonable and documented amounts paid by a party to Third Party contractors and consultants and other Third Parties in connection with such Global Development Plan activity, including, without limitation, any such amounts paid to a Regulatory Authority to apply for, obtain or maintain any IND or other Product Filings specific to any Global Development Plan activity (for clarity, excluding any NDA, MAA or Regulatory Approval); and (ii) notwithstanding the foregoing limitation of Global Development Costs to external costs and expenses, the Cost of Goods of Licensed Product used in the conduct of such Global Development Plan activity. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, Global Development Costs shall exclude the Cost of Goods of any validation batches of Licensed Product that […***…] (any such additional validation batch, an “Excluded Validation Batch”).

1.60 “Global Development Plan” shall mean the written plan attached hereto as Exhibit B for the conduct of (a) the Lead Indication Trials; (b) the GLP Studies specified therein; and (c) the CMC development activities specified therein; in each case of (a) to (c), to be conducted by or on behalf of Cidara (but which may include activities in the Mundipharma Territory that will be conducted by Mundipharma and/or its Affiliates) that are intended to support the clinical development of, and filing of MAAs for, the Lead Indication Product in the Lead Indications in the Major Markets, as such plan may be amended from time to time in accordance with Section 3.1 and Section 4.1(b); provided, however, that the Global Development Plan shall not include the conduct of (i) the Lead Indication Trial in the Prophylaxis Indication in China, and (ii) the European Pediatric Investigational Plan referred to in the Mundipharma Territory Development Plan.

1.61 “GLP” shall mean current good laboratory practices as established by the FDA and as interpreted by relevant ICH guidelines; in each case, as amended from time to time.

1.62 “GLP Study” shall mean any non‑clinical study of a Compound or Product (a) that is intended to comply with GLP or (b) the results of which would be required to be reported to any Regulatory Authority.

1.63 “GMP” shall mean current good manufacturing practices and standards for the production of drugs and finished pharmaceuticals, as set forth in 21 C.F.R. Parts 210 and 211, as amended from time to time and as interpreted by relevant ICH guidelines.

1.64 “GVP” shall mean the current good pharmacovigilance practices guidelines that are mandatory to follow for pharmaceutical products marketed in the EU.

1.65 “Grant-Back License” shall mean the licenses granted by Mundipharma to Cidara pursuant to Section 2.6.

1.66 “ICH” shall mean the International Council for Harmonisation (formerly the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use).

1.67 “IND” shall mean an investigational new drug application, clinical trial application, clinical trial exemption, or similar application or submission filed with or submitted to a Regulatory Authority in a jurisdiction that is necessary to commence human clinical trials in such jurisdiction, including any such application filed with the FDA pursuant to 21 C.F.R. Part 312.

1.68 “Independent Development Party” shall have the meaning provided in Section 4.3(b).

1.69 “Information” shall mean any and all tangible and intangible (a) techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, data (including biological, chemical, pharmacological, toxicological, safety, pharmacokinetic, clinical, CMC, analytical, quality control, mechanical, software, electronic and other data), results of research, preclinical and non-clinical studies (including in vitro, in vivo, and ex vivo studies), clinical trials and other testing, software and algorithms, and (b) compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical material; that, in each case, are not in the public domain.

1.70 “Insolvency Event” shall mean, with respect to a party, circumstances under which such party: (a) makes a general assignment for the benefit of, or an arrangement or composition generally with, its creditors; (b) appoints or suffers appointment of an examiner or of a receiver, custodian, liquidator, trustee or similar person over all or substantially all of its property; (c) passes a resolution for its winding up, liquidation, dissolution, reorganization or similar process (but excluding (i) any such process for the purpose of, or in connection with, any solvent amalgamation, solvent reconstruction or solvent restructuring, (ii) a consolidation with a wholly-owned subsidiary of such party, (iii) a merger effected exclusively to change the domicile of such party and (iv) any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by such party or indebtedness of such party is cancelled or converted or a combination thereof); or (d) files a petition or commences a proceeding under any bankruptcy or insolvency act or law or has any such involuntary petition filed, or involuntary proceeding commenced, against it, unless, in the case of any such involuntary petition or involuntary proceeding, such petition or proceeding is dismissed within 90 days after the filing or commencement thereof.

1.71 “Invention” shall mean any invention or discovery, whether or not patentable, that is made, conceived, generated or reduced to practice, in whole or in part, in the course and as a result of the conduct of the activities expressly contemplated by this Agreement.

1.72 “Joint Commercialization Committee” or “JCC” shall have the meaning provided in Section 3.2.

1.73 “Joint Development Committee” or “JDC” shall have the meaning provided in Section 3.2.

1.74 “Joint Invention” shall mean any Invention made jointly by, on the one hand, one or more employees, consultants or contractors of Mundipharma and/or any of its Affiliates, and, on the other hand, one or more employees, consultants or contractors of Cidara.

1.75 “Joint Know-How” shall mean any Information and Data made or generated jointly by, on the one hand, one or more employees, consultants or contractors of Mundipharma and/or any of its Affiliates, and, on the other hand, one or more employees, consultants or contractors of Cidara and/or any Cidara-Controlled Affiliates.

1.76 “Joint Patents” shall mean Patents claiming Joint Inventions.

1.77 “Joint Steering Committee” or “JSC” shall have the meaning provided in Section 3.1(a).

1.78 “Joint Technology” shall mean the Joint Patents, Joint Inventions and Joint Know-How.

1.79 “JSC Dispute Resolution Matrix” shall mean Exhibit C hereto.

1.80 “Key Matter” shall have the meaning provided in Section 3.1(f).

1.81 “Knowledge” means (i) the actual knowledge of the executive officers and outside intellectual property counsel of Cidara; and (ii) the knowledge that any of such individuals reasonably should have gained through operating in the ordinary course of business.

1.82 […***…].

1.83 “Lead Compound” shall mean the active pharmaceutical ingredient of rezafungin with chemical formula: N^5.1,6-anhydro[(4R,5R)-4-hydroxy-2-[3⁴- (pentyloxy)[1¹,2¹:2⁴,3¹-terphenyl]-1⁴-carboxamido]-5-[2- (trimethylazaniumyl)ethyl]-L-ornithyl-L-threonyl-trans-4-hydroxy-L-prolyl-(4S)-4-hydroxy-4-(4-hydroxyphenyl)-L-threonyl-L-threonyl-(3S,4S)-3-hydroxy-4-methyl-L-proline] acetate, having the chemical structure set forth in Exhibit E attached hereto.

1.84 “Lead Indication Product” shall mean the Licensed Product containing the Lead Compound in a formulation for intravenous administration that is being investigated in the Lead Indication Trials for the Lead Indications as of the Effective Date.

1.85 “Lead Indications” shall mean: (a) the treatment of candidemia and/or invasive candidiasis (the “Treatment Indication”); and (b) the prophylaxis of invasive fungal infections in adult allogeneic blood and marrow transplant recipients (the “Prophylaxis Indication”).

1.86 “Lead Indication Trials” shall mean the ReSTORE Trial and the ReSPECT Trial.

1.87 “License” shall have the meaning provided in Section 2.1(b).

1.88 “Licensed Product” shall mean any Product in a formulation for intravenous administration, including all uses, presentations and dosage strengths thereof. For clarity, Licensed Product shall, subject to Section 4.3, include an Expanded Licensed Product.

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1.89 “Licensed Product Global Development Expansion” shall have the meaning provided in Section 4.3(a).

1.90 “MAA” shall mean an application or submission for approval to market a pharmaceutical product filed with the governing Regulatory Authority in any jurisdiction other than the U.S., including, without limitation, a marketing authorisation application filed with the EMA using the centralized EU filing procedure or filed with the applicable national Regulatory Authority in an individual European country, whether or not such country is an EU member state (including, for purposes of this Agreement, the United Kingdom) if the centralized EU filing procedure is not used, or is not available for use, in such European country.

1.91 “Major European Country” shall mean any of the following countries: France, Germany, Italy, Spain and the United Kingdom (without regard to whether or not any of the foregoing is an EU member state at any given time).

1.92 “Major Market” shall mean a […***…].

1.93 “Manufacturing License” shall have the meaning provided in Section 2.1(b).

1.94 “Marketing Partner” shall mean a Third Party to which Mundipharma or its Affiliates has granted the right solely to market or promote, but not to sell or offer for sale, Licensed Product in the Field in the Mundipharma Territory.

1.95 “Material Impact” shall mean (a) a material adverse impact on (i) the likelihood or timing of obtaining Regulatory Approval (excluding pricing and reimbursement approval) of Licensed Product in a party’s Territory, (ii) continuing maintenance of the Regulatory Approval (excluding pricing and reimbursement approval) of Licensed Product in a party’s Territory and/or (iii) the safety profile of Licensed Product, or (b) an unacceptable risk to patient/subject safety.

1.96 “Material Impact Objection” shall have the meaning provided in Section 3.1(f)(iii).

1.97 “MA Variation” shall mean an application for a variation or amendment to an MAA filed with the governing Regulatory Authority in any jurisdiction other than the U.S., including, without limitation, an application for variation to a marketing authorisation application filed with the EMA using the centralized EU filing procedure or filed with the applicable national Regulatory Authority in an individual European country, whether or not such country is an EU member state (including, for purposes of this Agreement, the United Kingdom) if the centralized EU filing procedure is not used, or is not available for use, in such European country.

1.98 “Mundipharma” shall have the meaning first set out above.

1.99 “Mundipharma Invention” shall mean any Invention made solely by one or more employees, consultants or contractors of Mundipharma or any of its Affiliates.

1.100 “Mundipharma Know-How” shall mean all Information and Data that: (a) is generated, developed or obtained by or on behalf of Mundipharma or any of its Affiliates or

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Sublicensees during the Term in the development, registration, manufacture, use or commercialization of Compound or Licensed Product; or (b) is otherwise Controlled by Mundipharma or any of its Affiliates during the Term and is necessary for, or is both useful for and actually used by Mundipharma or any of its Affiliates or Sublicensees in, the development, registration, manufacture, use or commercialization of Compound or Licensed Product; in each case, including Mundipharma Inventions; but, in each case, excluding: (i) Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Mundipharma as an Independent Development Party unless the parties have executed an Expanded Licensed Product Amendment with respect to the applicable Expanded Licensed Product; (ii) Mundipharma Patents; and (iii) Joint Technology.

1.101 “Mundipharma Marketing Information” shall mean that portion of the Mundipharma Know-How constituting strategic marketing information, strategic pricing information, marketing materials, marketing know-how, data and information resulting from health economic outcomes research, real world evidence and observational studies, market research and marketing advisory boards, and any other studies, research or Third Party consultancy performed to support pricing or reimbursement approval but not necessary to obtain or maintain Regulatory Approvals other than pricing and reimbursement approvals.

1.102 “Mundipharma Patents” shall mean: (a) all Patents claiming Mundipharma Inventions; and (b) all other Patents Controlled by Mundipharma or any of its Affiliates that claim inventions that are necessary for, or both useful for and actually used by or on behalf of Mundipharma or any of its Affiliates or Sublicensees in, the development, registration, manufacture, use or commercialization of Compound or Licensed Product; but, in each case, excluding Joint Patents.

1.103 “Mundipharma Peak Incremental Net Sales Forecast” shall have the meaning provided in Section 4.3(a)(i).

1.104 “Mundipharma Subcutaneous Peak Net Sales Forecast” shall have the meaning provided in Section 4.4(c)(ii).

1.105 “Mundipharma Technology” shall mean the Mundipharma Patents, Mundipharma Inventions and Mundipharma Know-How.

1.106 “Mundipharma Territory” shall mean the entire world, excluding the Cidara Territory.

1.107 “Mundipharma Territory Plan” shall mean the written plan attached hereto as Exhibit F setting forth the Mundipharma Territory-Specific clinical trials and GLP Studies of the Lead Indication Product in the Lead Indications to be conducted by or on behalf of Mundipharma in the Mundipharma Territory that are required to support MAA filing and Regulatory Approval (excluding pricing and reimbursement approval) for the Lead Indication Product in the Lead Indications in the Mundipharma Territory, including the European Paediatric Investigational Plan, as such plan may be amended from time to time in accordance with Section 3.1 and Section 4.2.

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1.108 “Mundipharma Territory-Specific” shall mean, in reference to any GLP Study or clinical trial of Lead Indication Product in a Lead Indication, or of Pediatric Licensed Product, in each case, in the Mundipharma Territory, that such study or trial is necessary to support MAA filing and Regulatory Approval of Lead Indication Product in such Lead Indication or Pediatric Licensed Product in the Mundipharma Territory or any portion thereof, but is not included in the Global Development Plan.

1.109 “NDA” shall mean a New Drug Application (as more fully defined in 21 CFR 314.5, et seq.) filed with the FDA, or any successor application thereto in the U.S.

1.110 “Net Sales” shall mean the gross amounts amount billed or invoiced by Mundipharma, its Affiliates and Sublicensees (in each case, a “Selling Party”) for sales or other dispositions of Licensed Products to Third Parties (excluding Sublicensees), less the following amounts specifically attributable to Licensed Products and actually incurred, allowed, paid or accrued, or otherwise specifically allocated to Licensed Products by the Selling Party (if not previously deducted in calculating the amount invoiced), all in compliance with applicable Accounting Standards, consistently applied by the Selling Party:

(a) Normal and customary trade discounts, including trade, cash and quantity discounts or trade rebates, credits or refunds, actually allowed or taken (including amounts repaid, discounted or credited by reason of risk sharing schemes with any governmental authority or Regulatory Authority); credits or allowances actually granted or made for rejection of or return of previously sold Licensed Products, including recalls, or for retroactive price reductions and billing errors;

(b) […***…];

(c) governmental and other rebates (or chargeback payments, credits or other equivalents thereof, including amounts repaid, discounted or credited by reason of retroactive price reductions, discounts, or rebates, which are, in each case, imposed upon Mundipharma, its Affiliates or Sublicensees by any governmental authority or Regulatory Authority) actually granted to managed health care organizations, commercial insurance companies, pharmacy benefit managers (or equivalents thereof), distributors, governments, their agencies and purchasers, and reimbursers;

(d) charges separately invoiced for outbound freight, insurance, transportation, postage and handling; and

(e) tariffs, customs duties and Sales Tax levied on the billing amount for Licensed Products or otherwise imposed with respect to the sale, transportation or delivery of Licensed Products, and, in each case, actually paid, as adjusted for rebates and refunds;

provided that, in each case ((a) through (f)), (1) each such deduction is calculated in a manner consistent with the Selling Party’s customary practice for pharmaceutical products and in accordance with applicable Accounting Standards, consistently applied by the Selling Party, (2) each such deduction is directly allocable to Licensed Product, or apportioned on a good faith, fair and equitable basis to Licensed Product and other products of the Selling Party and its Affiliates such that Licensed

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Product does not bear a disproportionate portion of such deductions, and (3) no particular amount identified above shall be deducted more than once in calculating Net Sales (i.e., no “double counting” of deductions).

For clarification, sale or other disposition of Licensed Product by a Selling Party to another Selling Party for resale by such other Selling Party to a Third Party (other than a Selling Party) shall not be deemed a sale for purposes of this definition of “Net Sales,” provided that the subsequent resale is included in the computation of Net Sales. In the event of any sale or other disposition of Licensed Product for any consideration other than exclusively monetary consideration on bona fide arm’s-length terms (including any sale or other disposition of Licensed Product by a Selling Party to another Selling Party for end use by such other Selling Party), then for purposes of calculating Net Sales under this Agreement, such Licensed Product shall be deemed to have been sold exclusively for cash at the weighted (by sales volume) average sale price of such Licensed Product in bona fide arm’s-length transactions (when sold alone, and not with other products) in the applicable country in which such sale or other disposition occurred during the applicable accounting period. Transfers or dispositions of Licensed Product for charitable, research and development, clinical or humanitarian purposes, in all cases without consideration, shall be disregarded in determining Net Sales.

On a country-by-country basis, if a Licensed Product is sold in a country as part of a Combination Product in a calendar quarter, Net Sales of such Licensed Product in such country during such calendar quarter for the purpose of determining royalties and commercialization milestone payments due hereunder shall be calculated as follows:

(i) In the event that both (x) a Single-Agent Licensed Product is sold separately in finished form in such country during such calendar quarter and (y) the Other Active(s) in such Combination Product are sold separately in finished form in such country during such calendar quarter, then Net Sales of such Licensed Product shall be determined by multiplying the actual Net Sales of the Combination Product calculated pursuant to the preceding provisions of this Section 1.110 (“Actual Combination Product Net Sales”) in such country during such calendar quarter by the fraction, A / (A+B) where A is the weighted average sale price of such Single-Agent Licensed Product when sold separately in finished form in such country during such calendar quarter, and B is the weighted average sale price of the Other Active(s) in the Combination Product when sold separately in finished form in such country during such calendar quarter.

(ii) In the event that a Single-Agent Licensed Product is sold separately in finished form in such country during such calendar quarter, but the Other Active(s) in such Combination Product are not sold separately in finished form in such country during such calendar quarter, then Net Sales of such Licensed Product shall be calculated by multiplying the Actual Combination Product Net Sales of the Combination Product in such country during such calendar quarter by the fraction A / C where A is the weighted average sale price of such Single-Agent Licensed Product when sold separately in finished form in such country during such calendar quarter and C is the weighted average sale price of the Combination Product in such country during such calendar quarter.

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(iii) In the event that no Single-Agent Licensed Product is sold separately in finished form in such country during such calendar quarter, but the Other Active(s) in such Combination Product are sold separately in finished form in such country during such calendar quarter, Net Sales of such Licensed Product shall be calculated by multiplying the Actual Combination Product Net Sales of the Combination Product by the fraction (C‑B) / C, where B is the weighted average sale price of the Other Active(s) in the Combination Product when sold separately in finished form in such country during such calendar quarter, and C is the weighted average sale price of the Combination Product in such country during such calendar quarter.

(iv) In the event that neither any Single-Agent Licensed Product is sold separately in finished form in such country during such calendar quarter, nor the Other Active(s) in such Combination Product are sold separately in finished form in such country during such calendar quarter, then the methodology for determining Net Sales of such Licensed Product in such country shall be mutually agreed in writing by the parties in good faith based on the relative contributions of the Compound and the Other Active(s) in such Combination Product to the total value of the Combination Product.

1.111 “New Indication” shall have the meaning provided in Section 4.3(a).

1.112 “New Other Product Indication” shall have the meaning provided in Section 4.5(c).

1.113 “NIH Trial” shall have the meaning provided in Section 4.4(a).

1.114 “NMPA” shall mean China’s National Medical Products Administration or any successor agency thereto in China having substantially the same function.

1.115 “Non-Exclusively Licensed Mundipharma Patent Claim” shall mean a claim of a Mundipharma Patent that covers:

(a) […***…]; or

(b) […***…].

1.116 “Other Active” shall mean any active pharmaceutical ingredient other than Compound.

1.117 “Other Product” shall have the meaning provided in Section 4.5(a).

1.118 “Other Product Amendment” shall have the meaning provided in Section 4.5(c).

1.119 “Other Product Efficacy Trial” shall have the meaning provided in Section 4.5(b).

1.120 “Other Product Efficacy Trial Notice” shall have the meaning provided in Section 4.5(b).

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1.121 “Other Product Exercise Notice” shall have the meaning provided in Section 4.5(c).

1.122 “Other Product Option” shall have the meaning provided in Section 4.5.

1.123 “Other Product Option Period” shall mean the period beginning on the Effective Date and, subject to earlier termination of this Agreement, expiring […***…] after […***…].

1.124 “Patents” shall mean (a) all national, regional and international patents and patent applications filed in any country or jurisdiction, including without limitation provisional patent applications, (b) all patent applications filed either from such patents and patent applications or from a patent application claiming priority from either of these, including any continuation,

continuation-in-part, division, provisional, converted provisional and continued prosecution applications, or any substitute applications, (c) any patent issued with respect to or in the future issued from any such patent applications including utility models, petty patents and design patents and certificates of invention, and (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, reexaminations and extensions (including any supplementary protection certificates, patent term extensions and the like) of the foregoing patents or patent applications.

1.125 “Peak Incremental Net Sales Forecasts” shall have the meaning provided in Section 4.3(a)(i).

1.126 “Pediatric Licensed Product” shall mean Licensed Product intended for use in patients younger than 18 years of age.

1.127 “Person” any natural person or Entity.

1.128 “Phase 2 Trial” shall mean a human clinical trial that would satisfy the requirements for a Phase 2 study as defined in 21 CFR § 312.21(b) (or any amended or successor regulations), regardless of where such clinical trial is conducted.

1.129 “Phase 3 Trial” shall mean a human clinical trial that would satisfy the requirements for a Phase 3 study as defined in 21 CFR § 312.21(c) (or any amended or successor regulations), regardless of where such clinical trial is conducted.

1.130 “Prior CDA” shall mean that certain Mutual Non-Disclosure Agreement between Cidara and Mundipharma International Limited dated December 14, 2018.

1.131 “Product” shall mean any pharmaceutical composition or preparation containing or comprising Compound (whether or not as the sole active ingredient), in any formulation, including all uses, routes of administration, presentations and dosage strengths thereof.

1.132 “Product Filings” shall mean all INDs, NDAs, MAAs, MA Variations, Regulatory Approvals, and other filings with, and formal submissions to, Regulatory Authorities, in each case, with respect to the development, manufacture, and marketing and sale of Licensed Product in any country or other jurisdiction.

1.133 “Product Trademarks” shall have the meaning provided in Section 8.8(a).

1.134 “Prophylaxis Indication” shall have the meaning provided in Section 1.85.

1.135 “Receiving Party” shall have the meaning provided in Section 7.1.

1.136 “ReCoRD” shall mean a document prepared by Mundipharma in respect of each MAA approved in each country in the Mundipharma Territory, together with MAAs approved by the European Commission and NMPA, with a unique identification number, which comprises relevant registered compliance data from Module 3 of the relevant MAA.

1.137 “Regulatory Approval” shall mean, with respect to a pharmaceutical product in a particular jurisdiction, all approvals or other permissions from the applicable Regulatory Authority in such jurisdiction necessary to develop, market and sell such product in such jurisdiction, including approvals of INDs, NDAs, MAAs, MA Variations, and pricing and reimbursement approvals if required for marketing or sale of such product in such jurisdiction.

1.138 “Regulatory Authority” shall mean any country, federal, supranational, state or local regulatory agency, department, bureau or other governmental or regulatory authority having the administrative authority to regulate the development, marketing or sale of pharmaceutical products in any country or other jurisdiction, including the pricing and reimbursement of such products, and other market access activities.

1.139 “Regulatory Exclusivity” shall mean any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a pharmaceutical product other than a Patent, including orphan drug exclusivity, new chemical entity exclusivity, data exclusivity, or pediatric exclusivity.

1.140 “ReSPECT Trial” shall mean the Phase 3 Trial of the Lead Indication Product in the Prophylaxis Indication described in Cidara Clinical Protocol No. CD101.IV.3.08, entitled “A Phase 3, Multicenter, Randomized, Double-blind Study of the Efficacy and Safety of Rezafungin for Injection Versus the Standard Antimicrobial Regimen to Prevent Invasive Fungal Diseases in Adults Undergoing Allogeneic Blood and Marrow Transplantation,” as amended from time to time in accordance with this Agreement.

1.141 “ReSTORE Trial” shall mean the Phase 3 Trial of the Lead Indication Product in the Treatment Indication described in Cidara Clinical Protocol No. CD101.IV.3.05, entitled “A Phase 3, Multicenter, Randomized, Double-blind Study of the Efficacy and Safety of Rezafungin for Injection Versus Intravenous Caspofungin Followed by Optional Oral Fluconazole Step-down in the Treatment of Subjects with Candidemia and/or Invasive Candidiasis,” as amended from time to time in accordance with this Agreement.

1.142 “Right of Reference” shall mean: (a) in the U.S., a “right of reference or use,” as such term is defined in 21 C.F.R. 314.3(b); or (b) in any other country or jurisdiction, the equivalent authority to rely upon, and otherwise use, an investigation for the purpose of filing, and conducting a clinical trial under, an IND, or obtaining approval of an NDA, MAA, MA Variation or other Regulatory Approval, including the ability to make available the underlying raw data from the investigation for audit by the applicable Regulatory Authority in such country or other jurisdiction, if necessary.

1.143 “Royalty Term” shall have the meaning provided in Section 5.8.

1.144 “Sales Tax” shall have the meaning provided in Section 6.3(d).

1.145 “Selling Party” shall have the meaning set forth in Section 1.110.

1.146 “Single-Agent Product” shall mean a Licensed Product containing Compound as its sole active pharmaceutical ingredient.

1.147 “Subcommittee” shall mean the JDC, the JMC, the JCC or any other subcommittee established by the JSC pursuant to Section 3.2.

1.148 “Subcutaneous Efficacy Trial” shall have the meaning provided in Section 4.4(b).

1.149 “Subcutaneous Efficacy Trial Notice” shall have the meaning provided in Section 4.4(b).

1.150 “Subcutaneous Global Development Plan” shall mean, solely in the event of Mundipharma’s exercise of the Subcutaneous Product Option, a written plan for the conduct of Cidara-sponsored clinical trial(s) and GLP Studies of Subcutaneous Product in the Subcutaneous Indication(s), and CMC development activities to be conducted by or on behalf of Cidara (which may include activities in the Mundipharma Territory that will be performed by Mundipharma and/or its Affiliates) in support of the clinical development of, and filing of MAAs for, the Subcutaneous Product in the Subcutaneous Indication(s) in the Major Markets.

1.151 “Subcutaneous Indication” shall mean an indication in the Field that is the subject of a Subcutaneous Product Amendment executed by the parties.

1.152 “Subcutaneous License Expansion” shall have the meaning provided in Section 4.4(c)(i).

1.153 “Subcutaneous Mundipharma Territory Plan” shall mean, solely in the event of Mundipharma’s exercise of the Subcutaneous Product Option, a written plan setting forth the Mundipharma Territory-Specific (mutatis mutandis) clinical trials and GLP Studies of Subcutaneous Product in the Subcutaneous Indication to be conducted by or on behalf of Mundipharma in the Mundipharma Territory that are required to support MAA filing and Regulatory Approval (excluding pricing and reimbursement approval) for Subcutaneous Product in the Subcutaneous Indication in the Mundipharma Territory but are not included in the Subcutaneous Global Development Plan.

1.154 “Subcutaneous Negotiation Period” shall have the meaning provided in Section 4.4(c).

1.155 “Subcutaneous Option Payment” shall have the meaning provided in Section 4.4(c)(ii).

1.156 “Subcutaneous Peak Incremental Net Sales Forecasts” shall have the meaning provided in Section 4.4(c)(ii).

1.157 “Subcutaneous Product” shall mean any Product in a formulation for subcutaneous administration, including all uses, presentations and dosage strengths thereof.

1.158 “Subcutaneous Product Amendment” shall have the meaning provided in Section 4.4(c).

1.159 “Subcutaneous Product Option” shall have the meaning provided in Section 4.4(a).

1.160 “Subcutaneous Product Option Period” shall mean the period beginning on the Effective Date and, subject to earlier termination of this Agreement, expiring […***…] after the latest to occur of […***…].

1.161 “Sublicense” shall mean (a) a sublicense under the License or any portion thereof, or (b) a right to market, promote and sell Licensed Product in the Field in the Mundipharma Territory. As used in this Agreement, a Sublicense shall not include the rights granted to a Distributor or to a Marketing Partner.

1.162 “Sublicensee” shall mean any Affiliate or Third Party that has received a Sublicense, directly or indirectly through one or more tiers, from Mundipharma or its Affiliate. As used in this Agreement, “Sublicensee” shall not include a Distributor or a Marketing Partner.

1.163 “Successful Completion” shall mean:

(a) with respect to the ReSTORE Trial, delivery by Cidara to Mundipharma of top-line results of the ReSTORE Trial with results in the assessment of Global Cure at […***…] of subjects who are randomized to Licensed Product compared to subjects who are randomized to intravenous caspofungin; and

(b) with respect to the ReSPECT Trial, delivery by Cidara to Mundipharma of top-line results of the ReSPECT Trial with results in the assessment of Fungal-Free Survival at […***…] of subjects who are randomized to Licensed Product compared to subjects randomized to the standard antimicrobial regimen.

1.164 “Supply Price” shall have the meaning provided in Section 4.18(d).

1.165 “Taxes” shall have the meaning provided in Section 6.3(b).

1.166 “Territory” shall mean, as applicable, the Cidara Territory or the Mundipharma Territory.

1.167 “Term” shall have the meaning provided in Section 10.1.

1.168 “Third Party” shall mean any entity other than Cidara or Mundipharma or an Affiliate of Cidara or Mundipharma.

1.169 “Treatment Indication” shall have the meaning provided in Section 1.85.

1.170 “U.S.” shall mean the United States of America, including its territories and possessions.

1.171 “Valid Claim” shall mean: (a) a claim of an issued and unexpired patent, or a supplementary protection certificate thereof, which has not been held permanently revoked, unenforceable or invalid by a decision of a court, patent office or other forum of competent jurisdiction, unappealable or unappealed within the time allowed for appeal and that is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; or (b) a claim of a pending patent application that has not been abandoned, finally rejected or expired without the possibility of appeal or re-filing and that has not been pending for more than […***…] years from the filing date of the earliest patent application from which such claim derives priority; […***…].


2.	LICENSE GRANTS

2.1 License Grant to Mundipharma. Subject to the terms and conditions of this Agreement, Cidara hereby grants to Mundipharma, during the Term:

(a) an exclusive (even as to Cidara and its Affiliates, except as set forth in Section 2.4), royalty‑bearing license, including the right to sublicense as expressly permitted by Section 2.2, under the Cidara Technology and Cidara’s interest in Joint Technology, solely to develop, register, use, sell, have sold, offer for sale and import Licensed Product in the Field in the Mundipharma Territory (the “Exclusive License”); provided, however, that for purposes of the Exclusive License, the Cidara Technology excludes all Cidara Patents existing outside of the Mundipharma Territory; and

(b) a co‑exclusive (with Cidara), royalty-bearing license (but solely during the Royalty Term and pursuant to and in accordance with Section 5.3 and Sections 5.7 through 0), without the right to sublicense (other than to its Affiliates pursuant to Section 2.2), but, for clarity, with the right to subcontract to a CMO, under the Cidara Technology and Cidara’s interest in Joint Technology, to make and have made Compound solely for incorporation into Licensed Products, and to make and have made Licensed Products; in each case, anywhere in the world but solely to develop, register, use, sell, have sold, offer for sale and import such Licensed Products in the Field in the Mundipharma Territory (the “Manufacturing License” and, collectively with the Exclusive License, the “License”).

2.2 Sublicenses and Appointments. The License shall include:

(a) the right to grant Sublicenses (through one or more tiers) to any of the Affiliates of Mundipharma without Cidara’s consent, provided that any further Sublicense proposed to be granted by any such Affiliate to a Third Party in a Major Market shall be subject to Section 2.2(b);

(b) the right to grant Sublicenses to a Third Party in a Major Market only with Cidara’s prior written consent, not to be unreasonably withheld, conditioned or delayed;

(c) the right to grant Sublicenses to a Third Party outside the Major Markets in the Mundipharma Territory without Cidara’s prior written consent;

(d) the right to appoint Distributors and Marketing Partners, in each case, without Cidara’s prior written consent; and

(e) the right to appoint any other Third Party subcontractors (and grant limited sublicenses as necessary in connection with such subcontracting) to perform Mundipharma’s obligations and/or to exercise Mundipharma’s rights herein on behalf of Mundipharma and/or its Affiliates without Cidara’s consent.

Any Sublicense granted to any Affiliate of Mundipharma or to any Third Party, and any appointment of a Marketing Partner or Distributor shall be in writing and shall be subject to, and consistent with, the terms and conditions of this Agreement. Mundipharma shall be fully responsible for the compliance of its Affiliates, Sublicensees, Marketing Partners, Distributors, other subcontractors (including any CMO contracted by Mundipharma or its Affiliate to package and label Licensed Product manufactured and supplied by or on behalf of Cidara), with the terms and conditions of this Agreement and shall remain solely liable for the performance of its obligations hereunder, notwithstanding any such Sublicense or appointment. Mundipharma shall promptly notify Cidara in writing of the execution of any Sublicense agreement with a Third Party and shall provide Cidara with a copy of such Sublicense agreement, and any amendment thereto, no later than 30 days following execution thereof; provided, that Mundipharma may redact any confidential or financial information contained therein that is unnecessary for Cidara to ascertain compliance with this Agreement.

2.3 Initial Delivery of Cidara Know-How; Ongoing Know-How Exchange.

(a) Within 30 days after the Effective Date, Cidara shall, at no additional charge to Mundipharma, deliver to Mundipharma or its designated Affiliate such existing and available (in recorded form) Cidara Know-How in the possession of Cidara and/or Cidara-Controlled Affiliates as is necessary or useful for Mundipharma and its Affiliates to (i) exercise the License in accordance with this Agreement; and (ii) otherwise exercise Mundipharma’s rights and perform Mundipharma’s obligations under this Agreement. Thereafter, on an ongoing basis during the Term, Cidara shall also disclose to Mundipharma or its designated Affiliate such additional Cidara Know-How arising after the Effective Date as is necessary or useful for Mundipharma and its Affiliates to (i) exercise the License in accordance with this Agreement and (ii) otherwise exercise Mundipharma’s rights and perform Mundipharma’s obligations under this Agreement. Without limiting the generality of the foregoing, Cidara shall provide to Mundipharma true and complete copies of all written, graphic or electronic embodiments of Data generated by or on behalf of Cidara or any of its Affiliates or licensees, including, without limitation, all draft and final protocols and all final reports of any GLP Study or clinical trial of Compound or Product in the Field conducted by or on behalf of Cidara and/or Cidara-Controlled Affiliates, and all pharmacology, toxicology, pharmacokinetic and other data with respect to Compound or Licensed Product, and Mundipharma shall have the right to use such disclosed Data solely within the scope of the License and as otherwise expressly permitted by this Agreement. Notwithstanding the foregoing, Mundipharma shall have no license or right to use any Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Cidara and/or Cidara-Controlled Affiliates in support of any MAA, MA Variation or other Product Filing or Regulatory Approval for the applicable Expanded Licensed Product in the Mundipharma Territory or in the commercialization of an Expanded Licensed Product in the Mundipharma Territory, unless the parties have executed an Expanded Licensed Product Amendment for such Expanded Licensed Product and, if applicable, Mundipharma has paid the applicable Expanded Licensed Product Buy‑In Fee with respect thereto.

(b) On an ongoing basis during the Term, Mundipharma shall disclose to Cidara such Mundipharma Know-How as is necessary or useful for Cidara to (i) exercise the Grant-Back License in accordance with this Agreement or (ii) otherwise exercise Cidara’s rights and perform Cidara’s obligations under Article 4 of this Agreement. Without limiting the generality of the foregoing, Mundipharma shall provide to Cidara true and complete copies of all written, graphic or electronic embodiments of Data generated by or on behalf of Mundipharma or any of its Affiliates or Sublicensees, including, without limitation, all draft and final protocols and final reports of any GLP Study or clinical trial of Compound or Licensed Product (including the trial described in the European Paediatric Investigational Plan) in the Field conducted by or on behalf of Mundipharma and/or its Affiliates, and all pharmacology, toxicology, pharmacokinetic and other data with respect to Compound or Licensed Product, and Cidara shall have the right to use such disclosed Data solely within the scope of the Grant-Back License and as otherwise expressly permitted by this Agreement. Notwithstanding the foregoing, Cidara shall have no license or right to use any Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Mundipharma and/or its Affiliates in support of any NDA, MAA, MA Variation or other Product Filing or Regulatory Approval for the applicable Expanded Licensed Product in the Cidara Territory or in the commercialization of such Expanded Licensed Product in the Cidara Territory, unless the parties have executed an Expanded Licensed Product Amendment for such Expanded Licensed Product and Cidara has paid the applicable Expanded Licensed Product Buy‑In Fee with respect thereto.

2.4 Retained Rights.

(a) Under Exclusive License. Notwithstanding the exclusivity of the Exclusive License, Cidara retains the non‑exclusive right to practice the Cidara Technology and Cidara’s interest in Joint Technology in the Mundipharma Territory for the purpose of performing development activities related to the Licensed Product, including Global Development Plan activities, in the Mundipharma Territory, including the right to file and maintain INDs for, and to use, Licensed Product for such purposes in the Mundipharma Territory.

(b) Under Manufacturing License. Notwithstanding the co‑exclusivity of the Manufacturing License, Cidara retains the right to grant licenses under the Cidara Technology and Cidara’s interest in Joint Technology to its licensees that have the right to market, promote and sell Licensed Product in the Cidara Territory, to make and have made Compound for incorporation in Licensed Product, and to make and have made Licensed Product, anywhere in the world, subject to the terms and conditions of this Agreement.

(c) Development. For clarity, Cidara shall at all times have the right to develop Compound and Product in the Field anywhere in the world, subject to compliance with its obligations under Articles 3 and 4 hereof.

2.5 Mundipharma Negative Covenants. Mundipharma hereby covenants on behalf of itself and its Affiliates not to practice, and not to permit or cause any Affiliate, Sublicensee, Marketing Partner, Distributor or other Third Party to practice, any Cidara Technology for any purpose other than as expressly authorized in this Agreement. Mundipharma further covenants on behalf of itself and its Affiliates:

(a) not to develop, register, use, sell, have sold or offer for sale or seek Regulatory Approval for Compound or Product (including Licensed Product) in the Cidara Territory. Without limiting the generality of the foregoing, Mundipharma hereby covenants on behalf of itself and its Affiliates not to, and not to permit or cause any Affiliate to, sell or provide Compound or Licensed Product to any Sublicensee, Distributor or other Third Party if any of them knows that Compound or Licensed Product sold or provided to such Third Party would be sold or transferred, directly or indirectly, for use in the Cidara Territory;

(b) except as otherwise mutually agreed by the parties in writing pursuant to Section 4.3, Section 4.4 or Section 4.5, not to develop, register, use, sell, have sold, offer for sale or import or seek Regulatory Approval for (i) any Licensed Product containing any Compound other than the Lead Compound, (ii) any Licensed Product containing the Lead Compound other than the Lead Indication Product and the Pediatric Licensed Product for the Mundipharma Territory; (iii) any Combination Product, or (iv) any Product other than Licensed Product;

(c) not to conduct or have conducted any GLP Study or clinical trial of Compound or Licensed Product, except in accordance with a protocol approved in accordance with Article 3 and the JSC Dispute Resolution Matrix;

(d) not to make or have made Compound or Product, except Compound and Licensed Product within the express scope of the Manufacturing License; and

(e) not to grant, or purport to grant, any Affiliate of Mundipharma or any Third Party any license or other right to do any of the foregoing.

2.6 License Grant-Back to Cidara.

(a) Cidara Territory. Subject to the terms and conditions of this Agreement, Mundipharma hereby grants to Cidara:

(i) an exclusive (even as to Mundipharma), royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Mundipharma Technology (excluding any and all Non-Exclusively Licensed Mundipharma Patent Claims) and Mundipharma’s interest in Joint Technology, solely to develop, register, use, sell, have sold, offer for sale and import Compound and Product in the Cidara Territory; and

(ii) a non‑exclusive, royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Non‑Exclusively Licensed Mundipharma Patent Claims, solely to develop, register, use, sell, have sold, offer for sale and import Compound and Product in the Cidara Territory. In addition, Mundipharma hereby grants to Cidara an exclusive option to negotiate with Mundipharma for an exclusive, royalty-bearing license under Non‑Exclusively Licensed Mundipharma Patent Claims, solely to develop, register, use, sell, have sold, offer for sale and import Compound and Product in the Cidara Territory. For clarity, however, no right, license or option under any Non‑Exclusively Licensed Mundipharma Patent Claim is granted to Cidara or its Affiliates to develop, register, use, sell, have sold, offer for sale or import any compound that is not a Compound or any product that is not a Product, and Mundipharma hereby expressly reserves exclusively to itself all rights under the Non‑Exclusively Licensed Mundipharma Patent Claims to develop, register, use, sell, have sold, offer for sale and import all compounds that are not Compounds and all products that are not Products.

(b) Mundipharma Territory – Products Other Than Licensed Products. Subject to the terms and conditions of this Agreement (including, for clarity, Sections 4.4 and 4.5), Mundipharma hereby grants to Cidara:

(i) an exclusive (even as to Mundipharma), royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Mundipharma Patents (excluding any and all Non-Exclusively Licensed Mundipharma Patent Claims), the Mundipharma Know-How (excluding Mundipharma Marketing Information), and Mundipharma’s interest in Joint Technology, in each case, solely to develop, register, use, sell, have sold, offer for sale and import Compound (other than for incorporation into Licensed Product) and Product (other than Licensed Product) in the Mundipharma Territory; and

(ii) a non‑exclusive, royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Non-Exclusively Licensed Mundipharma Patent Claims, solely to develop, register, use, sell, have sold, offer for sale and import Compound (other than for incorporation into Licensed Product) and Product (other than Licensed Product) in the Mundipharma Territory. In addition, Mundipharma hereby grants to Cidara an exclusive option to negotiate with Mundipharma for an exclusive, royalty-bearing license under Non‑Exclusively Licensed Mundipharma Patent Claims, solely to develop, register, use, sell, have sold, offer for sale and import Compound (other than for incorporation into Licensed Product) and Product (other than Licensed Product) in the Mundipharma Territory.

(c) Global Development Plan and Other Development Activities for Licensed Product. Subject to the terms and conditions of this Agreement, Mundipharma hereby grants to Cidara a co‑exclusive (with Mundipharma), worldwide, royalty-free, fully-paid license, without the right to sublicense but, for clarity, with the right to subcontract, under the Mundipharma Technology and Mundipharma’s interest in Joint Technology, solely to perform development activities related to the Licensed Product, including Global Development Plan activities, including the right to file and maintain INDs for, Compound and Licensed Product in the Mundipharma Territory for such purposes.

(d) Manufacturing. Subject to the terms and conditions of this Agreement (including, for clarity, Section 2.7), Mundipharma hereby grants to Cidara:

(i) a co-exclusive (with Mundipharma), worldwide, royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Mundipharma Technology (excluding any and all Non-Exclusively Licensed Mundipharma Patent Claims) and Mundipharma’s interest in Joint Technology, to make and have made Compound and Product; and

(ii) a non-exclusive, worldwide, royalty‑free, fully‑paid, irrevocable, perpetual license, with the right to sublicense through multiple tiers of sublicense, under the Non-Exclusively Licensed Mundipharma Patent Claims, solely to make and have made Compound and Product. In addition, Mundipharma hereby grants to Cidara an exclusive option to negotiate with Mundipharma for an exclusive, worldwide, royalty-bearing license under Non‑Exclusively Licensed Mundipharma Patent Claims, solely to make and have made Compound and Product. For clarity, however, no right, license or option under any Non‑Exclusively Licensed Mundipharma Patent Claim is granted to Cidara or its Affiliates to make or have made any compound that is not a Compound or any product that is not a Product, and Mundipharma hereby expressly reserves exclusively to itself all rights under the Non‑Exclusively Licensed Mundipharma Patent Claims to make and have made all compounds that are not Compounds and all products that are not Products.

Notwithstanding the co‑exclusivity of the license granted pursuant to Section 2.6(d)(i), Mundipharma retains the right to grant licenses under, and the right to subcontract to a CMO, the Mundipharma Technology and Mundipharma’s interest in Joint Technology to its Affiliates and permitted Sublicensees that have the right to market, promote and sell Licensed Product, in each case, to make and have made Compound solely for incorporation into Licensed Product, and to make and have made Licensed Product; in each case, anywhere in the world, solely for Mundipharma to develop, register, use, sell, have sold, offer for sale and import such Licensed Products in the Field in the Mundipharma Territory subject to the terms and conditions of this Agreement.

2.7 Cidara Negative Covenants. Cidara hereby covenants on behalf of itself and its Affiliates not to practice, and not to permit or cause any Affiliate of Cidara or any licensee, marketing partner or distributor of Cidara or any other Third Party to practice, any Mundipharma Technology for any purpose other than as expressly authorized in this Agreement. Cidara further covenants on behalf of itself and its Affiliates:

(a) not to develop, register, use, or seek Regulatory Approval for, Licensed Product (or Compound incorporated or for incorporation in Licensed Product) in the Mundipharma Territory; in each case, except as necessary (i) to perform Global Development Plan activities in the Mundipharma Territory, including the right to file and maintain INDs for, Compound and Licensed Product for the purpose of performing Global Development Plan activities in the Mundipharma Territory, and (ii) to perform Cidara’s obligations under Section 4.10 (CMC Development Activities);

(b) not to sell, have sold, offer for sale, or import for sale (other than to Mundipharma, its Affiliates and Sublicensees) Licensed Product (or Compound incorporated or for incorporation in Licensed Product) in the Mundipharma Territory. Without limiting the generality of the foregoing, Cidara hereby covenants on behalf of itself and Cidara-Controlled Affiliates not to, and not to permit or cause any Affiliate of Cidara to, sell or provide Compound or Licensed Product to any Third Party licensee, marketing partner or distributor of Cidara or other Third Party if any of them knows that Compound or Licensed Product sold or provided to such Third Party would be sold or transferred, directly or indirectly, for use in the Mundipharma Territory in the conduct of any activity in which Cidara itself is not permitted to engage under this Agreement. For clarity, and except as otherwise mutually agreed by the parties in writing pursuant to Section 4.3, Cidara covenants on behalf of itself and its Affiliates not to register, sell, have sold, offer for sale or import or seek Regulatory Approval for (i) any Licensed Product containing any Compound other than the Lead Compound, (ii) any Licensed Product containing the Lead Compound other than the Lead Indication Product and the Pediatric Licensed Product; or (iii) any Combination Product; in each case, in the Mundipharma Territory;

(c) except to the extent permitted by Sections 4.4 and 4.5, not to register, sell, have sold, offer for sale or import for sale, or seek Regulatory Approval for, a Product that is not Licensed Product in the Mundipharma Territory;

(d) not to conduct or have conducted any GLP Study or clinical trial of Compound or Product, except in accordance with the Global Development Plan or a protocol approved in accordance with Article 3 and the JSC Dispute Resolution Matrix; and

(e) not to grant, or purport to grant, any Affiliate of Cidara or any Third Party any license or other right to do any of the foregoing.

2.8 No Implied Licenses. No right or license under any Patents, Inventions, Data or Information of either party or its Affiliates is granted or shall be granted by implication. All such rights or licenses are or shall be granted only as expressly provided in this Agreement.


3.	GOVERNANCE

3.1 Joint Steering Committee.

(a) Establishment and Composition. Within 30 days after the Effective Date, the parties shall establish a Joint Steering Committee (the “JSC”) composed of three representatives of each of Cidara and Mundipharma, and each party shall designate its initial JSC representatives by written notice to the other party. Each party shall be free to change its JSC representatives on written notice to the other party, provided that each party shall ensure that, at all times during the existence of the JSC, its representatives on the JSC have (i) appropriate expertise for the then-current stage of development or commercialization of Licensed Product in the Field in the Mundipharma Territory; and (ii) the authority to bind such party with respect to matters requiring approval by the JSC.

(b) Responsibilities and Authority. The JSC’s overall responsibility shall be to encourage and facilitate the exchange of information between the parties contemplated by this Agreement, and to facilitate, coordinate and oversee the development, registration and commercialization of Licensed Product in the Field in the Mundipharma Territory. The specific responsibilities of the JSC shall be:

(i) to seek harmonization in global development, regulatory approval and CMC efforts, and in relation to drug-safety matters, with respect to Licensed Product in the Field;

(ii) to serve as the principal means by which the parties review, discuss, and, to the extent required by the JSC Dispute Resolution Matrix and in accordance with Section 3.1(f), approve, amendments or updates of the Global Development Plan in accordance with Section 4.1(b);

(iii) to serve as the principal means by which the parties review, discuss, and, to the extent required by the JSC Dispute Resolution Matrix and in accordance with Section 3.1(f), approve the Mundipharma Territory Plan or any amendment thereto in accordance with Section 4.2;

(iv) to serve as the principal means by which the parties review, discuss and, to the extent required by the JSC Dispute Resolution Matrix and in accordance with Section 3.1(f), approve amendments or updates of the CMC Development Plan in accordance with Section 4.10;

(v) at the request of either party, to consider and discuss any potential Licensed Product Global Development Expansion as required by Section 4.3(a);

(vi) to review and approve the protocol (and amendments or updates thereof) for each GLP Study and clinical trial of: (A) Licensed Product proposed to be conducted by or on behalf of either party or any of its Affiliates, licensees or Sublicensees; (B) subject to Section 4.4(b), Subcutaneous Product proposed to be conducted by or on behalf of Cidara (or, after execution of a Subcutaneous Product Amendment, by or on behalf of Mundipharma) or any of its Affiliates, licensees or Sublicensees; and (C) subject to Section 4.4(b), Other Product proposed to be conducted by or on behalf of Cidara (or, after execution of an Other Product Amendment by or on behalf of Mundipharma) or any of its Affiliates, licensees or Sublicensees;

(vii) to (A) discuss any anticipated circumstance brought to the JSC’s attention by Cidara pursuant to Section 4.1(c) that could impair Cidara’s ability to perform the Global Development Plan, (B) consider measures to avoid or minimize any potential disruption to the performance of the Global Development Plan as a result thereof, and (C) approve a plan of action to implement any such measure(s) that the JSC determines to be advisable; in each case, in accordance with Section 4.1(c);

(viii) to facilitate the exchange of Cidara Know-How and Mundipharma Know-How subject to and in accordance with Section 2.3;

(ix) to serve as the principal means by which (A) Mundipharma keeps Cidara reasonably informed regarding Mundipharma’s development, registration and commercialization of Licensed Product in the Field in the Mundipharma Territory, and (B) Cidara keeps Mundipharma reasonably informed regarding Cidara’s development, registration and commercialization of Licensed Product in the Field in the Cidara Territory;

(x) to coordinate the parties’ activities in relation to international meetings and congresses that will be attended by representatives of both parties;

(xi) to review, discuss and approve opportunities to support investigator-initiated trials of, and (subject to Section 4.17) named patient programs for, the Licensed Product in the Field and to approve the supply by either party of Licensed Product for, the provision by either party of any other support of, and any other participation by either party in, any such investigator-initiated trial or such named patient program;

(xii) to establish Subcommittees (in addition to the JDC and JCC) as it deems necessary or advisable to further the purposes of this Agreement, to delegate to such Subcommittees such of the JSC’s responsibilities (excluding its responsibilities under Sections 3.1(b)(xii) and 3.1(b)(xiii)) as the JSC deems appropriate, subject to Sections 3.1(f) and 3.3, and to dissolve Subcommittees;

(xiii) to serve as a point of escalation from, and to seek to resolve disagreements and issues referred to it by, any Subcommittee; and

(xiv) to carry out such other obligations as are expressly delegated to it under this Agreement.

(c) Meetings. The JSC shall meet at least once every calendar quarter from the Effective Date until the granting of Regulatory Approval for the Lead Indication Product in the Lead Indications in the Major Markets and thereafter at such frequency as mutually agreed by the parties. JSC meetings may be conducted in person at times and places to be determined by the JSC members. Alternatively, the JSC may meet by means of teleconference, videoconference or other similar communications equipment. A reasonable number of additional representatives of a party may attend meetings of the JSC in a non‑voting capacity. Each party shall bear its own expenses of participating in meetings of the JSC. Responsibility for chairing JSC meetings shall alternate between the parties. The chair for any JSC meeting shall not have any greater authority than any other representative of either party on the JSC.

(d) Minutes. The Alliance Manager of the party responsible for chairing a JSC meeting shall be responsible for preparing the agenda and subsequent minutes of each meeting. Such Alliance Manager shall circulate a draft agenda 10 Business Days prior to the scheduled date of the JSC meeting. Such agenda shall be finalized no later than 5 Business Days prior to the scheduled JSC meeting and shall indicate which, if any, items on the agenda are Key Matters. After the JSC meeting, such Alliance Manager shall circulate a draft of the minutes of such meeting to all members of the JSC for comments within 10 Business Days after such meeting. Such minutes shall provide a description, in reasonable detail, of the discussions at the meeting and shall document all actions and determinations approved by the JSC at such meeting, as well as any Material Impact Objection raised by either party at such meeting. In addition, in the event of planned discussion at any JSC meeting of any of the matters described in Section 3.1(b)(ii), 3.1(b)(iii), 3.1(b)(iv), 3.1(b)(vi) or 3.1(b)(xi), all applicable materials, including draft plans, amendments, updates, protocols, and protocol amendments, shall be attached to the agenda as an exhibit, and, in the event of any approval by the JSC at any JSC meeting of any such plan, amendment, update, protocol or protocol amendment, such approved plan, amendment, update, protocol or protocol amendment shall be attached in final form as an exhibit to the finalized minutes of such JSC meeting. The parties shall promptly review and comment on draft minutes, and the applicable Alliance Manager shall update such draft minutes accordingly and recirculate until the parties have agreed on the final form. The parties shall cooperate in good faith to finalize the minutes no later than the date of the next JSC meeting or within 30 days of the first circulation of the draft minutes, whichever is earlier.

(e) Decision-Making. Decisions within the scope of the JSC’s authority shall be made by unanimous vote, with each party’s representatives on the JSC collectively having one

vote. The presence of at least one of each party’s JSC representatives constitutes a quorum for the conduct of business at any JSC meeting, and no vote of the JSC may be taken without a quorum present. If the JSC is unable to decide or resolve unanimously any matter within the scope of its authority set forth in Section 3.1(b), the status quo shall continue, except in the case of Key Matters, which shall be resolved in accordance with Section 3.1(f). Without limiting the generality of the foregoing, the matters described in Section 3.1(b)(xi) regarding investigator-initiated trials and named patient support shall always require unanimous approval of the JSC without resort to the dispute resolution provisions set forth in Section 3.1(f).

(f) JSC Dispute Resolution Matrix for Key Matters. If the JSC is unable to decide or resolve unanimously in accordance with Section 3.1(e) any of the matters specified in the JSC Dispute Resolution Matrix (each, a “Key Matter”), such Key Matter shall be subject to dispute resolution as specified in the JSC Dispute Resolution Matrix and as more fully described below in this Section 3.1(f).

(i) Exercise of Party’s Final Decision-Making Authority. With respect to any Key Matter that the JSC Dispute Resolution Matrix specifies is subject to final decision-making authority of a party’s JSC representatives, such party’s JSC representatives, in the exercise of their final decision-making authority, shall give good faith consideration to, and take reasonable account of, the position of the other party’s JSC representatives on such matter.

(ii) Escalation to Senior Executives. Any Key Matter that the JSC Dispute Resolution Matrix specifies is subject to Escalation to Senior Executives shall be referred to the Chief Executive Officer of Cidara and the President and CEO of Mundipharma, Europe, (in each case, such party’s “Senior Executive”) who shall promptly meet and attempt in good faith to resolve such issue within 30 days.

(iii) Material Impact Objection. If a party proposes a Key Matter specified in the JSC Dispute Resolution Matrix in respect of which the other party has the right to raise a Material Impact Objection (defined below), and such other party in good faith believes that the proposed Key Matter is substantially likely to have a Material Impact on the Licensed Product, then such other party’s JSC representatives may instruct the Alliance Manager with responsibility for preparing the minutes of the applicable JSC meeting to reflect in such minutes that it objects to such proposed Key Matter on the basis of such Material Impact (such objection, a “Material Impact Objection”). Alternatively, a party may raise a Material Impact Objection either before the JSC meeting at which a Key Matter proposed by the other party is to be discussed or within 15 Business Days after such JSC meeting by delivering notice (including by email) to the proposing party’s Alliance Manager, who shall promptly bring the matter to the attention of the JSC, and if such Material Impact Objection is raised after such JSC meeting, the JSC shall promptly convene a meeting to discuss such Material Impact Objection. As specified in the JSC Dispute Resolution Matrix, any such Key Matter with respect to which a party raises a Material Impact Objection that is not resolved by unanimous vote of the JSC shall first be escalated to the Senior Executives for attempted resolution in accordance with Section 3.1(f)(ii) and, if the Senior Executives are unable to resolve such Key Matter, shall be […***…], and the party proposing such Key Matter shall not proceed with the activity or course of action that is the subject of such Material Impact Objection unless and until such Material Impact Objection is resolved in

such party’s favor in accordance with the foregoing procedures and pursuant to and in accordance with Section 3.1(f)(iv). If the JSC or the Senior Executives agree, […***…] that the applicable activity or course of action does not pose a substantial risk of a Material Impact […***…], the parties shall be bound by such determination […***…]. If the JSC or the Senior Executives agree, […***…] that the applicable activity or course of action should not be undertaken because it poses a substantial risk of a Material Impact, the parties shall be bound by such determination, and the proposing party shall not have the right to conduct such activity or take such course of action […***…].

(iv) […***…] Any Key Matter specified in the JSC Dispute Resolution Matrix with respect to which a party has a right to and does raise a Material Impact Objection that is not resolved by the Senior Executives in accordance with Section 3.1(f)(ii) shall be […***…]. Promptly after […***…]. The parties shall mutually agree on the medium by which each party may present its position […***…] (i.e., in writing and/or orally) and shall establish a reasonable limit on the length (i.e., page limit and/or duration) of each party’s presentation. Each party may, but is not required to, include in its presentation a recommendation that […***…]. The parties shall share equally the fees and costs of […***…], regardless of the […***…] ultimate determination. The questions to be posed to […***…] are:


(A)	[…***…]


(B)	[…***…]


(C)	[…***…]

[…***…]

If the answer to the questions in (A) and (B) are both “Yes”, the proposed activity or course of action […***…]. The party proposing the applicable activity or course of action shall consider in good faith[…***…].

If the answer to the question in (A) is “No” and the answer to the question in (C) is “Yes”, the proposed activity or course of action […***…]. The party proposing the applicable activity or course of action shall consider in good faith[…***…]

(v) No Arbitration. The parties intend that all matters within the scope of the JSC’s decision-making authority shall be resolved by the parties in accordance with Section 3.1(e), this Section 3.1(f) and the JSC Dispute Resolution Matrix, and no matter within the scope of the JSC’s authority shall be subject to the dispute resolution mechanisms set forth in Article 12.

3.2 Subcommittees.

(a) Within 30 days after the Effective Date, the parties shall establish a Joint Development Committee (the “Joint Development Committee” or “JDC”) to oversee activities needed to obtain Regulatory Approvals for Licensed Product in the Field in the Mundipharma Territory.

(b) Within 30 days after the Effective Date, the parties shall establish a Joint Manufacturing Committee (the “Joint Manufacturing Committee” or “JMC”) to oversee activities in relation to the manufacturing of Compound and Licensed Product, including CMC development activities to generate Data needed to obtain Regulatory Approvals for Licensed Product in the Field in the Mundipharma Territory, and in relation to the CMC Development Plan.

(c) As soon as reasonably practical but no later than 12 months prior to the anticipated date of Regulatory Approval of the Lead Indication Product in the Treatment Indication in the Major European Countries, the parties shall establish a Joint Commercialization Committee (the “Joint Commercialization Committee” or “JCC”) to oversee commercialization of Licensed Product in the Field in the Mundipharma Territory.

(d) In addition, from time to time, the JSC may establish additional subcommittees to which it may delegate specified projects or activities within the scope of authority of the JSC, as it deems necessary or advisable. Each Subcommittee shall be composed of an equal number of representatives of each party as the JSC determines is appropriate from time to time and shall meet with such frequency as the applicable Subcommittee shall determine.

Matters relating to the composition (other than the number of representatives), meetings and minutes of each Subcommittee shall be as set forth in Sections 3.1(a) through 3.1(e), mutatis mutandis. Decisions within the scope of the Subcommittee’s authority shall be made by unanimous vote, with each party’s representatives on the Subcommittee collectively having one vote. The presence of at least one of each party’s Subcommittee representatives constitutes a quorum for the conduct of business at any Subcommittee meeting, and no vote of the Subcommittee may be taken without a quorum present. If, with respect to a matter that is subject to a Subcommittee’s decision-making authority, the Subcommittee cannot reach unanimity, the matter shall be referred to the JSC for resolution in accordance with Section 3.1(f) and the JSC Dispute Resolution Matrix.

3.3 Scope of Authority; Exclusions. Notwithstanding the establishment and existence of the JSC or any Subcommittee, each party shall retain the rights, powers and discretion granted to it hereunder, and neither the JSC nor any Subcommittee shall be delegated or vested with rights, powers or discretion unless such delegation or vesting is expressly provided herein. In addition to any other exclusions from or limitations on its authority set forth in this Article 3 or elsewhere in this Agreement, the JSC shall have no right or authority:

(a) to interpret, modify, amend, or waive compliance with any provision of, or any right or remedy under, this Agreement;

(b) to approve any Licensed Product Global Development Expansion (each of which shall require the negotiation and execution by the parties of an Expanded Licensed Product Amendment as described in Section 4.3(a) or Section 4.3(c);

(c) to approve a Subcutaneous License Expansion (which shall require the negotiation and execution by the parties of a Subcutaneous Product Amendment as described in Section 4.4);

(d) to approve the expansion of the scope of the licenses granted under this Agreement to include an Other Product (which shall require the negotiation and execution by the parties of an Other Product Amendment for such Other Product as described in Section 4.5);

(e) to determine whether or not a party has complied with any of its obligations under this Agreement;

(f) to determine whether or not, or when, any milestone event set forth in Section 5.3, 5.5 or 5.6 has been achieved;

(g) to determine any issue in a manner that would conflict with the express terms of this Agreement; or

(h) to make any decision or approve any matter that is expressly stated to require the mutual written agreement of the parties or the written consent of one or both parties.

3.4 Alliance Managers. Within 30 days after the Effective Date, each party shall appoint (and notify the other party of the identity of) a representative of such party to act as the primary point of contact for the parties with responsibility for the smooth functioning of the alliance by creating and maintaining collaborative, efficient, and responsive communications within and between Mundipharma and Cidara (each, an “Alliance Manager”). A party may replace its Alliance Manager on written notice to the other party and may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the other party. The Alliance Managers shall support alliance governance activities and shall attend all JSC meetings (except as otherwise determined by the JSC) and support their chairperson of the JSC in the discharge of their responsibilities but shall be non-voting participants in such JSC meetings. The Alliance Managers shall also: (i) support project teams across all functions in meeting the objectives for this Agreement; (ii) take responsibility for ensuring that governance activities, such as the conduct of required JSC meetings and production of meeting agendas and minutes occur as set forth in this Agreement, and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed; (iii) bring to the attention of the JSC (and other Subcommittees in a timely manner any matters or issues they reasonably believe should be discussed; (iv) serve as the primary point of communication for seeking consensus between the parties regarding issues; and (v) attend meetings of the JDC, JCC or other Subcommittee as may be deemed appropriate.


4.	DEVELOPMENT AND REGULATORY

4.1 Global Development Program and Development in the Cidara Territory.

(a) Global Development Plan. Subject to the remainder of this Section 4.1(a) and to Section 5.2, Cidara shall use Commercially Reasonable Efforts to conduct, or have conducted, the Global Development Plan in accordance with the budgeted costs and timelines. Upon Cidara’s reasonable request, Mundipharma shall provide reasonable cooperation and informal, non-financial (other than the Global Development Costs) assistance to Cidara in connection with (i) Cidara’s management and execution of the Lead Indication Trial activities that are conducted in the Mundipharma Territory, (ii) Cidara’s filing of INDs with Regulatory Authorities in the Mundipharma Territory for the Lead Indication Trials and in interactions with such Regulatory Authorities in connection therewith, and (iii) Cidara’s management and execution of the CMC development activities set forth in the Global Development Plan. Each party shall keep the JSC and JDC regularly informed of the status, progress and results of all Global Development Plan activities conducted by it or on its behalf.

(b) Amendments to Global Development Plan. The parties shall periodically review and, if necessary, propose updates to the then-current Global Development Plan for discussion at the JSC; provided that Cidara shall be responsible for preparing any formal written amendment to the Global Development Plan for review, and, if applicable, approval, by the JSC. The parties shall discuss in good faith, and attempt to reach consensus regarding, any such proposed modification to the Global Development Plan. Approval requirements for amendments or updates to the Global Development Plan shall be as set forth in Sections 3.1(b)(ii), 3.1(b)(vi) and 3.1(e), and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix. References to the “Global Development Plan” in this Agreement shall be construed to refer to the Global Development Plan, as then in effect (including all updates and amendments thereto made in accordance with Sections 3.1(b)(ii), 3.1(b)(vi) and 3.1(e), and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix.

(c) Anticipated Performance Issue. If, during the performance of the Global Development Plan, Cidara anticipates that any change in Cidara’s circumstances occurring after the Effective Date is likely to arise that would impair Cidara’s ability to perform the Global Development Plan, (i) Cidara’s Alliance Manager shall promptly inform Mundipharma’s Alliance Manager thereof, (ii) each party’s Alliance Manager shall promptly bring such anticipated change in circumstances to the attention of such party’s JSC representatives, and a meeting of the JSC shall be convened as promptly as practicable to discuss the matter. At such meeting, the parties’ JSC representatives shall discuss such anticipated change in circumstances, consider practical measures that may be taken to avoid or minimize any potential disruption to the performance of the Global Development Plan, and cooperate in good faith to formulate a plan of action to implement any such measure(s) that the JSC determines to be advisable. By way of example and not of limitation, such measures could include Mundipharma’s assumption of responsibility for overseeing or performing one or more Global Development Plan activities, or Mundipharma making payments on behalf of Cidara to Third Party contractors performing Global Development Plan activities. If the parties agree to Mundipharma making payments on behalf of Cidara to such Third Parties, (i) Mundipharma shall have the right to deduct the payments from future payment obligations of Mundipharma to Cidara arising under this Agreement, and (ii) any activity under the Global Development Plan for which Mundipharma makes any such payment on behalf of Cidara in an amount that exceeds the greater of (x) […***…]% of the total cost of such activity and (y) $[…***…], shall be deemed to be Key Matters pursuant to Section 3.1(f) […***…].

(d) Development in the Cidara Territory. Cidara shall in a timely manner keep the JSC and JDC reasonably and regularly informed of the status, progress and results of any GLP Study and clinical trial of Licensed Product in the Field in the Cidara Territory and in the Mundipharma Territory that are not part of the Global Development Plan.

4.2 Mundipharma Territory Plan.

(a) Mundipharma shall be solely responsible for conducting, at Mundipharma’s sole expense, such Mundipharma Territory-Specific development activities with respect to Lead Indication Product in the Lead Indications and a Pediatric Licensed Product in the Mundipharma Territory as may be required by applicable Regulatory Authorities to support MAA filing and Regulatory Approval in the Mundipharma Territory, including the European Paediatric Investigational Plan. Upon Mundipharma’s reasonable request, Cidara shall provide reasonable cooperation and informal, non-financial assistance to Mundipharma in connection with the Mundipharma Territory Plan.

(b) Mundipharma shall have the right to amend or update the Mundipharma Territory Plan from time to time, subject to Sections 3.1(b)(iii), 3.1(b)(vi) and 3.1(e) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix, provided that at all times the activities covered by the Mundipharma Territory Plan shall be limited to Mundipharma Territory-Specific development activities with respect to Lead Indication Product in the Lead Indications. References to the “Mundipharma Territory Plan” in this Agreement shall be construed to refer to the Mundipharma Territory Plan, as then in effect (including all amendments thereto).

(c) Mundipharma shall in a timely manner keep the JSC and JDC reasonably and regularly informed of the status, progress and results of all Mundipharma Territory Plan activities.

(d) Mundipharma shall be responsible for conducting the European Paediatric Investigational Plan with respect to a Pediatric Licensed Product as required by the EMA to maintain the Regulatory Approval for the Lead Indication Product.

4.3 Expanded Licensed Products.

(a) Licensed Product Global Development Expansion. The parties acknowledge that the scope of the Global Development Plan and the Mundipharma Territory Plan as of the Effective Date is limited to development of Lead Indication Product for the Lead Indications and the Pediatric Licensed Product. However, the parties also acknowledge that it may be beneficial to both parties to pursue development of an Expanded Licensed Product. At the request of either party from time to time, the JSC shall consider and discuss the potential expansion of the scope of the parties’ collaborative development efforts under this Agreement to encompass development of an Expanded Licensed Product (on an New Indication-by-New Indication and/or Expanded Licensed Product-by-Expanded Licensed Product (as applicable) basis, a “Licensed Product Global Development Expansion”). For clarity, (A) Cidara shall be free to conduct development of any Expanded Licensed Product, provided that the protocol for any GLP Study or clinical trial of such Expanded Licensed Product shall require JSC approval under Section 3.1(b)(vi), subject, if applicable, to Section 3.1(f) and the JSC Dispute Resolution Matrix; and (B) Mundipharma shall not have the right to conduct any GLP Study or clinical trial of any Expanded Licensed Product, without first (x) obtaining required approval of the protocol for any such GLP Study or clinical trial of any of the foregoing under Sections 3.1(b)(vi) and, if applicable, to Section 3.1(f) and the JSC Dispute Resolution Matrix, and (y) proposing a Licensed Product Global Development Expansion for the same to the JSC for consideration and discussion as set forth above. (For clarity, the parties acknowledge and agree that the Pediatric Licensed Product shall not require any Licensed Product Global Development Expansion and that Mundipharma shall be free to conduct the European Pediatric Investigational Plan without following the procedures set forth in this Section 4.3, subject to obtaining required approval of the protocol for the European Pediatric Investigational Plan under Sections 3.1(b)(vi) and, if applicable, to Section 3.1(f) and the JSC Dispute Resolution Matrix.) If the parties reach consensus at the JSC level to pursue a Licensed Product Global Development Expansion for an Expanded Licensed Product, such expansion shall become effective only upon:

(i) mutual written agreement of the parties on: (A) a mutually-agreed forecast of the peak incremental Net Sales of such Expanded Licensed Product in the Mundipharma Territory over (x) […***…] (for each such Expanded Licensed Product, the “Mundipharma Peak Incremental Net Sales Forecast”); and (B) a mutually-agreed forecast of the peak incremental Net Sales of such Expanded Licensed Product in the Cidara Territory over […***…] (for each Expanded Licensed Product, the “Cidara Peak Incremental Net Sales Forecast” and, collectively with the Mundipharma Peak Incremental Net Sales Forecast for such Expanded Licensed Product, the “Peak Incremental Net Sales Forecasts”). In the event that the parties are unable to reach mutual agreement regarding the Peak Incremental Net Sales Forecasts for such Expanded Licensed Product, then upon the request of either party, the matter shall be referred to the Senior Executives, who shall promptly meet and attempt in good faith to agree upon such Peak Incremental Net Sales Forecasts within 30 days. If the Senior Executives are unable to agree upon such Peak Incremental Net Sales Forecasts within such 30-day period, then the Peak Incremental Net Sales Forecasts shall be determined in accordance with Section 12.5; and

(ii) execution by the parties of a written amendment to this Agreement (each, a “Expanded Licensed Product Amendment”) under which:

(1) an initial Expanded Licensed Product Global Development Plan and an initial Expanded Licensed Product Mundipharma Territory Plan for such Expanded Licensed Product would be attached as exhibits;

(2) the parties would share all Global Development Costs (mutatis mutandis) incurred after the execution of such Expanded Licensed Product Amendment in performing the Expanded Licensed Product Global Development Plan activities for such Expanded Licensed Product (for each Expanded Licensed Product, “Global Development Expansion Costs”), in accordance with Section 6.1(a), mutatis mutandis, provided that […***…] shall, unless otherwise mutually agreed by the parties in writing, be determined by […***…];

(3) with respect only to an Expanded Licensed Product referred to in clause (A) of Section 1.47 (New Indications) or in clause (C) of Section 1.47 (Combination Products), Mundipharma would pay an additional one-time, non‑refundable, non‑creditable Global Development Expansion fee to Cidara equal to […***…]% of the Mundipharma Peak Incremental Net Sales Forecast for such Expanded Licensed Product (such Global Development Expansion Fee not to exceed $[…***…]) in recognition of the approval of a MA Variation for the Expanded Licensed Product (New Indications) or approval of a MAA for the Expanded Product (Combination Product) in […***…] (the “Global Development Expansion Fee”), which shall be payable as follows:

(A) Mundipharma would pay 100% of the Global Development Expansion Fee within 10 Business Days of the first approval of a MA Variation or of a MAA, as applicable, for the Expanded Licensed Product in […***…]; or

(B) if the approval of a MA Variation or of a MAA approval, as applicable, for the Expanded Licensed Product in […***…] occurs before the approval of a corresponding MA Variation, or of a corresponding MAA, as applicable, for the Expanded Licensed Product in […***…],

(C)

Mundipharma would pay […***…]% of the Global Development Expansion Fee within 10 Business Days of the approval of the MA Variation or MAA, as applicable, for the Expanded Licensed Product in […***…] (i.e., […***…]% of the agreed Peak Incremental Net Sales Forecast for such Expanded Licensed Product) and, if applicable, the remaining […***…]% of the Global Development Expansion Fee within 10 Business Days of the approval of a MA Variation or MAA, as applicable, for the Expanded Licensed Product in […***…] (i.e., the remaining […***…]% of the agreed Peak Incremental Net Sales Forecast for such Expanded Licensed Product);

(4) Net Sales of all Licensed Products (including Lead Indication Product and Pediatric Licensed Product) for all indications in the Mundipharma Territory would be aggregated for purposes of the calculation of royalties under Section 5.7 and determination of the achievement of Commercial Milestone Events under Section 5.6; and

(5) except as otherwise set forth in this Section 4.3(a)(ii), Mundipharma would not have any other obligations to pay Cidara any additional amounts pursuant to the Expanded Licensed Product Amendment.

If the parties reach consensus at the JSC level to pursue a Licensed Product Global Development Expansion for an Expanded Licensed Product, the parties shall negotiate in good faith with the objective of entering into an Expanded Licensed Product Amendment as described above in an expeditious manner. Any Expanded Licensed Product Amendment would contain other appropriate and commercially reasonable terms, provided that, except as otherwise expressly set forth in the preceding subparagraphs (1) through (5) of this Section 4.3(a)(ii), the general expectation of the parties is that the terms and conditions of this Agreement would apply to such Licensed Product Global Development Expansion to the same extent as they apply to the Lead Indication Product for the Lead Indications and to the Pediatric Licensed Product. For clarity, neither party shall be obligated to enter into any Expanded Licensed Product Amendment.

(b) Election Not to Pursue Licensed Product Global Development Expansion. If a party proposes at the JSC level a Licensed Product Global Development Expansion for an Expanded Licensed Product, but either (i) the other party does not wish to pursue such Licensed Product Global Development Expansion for such Expanded Licensed Product or (ii) the parties reach consensus at the JSC level to pursue a Licensed Product Global Development Expansion for such Expanded Licensed Product but are unable to conclude an Expanded Licensed Product Amendment for such Licensed Product Global Development Expansion within […***…] after initiating good faith negotiations regarding such expansion, then, in each case, a party desiring to develop such Expanded Licensed Product shall be free to conduct independent development of such Expanded Licensed Product, subject to Section 3.1(b)(vi) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix, and to register and commercialise such Expanded Licensed Product solely in its respective Territory. In such event, the other party shall not be entitled to use any Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of the first party in the development of such Expanded Licensed Product in support of any NDA, MAA, MA Variation or other Product Filing or for obtaining or maintaining Regulatory Approval for such Expanded Licensed Product in the other party’s Territory or in connection with the commercialization of such Expanded Licensed Product in the other party’s Territory, except as expressly set forth in Section 4.3(c).

(c) One-Time Buy-In Right for Global Development Expansion. In the absence of a Licensed Product Global Development Expansion for an Expanded Licensed Product, if Cidara, pursuant to the first paragraph of Section 4.3(a), or either party, pursuant to Section 4.3(b), pursues independent clinical development of such Expanded Licensed Product, such party (the “Independent Development Party”) shall, within […***…] after the first availability of top-line results from the […***…], deliver such top-line results to the other party, together with a written report of the reasonable and documented external costs and expenses incurred by the Independent Development Party to date in connection with such clinical trial or preparing, submitting, obtaining or maintaining Product Filings specific to such clinical trial (the “Independent Expanded Licensed Product Costs”). In such event, the other party shall have the one-time right, exercisable solely during the 60-day period after receipt of such top-line results and the report of Independent Expanded Licensed Product Costs, to notify the Independent Development Party that the other party wishes to pursue a Licensed Product Global Development Expansion for such Expanded Licensed Product, in which event the parties shall negotiate in good faith for up to an additional 120 days (or such longer period as the parties may agree) with the objective of executing an Expanded Licensed Product Amendment for such Expanded Licensed Product in accordance with Section 4.3(a), mutatis mutandis; provided, however, that, in addition to the terms set forth in subparagraphs (1) through (4), and notwithstanding subparagraph (5), of Section 4.3(a)(ii), such Expanded Licensed Product Amendment shall: (i) obligate the other party to pay to the Independent Development Party a buy-in fee in an amount equal to […***…]% of the applicable share of the Independent Expanded Licensed Product Costs incurred by the Independent Development Party up to the date of such Expanded Licensed Product Amendment, such share being determined by […***…] (each, an “Expanded Licensed Product Buy‑In Fee”), it being understood that such total Independent Expanded Licensed Product Costs may include additional Independent Expanded Licensed Product Costs incurred after the date of the written cost report delivered to the other party as described above in this Section 4.3(c); and (ii) entitle the other party, upon payment of such Expanded Licensed Product Buy-In Fee, to use the Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of the Independent Development Party with respect to such Expanded Licensed Product prior to execution of such Expanded Licensed Product Amendment in support of any IND, NDA, MAA, MA Variation, or other Product Filing or Regulatory Approval for such Expanded Licensed Product in the other party’s Territory or in connection with the commercialization of such Expanded Licensed Product in the other party’s Territory.

4.4 Subcutaneous Product Option.

(a) Subcutaneous Product Option Grant. Mundipharma acknowledges that, as of the Effective Date, the License granted to Mundipharma under this Agreement excludes any rights with respect to Subcutaneous Product (or any other Product that is not a Licensed Product). Subject to the terms and conditions of this Section 4.4, Cidara hereby grants to Mundipharma the exclusive option, exercisable only one time and solely during the Subcutaneous Product

Option Period in accordance with Section 4.4(c), to expand the License to include Subcutaneous Product (the “Subcutaneous Product Option”). During the Subcutaneous Product Option Period and, if Mundipharma exercises the Subcutaneous Product Option prior to expiration of the Subcutaneous Product Option in accordance with Section 4.4(c), during the Subcutaneous Negotiation Period, Cidara and its Affiliates shall not grant, or offer to grant, any Third Party any license under Cidara Technology (mutatis mutandis with respect to the Subcutaneous Product) or Cidara’s interest in Joint Technology (mutatis mutandis with respect to the Subcutaneous Product), to develop, register, use, sell, have sold, offer for sale or import Subcutaneous Product in the Field in the Mundipharma Territory, or any option or other right to obtain such license, or otherwise restrict or encumber Mundipharma’s rights and ability to expand the License to include Subcutaneous Product; provided, however, that the foregoing shall not be construed: (i) to prevent or restrict Cidara and its Affiliates from contracting with Third Party contract service providers to perform development activities with respect to Subcutaneous Product on behalf of Cidara or its Affiliates anywhere in the world, subject to Section 3.1(b)(vi) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix; or (ii) transferring or selling all or substantially all of Cidara’s business related to Compound and Product to a Third Party, whether by merger, sale of stock, sale of assets or otherwise, in conjunction with the assignment of this Agreement and all of Cidara’s rights and obligations hereunder, to a Third Party in accordance with Section 13.7. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, Cidara shall at all times be free to conduct or have conducted, and no JSC approval (or any approval by the Senior Executives or […***…]) shall be required for the conduct of, that certain Phase 1 clinical trial of Subcutaneous Product conducted with the U.S. National Institutes of Health to evaluate safety, tolerability, and pharmacokinetics for Subcutaneous Product (the “NIH Trial”).

(b) Cidara Development of Subcutaneous Product During Subcutaneous Product Option Period. During the Subcutaneous Product Option Period, Cidara may, but is not obligated to, develop Subcutaneous Product for one or more indications in the Field throughout the world, subject to Section 3.1(b)(vi) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix. Cidara shall keep Mundipharma reasonably and regularly informed, primarily via the JSC or JDC, of the plans for, and the status, progress and results of, development activities with respect to Subcutaneous Product and regulatory activities related thereto. In addition, Cidara shall provide to Mundipharma (i) top-line data from any clinical trial of Subcutaneous Product that is completed during the Subcutaneous Product Option Period, promptly following the first availability thereof, (ii) true and complete copies of all final reports of any GLP Study or clinical trial of Subcutaneous Product conducted by or on behalf of Cidara or Cidara-Controlled Affiliates that are received by Cidara or Cidara-Controlled Affiliates during the Subcutaneous Product Option Period, and (iii) copies of written advice received by Cidara or Cidara-Controlled Affiliates from, and copies of Product Filings (including INDs, in each case to the extent made by Cidara or received by Cidara directly from a Regulatory Authority) with, Regulatory Authorities regarding the development and Regulatory Approval of Subcutaneous Product. No later than […***…] before […***…] in the Mundipharma Territory (in either case, the “Subcutaneous Efficacy Trial”), Cidara shall provide Mundipharma with written notice thereof and a summary of […***…] (the “Subcutaneous Efficacy Trial Notice”).

(c) Subcutaneous Product Option Exercise; Subcutaneous Product Amendment. Subject to the terms and conditions of this Agreement, Mundipharma may exercise the Subcutaneous Product Option at any time (but only one time) during the Subcutaneous Product Option Period by delivering written notice of such exercise (“Exercise Notice”) to Cidara; provided that the expansion of the License to include the Subcutaneous Product shall become effective only upon payment in full of the Subcutaneous Product Option Payment. Promptly following delivery of the Exercise Notice, the parties shall negotiate in good faith a written amendment to this Agreement (a “Subcutaneous Product Amendment”) to which an initial Subcutaneous Global Development Plan and an initial Subcutaneous Mundipharma Territory Plan would be attached as exhibits, and which would include, without limitation, the following provisions:

(i) the expansion of the License and the Grant-Back License to include the Subcutaneous Product (collectively, the “Subcutaneous License Expansion”);

(ii) the Subcutaneous License Expansion would become effective upon the payment by Mundipharma to Cidara of an option payment equal to […***…]% of the Subcutaneous Peak Incremental Net Sales Forecast, to be determined as set forth below (the “Subcutaneous Option Payment”), such Subcutaneous Option Payment not to exceed $[…***…]. For clarity, the amount of the Option Payment (in U.S. dollars) would be specified in the Subcutaneous Product Amendment. Promptly following delivery of the Exercise Notice to Cidara, the parties shall mutually agree in good faith upon: (A) a forecast of the peak incremental Net Sales (mutatis mutandis) of Subcutaneous Product in the Mundipharma Territory (the “Mundipharma Subcutaneous Peak Incremental Net Sales Forecast”); and (B) a forecast of the peak incremental Net Sales (mutatis mutandis) of Subcutaneous Product in the Cidara Territory (the “Cidara Subcutaneous Peak Incremental Net Sales Forecast” and, collectively with the Mundipharma Subcutaneous Peak Net Sales Forecast, the “Subcutaneous Peak Net Sales Forecasts”); each of which shall be determined in accordance with the same methodology, which shall be mutually agreed upon by the parties in good faith. In the event that the parties are unable to reach mutual agreement regarding the Subcutaneous Peak Incremental Net Sales Forecasts, including the methodology to be used to determine the Subcutaneous Peak Incremental Net Sales Forecasts, then upon the request of either party, the matter shall be referred to the Senior Executives, who shall promptly meet and attempt in good faith to agree upon the Subcutaneous Peak Incremental Net Sales Forecasts and such methodology within 30 days. If the Senior Executives are unable to agree upon the Subcutaneous Peak Incremental Net Sales Forecasts and such methodology within such 30-day period, then the Subcutaneous Peak Incremental Net Sales Forecasts, including the methodology to be used to determine the Subcutaneous Peak Incremental Net Sales Forecasts, shall be determined in accordance with Section 12.5;

(iii) Cidara would use Commercially Reasonable Efforts to conduct, or have conducted, those development activities with respect to Subcutaneous Product in the Subcutaneous Indication(s) as are set forth in the Subcutaneous Global Development Plan. The provisions of Articles 3 and 4 (excluding this Section 4.4) would apply, mutatis mutandis, to Subcutaneous Product;

(iv) the parties would share all Global Development Costs (mutatis mutandis) incurred after delivery of the Exercise Notice in performing Subcutaneous Global Development Plan activities for the Subcutaneous Indication(s) (“Subcutaneous Global Development Costs”), in accordance with Section 6.1(a), mutatis mutandis, provided that […***…] shall, unless otherwise mutually agreed by the parties in writing, be determined by […***…];

(v) the provisions of Article 2 would apply, mutatis mutandis, to Subcutaneous Product;

(vi) within 30 days following the first achievement (whether by Mundipharma, an Affiliate of Mundipharma or a Sublicensee) of each of the milestone events set forth in the table below, Mundipharma would provide Cidara with written notice of such achievement and pay to Cidara the corresponding non‑refundable, non‑creditable milestone payment set forth in such table, subject to Section 5.4, mutatis mutandis:



Subcutaneous Regulatory Milestone Event	Payment (USD)
1. […***…]	$[…**…]
2. […***…]	$[…**…]


*	Aggregate amount payable for achievement in all Major European Countries.

(vii) Net Sales of all Licensed Products (including Lead Indication Product and Pediatric Licensed Product) and Subcutaneous Product for all indications in the Mundipharma Territory would be aggregated for purposes of the calculation of royalties under Section 5.7 and determination of the achievement of Commercial Milestone Events under Section 5.6.

(viii) except as otherwise set forth in this Section 4.4(c), Mundipharma would not have any other obligations to pay Cidara or any of its Affiliates any additional amounts pursuant to the Subcutaneous Product Amendment, including any upfront payments or any development, regulatory or commercialization milestone payments.

If Mundipharma exercises the Subcutaneous Product Option as set forth above, the parties shall negotiate in good faith for up to […***…] (as such period may be extended by mutual written agreement of the parties, the “Subcutaneous Negotiation Period”) with the objective of entering into the Subcutaneous Product Amendment before expiration of the Subcutaneous Negotiation Period. The Subcutaneous Product Amendment would contain other appropriate and commercially reasonable terms, provided that, except as otherwise expressly set forth in the preceding subparagraphs (i) through (viii) of this Section 4.4(c), the general expectation of the parties is that the terms and conditions of this Agreement would apply to such Subcutaneous

License Expansion, mutatis mutandis, to the same extent as they apply to the Lead Indication Product and the Pediatric Licensed Product for the Lead Indications.

(d) Failure to Exercise Subcutaneous Product Option or to Execute Subcutaneous Product Amendment. If Mundipharma fails to deliver an Exercise Notice prior to expiration of the Subcutaneous Product Option Period, or if Mundipharma delivers an Exercise Notice prior to expiration of the Subcutaneous Product Option Period and the parties engage in negotiations of a Subcutaneous Product Amendment but are unable to conclude such Subcutaneous Product Amendment prior to expiration of the Subcutaneous Negotiation Period, then Cidara shall be free to develop, register and commercialize Subcutaneous Product throughout the world, and to grant licenses to one or more Third Parties to do so, without obligation to Mundipharma; provided, however, that if the parties had engaged in negotiations of a Subcutaneous Product Amendment but were unable to conclude such Subcutaneous Product Amendment prior to expiration of the Subcutaneous Negotiation Period, then, during the […***…] period commencing upon expiration of the Subcutaneous Negotiation Period, Cidara and its Affiliates shall not […***…].

(e) Cidara Launch of Subcutaneous Product in Mundipharma Territory. If the Subcutaneous Product is launched by Cidara, any of its Affiliates or Third Party licensees in any country within the Mundipharma Territory, then […***…], and, […***…], Net Sales of such Licensed Product in such country are […***…], […***…] in accordance with this Section 4.4(e). For purposes of this Section 4.4(e), “Independent Factor” shall mean […***…]. Subject to the preceding provisions of this Section 4.4(e), on a country-by-country basis, […***…].

The […***…] pursuant to this Section 4.4(e) shall be calculated as follows:

[…***…]

Where: (A) […***…]; (B) […***…]; (C) […***…]; and (D) […***…].

Notwithstanding the foregoing:

(x) if […***…], there shall be […***…];

(y) Mundipharma shall […***…] under this Section 4.4(e) if […***…]; and

(z) the […***…].

[…***…]

4.5 Option for Other Products.

(a) Other Product Option Grant. Mundipharma acknowledges that, as of the Effective Date, the License granted to Mundipharma under this Agreement excludes any rights with respect to any Product in a formulation for non-intravenous and non-subcutaneous administration – i.e., a Product that is neither a Licensed Product nor a Subcutaneous Product (on a formulation for other administration-by-formulation for other administration basis, an “Other Product”). Subject to the terms and conditions of this Section 4.5, Cidara hereby grants to Mundipharma the exclusive option, exercisable only one time per Other Product and solely during

the Other Product Option Period for each Other Product in accordance with Section 4.5(c), to expand the License to include such Other Product (each, an “Other Product Option”) on the terms and conditions of Section 4.4(c), which shall apply mutatis mutandis to such Other Product and Other Product Option, except as expressly provided in Section 4.5(c). During the Other Product Option Period for an Other Product and, if Mundipharma exercises the Other Product Option for such Other Product prior to expiration of the applicable Other Product Option in accordance with Section 4.4(c), mutatis mutandis, during the Other Product Negotiation Period, mutatis mutandis, for such Other Product, Cidara and its Affiliates shall not grant, or offer to grant, any Third Party any license under Cidara Technology (mutatis mutandis with respect to the applicable Other Product) or Cidara’s interest in Joint Technology (mutatis mutandis with respect to the applicable Other Product), to develop, register, use, sell, have sold, offer for sale or import such Other Product in the Field in the Mundipharma Territory, or any option or other right to obtain such license, or otherwise restrict or encumber Mundipharma’s rights and ability to expand the License to include such Other Product; provided, however, that the foregoing shall not be construed: (i) to prevent or restrict Cidara and its Affiliates from contracting with Third Party contract service providers to perform development activities with respect to such Other Product on behalf of Cidara or its Affiliates anywhere in the world, subject to Section 3.1(b)(vi) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix; or (ii) transferring or selling all or substantially all of Cidara’s business related to Compound and Product to a Third Party, whether by merger, sale of stock, sale of assets or otherwise, in conjunction with the assignment of this Agreement and all of Cidara’s rights and obligations hereunder, to a Third Party in accordance with Section 13.7.

(b) Cidara Development of Other Product During Other Product Option Period. On an Other Product-by-Other Product basis, during the Other Product Option Period for an Other Product, Cidara may, but is not obligated to, develop such Other Product for one or more indications in the Field throughout the world, subject to Section 3.1(b)(vi) and, if applicable, Section 3.1(f) and the JSC Dispute Resolution Matrix. Cidara shall keep Mundipharma reasonably and regularly informed, primarily via the JSC or JDC, of the plans for, and the status, progress and results of, development activities with respect to such Other Product and regulatory activities related thereto. In addition, Cidara shall provide to Mundipharma (i) top-line data from any clinical trial of such Other Product that is completed during the applicable Other Product Option Period, promptly following the first availability thereof, (ii) true and complete copies of all final reports of any GLP Study or clinical trial of such Other Product conducted by or on behalf of Cidara or Cidara-Controlled Affiliates that are received by Cidara or Cidara-Controlled Affiliates during the applicable Other Product Option Period, and (iii) copies of written advice received by Cidara or Cidara-Controlled Affiliates from, and copies of Product Filings (including INDs) with, Regulatory Authorities regarding the development and Regulatory Approval of such Other Product. No later than […***…] before[…***…] (in either case, an “Other Product Efficacy Trial” of the applicable Other Product), Cidara shall provide Mundipharma with written notice thereof and a summary of […***…] (each, an “Other Product Efficacy Trial Notice”).

(c) Other Product Option Exercise; Other Product Amendment. Subject to the terms and conditions of this Agreement, on an Other Product-by-Other Product basis, Mundipharma may exercise the Other Product Option for an Other Product at any time (but only

one time) during the applicable Other Product Option Period by delivering written notice of such exercise (“Other Product Exercise Notice”) to Cidara; provided that if, and only if, the parties agree to develop such Other Product for […***…], the expansion of the License to include the applicable Other Product […***…] shall become effective only upon payment in full of an Other Product option payment determined in accordance with Section 4.4(c)(ii), mutatis mutandis (“Other Product Option Payment”). Promptly following delivery of the Other Product Exercise Notice for an Other Product, the parties shall negotiate in good faith a written amendment to this Agreement for such Other Product (an “Other Product Amendment”) to which an initial Other Global Development Plan and an initial Other Mundipharma Territory Plan for such Other Product would be attached as exhibits, and which would include, without limitation, the provisions described in Sections 4.4(c)(i) through 4.4(c)(viii) and the final paragraph of Section 4.4(c) (in each case, mutatis mutandis); provided, however, that […***…]. If the parties agree to develop such Other Product for any such New Indication (a “New Other Product Indication”), […***…].

(d) Failure to Exercise Other Product Option or to Execute Other Product Amendment. Section 4.4(d) shall apply, mutatis mutandis, to each Other Product.

(e) Cidara Launch of Other Product in Mundipharma Territory. For clarity, Section 4.4(e), mutatis mutandis, shall apply to any Other Product.

4.6 Right of First Negotiation for Anti-Fungal Products. During the period beginning on the Effective Date and expiring on the seventh (7^th) anniversary of First Commercial Sale of Licensed Product in the Mundipharma Territory (the “Anti-Fungal ROFN Term”), if either party desires to seek a Third Party Licensee (defined below) of the right to commercialize any Anti-Fungal Product Controlled by such party or in the case of Mundipharma, its Affiliates, or in the case of Cidara, Cidara-Controlled Affiliates (the “Licensing Party”) in the other party’s Territory, then, subject to Section 13.7(a)(iii) hereof, the Licensing Party shall provide the other party with written notice thereof and hereby grants the other party the exclusive right of first negotiation, exercisable only one time per Anti-Fungal Product and solely during the applicable Anti-Fungal Product ROFN Exercise Period, to obtain an exclusive license with respect to such Anti-Fungal Product in the other party’s Territory (each, an “Anti-Fungal Product ROFN”) in accordance with this Section 4.6. For purposes of this Section 4.6, “Third Party Licensee” means a Third Party to which a party proposes to grant a license to commercialize the applicable Anti-Fungal Product that includes the right to book sales of such Anti-Fungal Product. With respect to each such Anti-Fungal Product for which a party desires to seek a Third Party Licensee in the other party’s Territory during the Anti-Fungal ROFN Term, the other party shall, within […***…] after

receipt of notice thereof from the Licensing Party (the “Anti-Fungal Product ROFN Exercise Period”), notify the Licensing Party in writing either that (a) the other party desires to exercise its Anti-Fungal Product ROFN for such Anti-Fungal Product or (b) the other party does not wish to exercise and therefore rejects such Anti-Fungal Product ROFN. If the other party notifies the Licensing Party within such Anti-Fungal Product ROFN Exercise Period that the other party desires to exercise such Anti-Fungal Product ROFN, the parties shall negotiate exclusively and in good faith for up to […***…] from such notification regarding the terms pursuant to which the Licensing Party would grant the other party such license in the other party’s Territory. Failure by the other party to give notice of its interest or lack of interest in exercising an Anti-Fungal Product ROFN within the applicable Anti-Fungal Product ROFN Exercise Period shall be deemed to constitute a waiver by the other party of such Anti-Fungal Product ROFN. During the applicable Anti-Fungal Product ROFN Exercise Period with respect to an Anti-Fungal Product and, if the other party exercises its Anti-Fungal Product ROFN with respect to such Anti-Fungal Product within such Anti-Fungal Product ROFN Exercise Period, during the applicable exclusive […***…] negotiation period, the Licensing Party shall not offer to, or grant, any Third Party any option, license or other right to commercialize such Anti-Fungal Product in the other party’s Territory. If the other party waives or is deemed to have waived its Anti-Fungal Product ROFN with respect to an Anti-Fungal Product, or if the parties fail to enter into a definitive license agreement with respect to such Anti-Fungal Product in the other party’s Territory within such […***…] negotiation period, then the Licensing Party shall be free to license such Anti-Fungal Product to one or more Third Parties in the other party’s Territory and shall have no further obligation to the other party with respect to such Anti-Fungal Product. Effective as of the expiration of the Anti-Fungal ROFN Term, this Section 4.6 shall terminate and be of no further force or effect.

4.7 Development Diligence. Mundipharma shall use Commercially Reasonable Efforts to conduct Mundipharma Territory-Specific development activities with respect to Lead Indication Product in the Lead Indications in the Mundipharma Territory as are necessary to obtain and maintain Regulatory Approval for Lead Indication Product in the Lead Indications in each of the Major Markets, including the development of the Pediatric Licensing Product; provided that, for clarity, Mundipharma shall not be under any obligation to conduct any development activities that are solely for obtaining or maintaining Regulatory Approval in China for the Lead Indication Product or the Pediatric Licensed Product in the Prophylaxis Indication.

4.8 Regulatory Activities in the Mundipharma Territory.

(a) Product Filings. Mundipharma shall be solely responsible for preparing, filing, obtaining and maintaining all Product Filings for Licensed Products (including Pediatric Licensed Product) in the Mundipharma Territory, and subject to Section 4.10, at Mundipharma’s sole expense; provided, however, that (i) Cidara shall be solely responsible for preparing, filing, obtaining and maintaining all INDs for the Lead Indication Trials in the Mundipharma Territory at Cidara’s sole expense, (ii) Cidara shall be the sole holder of such INDs, and (iii) Cidara shall provide to Mundipharma (A) a copy of each such IND, (B) copies of all draft material communications to the applicable Regulatory Authorities in connection with such INDs for review and comment by Mundipharma reasonably in advance of submission to such Regulatory Authorities, and (C) copies of all communications received by Cidara or its Affiliates from such Regulatory Authorities in connection therewith.

(b) Subject to Section 4.8(a), Mundipharma shall be the sole holder of all Product Filings for Licensed Products in the Mundipharma Territory, provided that Mundipharma shall provide to Cidara for review and comment reasonably in advance of submission to such Regulatory Authorities copies of drafts of INDs and those portions of Modules 1 and 2 of MAAs (together with English translations, if required) proposed to be filed with the applicable Regulatory Authorities in the Major Markets which differ from the latest draft of the NDA or the NDA as filed by Cidara, as applicable, for the same Licensed Product in the US. Mundipharma shall provide to Cidara (A) copies of INDs and of Modules 1 and 2 of MAAs as filed with Regulatory Authorities in the Major Markets, and (B) copies of all draft material communications to the applicable Regulatory Authorities in the Major Markets in connection with such INDs and Modules 1 and 2 of MAAs for review and comment by Cidara reasonably in advance of submission of such communications to such Regulatory Authorities. Mundipharma shall promptly provide Cidara with copies, and English summary descriptions, of all material documents, information and correspondence received from any Regulatory Authority in the Major Markets in the Mundipharma Territory relating to Licensed Product and, at Cidara’s reasonable request and expense, copies of any other documents, reports and communications from or to any such Regulatory Authority relating to Licensed Product in the Major Markets.

(c) Regulatory Dossier Development Plan. Within six (6) months of the Effective Date, the parties shall negotiate in good faith to agree a regulatory registration dossier development plan comprising the parties’ plans and timelines for the authoring, co-ordination and submission of MAAs to the FDA, EMA and NMPA, and the coordination of communications with a Regulatory Authority in the Mundipharma Territory with which both Mundipharma has commenced pre-MAA submission communications and Cidara is communicating in relation to an IND for a Lead Indication Trial (the “Regulatory Dossier Development Plan”).

(d) Orphan Drug Designation. Mundipharma shall be solely responsible for preparing, filing, obtaining and maintaining any orphan drug designation for Licensed Product in the Mundipharma Territory, including deciding whether or not such filing(s) will be submitted in any particular country or regulatory jurisdiction. Mundipharma shall provide Cidara with copies of any such orphan drug designation filings. Cidara shall provide to Mundipharma reasonable cooperation and informal, non-financial assistance in connection with any such orphan drug designation, including (in editable format wherever possible): (i) all documentation and other materials submitted by Cidara to the EMA prior to the Effective Date regarding orphan drug designation in respect of the Licensed Product; and (ii) any Data generated by or on behalf of Cidara subsequent to the submission of such documentation and materials to the EMA that is necessary or useful for preparing, filing, obtaining or maintaining any orphan drug designation in the Mundipharma Territory (to the extent not previously provided to Mundipharma).

(e) Costs and Expenses of Regulatory Activities. Except as expressly set forth in this Section 4.8 and in Section 4.10, Mundipharma shall bear all costs and expenses incurred in connection with regulatory activities with respect to Licensed Product in the Mundipharma Territory, and Mundipharma shall have responsibility, and shall be the primary contact, for all interactions with Regulatory Authorities in the Mundipharma Territory with respect to Licensed Product and for all compliance filings, certificates, and, subject to Section 4.15, safety reporting, with respect to Licensed Product in the Mundipharma Territory.

4.9 Regulatory Diligence. Subject to Successful Completion of the applicable Lead Indication Trial, Mundipharma shall use Commercially Reasonable Efforts to obtain and maintain Regulatory Approvals for Lead Indication Product for the corresponding Lead Indication in each of the Major Markets; provided that, for clarity, Mundipharma shall not be under any obligation to obtain or maintain any Regulatory Approvals for the Lead Indication Product or the Pediatric Licensed Product in the Prophylaxis Indication in China.

4.10 CMC Development Activities.

(a) CMC Development Plan. CMC development activities, other than those contained in the Global Development Plan, to be undertaken by or on behalf of Cidara (which may include activities in the Mundipharma Territory that will be conducted by Mundipharma and/or its Affiliates) and which are necessary or useful during the development and/or commercial life of the Licensed Product, including CMC activities intended to improve the manufacturing process(es) for Compound and/or Licensed Product and to reduce the Cost of Goods, shall be contained in a written plan, the initial version of which is attached hereto as Exhibit D (the “CMC Development Plan”). In the event the CMC Development Plan conflicts with the CMC terms set forth in the Global Development Plan, the terms in the Global Development Plan shall prevail.

(b) Conduct of the CMC Development Plan. Cidara shall use Commercially Reasonable Efforts to conduct, or have conducted, the CMC Development Plan in accordance with the budgeted costs and timelines. Upon Cidara’s reasonable request, Mundipharma shall provide reasonable cooperation and informal, non-financial (other than as specified in Section 4.10(e) and Section 5.3 below) assistance to Cidara in connection with Cidara’s management and execution of the CMC Development Plan. Each party shall keep the JMC regularly informed of the status, progress and results of all CMC Development Plan activities conducted by it or on its behalf, and shall discuss in good faith, and attempt to reach consensus regarding, any proposed modification to the CMC Development Plan.

(c) CMC Cost of Goods Reductions. Cidara and Mundipharma shall use Commercially Reasonable Efforts to collaborate to reduce the Cost of Goods to USD $[…***…] per naked vial of Lead Indication Product by […***…].

(d) Change Control. Within six (6) months of the Effective Date, the parties shall negotiate and agree a written change control procedure for the management, cost, discussion and agreement (if required) of any amendment, variation or addition to the CMC-related portions of Regulatory Approvals for the Licensed Product in the Field in the Mundipharma Territory that is proposed by either party or that is requested by any Regulatory Authority in the Mundipharma Territory; provided that after the parties have executed a quality agreement in accordance with the principles as set forth in the Key Supply Terms attached hereto as Exhibit G, any change governed by such quality agreement shall be determined in accordance with the provisions thereof.

(e) Costs and Expenses. Cidara shall:

(i) be solely responsible for all costs and expenses related to the conduct of the CMC Development Plan (excluding those CMC activities included in the Global Development Plan, which shall be subject to Section 6.1(a), and as otherwise subject to the terms relating to costs and expenses agreed as part of a change control procedure agreed pursuant to Section 4.10(d)), provided that Mundipharma shall contribute to the costs of the conduct of the CMC Development Plan by payment of Development Milestone Payment 1 pursuant to Section 5.3; and

(ii) provide (and use Commercially Reasonable Efforts to procure that its CMOs for Licensed Product provide) Mundipharma, at Mundipharma’s reasonable request, with reasonable cooperation and non-financial assistance in connection with CMC regulatory matters arising in the Mundipharma Territory prior to and following the first Regulatory Approval in the Mundipharma Territory, which assistance may include facilitating direct communication between Mundipharma and Third Party contractors of Cidara. After the first Regulatory Approval of Licensed Product in the Mundipharma Territory, Cidara shall provide up to […***…] FTE hours of assistance by Cidara personnel per year in connection with such CMC regulatory matters free of charge to Mundipharma. In the event that Mundipharma requests assistance after the first Regulatory Approval of Licensed Product in the Mundipharma Territory exceeding […***…] FTE hours per year, Mundipharma shall compensate Cidara in respect of such excess time spent in accordance with a reasonable hourly rate to be mutually agreed by the parties. If at any time prior to the first Regulatory Approval for Licensed Product in the Mundipharma Territory, Cidara becomes concerned that the level of assistance being requested by Mundipharma from Cidara personnel is excessively burdensome on Cidara, upon the request of Cidara, the matter shall be referred to the JDC (prior to the first Regulatory Approval of Licensed Product in the Mundipharma Territory) or JMC (after the first Regulatory Approval of Licensed Product in the Mundipharma Territory), and the applicable Subcommittee shall discuss such concerns and attempt in good faith to arrive at a reasonable solution. For any such assistance requested by Mundipharma from Cidara’s CMOs, whether prior to or after the first Regulatory Approval of Licensed Product in the Mundipharma Territory, Mundipharma shall reimburse Cidara for the actual amount invoiced by such CMOs to Cidara for such assistance.

(f) Notwithstanding, the foregoing, the parties may mutually agree that certain activities in the CMC Development Plan be conducted by or on behalf of Mundipharma. In such event, the parties shall update the CMC Development Plan and Mundipharma shall be responsible for such obligations to the same extent as Cidara is obligated hereunder, mutatis mutandis.

4.11 Access to Regulatory Filings.

(a) Mundipharma shall promptly provide to Cidara true and complete copies (including English translations if required) of all ReCoRDs, summaries of product characteristics (SmPCs) and/or national prescribing information for Licensed Product (including Pediatric Licensed Product) as approved by each Regulatory Authority in the Major Markets, and copies of all INDs, master MAAs and Regulatory Approvals for Licensed Product (including Pediatric Licensed Product) in the Mundipharma Territory. Mundipharma hereby grants to Cidara Rights of Reference to all such Product Filings (excluding Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Mundipharma as an Independent Development Party unless the parties have executed an Expanded Licensed Product Amendment with respect to the applicable Expanded Licensed Product) for the purposes of: (i) obtaining and maintaining Regulatory Approvals for Licensed Product (including Pediatric Licensed Product) in the Cidara Territory, subject to Section 2.3; (ii) to the extent Mundipharma or any of its Affiliates is manufacturing, or

having its CMO manufacture, Compound or Licensed Product, conducting or having conducted CMC activities in relation to Compound or Licensed Product (including Pediatric Licensed Product); (iii) to the extent Mundipharma or any of its Affiliates is manufacturing, or having its CMO manufacture, Compound or Licensed Product, the manufacture of Compound or Licensed Product (including Pediatric Licensed Product) for use or distribution anywhere in the world, subject to Section 2.7; and (iv) complying with applicable pharmacovigilance and other regulatory requirements with respect to Product in the Cidara Territory. For clarity, Cidara shall not have Rights of Reference to such Product Filings for Licensed Product for the purposes of obtaining or maintaining Regulatory Approvals for Product that is not Licensed Product, except that Cidara shall have such Rights of Reference to Data regarding Pediatric Licensed Product that is contained in such Product Filings for the purposes of obtaining or maintaining Regulatory Approvals for Product that is not Licensed Product.

(b) Cidara shall promptly provide to Mundipharma true and complete copies of all Product Filings for Licensed Product (including Pediatric Licensed Product) in the Cidara Territory. Subject to Section 5.3, Cidara hereby grants to Mundipharma the Rights of Reference to all such Product Filings (excluding Expanded Licensed Product Clinical Efficacy Data generated by or on behalf of Cidara unless the parties have executed an Expanded Licensed Product Amendment with respect to the applicable Expanded Licensed Product) for the purposes of: (i) obtaining and maintaining Regulatory Approvals for Licensed Product (including Pediatric Licensed Product) in the Mundipharma Territory, subject to Section 2.5; (ii) conducting or having conducted CMC activities in relation to Licensed Product (including Pediatric Licensed Product); and (iii) complying with applicable pharmacovigilance and other regulatory requirements with respect to Licensed Product (including Pediatric Licensed Product) in the Mundipharma Territory.

(c) Each party shall, promptly upon request of the other party, file with applicable Regulatory Authorities such letters of authorization, access or cross-reference as may be necessary to accomplish the intent of this Section 4.11, which cooperation shall include the provision to Mundipharma by Cidara of the necessary certificates of pharmaceutical product, ancillary documents and supporting information (e.g., on reference pricing) required or requested by a Regulatory Authority in the Mundipharma Territory.

4.12 Regulatory Cooperation.

(a) Each party shall:

(i) use Commercially Reasonable Efforts to provide the other party with all reasonable cooperation and informal, non-financial assistance and take all actions reasonably requested by such other party, without changing the allocation of responsibilities set forth in this Article 4, that are necessary or desirable to enable: (i) Mundipharma to obtain and maintain Regulatory Approvals in the Mundipharma Territory for Licensed Product (including the Pediatric Licensed Product) for the Lead Indications and Expanded Licensed Products that are the subject of Expanded Licensed Product Amendments; and (ii) Cidara to obtain and maintain Regulatory Approvals in the Cidara Territory for Licensed Product (including the Pediatric Licensed Product) for the Lead Indications and Expanded Licensed Products that are the subject of Expanded Licensed Product Amendments;

(ii) to cooperate with any inspection by the FDA, EMA, NMPA or other Regulatory Authority relating to Licensed Product (including Pediatric Licensed Product), including, but not limited to, any inspection prior to approval of an application for Regulatory Approval for Licensed Product (including Pediatric Licensed Product); and

(iii) in a timely manner keep the JSC and JDC reasonably and regularly informed of the status, progress and results of regulatory activities in relation to Licensed Product (including the Pediatric Licensed Product) in the Field in its respective Territory.

(b) Amendments to Regulatory Approvals. Within six (6) months of the Effective Date, the parties shall negotiate and agree on procedures for the management, discussion and agreement (if required) of any amendment, variation or addition to Product Filings and Regulatory Approvals for the Licensed Product in the Field in the Mundipharma Territory (excluding the CMC-related portions thereof, changes to which shall be governed by Section 4.10(d)) that is proposed by either party or that is requested by any Regulatory Authority in the Mundipharma Territory, including without limitation any labelling- or safety-related changes.

4.13 Compliance. In conducting any activity pursuant to this Article 4, each party shall comply with all Applicable Laws, including, as applicable, GLP, GCP, GMP and GVP.

4.14 Records. In conformity with standard pharmaceutical and biotechnology industry practices and the terms and conditions of this Agreement, each party shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data (including Data) with respect to all development and CMC activities of Licensed Product in the Field. Such records shall fully and properly reflect all work done and results achieved in the performance of the development and CMC activities in good scientific manner appropriate for regulatory and patent purposes. Each party shall document all GLP Studies and clinical trials in formal written study records according to Applicable Law, including applicable national and international guidelines such as ICH, GMP, GCP, GLP and GVP. Each Party may review such records (including, to the extent permitted by applicable data privacy laws, clinical study reports and case report forms) maintained by the other party at reasonable times, and upon reasonable notice, to obtain access to the original records to the extent such party has a license to use the Information, Data or Inventions contained in such records pursuant to the terms of this Agreement.

4.15 Global Safety Database; Pharmacovigilance; Adverse Event Reporting.

(a) Pharmacovigilance Procedures. Prior to the execution of a pharmacovigilance agreement regarding Licensed Product (“Pharmacovigilance Agreement”), the parties shall coordinate their pharmacovigilance procedures in connection with the development of the Licensed Product, and Cidara shall submit to Regulatory Authorities in the Mundipharma Territory all safety information and reporting in relation to the Lead Indication Trials in a manner that meets reporting requirements under Applicable Laws in the Mundipharma Territory. Mundipharma shall not conduct any development activities, or engage any Third Party contractor to perform any development activities on its behalf, prior to the execution of the Pharmacovigilance Agreement.

(b) Pharmacovigilance Agreement. Within six (6) months of the Effective Date and in any event prior to initiation of any development activities by Mundipharma, the parties shall negotiate in good faith and enter into a Pharmacovigilance Agreement, which shall include mutually acceptable procedures governing the collection, investigation, reporting, and exchange of information concerning adverse drug reactions/experiences, pregnancy reports and any other information concerning the safety of the Licensed Product, sufficient to permit each party to comply with its regulatory and other legal obligations within the applicable timeframes. The terms and conditions of the Pharmacovigilance Agreement shall be in accordance with U.S., EU and ICH guidelines, except where said guidelines may conflict with existing local regulatory or safety reporting requirements, in which case local reporting requirements shall prevail.

(c) Responsibility. The Pharmacovigilance Agreement, shall specify that, during the Term, each party shall, in its respective Territory, be responsible for monitoring all clinical experiences with respect to Licensed Product in the course of its own Licensed Product development activities. The parties respective responsibilities regarding the following shall also be set forth in the Pharmacovigilance Agreement: (i) filing all required reports with respect thereto (including quality complaints, adverse events and safety data); and (ii) responding to safety issues and to all associated requests of Regulatory Authorities relating to Licensed Product; provided that Cidara shall be responsible for all monitoring and reporting obligations in respect of the Lead Indication Trials, including any reporting required to the appropriate Regulatory Authorities in the Mundipharma Territory.

(d) Global Safety Database, Signaling, Aggregate Reporting and Labelling. As between the parties, Cidara will hold, solely own and be solely responsible for maintaining the global safety database for Licensed Product, provisions concerning which shall be included in the Pharmacovigilance Agreement. In addition, Cidara shall be responsible for the preparation and maintenance of the global developmental safety update reports, periodic safety update reports, risk management plans, signal detection activities, and the company core data sheet in respect of the Licensed Product. Pursuant to the terms of the Pharmacovigilance Agreement, Mundipharma will collaborate with Cidara in respect of signaling, aggregate reporting and labelling activities.

(e) Qualified Person for Pharmacovigilance and Pharmacovigilance System Master File. Subject to the terms of the Pharmacovigilance Agreement, Mundipharma shall have a European Economic Area Qualified Person for Pharmacovigilance, and shall develop and maintain the pharmacovigilance system master file. Cidara shall provide reasonable cooperation and informal, non-financial assistance in connection with the same, including the provision of all relevant pharmacovigilance information for inclusion in the pharmacovigilance system master file. In particular, Cidara shall provide to Mundipharma at least on a quarterly basis a summary report of serious adverse events, aggregate reports (e.g., DSURs, PSURs, RMPs, all as defined by the EMA), investigator brochures and any updates to the same.

(f) Adverse Event and other Regulatory Reporting. As between the parties, following execution of the Pharmacovigilance Agreement: (i) Mundipharma shall be responsible, at its own cost and expense, for the timely reporting of all adverse drug reactions/experiences, product quality complaints and safety data relating to Licensed Product to the appropriate Regulatory Authorities in the Mundipharma Territory (except with respect to any of the foregoing arising in the Lead Indication Trials, which Cidara shall be responsible for reporting to the appropriate Regulatory Authorities in the Mundipharma Territory); and (ii) Cidara shall be responsible, at its own cost and expense, for reporting all adverse drug reactions/experiences, product quality complaints and product safety data relating to Licensed Product to the appropriate Regulatory Authorities in the Cidara Territory; in each case ((i) and (ii)) in accordance with Applicable Laws of the relevant countries and Regulatory Authorities. Each party shall use Commercially Reasonable Efforts to ensure that its Affiliates, licensees and Sublicensees comply with such reporting obligations.

(g) Audits and Inspections. Subject to the terms of the Pharmacovigilance Agreement: (i) either party may audit relevant elements of the other party’s pharmacovigilance system to verify compliance with such party’s pharmacovigilance obligations; and (ii) if either party is subject to inspection of their pharmacovigilance system by a Regulatory Authority, the parties will collaborate in preparing for inspection and addressing any inspection questions and findings, detail of such collaboration to be contained in the Pharmacovigilance Agreement.

4.16 Commercialization in the Mundipharma Territory.

(a) Subject to the terms and conditions of this Agreement, Mundipharma shall control and be solely responsible, at its expense, for marketing, promotion and other commercialization of Licensed Product in the Field in the Mundipharma Territory, including obtaining and maintaining pricing and reimbursement Regulatory Approvals, conducting health economic outcomes research and market research, determining launch sequencing and, subject to Mundipharma’s compliance with its diligence obligations under this Agreement, deciding whether or not to launch in a particular market.

(b) Subject to obtaining Regulatory Approval for the Lead Indication Product in a Lead Indication in a Major Market, Mundipharma shall use Commercially Reasonable Efforts to commercialise the Lead Indication Product for the applicable Lead Indication in such Major Market.

4.17 Named Patient Supply. Prior to the first NDA approval for Licensed Product in the U.S., neither party shall support any named patient program for Licensed Product in such party’s Territory without prior JSC approval, and any such proposed named patient program of a party shall always require unanimous approval of the JSC without resort to the dispute resolution provisions set forth in Section 3.1(f). After the first NDA approval for Licensed Product in the U.S., each party may support named patient programs for Licensed Product in such party’s Territory subject only to discussion by the JSC.

4.18 Manufacturing and Supply.

(a) General. Subject to the terms and conditions of this Agreement and any Commercial Supply Agreement, Cidara shall sell and supply, or cause to be supplied, to Mundipharma, and Mundipharma shall purchase from Cidara: (i) Mundipharma’s, its Affiliates’ and its and their Sublicensees requirements of Licensed Product for clinical trials and other development and registration activities in the Mundipharma Territory, as described in additional detail in Sections 4.18(b) and 4.18(d); and (ii) Mundipharma’s, its Affiliates’ and its and their Sublicensees requirements of Licensed Product for commercial distribution in the Mundipharma

Territory, as described in additional detail in Sections 0 and 4.18(d). Mundipharma acknowledges that […***…], and that accordingly, except as set forth in Section 4.18(b) and in the Key Supply Terms attached hereto as Exhibit G (in the case of Licensed Product clinical trial material), […***…]. Initially, and until otherwise mutually agreed by the parties in writing, […***…]. The parties may subsequently mutually agree in writing that […***…].

(b) Clinical Supply. Cidara shall manufacture, or have manufactured, and supply, or have supplied, to Mundipharma, Licensed Product in final packaged and labeled form for use in clinical trials and other development and registration activities with respect to Licensed Product in the Mundipharma Territory, in accordance with a clinical supply plan and associated terms governing such supply and purchase, including in relation to (i) shelf life, (ii) lead time, (iii) inspection/acceptance and rejection/defects and latent defects, (iv) warranties, (v) exclusions and limitations of liability, and (vi) indemnities; such plan to be developed and unanimously approved by the JSC, without resort to either party’s final decision-making authority, and to be consistent with, and designed to permit Cidara to comply with its obligations under, Cidara’s corresponding supply agreements with its CMOs (the “Clinical Supply Plan”). In addition, the Clinical Supply Plan shall […***…], and Cidara shall […***…], provided that […***…]; provided, however, that the foregoing provisions of this sentence shall not apply to the extent […***…]. The parties agree that clinical supplies of Licensed Product shall be delivered DAP Incoterms 2010 (named European destination), and Cidara shall be responsible for obtaining any approvals required for the import and/or export of clinical supplies in the Mundipharma Territory.

(c) Commercial Supply. Commencing promptly after the Effective Date, the parties, primarily via the JMC, shall work together in good faith to negotiate commercial supply agreements (which shall include providing Mundipharma with reasonable advance notice of all scheduled meetings and scheduled calls with Cidara CMOs so that Mundipharma has an

opportunity to physically attend such meetings and join such calls, and permitting Mundipharma to review and jointly prepare all drafts of term sheets and agreements, and to conduct quality audits and technical assessments) with Cidara’s selected Third Party CMOs (“Cidara CMO(s)”) for Compound (including Compound starting material) and Licensed Product for clinical use and commercial distribution in the parties’ respective Territories (the “CMO Supply Agreements”). As soon as is reasonably practicable following the Effective Date, the parties shall negotiate in good faith and enter into a separate written commercial supply agreement, pursuant to which, subject to Sections 0 and 4.18(d), Cidara will manufacture, or have manufactured, and supply, or have supplied, to Mundipharma, Licensed Product (including Pediatric Licensed Product) for commercial distribution in the Mundipharma Territory (the “Commercial Supply Agreement”). The Commercial Supply Agreement shall be negotiated in good faith by the parties and shall be on commercially reasonable terms consistent with the terms of this Agreement. In any event, but save as provided in the paragraph below, the provisions of the Commercial Supply Agreement shall be consistent with, and shall be designed to permit Cidara to comply with its obligations under, the corresponding CMO Supply Agreements. Subject to the foregoing, the Commercial Supply Agreement, and, to the extent applicable, the CMO Supply Agreements, shall be negotiated in line with the principles set forth in the Key Supply Terms attached hereto as Exhibit G.

In addition, the Commercial Supply Agreement shall […***…], and Cidara shall […***…], provided that […***…]; provided, however, that the foregoing provisions of this sentence shall not apply to the extent […***…].

(d) Supply Price. The transfer price for Licensed Product supplied by or on behalf of Cidara pursuant to this Agreement, the Clinical Supply Plan or the Commercial Supply Agreement (i) for use in clinical trials and other development and registration activities, including any Excluded Validation Batch, shall be equal to […***…] or (ii) for commercial distribution shall be equal to […***…] (in each case, the “Supply Price”).


5.	PAYMENTS

5.1 Upfront License Payment. Within 10 Business Days of the Effective Date, Mundipharma shall pay to Cidara a non-refundable, non-creditable upfront payment in the amount of USD $30 million (the “Upfront Payment”).

5.2 Global Development Costs. Subject to Section 6.1(a), Cidara and Mundipharma shall share equally (50/50) all Global Development Costs until such time as (a) Mundipharma has

paid or reimbursed an aggregate of $31.207 million of Global Development Costs or (b) all GLP Studies, clinical trials and CMC development activities in the Global Development Plan have been completed or terminated, whichever occurs sooner, and after which time Cidara shall be solely responsible for 100% of Global Development Costs.

5.3 Development Milestone Payments. Within 45 days following the first achievement of each of the milestone events set forth in the table below (each, a “Development Milestone Event”), Cidara shall provide Mundipharma with written notice of such achievement, and Mundipharma shall pay to Cidara the corresponding milestone payment set forth in such table (each, a “Development Milestone Payment”):



Development Milestone Event	Payment (USD)
1. […***…]	$11.145 million
2. Successful Completion of ReSTORE Trial	$[…***…]
3. Successful Completion of ReSPECT Trial	$[…***…]

Cidara shall deliver top-line results of each Lead Indication Trial to Mundipharma within 30 days after the first availability of such top-line results, and within 15 days after such delivery, the JSC shall convene a meeting to discuss such results. Cidara shall deliver a copy of the final report of each Lead Indication Trial within 30 days after the first availability of such report.

For clarity, each Development Milestone Payment shall be payable only once, for the first achievement of the applicable Development Milestone Event. Development Milestone Payment 1 shall be: (a) fully creditable toward the future royalties payable by Mundipharma hereunder until fully credited, provided that such royalties shall not be reduced in any calendar quarter as a result of such credits by more than […***…]%; and (b) refundable, and refunded (to the extent not already credited toward royalties payable hereunder) on the earlier of (i) December 31, 2024 and (ii) the earlier termination of this Agreement by Mundipharma for Cidara’s uncured material breach pursuant to Section 10.2(a)(i) or by Mundipharma for any reason pursuant to Section 10.3. Development Milestone Payments 2 and 3 are non‑creditable and non‑refundable; provided, however, that:

(1) if, after Mundipharma’s payment of Milestone Payment 2 to Cidara, the final report of the ReSTORE Clinical Trial contains results in the assessment of Global Cure at […***…] of subjects who are randomized to Licensed Product compared to subjects who are randomized to intravenous caspofungin, then […***…]; and

(2) if, after Mundipharma’s payment of Milestone Payment 3 to Cidara, the final report of the ReSPECT Clinical Trial contains results in the assessment of Fungal-Free Survival at […***…] of subjects who are randomized to Licensed Product compared to subjects randomized to the standard antimicrobial regimen, then […***…].

Notwithstanding any other provision of this Agreement to the contrary, including paragraphs (1) and (2) above, if Development Milestone Event 2 or Development Milestone Event 3 is not achieved, and the first approval of the first MAA for Licensed Product for the applicable Lead Indication is received in a Major European Country, then Mundipharma shall pay to Cidara an amount equal to […***…]% of the corresponding Development Milestone Payment upon receipt of such first approval of the first MAA for Licensed Product for such Lead Indication in the first Major European Country (except in the event that […***…]) no later than the applicable due date for the Regulatory/Launch Milestone Payment corresponding to the first approval of the first MAA for Licensed Product for such Lead Indication (in addition to paying to Cidara the applicable Regulatory/Launch Milestone Payment).

5.4 Determination of Milestone Payment Amounts for Major European Country Regulatory Milestone Events. For purposes of Regulatory/Launch Milestone Payments under Section 5.5 that correspond to Acceptance for Filing or approval of an MAA for a Licensed Product in the Major European Countries, the following provisions shall apply. For purposes of this Section 5.4, the EMA shall be deemed to be a “Regulatory Authority of Competent Jurisdiction” in a particular Major European Country if, at the relevant time, either: (i) such Major European Country is an EU member state; or (ii) such Major European Country is not an EU member state but, by treaty, agreement, convention or other understanding with the EU or the EMA, the national government or applicable national Regulatory Authority of such Major European Country recognizes the centralized EU MAA filing procedure, or approval of an MAA filed in accordance therewith (as applicable), to the same extent as if such Major European Country were an EU member state.

(a) If the first MAA for Licensed Product in a particular Major European Country that is Accepted for Filing is (i) filed with the applicable national Regulatory Authority in a particular Major European Country, or (ii) approved by such Regulatory Authority, then the applicable Regulatory/Launch Milestone Event shall be deemed to have been achieved in such Major European Country upon such Acceptance for Filing or receipt of notification of approval by such Regulatory Authority, as applicable, and the amount payable upon such achievement shall be equal to 20% of the corresponding Regulatory/Launch Milestone Payment set forth in the table in Section 5.5.

(b) If the first MAA for Licensed Product in a particular Major European Country that is Accepted for Filing by a Regulatory Authority of Competent Jurisdiction is (i) filed with the EMA using the centralized EU filing procedure, or (ii) approved by the European Commission, then the applicable Regulatory/Launch Milestone Event shall be deemed to have been achieved in such Major European Country upon such Acceptance for Filing or receipt of notification of approval by the European Commission, as applicable, and the amount payable upon

such achievement shall be equal to 20% of the corresponding Regulatory/Launch Milestone Payment set forth in the table in Section 5.5.

For clarity, if the applicable Regulatory/Launch Milestone Event is achieved simultaneously in multiple Major European Countries by the filing or approval of the same MAA, then the amount payable upon such achievement shall be determined by multiplying the corresponding Regulatory/Launch Milestone Payment set forth in the table in Section 5.5 by the fraction X/5, where X equals the number Major European Countries in which such Regulatory/Launch Milestone Event is simultaneously achieved. If the applicable Regulatory/Launch Milestone Event is achieved simultaneously in all Major European Countries by the same MAA, then the full amount of the corresponding Regulatory/Launch Payment shall be payable upon such achievement.

5.5 Regulatory and Launch Milestone Payments. Within 45 days following the first achievement (whether by Mundipharma, an Affiliate of Mundipharma or a Sublicensee) of each of the milestone events set forth in the table below by the Lead Indication Product or other Licensed Product (each, a “Regulatory/Launch Milestone Event”), Mundipharma shall provide Cidara with written notice of such achievement and shall pay to Cidara the corresponding non‑refundable, non‑creditable milestone payment set forth in such table (each, a “Regulatory/Launch Milestone Payment”), subject to Section 5.4:



Regulatory/Launch Milestone Event	Payment (USD)
1. […***…]	$[…**…]
2. […***…]	$[…**…]
3. […***…]	$[…**…]
4. […***…]	$[…***…]†
5. […***…]	$[…***…]
6. […***…]	$[…***…]
7. […***…]	$[…***…]
8. […***…]	$[…***…] per country‡


*	Aggregate amount payable for achievement in all Major European Countries.


†	[…***…].


‡	$[…*…] in total if Regulatory/Launch Milestone Event achieved in […*…].

The aggregate Regulatory/Launch Milestone Payment for each of Regulatory/Launch Milestone Event No. 1, Regulatory/Launch Milestone Event No. 2 and Regulatory/Launch Milestone Event No. 3 shall be payable only once but may be payable in multiple payments as specified in Section 5.4. The Regulatory/Launch Milestone Payment for each of Regulatory/Launch Milestone Event No. 4, Regulatory/Launch Milestone Event No. 5, Regulatory/Launch Milestone Event No. 6 and Regulatory/Launch Milestone Event No. 7 shall be payable only once, for the first achievement of the applicable Regulatory/Launch Milestone Event. The Regulatory/Launch Milestone Payment for Regulatory/Launch Milestone Event No. 8 shall be payable once per listed country (i.e., up to a maximum of […***…] times), for the first achievement of the applicable Regulatory/Launch Milestone Event in each listed country.

5.6 Commercialization Milestone Payments. Within 45 days following the end of the calendar year in which each of the events set forth below (each, a “Net Sales Milestone Event”) is first achieved, Mundipharma shall pay to Cidara the corresponding one-time, non‑refundable, non‑creditable milestone payment (each, a “Net Sales Milestone Payment”) set forth below:



Commercialization Milestone Event	Payment (USD)
First calendar year in which aggregate annual Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]
First calendar year in which aggregate Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]
First calendar year in which aggregate annual Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]
First calendar year in which aggregate annual Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]



First calendar year in which aggregate annual Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]
First time aggregate annual Net Sales of all Licensed Products in the Mundipharma Territory equal or exceed $[…***…]	$[…***…]

Each Net Sales Milestone Payment shall be payable only once. Each Net Sales Milestone Payment shall be paid within 45 days of the end of the calendar year in which the corresponding Net Sales Milestone Event is achieved. If multiple Net Sales Milestone Events are achieved in any given calendar year, the Net Sales Milestone Payments corresponding to all of such multiple Net Sales Milestone Events shall be paid within 45 days of the end of such calendar year.

5.7 Royalties. Subject to Sections 5.8 to 5.11 below, Mundipharma shall pay to Cidara running royalties on aggregate annual Net Sales of all Licensed Product by Mundipharma, its Affiliates and Sublicensees in the Mundipharma Territory at the following incremental royalty rates:



Aggregate Annual Net Sales of Licensed Product in the Mundipharma Territory	Royalty Rate
On that portion of aggregate annual Net Sales in a calendar year of all Licensed Products in the Mundipharma Territory less than $[…***…]	[…***…]%
On that portion of aggregate annual Net Sales in a calendar year of all Licensed Products in the Mundipharma Territory greater than $[…*…] but less than $[…*…]	[…***…]%
On that portion of aggregate annual Net Sales in a calendar year of all Licensed Products in the Mundipharma Territory greater than $[…*…] but less than $[…*…]	[…***…]%
On that portion of aggregate annual Net Sales in a calendar year of all Licensed Products in the Mundipharma Territory greater than $[…*…] but less than $[…*…]	[…***…]%
On that portion of aggregate annual Net Sales in a calendar year of all Licensed Products in the Mundipharma Territory greater than $[…***…]	[…***…]%

5.8 Royalty Term. Royalties under Section 5.7 shall be payable on a Licensed Product-by-Licensed Product and country-by-country basis from the First Commercial Sale of a Licensed Product in a country until the latest of: (a) […***…] years from such First Commercial Sale of such Licensed Product in such country; (b) expiration of all Regulatory Exclusivity for such Licensed Product in such country; and (c) expiration of the last-to-expire Valid Claim of the Cidara Patents or Joint Patents that would, in the absence of the License (or, in the case of Joint Patents, in the absence of Mundipharma’s joint ownership interest thereof), be infringed by the

5.9

manufacture, use, sale, offer for sale or import of such Licensed Product in such country (the “Royalty Term”). For clarity: (i) there shall be only one Royalty Term per country for the Lead Indication Product, regardless of the number of indications for which the Lead Indication Product may be approved in such country, and such Royalty Term shall begin on the First Commercial Sale of such Lead Indication Product in such country; and (ii) other than an Expanded Licensed Product described in clause (A) of Section 1.47 (which itself is a new indication of any other Licensed Product, including any other Expanded Licensed Product), there shall be only one Royalty Term per country for each Expanded Licensed Product, regardless of the number of indications for which such Expanded Licensed Product may be approved in such country, and such Royalty Term shall begin on the First Commercial Sale of such Expanded Licensed Product in such country; provided, however, that […***…]; in which case, the Royalty Term for such Expanded Licensed Product in such country shall be […***…]. By way of example only, […***…] (x) shall […***…] for the purposes of this Section 5.8, (y) there shall be […***…], and (z) such […***…] in such country (it being understood that […***…]).

5.10 Consequences of Royalty Term Expiry. On a Licensed Product-by-Licensed Product and country-by-country basis, upon expiration of the Royalty Term for a Licensed Product in a country, Mundipharma’s License with respect to such Licensed Product in such country shall become royalty‑free, fully-paid, irrevocable and perpetual.

5.11 Generic Competition. On a country-by-country basis, if, following the launch of a Generic Product during the Royalty Term for Licensed Products in a country, the […***…] in such country reaches the percentage thresholds specified in Section 5.10(a) to 5.10(e) below, then for the remainder of the Royalty Term for Licensed Products in such country, Mundipharma’s royalty rates then applicable with respect to Net Sales of such Licensed Products in such country (i.e., as set forth in Section 5.7 but as such royalties may have been further reduced pursuant to Section 5.11) shall be reduced as follows.

(a) during any calendar quarter in which […***…] in a country in the Mundipharma Territory is equal to or greater than […***…] ([…***…]%) but less than […***…] percent ([…***…]%), the royalty rates for Licensed Products sold in such country shall be reduced to […***…] percent ([…***…]%) of the royalty rates then applicable;

(b) during any calendar quarter in which […***…] in a country in the Mundipharma Territory is equal to or greater than […***…] percent ([…***…]%) but less than […***…] ([…***…]%), the royalty rates for Licensed Products sold in such country shall be reduced to […***…] ([…***…]%) of the royalty rates then applicable;

(c) during any calendar quarter in which […***…] in a country in the Mundipharma Territory is equal to or greater than […***…] ([…***…]%) but less than […***…] percent ([…***…]%), the royalty rates for Licensed Products sold in such country shall be reduced to […***…] ([…***…]%) of the royalty rates then applicable;

(d) during any calendar quarter in which […***…] in a country in the Mundipharma Territory is equal to or greater than […***…] […***…]%) but less than […***…] percent ([…***…]%), the royalty rates for Licensed Products sold in such country shall be reduced to […***…] ([…***…]%) of the royalty rates then applicable; and

(e) during any calendar quarter in which […***…] in a country in the Mundipharma Territory is equal to or greater than […***…] percent ([…***…]%), the royalty rates for Licensed Products sold in such country shall be reduced to […***…] ([…***…]%) of the royalty rates then applicable.

For the purposes of this Section 5.10, […***…] shall mean […***…].

5.12 Third Party Licenses. In the event that Mundipharma or its Affiliate or Sublicensee (as applicable) is required to obtain one or more licenses under Patents of Third Parties (excluding Sublicensees) that are necessary for the manufacture, use, sale, offer for sale or import of Licensed Product in a country of the Mundipharma Territory (“Third Party Licenses”), […***…]% of the royalties actually paid by Mundipharma or such Affiliate or Sublicensee (as applicable) under such Third Party Licenses with respect to sales of such Licensed Product in such country for a calendar quarter will be creditable against the royalties payable by Mundipharma to Cidara with respect to Net Sales of such Licensed Product in such country for such calendar quarter; provided, however, that in no event will the royalties payable by Mundipharma to Cidara hereunder with respect to Net Sales of such Licensed Product in such country for such calendar quarter be reduced by more than […***…]% as a result of any and all such credits in the aggregate (but any portion of the royalties paid under Third Party Licenses with respect to sales of such Licensed Product in such country that Mundipharma would have been entitled to credit against royalties payable to Cidara in the absence of the foregoing limitation on aggregate credits in any calendar quarter shall be carried over and applied against royalties payable to Cidara in respect of such Licensed Product in any country in subsequent calendar quarters until the full deduction is taken); and provided, further, that Mundipharma will not be entitled to credit any portion of royalties that are paid or payable by Mundipharma or its Affiliate or Sublicensee to any Third Party with respect to sales of a Combination Product in any country by reason of the inclusion in such Combination Product of any Other Active.

5.13 Royalty Floor. In no event shall the effective royalty rate applicable to Net Sales of Licensed Products in a country be reduced by more than an aggregate of […***…] percent ([…***…]%) in any calendar quarter as a result of any and all reductions and credits pursuant to Sections 4.4(e), 5.10 and 5.11 ([…***…]) in the aggregate.


6.	PAYMENT; RECORDS; AUDITS

6.1 Payment; Reports.

(a) Global Development Costs. Within 30 days after the end of each calendar quarter during the performance of the Global Development Plan, each party shall provide to the other a written statement setting forth the Global Development Costs incurred by such first party and its Affiliates during such calendar quarter, such statement to include a reasonably detailed breakdown of the components of such Global Development Costs and the Global Development Plan activities to which such Global Development Costs are attributable (each such statement, a “Cost Report”). For the avoidance of doubt, Mundipharma may not submit a Cost Report to Cidara for Global Development Costs except to the extent the Global Development Plan contemplates Mundipharma incurring such amounts or such amounts have otherwise been approved by the JSC. Following receipt of Mundipharma’s Cost Report, if any, Cidara will provide Mundipharma with a written invoice for Mundipharma’s 50% share of the Global Development Costs for such calendar quarter; provided, however, that from and after such time as Mundipharma has paid or reimbursed an aggregate of $31.207 million of Global Development Costs, Cidara’s obligation to provide Cost Reports and its right to provide invoices to Mundipharma for Global Development Costs shall cease. Within 45 days after delivery of the Cost Report and associated invoice for a calendar quarter, Mundipharma shall pay the invoiced amount to Cidara (less any portion of such amount that Mundipharma disputes in good faith, of which Mundipharma shall promptly notify Cidara). Each party shall respond promptly to the other party’s questions regarding any Cost Report delivered hereunder or reasonable requests for supporting documentation, including, without limitation, copies of agreements or work orders for Global Development Plan activities performed by Third Parties (from which copies such party may redact confidential or proprietary information that is not necessary for the other party to ascertain Global Development Costs).

(b) Royalties. Royalties under Section 5.7 shall be calculated and reported for each calendar quarter and shall be paid within 45 days of the end of the calendar quarter. Each payment of royalties shall be accompanied or preceded by a report of Net Sales in sufficient detail to permit confirmation of the accuracy of the payment made, including, on a Licensed Product-by-Licensed Product and country-by-country basis, the number of each type of Licensed Product sold, gross sales, Net Sales and itemized deductions from gross sales (by major category as set forth in the definition of Net Sales), details of any Net Sales adjustments for any Combination Product, any applicable reductions or adjustments made pursuant to Section 5.8 and/or Section 5.10, details of any royalty credits taken pursuant to Section 5.3 in respect of Development Milestone Payment 1, and Section 5.11 on a Third Party License-by-Third Party License basis, royalties payable, and the exchange rates used, in each case on a Product-by-Product and country-by-country basis.

6.2 Exchange Rate; Manner and Place of Payment. All payment amounts specified in this Agreement are expressed in U.S. dollars, and all payments by Mundipharma to Cidara under this Agreement shall be paid in U.S. dollars. If any currency conversion shall be required in connection with the calculation of amounts payable hereunder, such conversion shall be calculated at the rate of exchange for such currency used throughout Mundipharma’s accounting system in conformity with Accounting Standards for the calendar quarter for which payment is due. All payments owed under this Agreement shall be made by wire transfer to a bank and account designated in writing by Cidara, unless otherwise specified in writing by Cidara.

6.3 Income Tax Withholding and VAT.

(a) Except as set forth herein, each party will pay all taxes (including related interest and penalties) imposed on its share of income, profits or gains arising directly or indirectly from the efforts of, or the receipt of any payment by, such party pursuant to this Agreement.

(b) If any taxes or similar duties, assessments or charges in the nature of a tax due to governmental or tax authorities (including related interest and penalties) (“Taxes”) are required to be withheld by one party (“payor”) from any payment to the other party (“payee”) under this Agreement, the payor shall (i) deduct such Taxes from the payment to the payee, (ii) timely pay such Taxes to the proper governmental or taxing authority, and (iii) send proof of payment to the payee within 30 days following such payment. Any amount actually withheld and remitted by the payor to such governmental or tax authority pursuant to this Section 6.3(b) shall be treated for all purposes of this Agreement as paid to the payee. Mundipharma acknowledges that based on Applicable Law as of the Effective Date no withholding tax is required to be deducted or withheld from payments made by Mundipharma to Cidara pursuant to this Agreement. Subject to Section 6.3(c) below, if the payor makes a payment without deduction for Tax withholding and an amount of Tax should have been withheld from such payment, then the payor shall be entitled to recover the underwithheld Tax by an additional withholding from any amount payable to the payee under this Agreement only if such failure to withhold is solely the fault of the payee (for example, without limitation, where the payor’s failure to properly withhold tax is due to the payee’s provision of incorrect tax information to the payor.

(c) If the payor is required to make a payment to the payee that is subject to a deduction or withholding of Taxes and the obligation to make such deduction or withholding arises or is increased solely as a result of (i) any failure on the part of the payor to comply with Applicable Laws relating to the withholding of Taxes or (ii) the assignment of this Agreement or transfer of any rights or obligations under this Agreement by the payor (a “Withholding Tax Action”), then the payment by the payor in respect of which such deduction or withholding of Taxes is required to be made shall be increased by such amount as will leave the payee in the same net of Tax position it would have been in had the Withholding Tax Action not occurred (it being understood that Taxes that would have been deducted or withheld in accordance with Section 6.3(b) in the absence of a Withholding Tax Action are the payee’s responsibility). Notwithstanding the foregoing, no additional amounts shall be payable by the payor to the payee under this Section 6.3(c) if the payee determines (acting in good faith) that any Taxes arising due to a Withholding Tax Action will be recovered by the payee or will offset the payee’s otherwise payable Taxes for the Tax year in which the Withholding Tax Action occurs.

(d) Notwithstanding anything contained in Section 6.3(a), 6.3(b) or 6.3(c), this Section 6.3(d) shall apply with respect to any value added, sales, use, goods, services, or other similar tax (“Sales Tax”) applicable to any sums payable by one party to the other party pursuant to this Agreement.

(i) All sums expressed to be payable under this Agreement are exclusive of Sales Tax (if applicable).

(ii) If any Sales Tax is payable on or in respect of any supply by any party under this Agreement, the recipient of the supply shall pay the amount of the Sales Tax to the supplier (to the extent that the supplier is liable to account for such Sales Tax to the appropriate tax or governmental authority) in respect of such supply following the receipt of a valid Sales Tax invoice in the appropriate form issued by the supplier in respect of the supply, such Sales Tax to be payable on the later of the due date of the payment for the supply to which such Sales Tax relates and ten (10) Business Days after the receipt by the recipient of the supply of the applicable Sales Tax invoice, and the supplier shall (where it is liable to account for such Sales Tax) timely remit such Sales Tax to the appropriate tax or governmental authority. Each party may propose to the other in writing changes to the payment and invoicing arrangements in relation to the supplied services, with a view to minimising, so far as lawfully and reasonably practicable, costs suffered on account of Sales Tax by that party. If a party receives such a proposal from the other, it will, acting reasonably, consider the proposal and, to the extent that it agrees to the proposal, will provide its reasonable cooperation in implementing it.

(iii) Where a party is required under this Agreement to pay an amount in respect of, or otherwise reimburse, any cost, charge or expense incurred by another party, the first party shall not be required to pay or reimburse any amount in respect of Sales Tax which is recoverable (whether by way of repayment, credit or set off) by the second party, and the second party shall use all reasonable endeavors to seek to minimize irrecoverable Sales Tax.

(iv) If any Sales Tax originally paid by the recipient of the relevant supply for Sales Tax purposes to the supplier in accordance with the terms of this Agreement is in whole or in part subsequently determined (by the applicable tax authority) not to have been chargeable, and the supplier has obtained a refund of such Sales Tax from the relevant tax or governmental authority, the supplier shall pay an amount equal to any such Sales Tax repaid by the relevant tax or governmental authority to the recipient of the relevant supply within ten (10) Business Days of receipt from the tax or governmental authority (whether receipt is by way of repayment, credit or set off).

(e) The parties agree to cooperate with one another and to use reasonable efforts to (I) reduce or eliminate Tax withholding or similar obligations and (II) assist in the claiming of foreign tax credits, refunds, or deductions, in each case, in respect of the payments made by one party to the other party under this Agreement. Without limiting the generality of the foregoing, each party shall (i) upon written request, provide the other with any tax forms and information in such party’s possession (and which it is legally able to provide) that may be reasonably necessary in order for (A) the payor not to withhold Tax, or to withhold Tax at a reduced rate, under an applicable double tax treaty or (B) the payee to obtain the benefit of any present or future applicable double tax treaty, within a reasonable time prior to the date the applicable payment is due, and (ii) provide the other with reasonable assistance to enable the recovery, as permitted by Law, of withholding Taxes, Sales Tax, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the party bearing such Tax or other obligation.

6.4 Audits.

(a) Global Development Cost Audit. During the performance of any Global Development Plan activities and for a period of […***…] years thereafter, each party and its Affiliates shall keep complete and accurate records pertaining to Global Development Costs incurred by it in sufficient detail to permit the other party to confirm the calculation of Global Development Costs (including, in the case of Cidara, the applicable Cost of Goods) and the accuracy of the other party’s invoices delivered to such party pursuant to Section 6.1(a). Each party shall have the right to cause an independent, certified public accountant reasonably acceptable to the other party to audit such records (other than tax returns and records related to tax returns) to confirm the calculation of such Global Development Costs and the accuracy of the other party’s invoices for such Global Development Costs for a period covering not more than the preceding […***…] full years. The audited party may require such accountant to execute a reasonable confidentiality agreement with the audited party prior to commencing the audit. Such audits may be conducted during normal business hours upon reasonable prior written notice to the party to be audited, but no more frequently than once per year. No accounting period of a party shall be subject to audit more than one time pursuant to this Section 6.4(a). Prompt adjustments (including remittances of underpayments or overpayments disclosed by such audit) shall be made by the parties to reflect the results of such audit, and no later than 30 days after the date of the accountant’s audit report. The auditing party shall bear the full cost of such audit unless such audit discloses an overstatement by the audited party of the audited party’s Global Development Costs in any calendar year of […***…]% or more, in which case the audited party shall bear the full cost of such audit. Alternatively, if a party provides notice of exercise of its audit right under this Section 6.4(a), then, at the other party’s written request made within 30 days of such exercise, the parties shall jointly retain an independent, certified public accountant reasonably acceptable to both parties to conduct an audit of both parties’ Global Development Costs for the applicable period, in which case the parties shall share equally (50/50) the cost of such joint audit. Prompt adjustments (including remittances of underpayments or overpayments disclosed by such audit) shall be made by the parties to reflect the results of such audit, and no later than 30 days after the date of the jointly retained, independent accountant’s audit report. If such jointly initiated audit discloses that one party (but not the other party) has overstated its Global Development Costs in any calendar year covered by such audit by […***…]% or more, such party shall reimburse the other party for the 50% share of the joint audit costs that was initially borne by the other party. The results of such audit will be final, absent manifest error.

(b) CMC Development Cost Audit. During the performance of any CMC Development Plan activities and for a period of […***…] years thereafter, each party and its Affiliates shall keep complete and accurate records pertaining to its external costs incurred by it (including any Costs of Goods) in sufficient detail to permit the other party to verify such costs incurred as compared to the budgeted amounts in the CMC Development Plan. Each party shall have the right to cause an independent, certified public accountant reasonably acceptable to the other party to audit such records (other than tax returns and tax records) to verify such costs for a period covering

(c)

not more than the preceding […***…] full years. The audited party may require such accountant to execute a reasonable confidentiality agreement with the audited party prior to commencing the audit. Such audits may be conducted during normal business hours upon reasonable prior written notice to the party to be audited, but no more frequently than once per year. No accounting period of a party shall be subject to audit more than one time pursuant to this Section 6.4(b). The auditing party shall bear the full cost of such audit.

(d) Net Sales Audits. Mundipharma shall keep, and shall cause its Affiliates and Sublicensees to keep, complete and accurate records pertaining to the sale or other disposition of Licensed Products in sufficient detail to permit Cidara to confirm the accuracy of all payments due hereunder, for at least […***…] full calendar years following the end of the calendar year to which they pertain. Cidara shall have the right, once annually, to cause an independent, certified public accountant reasonably acceptable to Mundipharma to audit such records to confirm Net Sales, royalties and the timing of achievement of Net Sales Milestone Events, for a period covering not more than the preceding […***…] full calendar years; provided, however, that Mundipharma shall not be required to provide, and neither the independent accountant nor the Cidara shall be entitled to review or examine, the tax returns or tax records of Mundipharma, its Affiliates of Sublicensees. No audited period shall be subject to audit under this Section 6.4(c) more than once. Such audits may be exercised during normal business hours upon reasonable prior written notice to Mundipharma, but no more frequently than once per year. The auditor will execute a reasonable written confidentiality agreement with Mundipharma and will disclose to Cidara only such information as is reasonably necessary to provide Cidara with information regarding any actual or potential discrepancies between amounts reported and actually paid and amounts payable under this Agreement, and between the reported timing and actual timing of achievement of Net Sales Milestone Events. The auditor will send a copy of the report to Mundipharma at the same time it is sent to Cidara. The report sent to both parties will include the methodology and calculations used to determine the results. If such audit reveals that Mundipharma has failed to accurately report information pursuant to Section 6.1(b) or to make any Net Sales Milestone Payment (or portion thereof) when actually due under this Agreement, then Mundipharma, within 30 days after receipt of the final audit report, shall pay to Cidara any underpaid amounts due under this Agreement, together with interest on such underpaid or late amounts calculated in accordance with Section 6.5. Cidara shall bear the full cost of such audit unless such audit discloses an underpayment by Mundipharma of more than […***…]% of the amount due for any calendar year under this Agreement, in which case Mundipharma shall bear the full cost of such audit. If such audit discloses an overpayment by Mundipharma, then Mundipharma will deduct the amount of such overpayment from amounts otherwise owed to Cidara under this Agreement. The results of such audit will be final, absent manifest error.

6.5 Late Payments. In the event that any payment due under this Agreement is not made when due, simple interest shall accrue on the late payment at a rate per annum that is […***…] basis points (i.e., […***…] percentage points) above the then-current prime rate quoted by Citibank in New York City (or such other rate and source as the parties mutually agree in writing) for the period from the due date for payment until the date of actual payment; provided, however, that

(a) in no event shall such rate exceed the maximum legal annual interest rate;

(b) the payment of such interest shall not limit a party from exercising any other rights it may have as a consequence of the lateness of any payment that it is due; and

(c) The parties may agree that a delay to a payment arising solely due to the parties’ efforts to lawfully reduce Tax or Sales Tax applicable to such payment shall not be a late payment that is subject to this Section 6.5, such agreement not to be unreasonably withheld. Any such agreement shall be in writing and delivered in accordance with the terms of this Agreement.


7.	CONFIDENTIALITY

7.1 Confidential Information. Subject to Section 7.3, “Confidential Information” of a party shall mean any Information or Business Information furnished by or on behalf of such party (the “Disclosing Party”) to the other party (the “Receiving Party”) pursuant to this Agreement or under the Prior CDA, whether in written, oral, visual, electronic or other form. Notwithstanding the foregoing definition, the parties hereby agree that the following information shall be deemed to constitute the “Confidential Information” of each party (without regard to which party initially disclosed such information to the other party), and that each party shall be deemed both a “Receiving Party” and a “Disclosing Party” with respect thereto, for purposes of this Agreement:

(a) the Global Development Plan, the Mundipharma Territory Plan and the CMC Development Plan;

(b) if applicable, in each case, the Expanded Licensed Product Global Development Plan for each Expanded Licensed Product, the Expanded Licensed Product Mundipharma Territory Development Plan for each Expanded Licensed Product, the Subcutaneous Global Development Plan, the Subcutaneous Mundipharma Territory Development Plan, and any plan equivalent to any of the foregoing with respect to an Other Product as contemplated by Section 4.5;

(c) the agenda and minutes of each meeting of the JSC or any Subcommittee (including, in each case, all accompanying documents, exhibits and attachments thereto) and all reports and written disclosures provided by either party to the JSC or any Subcommittee (or to the other party’s representatives on the JSC or any Subcommittee);

(d) any amendment to this Agreement;

(e) Information and Data generated pursuant to any of the plans described in Sections 7.1(a) and 7.1(b);

(f) all written materials provided by either party to […***…] pursuant to Section 3.1(f)(iv); and

(g) all written determinations, recommendations and awards issued by […***…], arbitral tribunal or Independent Expert (including any Expert Forecast) pursuant to this Agreement.

7.2 Obligations of Confidentiality and Non-Use. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the parties, the Receiving Party

7.3

agrees that, during the Term and for seven (7) years thereafter, the Receiving Party shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose, other than as expressly provided for in this Agreement, any Confidential Information of the Disclosing Party. The Receiving Party may use Confidential Information only to the extent required to exercise its rights and fulfil its obligations under this Agreement. The Receiving Party shall use at least the same standard of care as it uses to protect proprietary or confidential information of its own, but no less than reasonable care, to ensure that its, and its Affiliates’, directors, officers, employees, agents, consultants and other representatives (“Representatives”) do not disclose or make any unauthorized use of the Confidential Information. Receiving Party shall be responsible for any failure by its Representatives which, if committed by Receiving Party, would be a breach of this Agreement. The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Confidential Information.

7.4 Exceptions. Confidential Information shall not include any information that the Receiving Party can demonstrate: (a) is, or hereafter becomes, through no act or failure to act on the part of the Receiving Party in breach of this Agreement, generally known or available in the public domain; (b) is known by the Receiving Party at the time of receiving such information, as evidenced by its contemporaneously-maintained written records, with no restrictions on its use or disclosure; (c) is hereafter furnished to the Receiving Party on a non-confidential basis by a Third Party, as a matter of right (i.e., without breaching any obligation such Third Party may have to the Disclosing Party); or (d) is independently discovered or developed by the Receiving Party, independently of the activities undertaken by the Receiving Party pursuant to this Agreement and without the use of, reliance on, or reference to Confidential Information of the Disclosing Party, as evidenced by the Receiving Party’s contemporaneously-maintained written records.

7.5 Authorized Disclosure. Each party may disclose Confidential Information of the other party only as expressly permitted by this Agreement, or if and to the extent such disclosure is:

(a) made by the Receiving Party to a patent authority as may be reasonably necessary for the purposes of filing, prosecuting or enforcing Patents as permitted by this Agreement;

(b) necessary in order to enforce such party’s rights under this Agreement and/or to perform its obligations under this Agreement;

(d) made in response to a valid order of a court of competent jurisdiction or other competent authority, or otherwise required by applicable laws, rules or regulations, or the listing rules of any exchange on which such party’s securities are traded;

(e) necessary in Product Filings that the Receiving Party has the right to file, or holds, as expressly set forth in this Agreement;

(f) to the Receiving Party’s Affiliates, licensees and sublicensees/Sublicensees, potential licensees and sublicensees/Sublicensees, and to the Receiving Party’s and its Affiliates’ Representatives who, in each case, need to know such Confidential Information in order for the Receiving Party to exercise its rights or fulfill its obligations under this Agreement, provided, in each case, that any such Affiliate, actual or potential licensee or sublicensee/Sublicensee, or Representative is bound by obligations of confidentiality and non-use at least as restrictive as those set forth in this Article 7; and

(g) disclosure to Third Parties in connection with due diligence investigations by such Third Parties, and disclosure to potential Third Party investors in confidential financing documents, provided, in each case, that any such Third Party needs to know such Confidential Information and is bound by reasonable obligations of confidentiality and non-use.

Notwithstanding the foregoing, in the event the Receiving Party is required to make a disclosure of the Disclosing Party’s Confidential Information pursuant to Section 7.4(c) or 7.4(d), it will, to the extent practicable and not prohibited by law, (i) give reasonable advance notice to the Disclosing Party of such disclosure, (ii) provide the Disclosing Party with the opportunity to secure confidential treatment of such Confidential Information to be disclosed; (iii) cooperate with any such efforts by the Disclosing Party, at the Disclosing Party’s request and expense, to secure confidential treatment of such Confidential Information; and (iv) disclose only such minimal portion of the Confidential Information as is, on the advice of counsel, required to be disclosed. Disclosure by the Receiving Party of Confidential Information in accordance with any of the foregoing provisions of this Section 7.4 shall not, in and of itself, cause the information so disclosed to cease to be treated as Confidential Information under this Agreement, except to the extent that, by virtue of disclosure by the Receiving Party in full compliance with this Section 7.4, such information becomes generally known or available.

7.6 Confidentiality of this Agreement. Except as otherwise provided in this Article 7, each party agrees not to disclose to any Third Party the terms of this Agreement without the prior written consent of the other party hereto, except that each party may disclose the terms of this Agreement that are otherwise made public as contemplated by Section 7.6 or to the extent such disclosure is permitted under Section 7.4.

7.7 Public Announcements.

(a) The parties have agreed upon the content of a press release which shall be issued by Cidara (or jointly by the parties, if mutually agreed) substantially in the form attached hereto as Exhibit H, the release of which the parties will coordinate in order to accomplish the same promptly upon execution and delivery of this Agreement. Except to the extent already disclosed in a press release or other public communication issued in accordance with this Agreement, no public announcement concerning this Agreement, its subject matter or the transactions described herein shall be made, either directly or indirectly, by either party or its Affiliates, except as may be required by applicable law (including disclosure requirements of the U.S. Securities and Exchange Commission (“SEC”)), judicial order, or stock exchange or quotation system rule without first obtaining the approval of the other party and agreement upon the nature, text and timing of such announcement, which approval and agreement shall not be unreasonably withheld or delayed. The party desiring to make any such voluntary public announcement shall provide the other party with a written copy (including by email) of the proposed announcement in reasonably sufficient time prior to public release to allow the other party to comment upon such announcement, prior to public release. In the case of press releases or other public communications required to be made by law, judicial order or stock exchange or quotation system rule, the party making such press release or public announcement shall provide to the other party a copy of the proposed press release or public announcement in written or electronic form upon such advance notice as is practicable under the circumstances for the purpose of allowing the notified party to review and comment upon such press release or public announcement. Under such circumstances, the releasing party shall not be obligated to delay making any such press release or public communication beyond the time when the same is required to be made. Neither party shall be required to seek the permission of the other party to repeat any information regarding the terms of this Agreement or any amendment hereto that has already been publicly disclosed by such party or by the other party in accordance with this Section 7.6(a); provided that such information remains accurate as of such time and provided the frequency and form of such disclosure are reasonable.

(b) Each party may make public statements regarding this Agreement in response to questions by the press, analysts, investors or those attending industry conferences or financial analyst calls, provided that any such public statement or press release: (i) is not inconsistent with prior public disclosures or public statements made in accordance with Section 7.6(a) or as permitted by Section 7.4; and (ii) does not reveal (A) information regarding the terms of this Agreement that have not previously been disclosed in accordance with Section 7.6(a) or as permitted by Section 7.4 or (B) non‑public information about the other party.

(c) The parties shall coordinate in advance with each other in connection with the filing of this Agreement (including redaction of certain provisions of this Agreement) with the SEC or other governmental agency or any stock exchange on which securities issued by a party or its Affiliate are traded, and neither party shall make any such filing unless the parties have mutually agreed upon the provisions to be redacted (such agreement not to be unreasonably withheld). The party filing this Agreement shall use reasonable efforts to seek and obtain confidential treatment for the provisions of this Agreement that the parties mutually agree to redact from such filing; provided that such party shall retain ultimate discretion to disclose such information to the SEC or any stock exchange or other governmental agency (as the case may be) as such party determines, based on advice of legal counsel, is required to be so disclosed. Except as expressly set forth in this Article 7, neither party (or its Affiliates) shall be obligated to consult with or obtain approval from the other party with respect to any filings with the SEC or any stock exchange or other governmental agency where such filings do not disclose Confidential Information of the other party.

7.8 Scientific Publications. Each party recognizes that publications regarding results of clinical and non-clinical studies carried out under this Agreement and other information regarding Licensed Products (including Expanded Licensed Product), including oral or poster presentations and abstracts (each of the foregoing, a “Publication”), may be beneficial to both parties provided such Publications are subject to reasonable controls to protect Confidential Information. Accordingly, a party shall have the right to review and comment on any Publication prior to submission by the other party. Before a Publication is submitted for publication or disclosure (other than oral presentation materials and abstracts, which are addressed below), the party proposing publication shall deliver a complete copy to the other party at least 21 days prior to submitting the material to a publisher or initiating such other disclosure, and such other party shall review any such material and give its comments to the party proposing publication within 10 days of the delivery of such material to such other party. With respect to oral presentation materials and abstracts, the party proposing publication shall deliver a complete copy to the other party at least 14 days prior to the anticipated date of the presentation, and such other party shall make reasonable efforts to expedite review of such materials and abstracts, and shall return such items as soon as practicable to the party proposing publication with appropriate comments, if any, but in no event later than 10 days from the date of delivery to the non-publishing party. The party seeking to publish or present shall consider in good faith any comments thereto provided by the other party and shall comply with the other party’s request to remove any and all of such other party’s Confidential Information in any such material. In addition, the party seeking to publish or present agrees to delay any submission for publication or other public disclosure for a period of up to an additional 30 days, in the event that the other party can demonstrate a reasonable need for such delay for the purpose of preparing and filing appropriate patent applications. If the other party fails to provide its comments to the party seeking to publish or present within the applicable 10-day period, such other party shall be deemed not to have any comments, and the party seeking to publish or present shall be free to submit for publication or present in accordance with this Section 7.6 after the 21-day period or 14-day period, as applicable, has elapsed (but without waiver of, or prejudice to, any liability of the publishing party for breach of its obligations pursuant to this Article 7).


8.	INTELLECTUAL PROPERTY

8.1 Ownership. As between the parties, Cidara is and shall at all times be the sole and exclusive owner of all right, title and interest in and to the Cidara Technology. Inventorship of Inventions shall be determined in accordance with United States patent laws. Cidara shall solely own all Cidara Inventions. Mundipharma shall solely own all Mundipharma Inventions. The parties shall jointly own all Joint Inventions. Subject to the terms and conditions of this Agreement, and except to the extent that a party has granted the other party an exclusive license under such party’s joint ownership interest in Joint Inventions and Joint Patents, each party shall have the right to practice, and to grant licenses under, such party’s own joint ownership interest in Joint Inventions and Joint Patents without the other party’s consent, and shall have no duty to account to the other party for such practice or license, and each party hereby waives any right it may have under the laws of any country to require such consent or accounting.

8.2 Patent Prosecution and Maintenance. For purposes of this Section 8.2, the terms “prosecution” and “maintenance” (including variations such as “prosecute” and “maintain”) shall mean, with respect to a Patent, the preparation, filing, prosecution (including conducting all correspondence and interactions with any patent office and seeking, conducting and defending all any interferences, inter partes reviews, reissue proceedings, reexaminations, and oppositions and similar proceedings) and maintenance (including payment of any patent annuity fees) of such Patent, as well as re-examinations, reissues, appeals, post grant reviews (PGR), inter partes reviews (IPR) and requests for patent term adjustments, patent term extensions, supplementary protection certificates, or their equivalents with respect to such Patent, together with […***…]. For clarification, “prosecution” and “maintenance” (including variations such as “prosecute” and “maintain”) shall exclude any enforcement action with respect to a Patent, unless such enforcement action[…***…].

(a) Cidara Patents.

(i) Cidara Patents Other Than Cidara General Manufacturing/Formulation Patents.

(1) Cidara shall use Commercially Reasonable Efforts to prosecute and maintain the Patents derived from (x) international application […***…] and/or claiming priority from […***…] and (y) from international application […***…] and/or claiming priority from […***…], using counsel of its own choice, […***…]; provided, however, that the foregoing shall not be construed to prohibit ordinary course prosecution actions, including amending, or agreeing to amend, the scope of a claim of a pending patent application within the foregoing, or filing a terminal disclaimer with respect to or abandoning a claim of a pending patent application within the foregoing in favor of a related claim contained in another patent application filed by Cidara, subject to the remainder of this Section 8.2(a)(i).

(2) With respect to other Cidara Patents (excluding Patents referenced in Section 8.2(a)(i)(1) and the Cidara General Manufacturing/Formulation Patents), Cidara shall have the first right, but not the obligation, to prosecute and maintain in the Mundipharma Territory, using counsel of its own choice, […***…].

(3) Cidara shall keep Mundipharma reasonably informed of progress with regard to the prosecution and maintenance of all Cidara Patents (excluding the Cidara General Manufacturing/Formulation Patents) in the Mundipharma Territory, including any requests for patent term adjustments, patent term extensions, supplementary protection certificates or their equivalents. In addition, Cidara shall promptly provide Mundipharma with drafts of all proposed substantive filings and correspondence to any patent authority to the extent related to such Cidara Patents in the Mundipharma Territory for Mundipharma’s review and comment prior to the submission of such proposed filings and correspondence. Cidara shall consider in good faith Mundipharma’s comments related to such Cidara Patents prior to submitting such filings and correspondence, provided that Mundipharma provides such comments within 30 days (or a shorter period reasonably designated by Cidara if 30 days is not practicable given the filing deadline) of receiving the draft filings and correspondence from Cidara.

(4) In the event that Cidara seeks to abandon or cease the prosecution or maintenance of any Cidara Patent covered by Section 8.2(a)(i)(2) in the Mundipharma Territory (without initiation of the prosecution and maintenance of a substitution therefor), Cidara shall provide reasonable prior written notice to Mundipharma of such intention to abandon or cease such prosecution or maintenance (which notice shall be given no later than 30 days prior to the next deadline for any action that must be taken with respect to any such Cidara Patent in the relevant patent office in the Mundipharma Territory). […***…].

(ii) Cidara General Manufacturing/Formulation Patents. Cidara shall have the sole right, but not the obligation, to prosecute and maintain the Cidara General Manufacturing/Formulation Patents in the Mundipharma Territory […***…].

(b) Joint Patents. Cidara shall have the first right, but not the obligation, to control and manage the prosecution and maintenance of all Joint Patents in the Cidara Territory and the Mundipharma Territory, […***…]. Cidara shall consult with Mundipharma as to the prosecution and maintenance of Joint Patents reasonably prior to any deadline or action with any patent office, and shall furnish to Mundipharma copies of all relevant drafts and documents reasonably in advance of such consultation. Cidara shall keep Mundipharma reasonably informed of progress with regard to the prosecution and maintenance of Joint Patents and shall provide to Mundipharma copies of all material patent office submissions within a reasonable amount of time following submission thereof by Cidara. In the event that Cidara desires to abandon or cease the prosecution or maintenance of any Joint Patent in any country (without initiation of the prosecution and maintenance of a substitution therefor), Cidara shall provide reasonable prior written notice to Mundipharma of such intention to abandon (which notice shall, to the extent possible, be given no later than 30 days prior to the next deadline for any action that must be taken with respect to any such Joint Patent in the relevant patent office). In such case, at Mundipharma’s sole discretion, upon written notice to Cidara from Mundipharma, Mundipharma may elect to continue the prosecution and maintenance of any such Joint Patent, […***…].

8.3 Cooperation of the Parties. Each party agrees to cooperate fully in the preparation, filing, prosecution and maintenance of the Cidara Patents pursuant to Section 8.2. Such cooperation includes, but is not limited to: (a) executing all papers and instruments, or requiring its employees or contractors, to execute such papers and instruments, so as to effectuate the ownership of Inventions set forth in Section 8.1, and Patents claiming or disclosing such Inventions, and to enable the other party to apply for and to prosecute patent applications in any country as permitted by Section 8.2, and (b) promptly informing the other party of any matters coming to such party’s attention that may affect the prosecution and maintenance of any such patent applications.

8.4 Third Party Infringement. Each party shall notify the other party in writing within 10 Business Days (except as expressly set forth below) of becoming aware of any alleged or threatened infringement by a Third Party of any Cidara Patent or Joint Patent (“Infringement”), including (x) any such alleged or threatened Infringement on account of […***…] and (y) […***…] ((x) and (y), collectively, “Competitive Infringement”); provided, however, that each party shall notify the other party of any […***…] regarding any Cidara Patent or Joint Patent that it receives, and such party shall provide the other party with a copy of such[…***…], within five (5) Business Days of receipt.

(a) Cidara Patents.

(i) Cidara Patents. […***…] shall have the first right, but not the obligation, to bring and control any action or proceeding with respect to Competitive Infringement in the Field in the […***…] of any Cidara Patent[…***…], […***…], and […***…] shall have the right, […***…], to be represented in any such action […***…]. […***…] fails to bring any such action or proceeding within (i) […***…] following the notice of alleged infringement, or (ii) […***…] before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, then […***…] shall have the right to bring and control any such action, […***…], and […***…] shall have the right, […***…], to be represented in any such action […***…]. […***…] shall have the sole right, but not the obligation, to bring and control any action or proceeding with respect to Infringement of any such Cidara Patent, other than Competitive Infringement in the Field […***…]. Each party shall keep the other party reasonably informed of the status and progress of any action or proceeding brought by such party with respect to Competitive Infringement in the Field […***…] of any Cidara Patent[…***…], and shall provide the other party with drafts of all proposed substantive filings in such action or proceeding reasonably in advance of making such filings and consider the other party’s comments on such filings in good faith.

(ii) […***…]. […***…] shall have the sole right, but not the obligation, to bring and control any action or proceeding with respect to Infringement of any[…***…], […***…]. With respect to any action or proceeding with respect to Competitive Infringement in the Field in the Mundipharma Territory of any […***…] shall (x) keep […***…] reasonably informed of the status and progress of any such action or proceeding, but […***…] shall not have the right to be represented, or otherwise participate, in such action or proceeding without the prior written consent of […***…], which […***…] may withhold in its sole discretion, and (y) to the extent reasonably practicable, provide […***…] with drafts of substantive filings in such action or proceeding reasonably in advance of making such filings and consider […***…] comments on such filings in good faith.

(b) Joint Patents. […***…] shall have the first right, but not the obligation, to bring and control any action or proceeding to enforce any Joint Patent with respect to Competitive Infringement in the Field […***…], […***…], and […***…] shall have the right, […***…], to be represented in any such action […***…]. […***…] shall have the first right, but not the obligation, to bring and control any action or proceeding to enforce any Joint Patent with respect to Competitive Infringement in the Field in the […***…] and by counsel of its own choice, and […***…] shall have the right[…***…], to be represented in any such action[…***…]. If the party having the first right to bring and control any action or proceeding to enforce any Joint Patent under this Section 8.4(b) (the “First Party”) fails to bring and control any such action or proceeding within (i) […***…] following the notice of alleged infringement, or (ii) […***…], whichever comes first, then the other party shall have the right to bring and control any such action, […***…], and the First Party shall have the right, […***…], to be represented in any such action[…***…]. In the case of Infringement of a Joint Patent, other than Competitive Infringement, the parties shall mutually agree in good faith on a case-by-case basis whether to jointly bring and control any action or proceeding to enforce such Joint Patent, or whether one party will bring and control any action or proceeding to enforce such Joint Patent, and, in each case, how the costs and expenses of such action or proceeding, and any recovery from such action or proceeding, will be allocated between the parties.

(c) Cooperation. In the event a party brings an infringement action in accordance with this Section 8.4 (such party, the “Enforcing Party”), the other party shall cooperate fully, including, if required to bring such action, the furnishing of a power of attorney or being named as a party. The Enforcing Party shall not […***…].

(d) Recovery. Except as otherwise agreed by the parties in connection with a cost-sharing arrangement, any recovery as a result of any action or proceeding pursuant to Section 8.4(a)(i), 8.4(a)(ii) or 8.4(b), whether by way of settlement or otherwise, shall first[…***…], and any remainder of the recovery after reimbursement of the litigation costs and expenses of the parties (“Remainder”), […***…]; provided, however, that:

(i) any Remainder of a recovery realized by […***…] as a result of any action brought and controlled by […***…] pursuant to Section 8.4(a)(i) that is specifically attributable to Competitive Infringement in the Field […***…] of a Cidara Patent shall be allocated as follows: (A) […***…],

(1) if such damages are assessed either on the basis of the […***…], or as […***…], in either case, it shall be […***…]; or

(2) if the recovery is assessed on the basis of […***…];

and (B) to the extent it represents […***…];

(ii) any Remainder of a recovery realized by […***…] as a result of any action brought and controlled by […***…] pursuant to Section 8.4(a)(ii) that is specifically attributable to Competitive Infringement in the Field […***…] of any […***…], shall be allocated as follows: (A) to the extent it represents […***…] in the Field […***…], […***…]% to Cidara and […***…]% to Mundipharma; and (B) to the extent it represents […***…] for Competitive Infringement of such […***…] in the Field […***…], […***…]% to […***…] and […***…]% to […***…]. For clarity, […***…] shall not be entitled to any portion of a recovery realized by […***…] as a result of […***…] pursuant to Section 8.4(a)(ii) that is specifically attributable to Infringement, […***…], in the Field […***…] of any […***…]; and

(iii) any Remainder of a recovery realized by […***…] as a result of any action brought and controlled by […***…] pursuant to Section 8.4(b) that is specifically attributable to Competitive Infringement in the Field […***…] of any Joint Patent shall be allocated as follows: (A) to the extent it represents […***…],

(1) if such damages are assessed either on the basis of the […***…], or as […***…], in either case, it shall be […***…]; or

(2) if the recovery is assessed on the basis of […***…];

and (B) to the extent it represents […***…].

8.5 Infringement of Third Party Rights. Each party shall promptly notify the other in writing of any allegation by a Third Party that the manufacture, use, importation, offer for sale or sale of Product infringes or may infringe the intellectual property rights of such Third Party. Cidara shall have the sole right to control any defense of any such claim involving alleged

8.6

infringement of Third Party rights by Cidara’s activities at its own expense and by counsel of its own choice. Mundipharma shall have the sole right to control any defense of any such claim involving alleged infringement of Third Party rights by Mundipharma’s activities at its own expense and by counsel of its own choice. Neither party shall […***…].

8.7 Patent Marking. Mundipharma shall mark (or cause to be marked) Licensed Product marketed and sold hereunder with appropriate Cidara Patent numbers or indicia to the extent required by Applicable Laws.

8.8 European United Patent Court. In the event that the Unitary Patent Court (“UPC”) enters into force, Cidara shall (a) at least ten (10) days before any necessary decision, provide Mundipharma with a proposal on whether to allow some, or all, of the Cidara Patents in Europe to become automatically subject to the jurisdiction of the UPC; or whether to opt them out. In response to this proposal, Mundipharma and its patent counsel may provide an alternative proposal for consideration. This proposal shall be taken into consideration in good faith by Cidara and its patent counsel, and each party shall cooperate with and assist in all reasonable respects and provide the other party all reasonable assistance and cooperation in connection with the decisions on whether Cidara Patents should be opted out or allowed to remain in the UPC. In the event that a decision is taken to opt-out one or more of such Cidara Patents in Europe, Cidara, at its sole expense and acting through patent counsel of its choice, shall be solely responsible for preparing and registering the opt-outs.

8.9 Trademarks.

(a) Licensed Product Trademark. Mundipharma shall have the right to select the Licensed Product-specific trademark for use in connection with the marketing and sale of Licensed Product in the Mundipharma Territory (the “Licensed Product Trademark”), which may, but need not, be the same as the Licensed Product-specific trademark used in connection with the marketing and sale of Licensed Product in the Cidara Territory (the “Cidara Product Trademark”). Mundipharma shall consider in good faith Cidara’s suggestions regarding the selection of the Licensed Product Trademark but shall retain ultimate discretion as to such selection.

(i) Use of Cidara Product Trademark. In the event that Mundipharma elects to use the Cidara Product Trademark in connection with the marketing and sale of Licensed Product in the Mundipharma Territory, then, effective upon such selection and subject to the terms and conditions of this Agreement, Cidara hereby grants to Mundipharma during the Term an exclusive, royalty-free license, with the right to sublicense solely in conjunction with the grant of a permitted Sublicense under Section 2.2, to use the Cidara Product Trademark in connection with the marketing and sale of Licensed Product in the Mundipharma Territory in accordance with this Agreement. During the Term, Mundipharma shall not use (or license to an Affiliate or Third Party) the Cidara Product Trademark in connection with any product other than Licensed Product, nor shall Mundipharma use (or cause or permit any Affiliate or Sublicensee to use) the Cidara Product Trademark outside of the Mundipharma Territory. Mundipharma shall be responsible for the failure by its Affiliates and Sublicensees to comply with this Section 8.8, including all relevant restrictions, limitations and obligations. Mundipharma shall obtain Cidara’s approval prior to the first use of the Cidara Product Trademark in any Licensed Product labeling, packaging or marketing materials, such approval not to be unreasonably withheld, conditioned or delayed if the Cidara Product Trademark is used in a manner that is consistent with Cidara’s reasonable usage guidelines for the Cidara Product Trademark in the Cidara Territory. Cidara shall own and retain all right, title and interest in and to the Cidara Product Trademark, and all goodwill associated with or attached to the Cidara Product Trademark arising out of the use thereof by Mundipharma, its Affiliates and Sublicensees shall vest in and inure to the benefit of Cidara. Mundipharma agrees not to contest, oppose or challenge Cidara’s ownership of the Cidara Product Trademarks. Mundipharma agrees not to do or suffer to be done, at any time, any act or thing that will in any way impair Cidara’s ownership of or rights in and to the Cidara Product Trademark or any registration thereof or that may depreciate the value of the Cidara Product Trademark. Mundipharma agrees that in using the Cidara Product Trademark upon any Licensed Product packaging, labeling, advertising or promotional materials, it shall not represent in any way that it has any right or title to the ownership of the Cidara Product Trademark or the registration thereof. Mundipharma shall, at Cidara’s request and expense, assist Cidara in any action reasonably necessary or desirable to protect the Cidara Product Trademark. Mundipharma shall as soon as practicable notify Cidara of any apparent infringement by a Third Party of the Cidara Product Trademark. The parties agree that, in the event there is an actual Third Party opposition to Mundipharma’s use of a Cidara Product Trademark in the Mundipharma Territory, (x) Mundipharma may request that Cidara enter into one or more coexistence agreements with such Third Part(ies) in respect of trademarks that such Third Parties own and/or utilize in the Mundipharma Territory, and (y) Cidara shall consider such request in good faith and work cooperatively with Mundipharma to address the opposition to the extent reasonably practical which may include entering into an appropriate coexistence agreement.

(ii) Use of Other Licensed Product Trademark. If Mundipharma elects to use a Licensed Product Trademark other than the Cidara Product Trademark in connection with the marketing and sale of Licensed Product in the Mundipharma Territory, Mundipharma shall own all right, title and interest in and to such Licensed Product Trademark, and all goodwill associated with or attached to such Licensed Product Trademark arising out of the use thereof by Mundipharma, its Affiliates and Sublicensees shall vest in and inure to the benefit of Mundipharma.

(b) Prosecution. Cidara shall control the prosecution of, and, if Mundipharma elects to use the Cidara Product Trademark as the Licensed Product Trademark, use Commercially Reasonable Efforts to maintain, the Cidara Product Trademark. Unless Mundipharma elects to use the Cidara Product Trademark as the Licensed Product Trademark, Mundipharma shall control the prosecution of, and use Commercially Reasonable Efforts to maintain, the Licensed Product Trademark at its expense.

(c) Enforcement. In the event that Mundipharma elects to use the […***…], each party shall promptly notify the other party in writing upon becoming aware of any infringement of the […***…] in the Mundipharma Territory. […***…] shall control the enforcement of the […***…] in the […***…] at its expense. If […***…] uses a […***…] […***…] in the […***…], […***…] shall control the enforcement of the […***…] in the […***…] at its expense.

8.10 Domain Names. Mundipharma may, at its cost, register as domain names the Cidara Product Trademark or Licensed Product Trademark in any country in the Mundipharma Territory using any available generic top-level domain or country-code top-level domain.


9.	REPRESENTATIONS AND WARRANTIES

9.1 Mutual Representations and Warranties. Each party represents and warrants to the other party, as of the Effective Date, as follows:

(a) Corporate Power, Authority and Binding Agreement. (i) It is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof; (ii) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate or partnership action; and (iii) this Agreement has been duly executed and delivered on behalf of such party and constitutes a legal, valid and binding obligation upon it, enforceable in accordance with its terms, subject to enforcement of remedies under applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and subject to a court’s discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies.

(b) No Conflict. The execution and delivery of this Agreement, the performance of such party’s obligations hereunder, and the licenses to be granted by such party pursuant to this Agreement do not and will not: (i) conflict with any agreement, instrument or understanding, oral or written, to which it or any of its Affiliates is a party or by which it or they may be bound; (ii) violate any Applicable Law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it, existing as of the Effective Date; or (iii) conflict with or violate the certificate of incorporation, by-laws or other organizational documents of such party.

(c) No Consents. No authorization, consent, approval of a Third Party, nor any license, permit, exemption of, or filing or registration with, or notification to, any court or governmental authority is or will be necessary for the (i) valid execution, delivery or performance of this Agreement by such party; or (ii) the consummation by such party of the transactions contemplated hereby; except, in the case of Cidara, to the extent provided in the Cidara Loan and Security Agreement.

(d) Other Rights. Neither it, nor any of its Affiliates, is party to or otherwise bound by any contract or agreement, oral or written, that will result in any other person obtaining any interest in, or that would give to any other person any right to assert any claim in or with respect to, any of such party’s rights under this Agreement; except, in the case of Cidara, to the extent provided in the Cidara Loan and Security Agreement.

9.2 Cidara Representations and Warranties. Cidara hereby represents and warrants to Mundipharma, on behalf of itself and its Affiliates, as of the Effective Date, as follows:

(a) Patent Rights. Exhibit A attached hereto contains a true and complete list of the existing Patents as of the Effective Date that are Controlled by Cidara and/or any of its Affiliates and that are necessary or useful for (i) the development, registration, use or commercialization of Licensed Product in the Mundipharma Territory or (ii) the manufacture of Licensed Product worldwide (collectively, the “Existing Patents”), but, for clarity, Exhibit A does not include any patent application that has been abandoned, finally rejected or expired.

(b) Ownership of Existing Patents. Except to the extent provided in the Cidara Loan and Security Agreement, Cidara is the sole owner of the Existing Patents and has sufficient legal and beneficial title in and to the Existing Patents, free and clear of any mortgages, pledges, liens, security interests, charges, and encumbrances that would conflict with or derogate from the licenses, options and other rights granted to Mundipharma hereunder. Cidara has not granted any Third Party any license, option or right under or with respect to the Existing Patents that would conflict with or derogate from the licenses, options and other rights granted to Mundipharma hereunder.

(c) Compliance with Laws and Payment of Fees. Cidara has complied with all Applicable Laws in connection with the prosecution of the Existing Patents (including the duty of candour), and all material renewal and maintenance fees due with respect to the prosecution and maintenance of the Existing Patents have been paid.

(d) Cidara General Manufacturing/Formulation Patents. None of the Existing Patents are Cidara General Manufacturing/Formulation Patents.

(e) Intellectual Property Rights. The Cidara Technology includes all intellectual property rights Controlled by Cidara which is reasonably necessary or useful for the development, registration, manufacture, use and commercialization of Licensed Product as contemplated by the terms of this Agreement.

(f) Ownership of Existing Data. Cidara Controls the Data existing at the Effective Date that has arisen from the GLP Studies and clinical trials of the Licensed Product conducted by or on behalf of Cidara or any of its Affiliates, free and clear of any mortgages, pledges, liens, security interests, charges, and encumbrances that would conflict with or derogate from the licenses, options and other rights granted to Mundipharma hereunder. Cidara has not granted any Third Party any license, option or right under or with respect to the Data existing at the Effective Date that has arisen from the GLP Studies and clinical trials of the Licensed Product conducted by or on behalf of Cidara or any of its Affiliates that would conflict with or derogate from the licenses, options and other rights granted to Mundipharma hereunder.

(g) No Grant of Rights. Neither Cidara nor any of its Affiliates has granted to any Third Party or Affiliate any rights (including any license, or option or other right to obtain a license), to develop or commercialize Product in the Field in the Mundipharma Territory, except that Cidara has granted rights to the NIH to conduct the NIH Trial and to Third Party service providers to develop Product in the Field in the Mundipharma Territory on behalf of Cidara.

(h) Non-Infringement of Third Party Rights. To Cidara’s Knowledge, neither the conduct of the Lead Indication Trials nor the manufacture of the Lead Indication Product (as manufactured on behalf of Cidara as of the Effective Date) infringes, or would infringe, the Patents of any Third Party or misappropriates the proprietary information of any Third Party.

(i) Intellectual Property Challenge. Neither Cidara nor any of its Affiliates has received any written notice from any Third Party seeking to invalidate or otherwise challenge the ownership, scope, validity and/or enforceability of the claims of the Existing Patents and, to Cidara’s Knowledge, there is no such challenge pending or threatened.

(j) Notice of Infringement. Neither Cidara nor any of its Affiliates has received any written notice from any Third Party claiming that the development, manufacture, use, sale, offer for sale, export or import of Compound or Product infringes, misappropriates or would infringe or misappropriate the Patent or other intellectual property rights of any Third Party.

(k) No Unauthorized Use and Non-Infringement of Rights. To Cidara’s Knowledge, no Third Party is infringing or misappropriating, or has infringed or misappropriated, any of the Cidara Technology.

(l) Proceedings and Investigations. Other than patent office actions and proceedings related to the Existing Patents and the actions and proceedings of Regulatory Authorities related to the clinical development of Product by Cidara, neither Cidara nor its Affiliates is a party to any adverse action, suit, investigation or proceeding relating to the Cidara Technology, Compound or Product, and neither Cidara nor its Affiliates have received written notice of any pending or threatened adverse action, suit, investigation or proceeding related to the Cidara Technology, Compound or Product.

(m) Accuracy of Information. All tangible or recorded information and data (including Data) provided by or on behalf of Cidara to Mundipharma or its Affiliates related to Product on or before the Effective Date in contemplation of this Agreement was and is true, accurate and complete in all material respects, and Cidara has not failed to disclose, or failed to cause to be disclosed, any such information or data (including Data) related to Compound or Product in its possession and Control that would cause the information and data that has been disclosed to be misleading in any material respect.

(n) Material Contracts. Cidara has disclosed to Mundipharma all material contracts to which Cidara or any of its Affiliates is or was a party, (i) pursuant to which Cidara or any of its Affiliates acquired or obtained Control of any Existing Patent or any invention claimed by any Existing Patent, (ii) pursuant to which Data was generated; (iii) pursuant to which any Third Party has conducted, or is conducting, any GLP Study or clinical trial of Compound or Licensed Product on behalf of Cidara or any of its Affiliates, or (iv) pursuant to which any Third Party has conducted, or is conducting, any CMC development activities with respect to Compound or Licensed Product on behalf of Cidara or any of its Affiliates, or has manufactured and supplied to Cidara or any of its Affiliates, or is obligated to manufacture and supply to Cidara or any of its Affiliates, any GLP-compliant or GMP-compliant Compound or Licensed Product.

(o) Employee, Consultant and Contractor Agreements. All current and former employees, paid consultants and Third Party contractors of Cidara who are or were substantively involved in the research, development or manufacture of Compound or Product (i) have executed written contracts containing, or are otherwise bound by, customary obligations of confidentiality and non‑use with respect to Cidara Technology, and (ii) have assigned to Cidara all right, title and interest in and to all inventions, Information and Data made or generated in the course of research, development or manufacture of Compound or Product.

(p) Third Party Confidentiality. No Third Party has received from Cidara or any of its Affiliates, or, to its Knowledge, its Representatives (that are not directors, officers or employees of Cidara or any of its Affiliates), any Data resulting from GLP Studies or clinical trials of Licensed Product that is within Cidara Know-How, or any other material Cidara Know-How, that, in each case, is Confidential Information of Cidara as of the Effective Date, which is not subject to customary obligations of confidentiality owed to Cidara or such Affiliate.

(q) Communications with Regulatory Authorities. Cidara: (i) has provided or made available all relevant documents and written communications and materials in its and its Affiliates’ possession or Control from and to any Regulatory Authority related to the Product; (ii) as of the Effective Date, Cidara and its Affiliates have not received any oral or written communication (including any notice of inspection, deficiency letter, warning letter or similar notice) from any Regulatory Authority alleging that the development of Product by or on behalf of Cidara and its Affiliates is not currently materially in compliance with any and all applicable laws or regulations implemented by any Regulatory Authority; and (iii) Cidara and its Affiliates have not made, with respect to the Product, any untrue statement of material fact to any Regulatory Authority, or failed to disclose a material fact required to be disclosed to such Regulatory Authority.

(r) Safety and Efficacy. Cidara has (i) allowed Mundipharma access to all material information in Cidara or its Affiliates’ possession and Control concerning the safety and efficacy of Compound or Licensed Product; (ii) informed Mundipharma of all drug-related adverse reactions relating to the Product or its use of which Cidara and its Affiliates are aware; and (iii) carried out GLP Studies of Compound and Licensed Product in accordance with GLP and clinical trials of Licensed Product in accordance with GCP.

(s) Debarment. Neither Cidara nor any of its Affiliates is or has been debarred or suspended under 21 U.S.C. §335(a) or §335(b) or any foreign equivalent thereof, or is the subject of a conviction described in such section or any foreign equivalent thereof.

(t) Anti-Corruption Laws. Cidara has not: (i) taken any action in violation of any Anti-Corruption Laws; or (ii) directly or indirectly through Affiliates or Third Parties, paid, promised or offered to pay, or authorized the payment of, any money or given any promise or offered to give, or authorized the giving of anything of value to a public official or Entity or other Person for purpose of obtaining or retaining business for or with, or directing business to, any Person, including to Cidara and its Affiliates, nor has Cidara or any of its Affiliates directly or indirectly promised, offered or provided any corrupt payment, gratuity, emolument, bribe, kickback, illicit gift or hospitality or other illegal or unethical benefit to a public official or entity or any other Person.

(u) Affiliates. Cidara has only two Affiliates, both of which are Cidara-Controlled Affiliates: (i) Cidara Therapeutics UK Limited; and (ii) Cidara Therapeutics (Ireland) Limited.

9.3 Mundipharma Representations and Warranties. Mundipharma represents and warrants to Cidara, as of the Effective Date, as follows:

(a) Debarment. Neither Mundipharma nor any of its Affiliates has been debarred or suspended under 21 U.S.C. §335(a) or §335(b) or any foreign equivalent thereof, or is the subject of a conviction described in such section or any foreign equivalent thereof.

(b) Anti-Corruption Laws. Neither Mundipharma nor any of its Affiliates has: (i) taken any action in violation of any Anti-Corruption Laws, or (ii) directly or indirectly through Affiliates or Third Parties, paid, promised or offered to pay, or authorized the payment of, any money or given any promise or offered to give, or authorized the giving of anything of value to a public official or Entity or other Person for purpose of obtaining or retaining business for or with, or directing business to, any Person, including to Mundipharma and its Affiliates, nor has Mundipharma or any of its Affiliates directly or indirectly promised, offered or provided any corrupt payment, gratuity, emolument, bribe, kickback, illicit gift or hospitality or other illegal or unethical benefit to a public official or entity or any other Person.

9.4 Mutual Covenants. In addition to any covenants made by it elsewhere in this Agreement, each party hereby covenants to the other party that:

(a) in the event that such party becomes aware that (i) it or any of its Affiliates has been debarred, suspended or is the subject of a conviction described in 21 U.S.C. §335(a) or §335(b) or any foreign equivalent thereof, or (ii) if any action, suit, claim, investigation, or legal or administrative proceeding is pending or, to its actual knowledge, is threatened, relating to such debarment, suspension or conviction, such party will immediately notify the other party in writing, and, to the extent such notice is referring to a such a debarment, suspension or conviction pursuant to clause (i), the other party may terminate this Agreement immediately upon written notice to the other party; provided, however, that if any of a party’s Affiliates, but not such party itself, is debarred, suspended or is the subject of a conviction described in 21 U.S.C. §335(a) or §335(b) or any foreign equivalent thereof, then such party may avoid termination of this Agreement by the other party by immediately terminating all rights, licenses and sublicenses (including any Sublicense) granted by such party to that Affiliate and notifying the other party thereof in writing;

(b) in the event that such party becomes aware that any Person that is performing activities hereunder on its behalf has been debarred, suspended or is the subject of a conviction described in 21 U.S.C. §335(a) or §335(b) or any foreign equivalent thereof, or if any action, suit, claim, investigation, or legal or administrative proceeding is pending or, to its actual knowledge, is threatened, relating to such debarment, suspension or conviction, such party will immediately notify the other party in writing and such party will cease, or cause its Affiliate to cease (as applicable), employing, contracting with, or retaining any such Person to perform any services relating to Product;

(c) neither such party nor any of its Affiliates will, directly or indirectly through Affiliates or Third Parties, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value to a public official or Entity or other Person for purpose of obtaining or retaining business for or with, or directing business to, any Person, including such party and its Affiliates, nor will such party or any of its Affiliates directly or indirectly promise, offer or provide any corrupt payment, gratuity, emolument, bribe, kickback, illicit gift or hospitality or other illegal or unethical benefit to a public official or entity or any other Person;

(d) neither such party nor any of its Affiliates (or any of their respective employees and contractors), in connection with the exercise of such party’s rights or performance of such party’s obligations under this Agreement, shall cause the other party to be in violation of Anti-Corruption Laws or Export Control Laws;

(e) such party shall immediately notify the other party if such party has any information that there is or is likely to be a violation of Anti-Corruption Laws or Export Control Laws in connection with the exercise of such party’s rights or performance of such party’s obligations under this Agreement; and

(f) each party shall undertake due diligence activities appropriate to its activities under this Agreement in accordance with applicable Anti-Corruption Laws and related guidance, including guidance issued by the U.S. Department of Justice Criminal Division (entitled “Evaluation of Corporate Compliance Programs”) as amended from time to time, concerning the Foreign Corrupt Practices Act (15 U.S.C. §§78dd-1, et. seq.), and issued by the U.K. Ministry of Justice concerning the UK Bribery Act 2010 as amended from time to time, such activities to include the conduct of appropriate due diligence in relation to Third Party contractors conducting any GLP Study or clinical trial on such party’s behalf (including, in the case of Cidara, those Third Party contractors conducting the Lead Indication Trials) and, without prejudice to each party’s obligation pursuant to clause (ii) of Section 9.1(b), shall collaborate with the other party to ensure such compliance.

Each party has the right, upon reasonable notice and at its sole expense, to conduct, or have conducted by an independent Third Party reasonably acceptable to the other party, no more than once every three years (except for cause), a reasonable and customary audit of the other party for the purposes of monitoring compliance with this Section 9.4, and the other party shall, subject to compliance with Applicable Laws, provide to such party any relevant documents reasonably requested by such party in relation thereto. Save in respect of such an audit for cause, the auditing party shall reimburse the audited party for reasonable and documented external costs and expenses incurred by the audited party in complying with the foregoing requirements.

9.5 Cidara Covenants.

(a) Third Party Licenses. During the Term, Cidara shall not grant any Third Party any license or other right with respect to any Compound, Product or Cidara Technology in derogation of the licenses and rights expressly granted to Mundipharma hereunder.

(b) Control of Cidara Technology. During the Term, neither Cidara nor any Cidara-Controlled Affiliate shall delegate or contract the performance of any activity under this Agreement that Cidara is responsible for performing to any Affiliate of Cidara that is not a Cidara-Controlled Affiliate, unless, in each case: (i) none of Mundipharma’s rights hereunder are diminished or otherwise adversely affected as a result of such delegation or contracting; (ii) each such Affiliate has made a present assignment in writing to Cidara or a Cidara-Controlled Affiliate of all right, title and interest in and to any and all Inventions and Data generated or made by such Affiliate in the course of performing the delegated or contracted activities, as necessary for Cidara to grant to Mundipharma the full scope of licenses and rights to such Inventions (including Patents claiming such Inventions) and Data expressly contemplated by this Agreement; and (iii) each such Affiliate undertakes in writing obligations of confidentiality and non‑use regarding Confidential Information which are at least as stringent as those undertaken by the parties pursuant to Article 7. In addition, during the Term, Cidara shall not transfer or assign, and shall not permit any Cidara-Controlled Affiliate to transfer or assign, any Cidara Technology or Cidara’s interest in any Joint Technology to any Affiliate of Cidara that is not a Cidara-Controlled Affiliate (except in conjunction with a permitted assignment by Cidara of this Agreement and all of Cidara’s rights and obligations hereunder in accordance with Section 13.7). Cidara further acknowledges and agrees that any permitted Affiliate transferee of any Cidara Technology or Cidara’s interest in any Joint Technology will take such Cidara Technology or Cidara’s interest in such Joint Technology or the applicable rights thereunder subject to the terms of this Agreement, including the License, and Cidara shall obtain such permitted Affiliate transferee’s written acknowledgment of, and agreement to, the foregoing.

(d) […***…]

(e) Existing Contracts. Cidara shall promptly notify Mundipharma of, and allow Mundipharma a reasonable opportunity to review and comment upon, any amendment, variation, modification, supplement or other change to any of the following existing agreements with Cidara’s CMOs (each, an “Existing CMO Agreement”) that is proposed before the date on which Cidara signs the CMO Supply Agreement contemplated by Section 4.18(c) with the applicable CMO, that would adversely affect or limit any representations or warranties with respect to anidulafungin, Compound or Licensed Product (as applicable), or any remedies (including indemnities, and exclusions and limitations of liability) for defective anidulafungin, Compound or Licensed Product (as applicable), manufactured by such CMO that are contained in such Existing CMO Agreement as of the Effective Date:

(i) Master Agreement for Pharmaceutical Development and Technology Transfer Services between Cidara and […***…] dated March 13, 2017;

(ii) Master Services Agreement between Cidara and […***…] dated June 17, 2015;

(iii) Master Services Agreement between Cidara and […***…] dated November 3, 2017; and

(iv) Master Services Agreement between Cidara, […***…] dated 2015.

(f) Compliance Declarations. As soon as reasonably practicable following the Effective Date, Cidara shall obtain from the CMOs of Cidara that synthesize starting material (anidulafungin) for use in the manufacture of the Compound to be used in Licensed Product, and provide to Mundipharma, reasonable documentary evidence that such CMOs are in compliance with applicable laws concerning the characterization and genealogy of the master cell bank used or intended to be used for the research, development and manufacture of Compound and Licensed Product, including the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity. If Cidara is not able to obtain such evidence of compliance from such CMOs, Cidara shall promptly use Commercially Reasonable Efforts to procure that such CMOs take steps necessary to ensure such compliance and thereafter maintain adequate records in connection therewith, as may be required by Regulatory Authorities or other governmental authorities of competent jurisdiction.

9.6 Performance by Affiliates, Sublicensees and Third Party Contractors. The parties recognize that each party may perform some or all of its obligations or exercise some or all of its rights under this Agreement through one or more Affiliates, Third Party contractors, or, in the case of Mundipharma and subject to Section 2.2, Sublicensees, Marketing Partners and Distributors; provided, in each case, that (a) none of the other party’s rights hereunder are diminished or otherwise adversely affected as a result of such delegation or contracting, and (b) each such Third Party contractor, and, in the case of Mundipharma, Sublicensee, Marketing Partner and Distributor, undertakes in writing obligations of confidentiality and non‑use regarding Confidential Information which are at least as stringent as those undertaken by the parties pursuant to Article 7; and provided, further, that each such Third Party contractor of a party agrees in writing to assign to such party any and all Inventions and Data generated or made by such contractor in the course of performing the contracted activities, so that such party can comply with its obligations under this Agreement. Each party shall at all times be fully responsible for the performance of its Affiliates, Third Party contractors, and, in the case of Mundipharma, Sublicensees, Marketing Partners and Distributors.

9.7 Disclaimer. Except as expressly set forth in this Agreement, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS PROVIDED BY CIDARA AND MUNDIPHARMA HEREUNDER ARE PROVIDED “AS IS.” Except as expressly set forth in this Agreement, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

9.8 Limitation of Liability. Except in the case of […***…], NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSSES OR DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided, however, that this Section 9.8 shall not be construed to limit […***…], or any liability (whether in contract, tort or otherwise) which cannot by law be excluded or limited.


10.	TERM AND TERMINATION

10.1 Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless earlier terminated pursuant to Section 9.4(a) or this Article 10, shall continue until the expiration of the last-to-expire Royalty Term for any Licensed Product.

10.2 Termination For Cause.

(a) Material Breach.

(i) A party shall have the right to terminate this Agreement before the end of the Term upon written notice to the other party if such other party is in material breach of this Agreement and has not cured such breach within 60 days (or 30 days with respect to any payment breach) after notice from the terminating party requesting cure of the breach. Any such termination shall become effective at the end of such 60-day (or 30-day with respect to any payment breach) period unless the breaching party has cured such breach prior to the end of such period. Any right to terminate under this Section 10.2(a) shall be stayed and the cure period tolled in the event that, during any cure period, the party alleged to have been in material breach shall have initiated dispute resolution in accordance with Article 12 with respect to the alleged breach, which stay and tolling shall continue until such dispute has been resolved in accordance with Article 12.

(ii) In the event of material breach of this Agreement by Cidara that is not cured within the applicable notice period set forth in Section 10.2(a)(i) or is not curable (in each case, including as determined or agreed pursuant to dispute resolution in accordance with Article 12), Mundipharma, at its sole discretion, may either:

(1) terminate this Agreement in accordance with Section 10.2(a)(i) (in addition to pursuing any remedy that may be available to Mundipharma at law or in equity as a result of Cidara’s breach of this Agreement); or

(2) elect (A) not to terminate this Agreement, (B) to retain the License, subject to all terms and conditions hereof, and (C) pursue any remedy that may be available to Mundipharma at law or in equity as a result of Cidara’s breach of this Agreement, without prejudice to Mundipharma’s right to terminate this Agreement at a later date pursuant to Section 10.2(a)(i) (for that uncured material breach or any other uncured material breach of this Agreement by Cidara) or pursuant to Section 10.3; provided, however, that to the extent that Development Milestone Payment 1 has not been fully credited against royalties payable by Mundipharma hereunder or otherwise repaid in full in accordance with Section 5.3, any remaining amount not already credited or repaid shall become immediately due and payable.

(b) Patent Challenge. Cidara shall have the right to terminate this Agreement immediately upon written notice to Mundipharma if Mundipharma or any of its Affiliates or Sublicensees, directly or indirectly through any Third Party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any Cidara Patent.

10.3 Mundipharma Termination At Will. After the first anniversary of the Effective Date], Mundipharma shall have the right to terminate this Agreement on a country-by-country basis or in its entirety for any reason or no reason at any time upon 90 days’ prior written notice to Cidara; provided, however, that no such termination of this Agreement in any country of the Mundipharma Territory but not in all countries of the Mundipharma Territory shall relieve Mundipharma of its obligations under Sections 4.1 and 4.2, other than Mundipharma Territory-Specific obligations in such terminated country; and provided, further, that if […***…] terminates this Agreement in its entirety […***…], […***…] shall continue to be liable for […***…]. Within 10 days after delivery of written notice pursuant to this Section 10.3, the JSC shall convene to discuss transition planning, subject to Section 10.5(d).

10.4 Termination for Mundipharma Insolvency. Cidara shall have the right to terminate this Agreement upon written notice to Mundipharma […***…] if Mundipharma incurs an Insolvency Event.

10.5 Effect of Expiration or Termination.

(a) Expiration. Upon expiration (but not earlier termination) of this Agreement pursuant to Section 10.1: (i) the License shall automatically become fully-paid, royalty-free, irrevocable and perpetual; (ii) the Grant-Back License shall survive; and (iii) all other rights and obligations of the parties under this Agreement shall terminate, except as provided elsewhere in this Section 10.5 or in Section 10.6 or Section 10.7.

(b) Effects of Termination. In the event of any termination of this Agreement by either party in accordance with the terms of this Agreement, the following shall occur:

(i) The License shall automatically terminate and revert to Cidara;

(ii) As promptly as practicable (and in any event within 45 days) after termination, Mundipharma shall, subject to Section 10.5(c)(ii): (A) to the extent not previously provided to Cidara, deliver to Cidara true, correct and complete copies of all Product Filings in the Field in the Mundipharma Territory (in each case, whether held in the name of Mundipharma, its Affiliate or a Sublicensee), and disclose to Cidara all previously-undisclosed Mundipharma Know-How; (B) transfer or assign, or cause to be transferred or assigned, to Cidara or its designee (or to the extent not so assignable, take all reasonable actions to make available to Cidara or its designee the benefits of all Product Filings in the Field in the Mundipharma Territory (in each case, whether held in the name of Mundipharma, its Affiliate or a Sublicensee); and (C) take such other actions and execute such other instruments, assignments and documents as may be necessary to effect, evidence, register and record the transfer, assignment or other conveyance of such rights to Cidara;

(iii) Mundipharma shall, as directed by Cidara, either promptly wind-down any ongoing development activities with respect to Licensed Product in an orderly fashion or promptly transition such development activities to Cidara or its designee; in each case, with due regard for patient safety and in compliance with all Applicable Laws and international guidelines. In addition, Mundipharma shall, as directed by Cidara, assign to Cidara or its designee any or all clinical trial agreements with respect to such development activities for Licensed Product (or to the extent not so assignable, take all reasonable actions to make available to Cidara or its designee the benefits of such agreements);

(iv) Subject to Section 10.6, Mundipharma shall reasonably cooperate, at Cidara’s request, with Cidara and its designee(s) to facilitate a smooth, orderly and prompt transition of any or all ongoing manufacturing and commercialization activities with respect to Licensed Product to Cidara or its designee(s). In addition, Mundipharma shall, as directed by Cidara, assign to Cidara or its designee any or all agreements with Third Party contractors for the manufacture and/or commercialization of Licensed Product (or to the extent not so assignable, take all reasonable actions to make available to Cidara or its designee the benefits of such agreements);

(v) Except otherwise expressly provided in Section 10.5(d) in the case of termination by Mundipharma pursuant to Section 10.3, all Sublicenses granted by Mundipharma to any of its Affiliates shall automatically terminate upon such termination and be of no further force or effect; and any Sublicense granted by Mundipharma to a Third Party that was in effect immediately prior to such termination shall survive and shall be assigned by Mundipharma to Cidara such that such Sublicense becomes a direct license from Cidara to such Sublicensee on the same terms as those set forth in this Agreement, to the extent applicable to the scope of the Sublicense granted by Mundipharma to such Sublicensee; provided, however, that such Sublicense was granted in accordance with the terms of Section 2.2, and that such Sublicensee is in compliance with the terms of the Sublicense agreement (and did not cause Mundipharma to breach its obligations under this Agreement) and agrees to comply with all applicable terms of this Agreement to the extent applicable to the scope of the Sublicense granted by Mundipharma to such Sublicensee; and provided, further, that in no event shall Cidara be bound by obligations contained in any Sublicense agreement that extend beyond the obligations of Cidara set forth in this Agreement;

(vi) Cidara shall have the first right, but not the obligation, to Prosecute all Joint Patents throughout the world, at Cidara’s sole expense and by counsel selected by Cidara. In the event that, after the effective date of such termination, Cidara desires to abandon or cease Prosecution of any Joint Patent, Cidara shall provide written notice to Mundipharma of such intention to abandon promptly after Cidara makes such determination (which notice shall be given no later than 30 days prior to the next deadline for any action that must be taken with respect to such Joint Patent in the relevant patent office). In such case, Mundipharma shall have the right, in its discretion, exercisable upon written notice to Cidara, to assume responsibility for Prosecution of such Joint Patent, at its sole cost and expense and by counsel of its own choice. Each party will cooperate with the other party and provide the other party with reasonable assistance with such Prosecution activities with respect to Joint Patents;

(vii) Cidara shall have the first right, but not the obligation, to bring and control any action or proceeding to enforce any Joint Patent with respect to Competitive Infringement anywhere in the world, at its own expense and by counsel of its own choice. If Cidara fails to bring and control any such action or proceeding within (A) 120 days following the notice of alleged infringement, or (B) 30 days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, then Mundipharma shall have the right to bring and control any such action, at its own expense and by counsel of its own choice, and Cidara shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. In the event a Party brings an infringement action in accordance with this paragraph, the other Party shall cooperate fully, including, if required to bring such action, the furnishing of a power of attorney or being named as a party. The Party that brings such infringement action shall not enter into any settlement or compromise of any action under this paragraph: (1) in a manner that would diminish the rights or interests of the other Party without the written consent of such other Party, which shall not be unreasonably withheld; or (2) that would impose any cost or liability on the other Party, or admit the invalidity or unenforceability of any Joint Patent, without such other Party’s prior written consent, which may be withheld in such other Party’s sole discretion. Except as otherwise agreed by the Parties in connection with a cost-sharing arrangement, any recovery as a result of any action or proceeding pursuant to paragraph, whether by way of settlement or otherwise, shall first be used first to reimburse the Party that brought and controlled such action or proceeding for its documented, out-of-pocket costs and expenses (including court, attorneys’ and professional fees) incurred in connection with such action or proceeding, and then to reimburse the other Party for its documented, out-of-pocket costs and expenses (including court, attorneys’ and professional fees) incurred in connection with such action or proceeding (to the extent not previously reimbursed by the Enforcing Party), and any remainder of the recovery after reimbursement of the litigation costs and expenses of the Parties, shall be retained by the Enforcing Party. In the case of infringement of a Joint Patent, other than Competitive Infringement, the Parties shall mutually agree in good faith on a case-by-case basis whether to jointly bring and control any action or proceeding to enforce such Joint Patent, or whether one Party will bring and control any action or proceeding to enforce such Joint Patent, and, in each case, how the costs and expenses of such action or proceeding, and any recovery from such action or proceeding, will be allocated between the Parties;

(viii) if Mundipharma was, prior to termination, manufacturing, or having manufactured on its behalf, any quantities of Licensed Product, then at Cidara’s request, until the earlier of (A) such time as Cidara has secured another source thereof that is able to meet Cidara’s quality and quantity requirements, and (B) […***…] months after such termination, Mundipharma shall use commercially reasonable efforts to supply, or cause to be supplied, to Cidara such quantities

(ix)

thereof as Cidara may reasonably require for the development and commercialization of Licensed Products in the Field; provided that Cidara shall use Commercially Reasonable Efforts to secure another source of supply as soon as reasonably practicable. Such material shall be provided at the transfer price paid by Cidara to Mundipharma immediately prior to the date of termination;

(x) Cidara shall remit payment to Mundipharma of the remaining portion of the Development Milestone Payment 1 that has not, as of the effective date of termination, been credited against royalties payable to Cidara by, or otherwise refunded by Cidara to, Mundipharma; and

(xi) All other rights and obligations of the parties under this Agreement shall terminate, except as provided in Section 10.3, elsewhere in this Section 10.5, and in Sections 10.6 and 10.7.

(c) Termination by Mundipharma Pursuant to Section 9.4(a) or Section 10.2(a). In addition to the effects of termination set forth in Section 10.5(b), in the event of termination of this Agreement by Mundipharma pursuant to Section 10.2(a) the following shall apply:

(i) The Grant-Back License shall survive such termination. Any expansion of the Grant-Back License (i.e., to obtain worldwide rights and/or full exclusivity with respect to Compound and Product) that occurred prior to such termination shall survive such termination in accordance with the terms mutually agreed by the parties in good faith prior to such termination, and any such expansion of the Grant-Back License that occurs after such termination shall be on a royalty-bearing basis and otherwise on commercially reasonable terms to be negotiated by the parties in good faith;

(ii) If Mundipharma or its Affiliate had generated any Expanded Licensed Product Clinical Efficacy Data with respect to any Expanded Licensed Product in respect of which the parties had not executed an Expanded Licensed Product Amendment prior to such termination, then Cidara must pay […***…] with respect thereto if Cidara wishes to use such Expanded Licensed Product Clinical Efficacy Data in support of any NDA, MAA or other Product Filing or Regulatory Approval for the applicable Expanded Licensed Product or in the commercialization of such Expanded Licensed Product anywhere in the world. Promptly upon written request by Cidara, Mundipharma shall deliver a written invoice to Cidara for […***…], and Cidara shall pay the invoiced amount within 30 days of invoice;

(iii) Mundipharma shall, upon Cidara’s request, grant Cidara a royalty-bearing license to all of Mundipharma’s and its Affiliates’ right, title and interest in and to the Licensed Product Trademarks (if other than the Cidara Licensed Product Trademark), including, in each case, all goodwill therein, on commercially reasonable terms to be negotiated in good faith; and

(iv) Mundipharma may dispose of all inventory of Licensed Product remaining in Mundipharma’s or its Affiliates’ possession as of the effective date of termination

(v)

for up to six (6) months after the effective date of termination, subject to Mundipharma’s royalty payment, Net Sales Milestone Payment and reporting obligations to Cidara under Section 5.6, Section 5.7 (subject to Sections 5.8 through 0) and Article 6, respectively;

(vi) Subject to Mundipharma’s rights under Section 10.5(e)(iv), Cidara shall have the right, but not the obligation, to purchase from Mundipharma any or all usable inventory of Licensed Product in Mundipharma’s or its Affiliates’ possession as of the date of termination at a supply price equal to […***…]. Any packaging, transport, insurance and other costs relating to delivery shall be at Cidara’s expense;

(vii) In the event Mundipharma terminates this Agreement pursuant to Section 10.2(a) prior to the […***…] anniversary of the First Commercial Sale of Licensed Product in the Mundipharma Territory, then Mundipharma shall be entitled to recoup the portion of Global Development Costs paid to Cidara pursuant to Section 5.2 as of the effective date of termination in the form of a reverse royalty which shall be payable by Cidara as follows: Cidara shall pay Mundipharma a quarterly royalty in an amount equal to […***…]% of Net Sales of Licensed Product sold by Cidara, its Affiliates and/or licensees in the Mundipharma Territory; provided that Cidara’s obligation under this subsection shall terminate upon the first to occur of i) Mundipharma recouping all such Global Development Costs paid to Cidara pursuant to Section 5.2 as of the effective date of termination, and ii) expiration of the […***…] anniversary of the First Commercial Sale of Licensed Product in the Mundipharma Territory

(viii) Until the […***…] anniversary of the termination date, Cidara and its Affiliates shall not directly commercialize Licensed Product in the Mundipharma Territory, including with the appointment of a Distributor (which definition shall apply mutatis mutandis to Cidara). For clarity, during such […***…] year period Cidara and its Affiliates shall have the right to appoint a Third Party, or grant a Third Party a license, to market, promote and sell Licensed Product in the Mundipharma Territory; provided, however, that such Third Party is not a Distributor or Marketing Partner (which definitions shall apply mutatis mutandis to Cidara).

(d) Termination by Mundipharma Pursuant to Section 10.3 or by Cidara Pursuant to Section 10.4. In addition to the effects of termination set forth in Section 10.5(b), in the event of termination of this Agreement by Mundipharma pursuant to Section 10.3 or by Cidara pursuant to Section 10.4, the following provisions shall apply:

(i) The Grant-Back License shall survive such termination;

(ii) All Sublicenses granted by Mundipharma to any of its Affiliates shall automatically terminate and be of no further force or effect (or, in the case of termination on a country-by-country basis, shall automatically terminate and be of no further force or effect in the country(ies) in which Mundipharma has terminated this Agreement but continue in full force and effect in accordance with the terms of this Agreement and the applicable Sublicense agreement in the country(ies) in which Mundipharma has not terminated this Agreement) upon such termination; and any Sublicense granted by Mundipharma to a Third Party that was in effect immediately prior to such termination shall automatically terminate and be of no further force or effect upon any such termination (except that, in the case of termination on a country-by-country basis, any Sublicense granted by Mundipharma to a Third Party in any country in which

(iii)

Mundipharma has not terminated this Agreement shall continue in full force and effect in accordance with the terms of this Agreement and the applicable Sublicense agreement);

(iv) If Mundipharma or its Affiliate had generated any Expanded Licensed Product Clinical Efficacy Data with respect to any Expanded Licensed Product in respect of which the parties had not executed an Expanded Licensed Product Amendment prior to such termination, then, if Cidara wishes to use such Expanded Licensed Product Clinical Efficacy Data in support of any NDA, MAA or other Product Filing or Regulatory Approval for the applicable Expanded Licensed Product or in the commercialization of such Expanded Licensed Product anywhere in the world, Cidara must pay a buy-in fee equal to […***…]. Promptly upon written request by Cidara, Mundipharma shall deliver a written invoice to Cidara for the applicable buy-in fee, and Cidara shall pay the invoiced amount within 30 days of invoice;

(v) Mundipharma shall, and hereby does, effective on such termination, assign to Cidara all of Mundipharma’s and its Affiliates’ right, title and interest in and to the Licensed Product Trademarks (if other than the Cidara Licensed Product Trademark), including, in each case, all goodwill therein, and Mundipharma shall promptly take such actions and execute such instruments, assignments and documents as may be necessary to effect, evidence, register and record such assignment;

(vi) Subject to Cidara’s rights under Section 10.5(d)(vi), Mundipharma may dispose of all inventory of Licensed Product remaining in Mundipharma’s or its Affiliates’ possession as of the effective date of termination for up to six (6) months after the effective date of termination, subject to Mundipharma’s royalty payment, Net Sales Milestone Payment and reporting obligations to Cidara under Section 5.6, Section 5.7 (subject to Sections 5.8 through 0) and Article 6, respectively; and

(vii) Cidara shall have the right, but not the obligation, to purchase from Mundipharma any or all usable inventory of Licensed Product in Mundipharma’s or its Affiliates’ possession as of the date of termination at a supply price equal to […***…]. Any packaging, transport, insurance and other costs relating to delivery shall be at Cidara’s expense.

(e) Termination by Cidara Pursuant to Section 9.4(a), 10.2(a) or 10.2(b). In addition to the effects of termination set forth in Section 10.5(b), in the event of termination of this Agreement by Cidara pursuant to Section 9.4(a), Section 10.2(a) or Section 10.2(b), the following provisions shall apply:

(i) The Grant-Back License shall automatically become worldwide and exclusive both within and outside the Field with respect to Compound and Product;

(ii) Mundipharma shall transfer to Cidara any Expanded Licensed Product Clinical Efficacy Data with respect to any Expanded Licensed Product in respect of which

(iii)

the parties had not executed an Expanded Licensed Product Amendment prior to such termination […***…];

(iv) Mundipharma shall, and hereby does, effective on such termination, assign to Cidara all of Mundipharma’s and its Affiliates’ right, title and interest in and to the Licensed Product Trademarks (if other than the Cidara Licensed Product Trademark), including, in each case, all goodwill therein, and Mundipharma shall promptly take such actions and execute such instruments, assignments and documents as may be necessary to effect, evidence, register and record such assignment;

(v) Subject to Cidara’s rights under Section 10.5(e)(v), Mundipharma may dispose of all inventory of Licensed Product remaining in Mundipharma’s or its Affiliates’ possession as of the effective date of termination for up to six (6) months after the effective date of termination, subject to Mundipharma’s royalty payment, Net Sales Milestone Payment and reporting obligations to Cidara under Section 5.6, Section 5.7 (subject to Sections 5.8 through 0) and Article 6, respectively; and

(vi) Cidara shall have the right, but not the obligation, to purchase from Mundipharma any or all usable inventory of Licensed Product in Mundipharma’s or its Affiliates’ possession as of the date of termination at a supply price equal to […***…]. Any packaging, transport, insurance and other costs relating to delivery shall be at Mundipharma’s expense.

10.6 Manufacturing Technology Transfer. In the event that Cidara requests any manufacturing technology transfer in connection with the exercise of licenses granted to Cidara upon termination of this Agreement in accordance with Section 10.5, […***…].

10.7 Accrued Obligations; Survival. Neither expiration nor termination of this Agreement shall relieve either party of any obligation or liability accruing prior to such expiration or termination, nor shall expiration or termination of this Agreement preclude either party from pursuing all rights and remedies it may have under this Agreement, at law or in equity, with respect to breach of this Agreement. The parties’ rights and obligations under Sections 5.6, 5.7, 5.8, 5.10, 5.11 and 0 (in the case of each of the foregoing sections, as applicable to Mundipharma’s rights and obligations under Section 10.5(c)(iv), 10.5(d)(v) or 10.5(e)(iv), as applicable), 5.9, 7.1, 7.2, 7.3, 7.4, 7.5, 8.1, 9.4(a) (excluding the termination right contained therein), 9.4(b), 9.7, 9.8, 10.3 (if applicable), 10.5, 10.6, 10.7, 13.2(a), 13.3, 13.4, 13.5, 13.6, 13.7, 13.8, 13.9, 13.10 and 13.12, and Articles 1 (to the extent necessary for the interpretation of the other surviving Sections and Articles hereof), 6, 11 and 12, of this Agreement shall survive expiration or termination of this Agreement.


11.	INDEMNIFICATION

11.1 By Mundipharma. Mundipharma hereby agrees to save, defend and hold Cidara […***…] (each, a “Cidara Indemnitee”) harmless from and against any and all claims, suits, actions, demands, liabilities, expenses and/or loss, including reasonable legal expense and attorneys’ fees (collectively,

11.2

“Losses”) to which any Cidara Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise directly or indirectly out of: (a) […***…]; (b) […***…] (c) […***…] or (d) […***…]; except, in each case, to the extent such Losses result from […***…] or […***…].

11.3 By Cidara. Cidara hereby agrees to save, defend and hold Mundipharma […***…] (each, an “Mundipharma Indemnitee”) harmless from and against any and all Losses to which any Mundipharma Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise directly or indirectly out of: (a) […***…]; (b) […***…]; (c) […***…]; or (d) […***…]; except, in each case, to the extent such Losses result from […***…] or […***…].

11.4 Procedure. In the event a party (the “Indemnified Party”) seeks indemnification under Section 11.1 or 11.2, the Indemnified Party shall: (a) inform the other party (the “Indemnifying Party”) of a claim as soon as reasonably practicable after it receives notice of the claim (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a claim as provided in this Section 11.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually damaged as a result of such failure to give notice); (b) permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration), using counsel reasonably satisfactory to the Indemnified Party, at the Indemnifying Party’s sole cost and expense; and (c) cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim. If the Indemnifying Party does not assume control of such defense within […***…] after receiving notice of the claim from the Indemnified Party, the Indemnified Party shall control such defense […***…] The party not controlling such defense may participate therein […***…]. The party controlling such defense shall keep the other party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider recommendations made by the other party with respect thereto. The Indemnified Party shall not […***…] . The Indemnifying Party shall not […***…].

11.5 Insurance. Each party, at its own expense, shall maintain product liability and other appropriate insurance (or self-insure) in an amount consistent with Applicable Law and industry standards during the Term and reasonable in light of the activities being conducted by such party under this Agreement. Each party shall provide a certificate of insurance (or evidence of self-insurance) evidencing such coverage to the other party upon request.


12.	DISPUTE RESOLUTION

12.1 Disputes. Subject to Sections 3.1(f)(v), 12.4 and 12.5, upon the written request of either party to the other party, any claim, dispute, or controversy as to the breach, enforcement, interpretation or validity of this Agreement will be referred to the Senior Executive of Cidara and the Senior Executive of Mundipharma, for resolution. In the event the two individuals referred to in the preceding sentence are unable to resolve such matter within 30 days after the initial written request, then, upon the written demand of either party, the matter shall be subject to arbitration, as provided in Section 12.2, except as expressly set forth in Sections 3.1(f)(v), 12.4 and 12.5.

12.2 Arbitration.

(a) Subject to Sections 3.1(f)(v), 12.4 and 12.5, any dispute, controversy or claim that is not resolved pursuant to Section 12.1 shall be resolved exclusively by final and binding arbitration in accordance with the applicable rules of the International Chamber of Commerce (“ICC”) as then in effect (the “Rules”), except to the extent any such Rule conflicts with the express provisions of this Article 12.

(b) The arbitration shall be conducted by an arbitral tribunal of three neutral arbitrators selected by the ICC in accordance with the Rules; provided that: (i) such arbitrators shall not be current or former employees or directors, or current stockholders, of either party, any of their respective Affiliates or any Sublicensee; (ii) each arbitrators shall have experience and familiarity with commercial licensing practices in the pharmaceutical and biotechnology industries; and (iii) to the extent permitted by the Rules, each party shall have the right to reject up to three proposed arbitrators selected by the ICC. The place of arbitration shall be New York, New York, USA, and all proceedings and communications shall be in the English language.

(c) The arbitral tribunal shall […***…] as reasonably necessary for an understanding of any legitimate issue raised in the arbitration, while also taking into account the desirability of making discovery efficient and cost-effective.

(d) The arbitral tribunal shall, in rendering an award, apply the substantive law of the State of New York, USA, in accordance with Section 13.3 and without giving effect to any conflicts of law provisions thereof that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction, and without giving effect to any of its rules or laws relating to arbitration. The award shall include a written statement describing the essential findings and conclusions upon which the award is based, including the calculation of any damages awarded. The arbitral tribunal’s authority to award special, incidental, consequential or punitive damages shall be subject to the limitation set forth in Section 9.8, except to the extent the substantive laws of the State of New York, USA, do not permit such limitation[…***…]. The award rendered by the arbitral tribunal shall be final, binding and non-appealable (subject only to the parties’ right to request correction of any errors in computation, clerical or typographical errors, or other errors of a similar nature, and the arbitral tribunal’s right to make any such correction on its own initiative, in each case, in accordance with the Rules), and judgment upon the award may be entered in any court of competent jurisdiction.

(e) Each party shall bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitration.

12.3 Confidentiality of Arbitration. Except to the extent necessary to confirm or enforce an award or as may be required by Applicable Law or the rules of any exchange on which a party’s securities are traded, neither a party nor the arbitral tribunal may disclose the existence, content, or results of an arbitration without the prior written consent of both parties.

12.4 Injunctive Relief; Court Actions. Either party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or other equitable relief in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing discussions between the parties or any ongoing arbitration proceeding. In addition, either party may bring an action in any court of competent jurisdiction to resolve disputes pertaining to the validity, construction, scope, enforceability, infringement or other violations of Patents or other intellectual property rights, and no such claim shall be subject to arbitration pursuant to Section 12.2. Further, no claim under any antitrust, anti-monopoly or

12.5

competition law or regulation, whether or not statutory, shall be subject to arbitration pursuant to Section 12.2.

12.6 Forecast Dispute Resolution. In the event the Senior Executives are unable to agree upon (a) the Peak Incremental Net Sales Forecasts in accordance with Section 4.3(a)(i), or (b) the Subcutaneous Peak Incremental Net Sales Forecasts, including the methodology to be used to determine the Subcutaneous Peak Incremental Net Sales Forecasts, in accordance with Section 4.4(c)(ii), or (c) the Other Product Peak Incremental Net Sales Forecasts, mutatis mutandis, including the methodology to be used to determine such Other Product Peak Incremental Net Sales Forecasts, in accordance with Section 4.4(c)(ii), then, in each case ((a) through (c)), upon the request of either party, the matter will be referred to a neutral Third Party expert with relevant experience and expertise (the “Independent Expert”) mutually agreed to by the parties in good faith (e.g., IQVIA, L.E.K.); provided that if the parties are unable to reach agreement as to the Independent Expert, then each party shall promptly designate one neutral Third Party expert with such experience and expertise, and such experts shall select the Independent Expert by mutual agreement. Within 10 days following selection of the Independent Expert, each party shall submit to the Independent Expert such party’s good faith proposal as to (i) the amounts of the Peak Incremental Net Sales Forecasts pursuant to (a) through (c) above, as applicable, or (ii) the methodology to be used to determine the Peak Incremental Net Sales Forecasts pursuant to (b) and (c) above, as applicable, and (iii) such party’s written argument, not to exceed five pages in length, in favor of the reasonableness of its proposal. Within 15 days following submission of the parties’ written proposals to the Independent Expert, the Independent Expert shall issue a written determination setting forth the Peak Incremental Net Sales Forecast that it believes is the most reasonable […***…] (the “Expert Forecast”), and the following shall apply:

(A) […***…]

(B) […***…]

If one of the parties fails to submit its proposal within […***…] after the selection of the Independent Expert, then, […***…], the Independent Expert must select the latter’s proposal. The proposal selected by the Independent Expert, or as determined in accordance with (A) through (C) above, shall be final and binding upon both parties. The parties shall […***…].


13.	MISCELLANEOUS

13.1 Standstill. Mundipharma hereby agrees that, during the Term, it will not directly or indirectly (including through any Affiliate) acquire beneficial ownership of any equity securities

13.2

of Cidara or securities convertible into or exchangeable for such equity securities, or rights or options to purchase such securities, or acquire the right to control directly or indirectly voting with respect to any other voting securities of Cidara (in each case, other than any such securities of Cidara directly and originally issued by Cidara to Mundipharma or its Affiliate pursuant to a written agreement between Cidara and Mundipharma or its Affiliate), without the prior written consent of Cidara, if the effect of such acquisition would be to entitle Mundipharma to cast directly or indirectly 20% or more of the voting power in any election of directors of Cidara. For purposes of the 20% calculation under this Section 13.1, all such securities, rights or options beneficially owned by Mundipharma (including through Affiliates or others) shall be treated on an as-exercised and as-converted basis, but such securities, rights or options beneficially owned by others shall not be so treated. Mundipharma will not be deemed to have breached this Section 13.1 by reason of (a) Mundipharma’s acquisition of or merger with a Third Party that already owns such securities, rights or options or (b) an acquisition of or merger with Mundipharma by a Third Party that already owns such securities, rights or options. In such event, however, this Section 13.1 shall still apply to activities by Mundipharma and its Affiliates after such event.

Notwithstanding the foregoing, the restrictions provided above shall no longer apply from the earliest of (x) the date Cidara publicly announces that it is seeking an acquisition or business combination in which Cidara would not be the surviving entity, (y) the date Cidara publicly announces its entrance into an agreement or letter of intent with a Third Party other than Mundipharma (or any of its Affiliates) which provides for the acquisition or business combination with Cidara or any of its Affiliates in which Cidara would not be the surviving entity, or (z) the date a Third Party commences a tender offer for all or some lesser portion of Cidara’s common equity that would result in a change of control in Cidara; provided, however, that, in each case, if such efforts or activities cease without any such proposed transaction having been consummated, then the restrictions set forth in the preceding paragraph of this Section 13.1 shall again be applicable.

13.3 Rights Upon Bankruptcy.

(a) Section 365(n). The parties acknowledge and agree that all rights and licenses granted under or pursuant to this Agreement to Mundipharma or Cidara are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code and other similar foreign laws, licenses of rights to “intellectual property” as defined under Section 101 of the United States Bankruptcy Code or other similar foreign laws. The parties agree that the parties shall retain and may fully exercise all of their rights and elections under the United States Bankruptcy Code (or any comparable provision of the laws applicable to bankruptcies or insolvencies), and other similar foreign laws. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a party under the United States Bankruptcy Code, the non‑debtor party shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property and the same, which, if not already in the non‑debtor party’s possession, shall be promptly delivered to it (a) upon any such commencement of a bankruptcy proceeding upon the non‑debtor party’s written request therefor, unless the debtor party continues to perform all of its obligations under this Agreement or (b) if not delivered under clause (a) above, following the rejection of this Agreement by or on behalf of the debtor party upon written request therefor by the non‑debtor party.

(b) […***…]

(i) […***…]

(ii) […***…]

(1) […***…]

(2) […***…]

(iii) […***…]

13.4 Governing Law. This Agreement and any disputes, claims, or actions related thereto shall be governed by and construed and enforced in accordance with the laws of the State of New York, USA, without regard to any conflicts of law provisions thereof that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

13.5 Entire Agreement; Amendment. This Agreement, including the Exhibits hereto, is both a final expression of the parties’ agreement and a complete and exclusive statement with respect to all of its terms. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written or otherwise, concerning any and all matters contained

13.6

herein. This Agreement may only be modified or supplemented in a writing expressly stated for such purpose and signed by an authorized representative of each party.

13.7 Relationship Between the Parties. The parties’ relationship, as established by this Agreement, is solely that of independent contractors. This Agreement does not create any partnership, joint venture or similar business relationship between the parties. Neither party is a legal representative of the other party, and neither party shall assume or create, or purport to assume or create, any obligation, representation, warranty or guarantee, express or implied, on behalf of the other party for any purpose whatsoever.

13.8 Non-Waiver. The failure of a party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance. Any waiver by a party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by an authorized representative of such party.

13.9 Assignment. Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either party without the prior written consent of the other party (which consent shall not be unreasonably withheld conditioned or delayed); provided, however, that either party may assign this Agreement and its rights and obligations hereunder without the other party’s consent:

(a) in connection with the transfer or sale of all or substantially all of such party’s business related to Compound and Product to a Third Party […***…], whether by merger, sale of stock, sale of assets or otherwise, provided that in the event of a such transaction (whether this Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)), provided that:

(i) the acquiring Third Party provides written confirmation to the other party of such Third Party’s agreement to be bound by and to comply with the terms of this Agreement;

(ii) intellectual property rights of the acquiring party to such transaction (if other than one of the parties to this Agreement) shall not be included in the technology licensed hereunder or otherwise subject to this Agreement; and

(iii) notwithstanding any other provision of this Agreement to the contrary, Section 4.6 shall not apply to any Anti-Fungal Product that is: […***…]; provided, however, that, in each case ((A), (B) and (C)), […***…]. For clarity, however, in the event of such acquisition, Section 4.6 shall continue to apply to any Anti-Fungal Product that was […***…]; or

(b) to an Affiliate of such party, provided that the assigning party shall remain liable and responsible to the non‑assigning party hereto for the performance and observance of all such duties and obligations by such Affiliate.

For purposes of Section 13.7(a), […***…].

The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties, and the name of a party appearing herein shall be deemed to include the name of such party’s successors and permitted assigns to the extent necessary to carry out the intent of this section. Any assignment not in accordance with this Agreement shall be void.

13.10 No Third Party Beneficiaries. This Agreement is neither expressly nor impliedly made for the benefit of any party other than those executing it. Without prejudice to the foregoing, the parties agree […***…]; provided that the limitations of liability set forth in this Agreement shall […***…].

13.11 Severability. If, for any reason, any part of this Agreement is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect or impair, in whole or in part, the validity, enforceability or legality of any remaining portions of this Agreement. All remaining portions shall remain in full force and effect as if the original Agreement had been executed without the invalidated, unenforceable or illegal part.

13.12 Notices. Any notice to be given under this Agreement must be in writing and delivered either in person, by any method of mail (postage prepaid) requiring return receipt, or by overnight courier or facsimile confirmed thereafter by any of the foregoing, to the party to be notified at its address(es) given below, or at any address such party has previously designated by

13.13

prior written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the earliest of: (a) the date of actual receipt; or (b) if delivered by overnight courier, the next Business Day the overnight courier regularly makes deliveries.



If to Mundipharma:	Mundipharma Medical Company Par La Ville Place 14 Par La Ville Road Hamilton HM08 Bermuda Attention: […*…], General Manager Telephone: […*…]
With a copy to:	Mundipharma International Limited Unit 196 Cambridge Science Park Milton Road Cambridge CB4 0AB United Kingdom Attention: General Counsel Telephone: […***…]
If to Cidara:	Cidara Therapeutics, Inc. 6310 Nancy Ridge Drive, Suite 101 San Diego, CA 92121 USA Attention: Chief Executive Officer Telephone: […***…]
With a copy to:	Cidara Therapeutics, Inc. 6310 Nancy Ridge Drive, Suite 101 San Diego, CA 92121 USA Attention: General Counsel Telephone: […***…]

13.14 Force Majeure. Each party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement if such failure is caused by reason of any event beyond such party’s reasonable control including but not limited to acts of nature, fire, flood, explosion, earthquake, or other natural forces, war, civil unrest, acts of terrorism, accident, destruction or other casualty, any lack or failure of transportation facilities, any lack or failure of supply of raw materials, or any other event similar to those enumerated above. Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the party has not caused such event(s) to occur. Notice of a party’s failure or delay in performance due to force majeure must be given to the other party within 30 days after its occurrence. All delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure.

13.15 Interpretation. The headings of clauses contained in this Agreement preceding the text of the sections, subsections and paragraphs hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction. All references in this Agreement to the singular shall include the plural where applicable. The word “including” (and variations thereof) as used in this Agreement means including, without limiting the generality of any description preceding such term, and the word “or” has the inclusive meaning represented by the phrase “and/or.” Unless otherwise specified, references in this Agreement to any Article shall include all Sections, subsections and paragraphs in such Article, references to any Section shall include all subsections and paragraphs in such Section, and references in this Agreement to any subsection shall include all paragraphs in such subsection. All references to days in this Agreement shall mean calendar days, unless otherwise specified. Ambiguities and uncertainties in this Agreement, if any, shall not be interpreted against either party, irrespective of which party may be deemed to have caused the ambiguity or uncertainty to exist. This Agreement has been prepared in the English language and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the parties regarding this Agreement shall be in the English language.

13.16 Counterparts. This Agreement may be executed in counterparts, including by transmission of facsimile or PDF copies of signature pages to the parties or their representative legal counsel, each of which shall be deemed an original document, and all of which, together with this writing, shall be deemed one instrument.

[Remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have duly executed this Collaboration and License Agreement as of the Effective Date.



Mundipharma Medical Company	Cidara Therapeutics, Inc.
By: Name: Title:	By: Name: Title:

Exhibit A

Cidara Patents

[…***…]

Exhibit B

Global Development Plan

[…***…]

Exhibit C

JSC Dispute Resolution Matrix re Key Matters

[…***…]

16.

Exhibit D

CMC Development Plan

[…***…]

Exhibit E

Lead Compound

Exhibit F

Mundipharma Territory Plan

[…***…]

Exhibit G

Key Supply Terms

[…***…]

Exhibit H

Form of Press Release

Cidara Therapeutics and Mundipharma Form Strategic Partnership to Develop and Commercialize Rezafungin

Collaboration combines strengths to develop and commercialize life-saving antifungal treatment and prophylaxis, an area of high unmet medical need

Mundipharma acquires exclusive rights to develop and commercialize rezafungin in all markets outside of the United States and Japan, which will be retained by Cidara

Cidara to receive upfront payment of $30 million and equity investment of $9 million, co-development funding, development milestones and tiered royalty stream

Total transaction value could exceed $568 million

Cidara to host conference call today at 8:00 a.m. ET/5:00 a.m. PT

SAN DIEGO, CA AND CAMBRIDGE, UK, September 3, 2019 – Cidara Therapeutics, Inc. (Nasdaq: CDTX) and Mundipharma announced today that they have entered into a strategic partnership to develop and commercialize rezafungin for the treatment and prevention of invasive fungal infections. Rezafungin is a novel, once-weekly echinocandin antifungal being developed for the first-line treatment of candidemia and invasive candidiasis as well as for the prophylaxis of invasive fungal infections in patients undergoing allogeneic blood and marrow transplantation, for which no new therapies have been approved in over 13 years.

The partnership agreement follows Cidara’s recent announcement of the successful completion of its STRIVE B Phase 2 trial. Under the terms of the agreement, in exchange for granting Mundipharma exclusive commercialization rights to rezafungin outside the U.S. and Japan, Cidara will receive a $30 million upfront payment and Mundipharma will make a $9 million equity investment in Cidara. Cidara will also receive an additional $42 million in near-term funding to support the global Phase 3 ReSTORE and ReSPECT trials for the treatment and prevention of fungal infections. In addition, Cidara is eligible to receive development, regulatory

and commercial milestone payments, representing a total potential transaction value of $568 million plus double-digit royalties. Cidara will continue to lead the ongoing global Phase 3 development programs for rezafungin with the support of Mundipharma. The companies may pursue additional indications or formulations of rezafungin.

“This is a transformational collaboration for Cidara, and we look forward to working closely with our colleagues at Mundipharma, a highly successful, profitable company with a commercial presence spanning 120 markets worldwide and annual sales exceeding €2 billion,” said Jeffrey Stein, Ph.D., President and Chief Executive officer of Cidara. “Mundipharma is particularly well positioned globally with established hospital and hematology/oncology business units to fully leverage the commercial potential of rezafungin. Through this partnership, both companies fully commit to advancing rezafungin and helping to save the lives of patients who are highly vulnerable to these deadly infections.”

“By partnering with Cidara on rezafungin, we continue to serve our purpose - to move medicine forward,” said Alberto Martinez, Ph.D., M.B.A., President and Chief Executive officer of Mundipharma. “In a world where antifungal resistance is posing a major threat to the lives of vulnerable immunocompromised patients, rezafungin shows promise to address a major unmet medical need as well as potentially providing a wider spectrum of efficacy in a more convenient administration schedule. With our proven commercial excellence we are confident that we will maximize the potential of this differentiated and innovative asset. Rezafungin will be a significant addition to our pipeline that integrates well with our overall portfolio and sales force capabilities. We are excited to work with the team at Cidara to deliver such an important medicine to patients around the world.”

Conference Call and Webcast

Cidara management will host a conference call and webcast at 8:00 a.m. ET/5:00 a.m. PT today. The live call may be accessed by dialing (844) 358-8763 for domestic callers and (703) 736-7375 for international callers and entering the conference code: 6567991. The webcast will be made available on Cidara’s website at www.cidara.com under the Investors tab in the Events section. Following the live audio webcast, a replay will be available on Cidara's website.

About Invasive Fungal Infections

Invasive fungal infections (IFIs) represent a serious threat to millions of patients worldwide, resulting in more than 1.5 million deaths annually and mortality rates ranging from 15 to 65 percent. These infections continue to be a global health issue, especially for critically ill patients in hospitals and patients with compromised immune systems, including cancer and transplant patients. Approximately 90 percent of IFI-related deaths are associated with Candida, Aspergillus, and Pneumocystis.

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About Rezafungin

Rezafungin is a novel echinocandin antifungal and the only once-weekly drug candidate being developed for the first-line treatment and prevention of serious invasive fungal infections. Rezafungin has a unique pharmacokinetic profile with a prolonged half-life and front-loaded plasma exposure which, in contrast to all other echinocandins, allows for once-weekly IV therapy for inpatient and outpatient use. The U.S. Food and Drug Administration (FDA) has designated rezafungin as a Qualified Infectious Disease Product (QIDP) with Fast Track status and orphan drug designation related to its use in the treatment of candidemia and invasive candidiasis.

About Cidara Therapeutics

Cidara is a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel anti-infectives that have the potential to transform the standard of care and save or improve patients’ lives. Cidara is currently advancing its novel echinocandin antifungal, rezafungin acetate, in a Phase 3 clinical trial for the first-line treatment of candidemia and/or invasive candidiasis (ReSTORE) and plans to commence a second Phase 3 trial of once-weekly rezafungin for prophylaxis against invasive fungal infections in patients undergoing allogeneic blood and marrow transplantation (ReSPECT) initially in Europe and Canada. In addition to its robust rezafungin clinical program, Cidara is applying its proprietary Cloudbreak^®platform to develop antiviral conjugates (AVCs) for the prevention and treatment of influenza and other viral diseases. The Cloudbreak platform is designed to discover compounds that both directly kill pathogens and direct a patient’s immune system to attack and eliminate pathogens. Cidara is headquartered in San Diego, California. For more information, please visit www.cidara.com.

About Mundipharma

Mundipharma is a global network of privately-owned independent associated companies whose purpose is to move medicine forward.

With a high performing and learning organisation that strives for innovation and commercial excellence through partnerships, we successfully transformed and diversified our portfolio of medicines to create value for patients, payers and wider healthcare systems across important therapeutic areas such as Diabetes, Respiratory, Oncology, Pain and Biosimilars.

For more information please visit: www.mundipharma.com

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act

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of 1995. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements relating to the transformational nature and value of Cidara’s collaboration with Mundipharma, Cidara’s ability to develop new anti-infectives that are innovative or address unmet needs, including Cidara’s ability to successfully complete the ReSTORE and ReSPECT Phase 3 clinical trials, Cidara’s ability to complete development of, obtain regulatory approval for and commercialize rezafungin including Cidara’s ability to receive milestone payments for the achievement of development milestones, the potential for rezafungin to successfully treat or prevent invasive fungal infections and represent an improvement over current approaches, and the ability of Cidara’s Cloudbreak program to successfully identify and develop product candidates to prevent and/or treat viral diseases, and other diseases. Risks that contribute to the uncertain nature of the forward-looking statements include: the success and timing of Cidara’s clinical trials; regulatory developments in the United States and foreign countries; changes in Cidara’s plans to develop and commercialize its product candidates; Cidara’s ability to obtain additional financing; Cidara’s ability to obtain and maintain intellectual property protection for its product candidates; and the loss of key scientific or management personnel. These and other risks and uncertainties are described more fully in Cidara’s most recent filings with the United States Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Cidara undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

CIDARA - INVESTOR CONTACT:

Robert H. Uhl

Westwicke Partners, LLC

Managing Director

(858) 356-5932

robert.uhl@westwicke.com

CIDARA - MEDIA CONTACT:

Andrea Cohen

Sam Brown Inc.

(917) 209-7163

andreacohen@sambrown.com

MUNDIPHARMA - MEDIA CONTACTS:

Helen Laurence

Makara Health Communications Limited

+44 (0) 23 81 247 327

helen@makarahealth.com

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Patrice Grand

Mundipharma

+44 (0) 1223 397 890

patrice.grand@mundipharma.com

###

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Exhibit 10.2

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of September 3, 2019 (the “Effective Date”) by and between Cidara Therapeutics, Inc., a Delaware corporation having its principal offices at 6310 Nancy Ridge Dr., Suite 101, San Diego, CA 92121, USA (the “Company”), and Mundipharma AG, having its principal offices at St.Alban-Rheinweg 74, Basel 4020, Switzerland (the “Purchaser”). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 9 of this Agreement.

RECITALS

WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act; and

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of Common Stock, $0.0001 par value per share (the “Common Stock”), in accordance with the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto hereby agree as follows:

Section 1.Authorization of Shares. The Company has authorized the sale and issuance to the Purchaser of 4,781,408 shares of Common Stock (the “Shares”) on the terms and subject to the conditions set forth in this Agreement.

Section 2. Sale and Purchase of the Shares.

2.01 Purchase Price. Upon the terms and subject to the conditions herein contained, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company at the Closing (as defined in Section 3), the Shares for an aggregate purchase price of $9,008,172.68 (the “Purchase Price”).

2.02 Purchase and Delivery. At the Closing, the Purchaser will pay the Purchase Price by wire transfer of immediately available funds in accordance with wire instructions provided by the Company to the Purchaser prior to the Closing. On or before the Closing, the Company will instruct its transfer agent to either deliver a stock certificate to the Purchaser or make a book-entry notation representing the Shares, in each case against delivery of the Purchase Price.

Section 3. Closing. Subject to the satisfaction of the closing conditions set forth in Section 6, the closing of the transactions contemplated in Section 2 of this Agreement (the “Closing”), shall take place remotely via the exchange of documents and signatures on the Effective Date, or at such other time as the Company and the Purchaser may agree (the “Closing Date”).

Section 4. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company that the statements contained in this Section 4 are true and correct as of the Effective Date and as of the Closing Date:

4.01 Validity. The execution, delivery and performance of this Agreement and the other instruments referred to herein, in each case to which the Purchaser is a party, and the consummation by the Purchaser of the transactions contemplated hereby, have been duly authorized by all necessary corporate, partnership, limited liability or similar actions, as applicable, on the part of the Purchaser. This Agreement has been duly executed and delivered by the Purchaser and, assuming the due execution and delivery of this Agreement by the Company, constitutes a valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

4.02 Brokers. There has been no broker, investment banker, financial advisor, finder or other Person retained by or authorized to act on behalf of the Purchaser who might be entitled to any fee or commission for which the Company will be liable in connection with the execution of this Agreement and the consummation of the transactions contemplated hereby.

4.03 Investment Representations and Warranties. The Purchaser understands and agrees that the offer and sale of the Shares has not been registered under the Securities Act or any applicable state securities laws and is being made in reliance upon federal and state exemptions for transactions not involving a public offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed in this Agreement.

4.04 Acquisition for Own Account; No Control Intent. The Purchaser is acquiring the Shares for its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act or any applicable state securities laws. The Purchaser is not party to any agreement providing for or contemplating the distribution of any of the Shares. The Purchaser has no present intent to effect a “change of control” of the Company as such term is understood under the rules promulgated pursuant to Section 13(d) of the Exchange Act.

4.05 Ability to Protect Its Own Interests and Bear Economic Risks. The Purchaser, by reason of the business and financial experience of its management, has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement and is capable of evaluating the merits and risks of the investment in the Shares. The Purchaser is able to bear the economic risk of an investment in the Shares and is able to sustain a loss of all of its investment in the Shares without economic hardship, if such a loss should occur.

4.06 Accredited Investor; No Bad Actor. The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) under the Securities Act. The Purchaser has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.

4.07 Access to Information. The Purchaser has been given access to Company documents, records, and other information, and has had adequate opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents, accountants, and representatives concerning the Company’s business, operations, financial condition, assets, liabilities, and all other matters relevant to its investment in the Shares. The Purchaser understands that an investment in the Shares bears significant risk.

4.08 Non-Reliance on Placement Agent. The Purchaser has, in connection with its decision to purchase the Shares, relied solely upon the representations and warranties of the Company contained herein, and the Purchaser has not relied on any placement agent in negotiating the terms of its purchase of the Shares. In making a decision to purchase the Shares, the Purchaser has not received or relied on any communication, investment advice or recommendation from any placement agent.

4.09 Restricted Shares.

(a) The Purchaser understands that the Shares will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a private placement under Section 4(a)(2) of the Securities Act and that under such laws and applicable regulations the Shares may be resold without registration under the Securities Act only in certain limited circumstances.

(b) The Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act and under applicable state securities laws or an exemption from such registration is available. The Purchaser understands that the Company is under no obligation to register the Shares, except as provided in this Agreement.

(c) The Purchaser is aware of the provisions of Rule 144 under the Securities Act, which permit limited resale of securities purchased in a private placement.

4.10 Tax Advisors. The Purchaser has had the opportunity to review with the Purchaser’s own tax advisors the federal, state and local tax consequences of this investment, where applicable, and the transactions contemplated by this Agreement. The Purchaser is relying solely on the Purchaser’s own determination as to tax consequences or the advice of such tax advisors and not on any statements or representations of the Company or any of its agents and understands that the Purchaser (and not the Company) shall be responsible for the Purchaser’s own tax liability that may arise as a result of the acquisition of the Shares.

4.11 Short Sales. Between the time the Purchaser learned about the offering contemplated by this Agreement and the public announcement of the offering, the Purchaser has not engaged in any short sales (as defined in Rule 200 of Regulation SHO under the Exchange Act (“Short Sales”)) or similar transactions with respect to the Common Stock, nor has the Purchaser, directly or indirectly, caused any Person to engage in any Short Sales or similar transactions with respect to the Common Stock.

4.12 Other Company Shares. Prior to the Closing Date, and other than the Shares, the Purchaser has held no other shares of capital stock of the Company.

4.13 Investor Questionnaire. In connection with the filing of a Registration Statement, the Company may require the Purchaser to furnish to the Company such information regarding the Purchaser and the Registrable Securities, as the Company may reasonably request in writing and as shall reasonably be required in connection with the filing of the Registration Statement. At least five Business Days prior to the first anticipated filing date of such Registration Statement, the Company shall notify the Purchaser of any information the Company reasonably requests from the Purchaser, to the extent related to the Registration Statement.

Section 5. Representations and Warranties by the Company. Except as set forth in the SEC Reports filed with or furnished to the Commission by the Company on or following January 1, 2019, which disclosures serve to qualify these representations and warranties in their entirety, the Company represents and warrants to the Purchaser that the statements contained in this Section 5 are true and correct as of the Effective Date and as of the Closing Date:

5.01 Organization and Good Standing. The Company: (a) is duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its formation, (b) is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified would not have a Material Adverse Effect, and (c) has all requisite corporate power and authority to own or lease and operate its assets and carry on its business as presently being conducted as disclosed in the SEC Reports.

5.02 Corporate Power and Authority; Valid Issuance of Shares.

(a) The Company has all requisite corporate power and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement the consummation of the transactions contemplated by this Agreement. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated by this Agreement, have been duly authorized by the Company’s Board of Directors (the “Board”) or a duly authorized committee thereof and no further consent or authorization of the Company, the Board or its stockholders is required. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement by the Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

(b) The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, the Shares will be validly issued, fully paid and non-assessable, and shall be free and clear of all taxes, liens and other encumbrances (other than restrictions on transfer arising under applicable federal and state securities laws), and are not subject to preemptive rights or other similar rights of stockholders of the Company

5.03 Consents. Neither the execution, delivery or performance of this Agreement by the Company, nor the consummation by it of the obligations and transactions contemplated hereby (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares) requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than filings required under applicable U.S. federal and state securities laws or the Committee on Foreign Investment in the United States.

5.04 Capitalization.

(a) As of August 30, 2019 (the “Capitalization Date”), the authorized capital stock of the Company consists of 210,000,000 shares of capital stock, of which 200,000,000 are designated as Common Stock and 10,000,000 are designated as preferred stock, $0.0001 par value per share, of which 5,000,000 have been designated as Series X Convertible Preferred Stock (the “Series X Preferred Stock”). As of the Capitalization Date: (i) 26,767,989 shares of Common Stock were issued and outstanding; (ii) 565,231 shares of Series X Preferred Stock were issued and outstanding and 5,652,310 shares of Common Stock were reserved for issuance upon conversion of the Series X Preferred Stock; (iii) 5,176,522 shares of Common Stock were issuable (and such number was reserved for issuance) upon exercise of outstanding options to purchase Common Stock; (iv) 488,902 shares of Common Stock were issuable (and such number was reserved for issuance) upon vesting of outstanding restricted stock units for the issuance of Common Stock; (v) 12,517,328 shares of Common Stock were issuable (and such number was reserved for issuance) upon exercise of outstanding warrants to purchase Common Stock; (vi) 486,423 shares of Common Stock were available for issuance pursuant to the Company’s 2015 Equity Incentive Plan; and (vii) 580,104 shares of Common Stock were available for issuance pursuant to the Company’s 2015 Employee Stock Purchase Plan. The Company has no other shares of capital stock or securities convertible into, or exchangeable for, capital stock of the Company authorized, issued or outstanding.

(b) No Person is entitled to preemptive rights with respect to any securities of the Company.

(c) The Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its securities or any interests therein or to pay dividends or to make distributions in respect thereof.

(d) There are no voting agreements, buy-sell agreements or right of first purchase agreements among the Company and any stockholders of the Company relating to the securities of the Company.

(e) The sale and issuance of the Shares hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person.

5.05 No Conflicts.

(a) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares) will not (a) result in a violation of the Company’s Amended and Restated Certificate of Incorporation, the Company’s Amended and Restated Bylaws or any equivalent organizational document of the Company (the “Charter Documents”) or require the approval of the Company’s stockholders, (b) violate, conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any material agreement, lease, mortgage, license, indenture, instrument or other contract to which the Company is a party, (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected, (d) result in a violation of or require stockholder approval under any rule or regulation of The Nasdaq Stock Market LLC (“Nasdaq”), or (e) result in the creation of any encumbrance upon any of the Company’s assets.

5.06 Nasdaq. The Common Stock is listed on The Nasdaq Global Market. There are no proceedings pending, or to the Company’s knowledge, threatened to revoke or suspend such listing or the listing of the Common Stock. The Company is in compliance with the requirements of Nasdaq for continued listing of the Common Stock thereon and any other applicable Nasdaq listing and maintenance requirements, and the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Shares) will not result in any noncompliance by the Company with any such requirements.

5.07 SEC Filings and Sarbanes-Oxley Act.

(a) The Company has timely filed with or furnished to the Commission all reports, schedules, forms, statements, prospectuses, registration statements and other documents required to be filed with or furnished to the Commission by the Company since January 1, 2016 (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the “SEC Reports”). To the Company’s knowledge, as of the date hereof, no SEC Report is the subject of ongoing review, comment or investigation by the Commission.

(b) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each SEC Report complied, and each SEC Report filed subsequent to the date hereof will comply, in all material respects with the applicable requirements of Nasdaq, the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be.

(c) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each SEC Report filed pursuant to the Exchange Act did not, and each SEC Report filed pursuant to the Exchange Act subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(d) Each SEC Report that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(e) The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to the Company is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. Such disclosure controls and procedures are effective in timely alerting the Company’s principal executive officer and principal financial officer to material information required to be included in the Company’s periodic and current reports required under the Exchange Act. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

(f) Since January 1, 2016, the Company has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s auditors and Audit Committee of the Board (1) any significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (2) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls.

(g) There are no outstanding loans or other extensions of credit made by the Company to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company. The Company has not, since the enactment of the Sarbanes-Oxley Act, taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(h) Since January 1, 2016, the Company has complied in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq and all applicable rules, regulations and requirements of the Sarbanes-Oxley Act.

(i) Each of the principal executive officer and principal financial officer of the Company (or each former principal executive officer and principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the Commission and Nasdaq, and the statements contained in any such certifications are true and complete.

(j) Since January 1, 2016, there has been no transaction, or series of similar transactions, agreements, arrangements or understandings, nor is there any proposed transaction as of the date of this Agreement, or series of similar transactions, agreements, arrangements or understandings to which the Company was or is to be a party, that would be required to be disclosed under Item 404 of Regulation S-K.

5.08 Financial Statements. The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company (including the notes thereto) included or incorporated by reference in the SEC Reports fairly present in all material respects, in conformity with GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the Commission) applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of the Company and its consolidated subsidiaries as at the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject to normal year-end audit adjustments in the case of any unaudited interim financial statements).

5.09 Absence of Certain Changes. Since June 30, 2019 and through the date hereof, (i) the business of the Company and its subsidiaries has been conducted in all material respects in the ordinary course consistent with past practices and (ii) there has not been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.10 Litigation. There is no Action (or any basis therefor) pending against, or, to the Company’s knowledge, threatened against or affecting the Company, any of its subsidiaries, any present or former officer, director or employee of the Company or any of its subsidiaries or any Person for whom the Company or any of its subsidiaries may be liable or any of their respective properties before (or, in the case of threatened Actions, would be before) or by any Governmental Entity or arbitrator (except for any stockholder litigation arising after the date hereof that relates to this Agreement or the transactions contemplated hereby), that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.11 Taxes. The Company has timely filed all tax returns and reports (including information returns and reports) as required by law. These returns and reports are correct and complete in all respects. The Company has paid all taxes and related interest, penalties and other assessments due (whether or not shown as due on a tax return). None of the Company’s federal income tax returns and none of its state income, franchise, sales or use tax returns is the subject of an audit or other Action. Since June 30, 2019, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business. The Company has not made an election to be treated as an S corporation for federal income tax purposes.

5.12 Brokers. There is no investment banker, broker, finder, financial advisor, placement agent or other Person that has been retained by or is authorized to act on behalf of the Company who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

5.13 Private Placement. Neither the Company nor any Person acting on its behalf, has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Shares under the Securities Act. Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4 of this Agreement, the issuance of the Shares are exempt from registration under the Securities Act.

5.14 Disclosure. No representation or warranty by the Company contained in this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

5.15 No Other Representations or Warranties. Except in the case of fraud, the Company acknowledges and agrees that: (a) the only representations, warranties, covenants and agreements made by the Purchaser or any of its Affiliates or representatives are the representations, warranties, covenants and agreements made in this Agreement; and (b) neither the Purchaser nor any other Person has made any representation or warranty, whether express or implied, as to the accuracy or completeness of any information regarding the Purchaser furnished or made available to the Company and its representatives except as expressly set forth in this Agreement.

Section 6. Conditions of Parties’ Obligations.

6.01 Conditions of the Purchaser’s Obligations at the Closing. The obligations of the Purchaser under Section 2 of this Agreement are subject to the fulfillment, prior to the Closing, of all of the following applicable conditions, any of which may be waived in whole or in part by the Purchaser in its absolute discretion.

(a) Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall be true and correct on and as of the Closing Date (except to the extent expressly made as of an earlier date in which case as of such earlier date).

(b) Performance. The Company shall have performed and complied in all material respects with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied by it on or prior to the Closing Date.

(d) Qualification under State Securities Laws. All registrations, qualifications, permits and approvals, if any, required under applicable state securities laws shall have been obtained for the lawful execution, delivery and performance of this Agreement.

(e) Consents and Waivers. The Company shall have obtained all consents or waivers necessary to execute and perform its obligations under this Agreement. All corporate and other action and governmental filings necessary for the Company to effectuate the terms of this Agreement and other agreements and instruments executed and delivered by the Company in connection herewith shall have been made or taken by the Company, and no Material Adverse Effect shall have occurred with respect to the operation of the Company’s business.

(f) Absence of Litigation. No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted or be pending before any court, arbitrator, governmental body, agency or official. The sale of the Shares by the Company shall not be prohibited by any law or governmental order or regulation.

6.02 Conditions of the Company’s Obligations. The obligations of the Company under Section 2 of this Agreement are subject to the fulfillment prior to or on the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Company: (a) the Purchaser shall have performed and complied in all material respects with all of its obligations hereunder required to be performed by it at or prior to the Closing; and (b) the representations and warranties of the Purchaser contained in this Agreement shall be true and correct on and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date).

Section 7. Transfer Restrictions; Restrictive Legend; Market Stand-Off; Other Covenants.

7.01 Transfer Restrictions. The Purchaser understands that the Company may, as a condition to the transfer of any of the Shares, require that the request for transfer be accompanied by an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed transfer does not result in a violation of the Securities Act, unless such transfer is covered by an effective registration statement or by Rule 144 or Rule 144A under the Securities Act; provided, however, that an opinion of counsel shall not be required for a transfer by the Purchaser that is: (A) a partnership transferring to its partners or former partners in accordance with partnership interests; (B) a corporation transferring to a wholly owned subsidiary or a parent corporation that owns all of the capital stock of the Purchaser; (C) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company; (D) transferring the Shares to any Affiliate of the Purchaser or other Person under common management with the Purchaser; or (F) a transfer that is made pursuant to a bona fide gift to a third party; provided, further, that (i) the transferee in each case agrees to be subject to the restrictions in this Section 7 and provides the Company with a representation letter containing customary investment representations under the Securities Act, (ii) the Company satisfies itself that the number of transferees is sufficiently limited and (iii) in the case of transferees that are partners or limited liability company members, the transfer is for no consideration. It is understood that the certificate or book entry statement evidencing the Shares may bear substantially the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.”

7.02 Unlegended Certificates. The Company shall, at its sole expense, upon appropriate notice from the Purchaser stating that Registrable Securities have been sold pursuant to an effective Registration Statement, timely prepare and deliver certificates representing the Shares to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free of any restrictive legends and in such denominations and registered in such names as the Purchaser may request. Further, the Company shall, at its sole expense, cause its legal counsel or other counsel satisfactory to the transfer agent to provide all opinions as may reasonably be required by the transfer agent in connection with the removal of legends. The Purchaser may request that the Company remove, and the Company agrees to authorize the removal of, any legend from the Shares following the delivery by the Purchaser to the Company or the Company’s transfer agent of a legended certificate representing such Shares: (i) following any sale of such Shares pursuant to Rule 144, (ii) if such Shares are eligible for sale under Rule 144(b)(1), or (iii) following the time a legend is no longer required with respect to such Shares. If a legend is no longer required pursuant to the foregoing, the Company will deliver or cause to be delivered to the Purchaser a certificate representing the Shares that is free from all restrictive legends. A certificate for the Shares free from all restrictive legends may be transmitted by the Company’s transfer agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company (“DTC”) as directed by the Purchaser. The Company warrants that the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement. If the Purchaser effects a transfer of the Shares in accordance with this Section 7.02, the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by the Purchaser to effect such transfer. Each Purchaser hereby agrees that the removal of the restrictive legend pursuant to this Section 7.02 is predicated upon the Company’s reliance that the Purchaser will sell any such Shares pursuant to an exemption from the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

7.03 Market Stand-Off Agreement. The Purchaser hereby agrees that it will not, without the prior written consent of the Company, during the period commencing on the Closing Date, and ending on the one-year anniversary of the Closing Date (such period, the “Lock-Up Period”), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Purchaser or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.

Section 8. Registration, Transfer and Substitution of Certificates for Shares.

8.01 Stock Register; Ownership of Shares. The Company will keep at its principal office, or will cause its transfer agent to keep, a register in which the Company will provide for the registration of transfers of the Shares. The Company may treat the Person in whose name any of the Shares are registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary. All references in this Agreement to a “holder” of any Shares shall mean the Person in whose name such Shares are at the time registered on such register.

8.02 Replacement of Certificates. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing any of the Shares, and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement and surety bond reasonably satisfactory to the Company or, in the case of any such mutilation, upon surrender of such certificate for cancellation at the office of the Company maintained pursuant to Section 8.01 hereof, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing such Shares, of like tenor.

Section 9. Registration Rights.

9.01 Mandatory Registration. No later than 90 days prior to the expiration of the Lock-Up Period (the “Filing Deadline”), the Company shall prepare and file with the Commission a Registration Statement under the Securities Act on appropriate form covering the resale of the full amount of the Shares (the “Registrable Securities”). The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective by the Commission as soon as practicable, but in no event later than the date (the “Effectiveness Deadline”), which shall be either: (i) in the event that the Commission does not review the Registration Statement, 45 days after the Filing Deadline, or (ii) in the event that the Commission reviews the Registration Statement, 90 days after the Filing Deadline (but in any event, no later than three Business Days following the Commission indicating that it has no further comments on the Registration Statement). Such Registration Statement shall not include any shares of Common Stock or other securities for the account of any other holder without the prior written consent of the Purchaser.

9.02 Rule 415; Cutback. If at any time the staff of the Commission (the “Staff”) takes the position that the offering of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires the Purchaser to be named as an “underwriter,” the Company shall use its reasonable best efforts to persuade the Commission that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that the Purchaser is not an “underwriter.” In the event that, despite the Company’s reasonable best efforts and compliance with the terms of this Section 9.02, the Staff refuses to alter its position, the Company shall (i) remove from the Registration Statement the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the Staff may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name the Purchaser as an “underwriter” in such Registration Statement without the prior written consent of the Purchaser. No liquidated damages shall accrue as to any Cut Back Shares until such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares). From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 9 (including the liquidated damages provisions) shall again be applicable to such Cut Back Shares; provided, however, that (x) the Filing Deadline for the Registration Statement including such Cut Back Shares shall be 10 Business Days after such Restriction Termination Date, and (y) the Effectiveness Deadline with respect to such Cut Back Shares shall be the 90th day immediately after the Restriction Termination Date or the 120th day if the Staff reviews such Registration Statement (but in any event no later than three Business Days from the Staff indicating it has no further comments on such Registration Statement).

9.03 Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statement. Subject to Section 9.02, if either: (a) a Registration Statement covering all of the Registrable Securities required to be covered thereby and required to be filed by the Company pursuant to this Agreement is (i) not filed with the Commission on or before the Filing Deadline (a “Filing Failure”) or (ii) not declared effective by the Commission on or before the Effectiveness Deadline (an “Effectiveness Failure”); or (b) on any day during the Reporting Period and after the Effectiveness Date, sales of all of the Registrable Securities required to be included on such Registration Statement cannot be made (other than (i) during an Allowable Grace Period or (ii) if the Registration Statement is on Form S-1, for a period of 15 days following the date the Company files a post-effective amendment to incorporate the Company’s Annual Report on Form 10-K) pursuant to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to such Registration Statement or to register a sufficient number of shares of Common Stock) (a “Maintenance Failure”), then, in satisfaction of the damages to the Purchaser by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock, the Company shall pay to the Purchaser an amount in cash equal to 1.0% of the Purchase Price on each of the following dates: (x) the day of a Filing Failure and on every 30^th day (prorated for periods totaling less than 30 days) thereafter until such Filing Failure is cured; (y) the day of an Effectiveness Failure and on every 30^th day (prorated for periods totaling less than 30 days) thereafter until such Effectiveness Failure is cured; and (z) the initial day of a Maintenance Failure and on every 30^th day (prorated for periods totaling less than 30 days) thereafter until such Maintenance Failure is cured. The payments to which the Purchaser shall be entitled pursuant to this Section 9.03 are referred to herein as “Registration Delay Payments;” provided that no Registration Delay Payments shall be required following the termination of the Reporting Period, and provided further that in no event shall the aggregate Registration Delay Payments accruing under this Section 9.03 exceed 6% of the Purchase Price (i.e., corresponding to a total delay of six months). The first such Registration Delay Payment shall be paid within three Business Days after the event or failure giving rise to such Registration Delay Payment occurred and all other Registration Delay Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Registration Delay Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Registration Delay Payments is cured.

9.04 Related Obligations. At such time as the Company is obligated to file a Registration Statement with the Commission pursuant to Section 9.01 of this Agreement, the Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

(a) The Company shall submit to the Commission, within three Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of the Commission or that the staff has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than two Business Days after the submission of such request. The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times with respect to each Purchaser’s Registrable Securities until the expiration of the Reporting Period. The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.

(b) The Company shall prepare and file with the Commission such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Reporting Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.

(c) Upon request of the Purchaser, the Company shall furnish to the Purchaser without charge, (i) promptly after the Registration Statement is prepared and filed with the Commission, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, and if requested by the Purchaser, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of the Registration Statement, 10 copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Purchaser may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Purchaser may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities.

(d) The Company shall notify the Purchaser in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and upon request deliver 10 copies of such supplement or amendment to the Purchaser (or such other number of copies as the Purchaser may reasonably request). Unless such information is publicly available, the Company shall also promptly notify the Purchaser in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Purchaser by facsimile or email on the same day of such effectiveness), (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

(e) The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Purchaser of such order and the resolution thereof or its receipt of notice of the initiation or threat of any proceeding for such purpose.

(f) If a Purchaser is required under applicable securities law to be described in the Registration Statement as an underwriter, at the reasonable request of the Purchaser, the Company shall furnish to the Purchaser, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as the Purchaser may reasonably request, (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Purchaser, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Purchaser.

(g) If the Purchaser is required under applicable securities law to be described in the Registration Statement as an underwriter, upon the written request of the Purchaser in connection with the Purchaser’s due diligence requirements, if any, the Company shall make available for inspection by (i) the Purchaser and its legal counsel and (ii) one firm of accountants or other agents retained by the Purchaser (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector solely for the purpose of establishing a due diligence defense under underwriter liability under the Securities Act, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to the Purchaser) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the Securities Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Purchaser agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order preventing disclosure of, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and the Purchaser) shall be deemed to limit the Purchaser’s ability to sell Registrable Securities in a manner which is otherwise consistent with Applicable Laws.

(h) The Company shall hold in confidence and not make any disclosure of information concerning the Purchaser provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Purchaser is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Purchaser and allow the Purchaser, at the Purchaser’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order preventing disclosure of, such information.

(i) The Company shall cooperate with the Purchaser and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Purchaser may reasonably request and registered in such name as the Purchaser may request.

(j) If requested by a Purchaser, the Company shall, as soon as practicable, (i) incorporate in a prospectus supplement or post-effective amendment such information as the Purchaser reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Purchaser.

(k) The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

(l) The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission in connection with any registration hereunder.

(m) Within two Business Days after a Registration Statement that covers Registrable Securities is declared effective by the Commission, the Company shall deliver to the transfer agent for such Registrable Securities (with copies to the Purchaser) confirmation that such Registration Statement has been declared effective by the Commission.

(n) Notwithstanding anything to the contrary herein, at any time after the Effectiveness Date, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify the Purchaser in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Purchaser) and the date on which the Grace Period will begin, and (ii) notify the Purchaser in writing of the date on which the Grace Period ends; and, provided further, that the Grace Periods shall not exceed an aggregate of 30 Trading Days during any 365-day period and the first day of any Grace Period must be at least 15 days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Purchaser receives the notice referred to in clause (i) and shall end on and include the later of the date the Purchaser receives the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 9.04(d) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 9.04(c) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of the Purchaser in accordance with the terms of this Agreement in connection with any sale of Registrable Securities with respect to which the Purchaser has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement (unless an exemption from such prospectus delivery requirement exists), prior to the Purchaser’s receipt of the notice of a Grace Period and for which the Purchaser has not yet settled.

(o) Neither the Company nor any subsidiary or affiliate thereof shall identify the Purchaser as an underwriter in any public disclosure or filing with the Commission or any applicable Trading Market without the prior written consent of the Purchaser, and the Purchaser being deemed an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement.

9.05 Expenses of Registration. All expenses incurred in connection with registrations, filings or qualifications pursuant to this Section 9, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company. Notwithstanding the foregoing, in no event shall the Company be responsible for underwriting discounts, commissions, placement agent fees or other similar expenses payable with respect to Registrable Securities being sold or offered for sale by the Purchaser.

9.06 Reports under the Exchange Act. With a view to making available to the Purchaser the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit the Purchaser to sell securities of the Company to the public without registration (“Rule 144”), the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144, during the Reporting Period;

(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act; and

(c) furnish to the Purchaser, so long as the Purchaser owns Registrable Securities, promptly upon request during the Reporting Period: (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Purchaser to sell such securities pursuant to Rule 144 without registration.

9.07 Indemnification.

(a) Company Indemnification. The Company will indemnify the Purchaser, each of its officers and directors, partners, members and each person controlling the Purchaser within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such Registration Statement, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (B) any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration; and in each case, the Company will reimburse the Purchaser, each of its officers and directors, partners, members and each person controlling the Purchaser, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on (X) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by the Purchaser or controlling person, and stated to be specifically for use therein, (Y) the use by the Purchaser of an outdated or defective prospectus after the Company has notified the Purchaser in writing that the prospectus is outdated or defective or (Z) the Purchaser’s (or any other indemnified person’s) failure to send or give a copy of the prospectus or supplement (as then amended or supplemented), if required, pursuant to Rule 172 under the Securities Act (or any successor rule) to the Persons asserting an untrue statement or alleged untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such person if such statement or omission was corrected in such prospectus or supplement.

(b) Purchaser Indemnification. The Purchaser will indemnify the Company, each of its directors and officers, any holders of the Company’s securities covered by a Registration Statement, each person who controls the Company within the meaning of Section 15 of the Securities Act, and each such holder, each of its officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (A) any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, and only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by the Purchaser and stated to be specifically for use therein, or (B) any violation by the Purchaser of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Purchaser, and in each case, the Purchaser will reimburse the Company, each other holder, and directors, officers, persons, underwriters or control persons of the Company and the other holders for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action; provided, that the indemnity agreement contained in this Subsection 9.07(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Purchaser (which consent shall not be unreasonably withheld or delayed). The liability of the Purchaser for indemnification under this Subsection 9.07(b) in its capacity as a seller of Registrable Securities shall not exceed the amount of net proceeds to the Purchaser of the securities sold in any such registration.

(c) Notice and Procedure. Each party entitled to indemnification under this Section 9.07 (each, an “Indemnified Party”) shall give written notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

(d) Contribution. If the indemnification provided for in this Section 9.07 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the untrue statement or omission that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by the Purchaser hereunder exceed the proceeds from the offering received by the Purchaser. The amount paid or payable by a party as a result of any loss, claim, damage or liability shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 9.07 was available to such party in accordance with its terms.

(e) Survival. The obligations of the Company and the Purchaser under this Section 9.07 shall survive completion of any offering of Registrable Securities in a Registration Statement and the termination of this Agreement. The indemnity and contribution agreements contained in this Section 9.07 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of other remedies or causes of action that the parties may have under this Agreement.

Section 10. Definitions. Unless the context otherwise requires, the terms defined in this Section 9 shall have the meanings specified for all purposes of this Agreement. All accounting terms used in this Agreement, whether or not defined in this Section 9, shall be construed in accordance with GAAP. If the Company has one or more subsidiaries, such accounting terms shall be determined on a consolidated basis for the Company and each of its subsidiaries, and the financial statements and other financial information to be furnished by the Company pursuant to this Agreement shall be consolidated and presented with consolidating financial statements of the Company and each of its subsidiaries.

“Action” means any civil, criminal or administrative action, audit, examination, suit, demand, claim, hearing, complaint, notice of violation, investigation, proceeding, demand letter, settlement, enforcement action or proceeding.

“Affiliate” shall mean, with respect to any Person (including the Company and Purchaser), any other Person controlled by, controlling, or under common control with such Person. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) shall mean direct or indirect ownership, including ownership by one or more trusts with substantially the same beneficial interests, of 50% or more of the outstanding voting and equity rights of such Person, or possession of the power to direct the management and policies of such Person.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means U.S. generally accepted accounting principles consistently applied.

“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority, self-regulatory organization or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

“knowledge” by a Person of a particular fact or other matter means the following: (a) if the Person is an individual, that such individual is actually aware or reasonably should be aware, after due inquiry, by virtue of such person’s office, of such fact or other matter; and (b) if the Person is an entity, that any executive officer of such Person is actually aware or reasonably should be aware, after due inquiry, of such fact or other matter.

“Material Adverse Effect” means any (i) adverse effect on the reservation, issuance, delivery or validity of the Shares, as applicable, or the transactions contemplated hereby or on the ability of the Company to perform its obligations under this Agreement, or (ii) material adverse effect on the condition (financial or otherwise), prospects, properties, assets, liabilities, business or operations of the Company or any of its subsidiaries.

“Person” means and includes all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures, limited liability companies and other entities and governments and agencies and political subdivisions.

“Reporting Period” means the period commencing on the Closing Date and ending on the earlier of: (i) the date as of which the Purchaser may sell all of the Shares under Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirements under Rule 144(c)(1) (or any successor thereto) promulgated under the Securities Act; and (ii) the date on which the Purchaser shall have sold all of the Shares pursuant to the Registration Statement.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

Section 11. Miscellaneous.

11.01 Waivers and Amendments. Upon the approval of the Company and the written consent of the Purchaser, the obligations of the Company and the rights of the Purchaser under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely). Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or terminated orally or by course of dealing, but only by an instrument in writing executed by the Company and the Purchaser.

11.02 Notices. All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed delivered: (a) when delivered, if delivered personally, (b) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) one Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next Business Day delivery, or (d) when receipt is acknowledged, in the case of email, in each case to the intended recipient as set forth below.

If to the Company:

Cidara Therapeutics, Inc.

6310 Nancy Ridge Dr., Suite 101

San Diego, California 92121

Attn: Jessica Oien

Email: joien@cidara.com

If to the Purchaser:

Mundipharma AG

St.Alban-Rheinweg 74

Basel 4020

Switzerland

Identification Number is CHE-107.788.217

With a copy to:

Mundipharma International Limited

Unit 196 Cambridge Science Park

Milton Road

Cambridge CB4 0AB

United Kingdom

Attn: General Counsel

or at such other address as the Company or the Purchaser may specify by written notice to the other parties hereto in accordance with this Section 11.02.

11.03 Cumulative Remedies. None of the rights, powers or remedies conferred upon the Purchaser on the one hand or the Company on the other hand shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

11.04 Successors and Assigns. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of each Purchaser and the successors of the Company, whether so expressed or not. None of the parties hereto may assign its rights or obligations hereof without the prior written consent of the other party, except that the Purchaser may, without the prior consent of the Company, assign the Shares or its rights to purchase the Shares hereunder to any of its Affiliates (provided each such Affiliate agrees to be bound by the terms of this Agreement and makes the same representations and warranties set forth in Section 4 hereof). This Agreement shall not inure to the benefit of or be enforceable by any other Person.

11.05 Headings. The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

11.06 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflict of law principles. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby must be brought exclusively in the Delaware Chancery Court, and each of the parties hereby consents to the jurisdiction of such court (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.

11.07 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts (including counterparts delivered electronically) shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

11.08 Expenses. The Company and Purchaser are liable for, and will pay, their own expenses incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, including, without limitation, attorneys’ and consultants’ fees and expenses.

11.09 Taxes. The Company shall pay any and all United States federal transfer, stamp or similar taxes (“Transfer Taxes”) and Purchaser shall pay any and all other Transfer Taxes that may be payable with respect to the issuance and delivery of the Shares to the Purchaser under this Agreement.

11.10 California Corporate Securities Law. THE SALE OF THE SHARES HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION BEING AVAILABLE.

11.11 Entire Agreement. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and, except as set forth below, this agreement supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and thereof. Notwithstanding the foregoing, this Agreement shall not supersede any confidentiality or other non-disclosure agreements that may be in place between the Company and any Purchaser.

11.12 Severability. If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum extent allowable by law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.

11.13 Specific Performance. Each party to this Agreement acknowledges and agrees that the other parties would be irreparably damaged in the event that any of the terms or provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Therefore, notwithstanding anything to the contrary set forth in this Agreement, each party to this Agreement hereby agrees that the other parties shall be entitled to an injunction or injunctions to prevent breaches of any of the terms or provisions of this Agreement and/or specific performance by any other party under this Agreement, and each party hereby agrees to waive the defense (and not to interpose as a defense or in opposition) in any such suit that the other parties have an adequate remedy at law, and hereby agrees to waive any requirement to post any bond in connection with obtaining such relief. The equitable remedies described in this Section 11.13 shall be in addition to, and not in lieu of, any other remedies at law or in equity that the parties to this Agreement may elect to pursue.

11.14 SEC Reports. The parties agree that any information contained in the SEC Reports shall only be deemed to be an exception to (or, as applicable, a disclosure for purposes of) the Company’s representations and warranties if the relevance of that information as an exception to (or a disclosure for purposes of) the representations and warranties set forth in this Agreement would be reasonably apparent to a reasonable person engaged in the business of the Company who has read that information concurrently with such representations and warranties, without any independent knowledge on the part of the reader regarding the matter(s) so disclosed; provided that in no event shall any information contained in any part of any documents filed with the Commission under the headings “Safe Harbor Statement” or “Risk Factors,” or any similar section, or that is predictive, cautionary or forward-looking in nature, be deemed to be an exception to (or, as applicable, a disclosure for purposes of) any representations and warranties of the Company contained in this Agreement.

* * *

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.

THE COMPANY:

CIDARA THERAPEUTICS, INC.

By: /s/ Jeffrey Stein

Name: Jeffrey Stein, Ph.D.

Title: President and Chief Executive Officer

PURCHASER:

MUNDIPHARMA AG

By: /s/ Jörg Fischer

Name: Jörg Fischer

Title: Director

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Stein, Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cidara Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make 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.



Date: November 7, 2019		/s/ Jeffrey Stein, Ph.D.
		Jeffrey Stein, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James Levine, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cidara Therapeutics, Inc.;

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.



Date: November 7, 2019		/s/ James Levine
		James Levine
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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 of Cidara Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey Stein, Ph.D., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: November 7, 2019		/s/ Jeffrey Stein, Ph.D.
		Jeffrey Stein, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

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 of Cidara Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Levine, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: November 7, 2019		/s/ James Levine
		James Levine
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)