Axovant Sciences Ltd. (Form: 10-Q, Received: 02/09/2016 16:48:10)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2015

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 001-37418

Axovant Sciences Ltd.

(Exact name of registrant as specified in its charter)



Bermuda		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Clarendon House - 2 Church Street Hamilton HM 11 Bermuda		Not Applicable
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +1 (441) 824-8100

(former name, former address and former fiscal year, if changed since last report)

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

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



Large accelerated filer	o	Accelerated filer	o



Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	o

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

The number of shares outstanding of the Registrant’s common shares, $0.00001 par value per share, on February 9, 2016 , was 99,150,000 .

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AXOVANT SCIENCES LTD.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED DECEMBER 31, 2015

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	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of December 31, 2015 and March 31, 2015	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended December 31, 2015 and for the period from October 31, 2014 (Date of Inception) to December 31, 2014	4
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the Nine Months Ended December 31, 2015 and for the period from October 31, 2014 (Date of Inception) to December 31, 2014	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2015 and for the period from October 31, 2014 (Date of Inception) to December 31, 2014	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53

SIGNATURES	54

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AXOVANT SCIENCES LTD.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)



	December 31, 2015			March 31, 2015
Assets
Current assets:
Cash	$	299,998		$	—
Prepaid expenses and other current assets	3,819			4
Deferred financing costs	—			1,104
Total current assets	303,817			1,108

Property, plant and equipment, net	61			9
Total assets	$	303,878		$	1,117

Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	3,556		$	403
Due to Roivant Sciences Ltd. and Roivant Sciences, Inc.	1,839			2,307
Accrued expenses	5,398			1,158
Contingent payment liability	5,000			—
Income tax payable	99			—
Total current liabilities	15,892			3,868

Contingent payment liability	—			5,000

Total liabilities	15,892			8,868

Commitments and contingencies (Note I)

Shareholders’ equity (deficit):
Common shares, par value $0.00001 per share, 1,000,000,000 shares authorized, 99,150,000 and 75,000,000 issued and outstanding at December 31, 2015 and March 31, 2015, respectively	1			1
Common shares subscribed	—			(1		)
Additional paid-in capital	412,506			13,296
Accumulated deficit	(124,521		)	(21,047		)

Total shareholders’ equity (deficit)	287,986			(7,751		)

Total liabilities and shareholders’ equity (deficit)	$	303,878		$	1,117

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

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AXOVANT SCIENCES LTD.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)



	(Third Fiscal Quarter) Three Months Ended			Nine Months Ended			Period From October 31, 2014 (Date Of Inception) To December 31, 2014
	December 31, 2015			December 31, 2015

Operating expenses:
Research and development expenses
(includes $14,599 and $24,421 of share-based compensation expense for the three and nine months ended December 31, 2015, respectively and $457 of share-based compensation expense for period from October 31, 2014 (Date of inception) to December 31, 2014)	$	34,324		$	53,209		$	10,538
General and administrative expenses
(includes $24,457 and $39,537 of share-based compensation expense for the three and nine months ended December 31, 2015, respectively and $146 of share-based compensation expense for period from October 31, 2014 (Date of inception) to December 31, 2014)	28,230			49,364			224
Total operating expenses	62,554			102,573			10,762

Loss before provision for income tax	(62,554		)	(102,573		)	(10,762		)

Income tax expense	802			901			—

Net loss and comprehensive loss	$	(63,356	)	$	(103,474	)	$	(10,762	)

Net loss per common share — basic and diluted	$	(0.64	)	$	(1.11	)	$	(1.08	)
Weighted average common shares outstanding — basic and diluted	99,150,000			92,914,909			10,000,000

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

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AXOVANT SCIENCES LTD.

Condensed Consolidated Statements of Shareholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)



	Common Shares			Common Shares Subscribed			Additional Paid in Capital		Accumulated Deficit			Total Shareholders’ Equity (Deficit)
	Shares	Amount		Common Shares Subscribed			Additional Paid in Capital		Accumulated Deficit			Total Shareholders’ Equity (Deficit)

Balance at October 31, 2014	10,000,000	$	—	$	—		$	—	$	—		$	—
Capital contribution	—	—		—			5,000		—			5,000
Net loss	—	—		—			—		(10,762		)	(10,762		)
Balance at December 31, 2014	10,000,000	$	—	$	—		$	5,000	$	(10,762	)	$	(5,762	)
Common stock issued to RSL	65,000,000	1		(1		)	—		—			—
Share-based compensation expense	—	—		—			518		—			518
Capital contribution — share-based compensation	—	—		—			7,778		—			7,778
Net loss	—	—		—			—		(10,285		)	(10,285		)
Balance at March 31, 2015	75,000,000	$	1	$	(1	)	$	13,296	$	(21,047	)	$	(7,751	)
Sale of common shares in initial public offering ($15.00 per share), net of underwriting discounts and commissions and offering expenses of $27,748	24,150,000	—		—			334,502		—			334,502
Common shares subscription paid	—	—		1			—		—			1
Capital contribution	—	—		—			750		—			750
Share-based compensation expense	—	—		—			13,542		—			13,542
Capital contribution — share-based compensation (Note E[1])	—	—		—			50,416		—			50,416
Net loss	—	—		—			—		(103,474		)	(103,474		)

Balance at December 31, 2015	99,150,000	$	1	$	—		$	412,506	$	(124,521	)	$	287,986

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

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AXOVANT SCIENCES LTD.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



	Nine Months Ended December 31, 2015			Period From October 31, 2014 (Date Of Inception) To December 31, 2014

Cash flows from operating activities:
Net loss	$	(103,474	)	$	(10,762	)

Adjustments to reconcile net loss to net cash used in operating activities:
In-process research and development expenses	5,252			10,000
Share-based compensation	63,958			—
Depreciation and amortization	8			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(3,814		)	(2		)
Accounts payable	3,153			—
Due to Roivant Sciences Ltd. and Roivant Sciences, Inc.	(781		)	758
Accrued liabilities	5,469			6
Income tax payable	98			—
Net cash used in operating activities	(30,131		)	—
Cash flows from investing activities:
Purchase of in-process research and development	(4,756		)	(5,000		)
Purchase of property, plant and equipment	(59		)	—
Net cash used in investing activities	(4,815		)	(5,000		)

Cash flows from financing activities:
Cash proceeds from issuance of common shares in initial public offering, net of underwriting discount	336,893			—
Initial public offering costs paid	(2,351		)	—
Cash capital contribution from Roivant Sciences Ltd.	750			5,000
Repayment of amounts due to Roivant Sciences Ltd. and Roivant Sciences, Inc. for amounts paid on behalf of the Company	(627		)	—
Due to Roivant Sciences Ltd. and Roivant Sciences, Inc. for amounts paid on behalf of the Company	279			—
Net cash provided by financing activities	334,944			5,000
Net change in cash	299,998			—
Cash—beginning of period	—			—
Cash—end of period	$	299,998		$	—
Supplemental disclosure of cash paid:
Taxes	$	804		$	—

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

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AXOVANT SCIENCES LTD.

Notes to Condensed Consolidated Financial Statements

Note A—Description of Business

Axovant Sciences Ltd. (the ‘‘Company’’) is a clinical-stage biopharmaceutical company focused on acquiring, developing and commercializing novel therapeutics for the treatment of dementia. The Company intends to develop a pipeline of product candidates to comprehensively address the cognitive, functional and behavioral aspects of dementia and related neurological disorders. The Company was founded on October 31, 2014 as a Bermuda Exempted Limited Company and a wholly-owned subsidiary of Roivant Sciences Ltd. (‘‘RSL’’), under the name Roivant Neurosciences Ltd. The Company changed its name to Axovant Sciences Ltd. in March 2015 . On February 24, 2015, Axovant Sciences, Inc. (“ASI”) was formed, and on March 7, 2015 it became a wholly-owned subsidiary of the Company based in the United States of America.

From its inception, the Company has devoted substantially all of its efforts to organizing and staffing the Company, raising capital, acquiring product candidates and preparing for and advancing its product candidates, RVT-101 and nelotanserin, into clinical development. The Company has determined that it has one operating and reporting segment.

Note B—Summary of Significant Accounting Policies

[1] Basis of Presentation:

The Company’s fiscal year ends on March 31, and its fiscal quarters end on June 30, September 30, and December 31.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the period from inception on October 31, 2014 through the period ended March 31, 2015 included in the Company’s final prospectus dated June 10, 2015 filed with the Securities and Exchange Commission (“SEC”) on June 11, 2015. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented have been included. Operating results for the three and nine months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending March 31, 2016, for any other interim period, or for any other future year.

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (‘‘ASC’’) and Accounting Standards Update (‘‘ASU’’) of the Financial Accounting Standards Board (‘‘FASB’’). The condensed consolidated financial statements include the accounts of the Company and ASI, its wholly-owned subsidiary. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

There have been no significant changes in the Company’s accounting policies from those disclosed in its final prospectus filed with the SEC on June 11, 2015.

[2] Use of estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to compensation expense allocated to the Company under its services agreement with Roivant Sciences, Inc. (“RSI”) and ASI, contingent liabilities, share-based compensation and research and development costs. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

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[3] Net Loss per Common Share:

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares of outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common shareholders by the diluted weighted-average number of common shares outstanding during the period calculated in accordance with the treasury stock method. Stock options to purchase 5,698,817 and 5,698,817 common shares were not included in the calculation of diluted weighted-average common shares outstanding for the three and nine months ended December 31, 2015 because they were anti-dilutive.

[4] Financial Instruments:

ASC Topic 820, Fair Value Measurement ("ASC 820"), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or 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 a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:


•	Level 1-Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.


•	Level 2-Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.


•	Level 3-Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company's financial instruments consist of cash and accounts payable. These financial instruments are stated at their respective historical carrying amounts, which approximates fair value due to their short-term nature.

[5] Recent Accounting Pronouncements:

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This amendment will simplify the presentation of deferred tax assets and liabilities on the balance sheet and require all deferred tax assets and liabilities to be treated as non-current ASU 2015-17 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is evaluating the effect that ASU 2015-17 will have on its consolidated financial statements and related disclosures.

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Note C—Asset Acquisitions

[1] RVT-101:

On December 17, 2014 the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") to acquire certain intellectual property and research and development materials from GSK, which the Company renamed RVT-101, in exchange for the following consideration:


•	$5 million in cash paid at closing, December 17, 2014;

•

$5 million in a deferred payment payable upon the earlier of (a) the Company having determined in good faith that it has received definitive guidance from the U.S. Food and Drug Administration (the ‘‘FDA’’) that a single Phase 3 trial with RVT-101 for Alzheimer’s disease will be sufficient for New Drug Application (‘‘NDA’’) approval, (b) filing of an NDA for RVT-101 for Alzheimer’s disease incorporating data from one Phase 3 trial for Alzheimer’s disease, and (c) the Company not having dosed the first patient in a second Phase 3 trial for RVT-101 within six (6)months following the dosing of the first patient in the Company’s first Phase 3 trial for RVT-101. Should the FDA require the Company to complete additional clinical work prior to commencement of the first Phase 3 trial, the Company will have no obligation to make this deferred payment to GSK;


•	$35 million , $25 million and $10 million upon approval of RVT-101 in the United States, the European Union and Japan, respectively;


•	A one-time payment of $85 million for the first calendar year in which the Company achieves global net sales of $1.2 billion of RVT-101; and


•	a fixed royalty of 12.5% on annual net product sales in certain territories, subject to reduction on a product-by-product and country-by-country basis, on account of expiration of patent and regulatory exclusivity or upon generic entry.

For the consideration above, the Company also received a small quantity of inventory of RVT-101, and certain research and development historical records. The Company did not hire, or receive, any GSK employees working on the development of RVT-101, or any research, clinical or manufacturing equipment. Additionally, the Company did not assume from GSK any contracts, licenses or agreements between GSK and any third party with respect to RVT-101. The Company has independently developed all clinical processes and procedures for the Phase 3 MINDSET Study through the use of internal and external resources.

As the intellectual property and inventory of RVT-101 acquired had no alternative future use on the date of acquisition, the Company recorded the $5 million upfront payment as research and development expense at the closing date, December 17, 2014. In addition, the Company assessed the likelihood of making the deferred payment as probable (Refer to Note I) and recorded an additional $5 million amount as research and development expense at the date of the transaction.

[2] Nelotanserin:

On October 28, 2015 the Company acquired the global rights to nelotanserin, an inverse agonist of the 5HT2 _A receptor, from RSL. Pursuant to the terms of the Option and Waiver Agreement between RSL and the Company entered into in May 2015 (the "Option and Waiver Agreement"), RSL granted the Company an option to acquire all of RSL’s rights, title and interest in and to the development, marketing and supply agreement for nelotanserin with Arena Pharmaceuticals, GmbH (‘‘Arena’’) (the ‘‘Arena Development Agreement’’), together with any amendments and related side letters or other agreements. The option became exercisable beginning on September 16, 2015 and, if not exercised, would have expired on December 16, 2016. The Company exercised the option on October 28, 2015 and acquired all of RSL's rights, title, interests and obligations under the Arena Development Agreement for nelotanserin and accounted for the acquisition of nelotanserin as an asset acquisition. The Company recorded $5.3 million , as research and development expense which reflects 110% of payments made by RSL to Arena, including but not limited to a $4 million up-front payment, and any costs incurred in connection with the development of nelotanserin, in each case pursuant to the Waiver and Option Agreement prior to the exercise of the option.

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Pursuant to the Arena Development Agreement the Company is obligated to pay Arena up to an aggregate of $ 4 million in development, $ 37.5 million in regulatory and $60 million in commercialization milestones based on the net sales of nelotanserin. The Company is also obligated to purchase finished drug product under a fixed price equal to 15% of net sales of nelotanserin.

For the consideration above, the Company also received a small quantity of inventory of nelotanserin, and certain research and development historical records. The Company did not hire, or receive, any employees working on the development of nelotanserin, or any research, clinical or manufacturing equipment. Additionally, the Company did not assume from Arena any contracts, licenses or agreements between Arena and any third party with respect to nelotanserin. The Company will need to independently develop all clinical processes and procedures for future clinical studies of nelotanserin through the use of internal and external resources.

As the intellectual property and inventory of nelotanserin acquired had no alternative future use on the date of acquisition, the Company recorded approximately $5.3 million upfront payment as research and development expense on the date the Company exercised its option with RSL, October 28, 2015.

Note D—Accrued Expenses

As of December 31, 2015 and March 31, 2015 our accrued expenses consisted of the following (in thousands):



	December 31, 2015		March 31, 2015

Research and development expenses	$	3,946	$	—
Salaries, bonuses, and other compensation	1,199		56
Legal expenses	253		832
Other expenses	—		270
Total accrued expenses	5,398		1,158

Note E—Related Party Transactions

[1] Services Agreement:

During 2015 , the Company and ASI entered into a services agreement with RSI (the ‘‘Services Agreement’’) under which RSI agreed to provide certain administrative and research and development services to the Company. The Company and ASI amended and restated its Services Agreement with RSI on October 13, 2015 for the fiscal year commencing April 1, 2015. Under the Services Agreement, as amended and restated, the Company will pay or reimburse RSI for any expenses it, or third parties acting on its behalf, incurs for the Company. For any general and administrative and research and development activities performed by RSI employees, RSI will charge back the employee compensation expense plus a pre-determined mark-up. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters. All other costs will be billed back at cost. The accompanying interim unaudited condensed consolidated financial statements include third-party expenses that have been paid by RSI and RSL.

Under the Services Agreement, for the three and nine months ended December 31, 2015 the Company incurred expenses of $2,121,317 and $5,420,656 respectively, inclusive of the mark-up. For the period from October 31, 2014 (date of inception) to December 31, 2014 the Company incurred expenses of $691,436 , inclusive of the mark-up, to the Company under the services agreement.

On December 4, 2015 BVC Ltd. ("BVC") a non-public entity, which held a non-controlling ownership interest in RSL, the parent of the Company was merged with and into RSL (the " BVC Merger"), with RSL as the surviving entity. Prior to the BVC Merger the Company recorded share-based compensation expense, in relation to the share-based awards issued by BVC to RSI employees based on the changes in fair value of share-based awards which were remeasured at each reporting period date until performance was completed. As such, because the share-based awards were not based on the Company’s or RSL’s shares, they were remeasured at fair value at each reporting period until the awards vest. As a result of the BVC Merger, all outstanding BVC share-based awards were converted into RSL common share awards with the same vesting and forfeiture terms as the original grant. On December 8, 2015 following the BVC Merger, RSL recapitalized in conjunction with a private financing.

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For the three and nine months ended December 31, 2015 the Company recorded share-based compensation expense of $33,625,473 and $49,462,763 respectively, in relation to the RSL common share awards issued by RSL to RSI employees. These share based compensation amounts include compensation expense for BVC awards prior to the BVC Merger on December 4, 2015. Share based compensation expense is allocated to the Company by RSL based upon the relative percentage of time utilized by RSI employees on Company matters.

The RSL common share awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. At the time of the BVC Merger on December 4, 2015, the unvested BVC awards that were converted into common shares of RSL were remeasured at the estimated fair value of RSL and that fair value is recognized over the remaining requisite service period. As a result of the BVC Merger, the converted BVC awards will not be remeasured prospectively. The estimated fair value of these RSL common share awards was determined by the valuation of the December 8, 2015 RSL private financing. Prior to the BVC Merger, the fair value of BVC awards were based on RSL’s valuation after considering the fair value of RSL's ownership interest in the Company and RSL's other investments, discounted cash flow analysis, transactions entered into and contemplated by RSL and relevant industry and comparable public company data. As RSL is a non-public entity, the majority of the inputs used to estimate the fair value of the BVC awards prior to the BVC Merger and the RSL common share awards following the BVC Merger are classified as level 3 due to their unobservable nature. Significant judgment and estimates were used to estimate the fair value of these awards, as they are not publicly traded. RSL common share awards are subject to specified vesting schedules and requirements (a mix of time-based, performance-based and corporate event-based, including targets for RSL’s post-IPO market capitalization and future financing events).

Compensation expense will be allocated to the Company over the required service period over which these RSL common share awards would vest and is based upon the relative percentage of time utilized by RSI employees on Company matters. At December 31, 2015 , the remaining weighted average requisite service period was 2.63 years. For the three and nine months ended December 31, 2015 , the Company recorded compensation arrangement expense of $150,588 and $953,216 provided to Vivek Ramaswamy as RSI’s Chief Executive Officer by one of RSL’s investors.

[2] Stock Options:

During the three and nine months ended December 31, 2015 the Company granted stock options to purchase 145,000 and 215,000 shares, respectively, of the Company's common stock to employees of RSI as compensation for support services provided to the Company. The fair value of the stock options granted to RSI employees is accounted for by the Company in accordance with the authoritative guidance for non-employee equity awards and is remeasured on each valuation date until performance is complete using the Black-Scholes pricing model. (Refer to Note G).

Each award is subject to a specified vesting schedule. Compensation expense will be recognized by the Company over the required service period to earn each award. The Company recorded $726,597 and $1,299,694 of share-based compensation expense for the three and nine months ended December 31, 2015 , respectively. The share-based compensation was recorded as research and development and general and administrative expense in the condensed consolidated statement of operations. The total remaining unrecognized compensation cost related to the non-vested stock options amounted to $7,655,322 as of December 31, 2015 , which will be recognized over the weighted-average remaining requisite service period of 3.12 years. Refer to (Note G) for additional disclosures.

[3] Information Sharing and Cooperation Agreement:

In March 2015, the Company entered into an information sharing and cooperation agreement (the “Cooperation Agreement”) with RSL. The Cooperation Agreement, among other things, grants the Company a right of first review on any potential dementia-related product or investment opportunity that RSL may consider pursuing and obligates the Company to deliver periodic financial statements and other financial information to RSL and comply with other specified financial reporting requirements.

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On May 1, 2015, the Company received an offer notice, as defined in the Cooperation Agreement, from RSL relating to the opportunity to acquire from Arena, certain rights to develop and market nelotanserin. On May 8, 2015, the Company entered into a Waiver and Option Agreement with RSL with respect to such opportunity and RSL entered into the Arena Development Agreement.

Pursuant to the terms of the Waiver and Option Agreement, RSL granted the Company an option to acquire all of RSL’s right, title, interest and obligations in and to the Arena Development Agreement, together with any amendments and related side letters or other agreements. The option became exercisable beginning on September 16, 2015 and, if not exercised, would have expired on December 16, 2016. The Company exercised the option on October 28, 2015. (Refer to Note C). Following exercise of the option, the Services Agreement between the Company and RSI was applied with regard to any reimbursements made by the Company to RSL.

[4] Family Relationships:

Geetha Ramaswamy, MD, the Vice President, Medical Affairs for ASI, is the mother of Vivek Ramaswamy, the Chief Executive Officer of ASI and the Company’s principal executive officer. Shankar Ramaswamy, MD, the Vice President of Corporate Development of ASI, is the brother of Vivek Ramaswamy.

Salary expenses were $62,500 and $187,500 for both Geetha Ramaswamy and Shankar Ramaswamy for the three and nine months ended December 31, 2015 , respectively. In March 2015 , Geetha Ramaswamy was granted a stock option for 262,500 common shares of the Company and Shankar Ramaswamy was granted a stock option for 750,000 common shares of the Company, in each case with an exercise price of $0.90 per share. Shankar Ramaswamy, while previously employed by RSI, was also granted restricted stock in BVC. Following the BVC Merger, this restricted stock in BVC was converted into RSL common share awards, subject to vesting and forfeiture terms consistent with the original grant. (Refer to E[1]).

For the three and nine months ended December 31, 2015 , the Company has recorded share-based compensation expense of $237,114 and $366,592 , respectively, related to the RSL common share awards held by Shankar Ramaswamy (inclusive of the compensation expense noted above for BVC awards prior to the BVC Merger on December 4, 2015), which the Company has recorded as research and development expense in the condensed consolidated statement of operations.

At December 31, 2015 , total unrecognized compensation expense related to this non-vested RSL common share awards was $1,197,743 and is expected to be recognized over the remaining weighted-average service period of 2.52 years.

Note F—Shareholders’ Equity

[1] Overview:

The Company’s Memorandum of Association, filed on October 31, 2014 in Bermuda, authorized the issuance of one class of shares. The total number of shares which the Company was authorized to issue was 10,000 , each with a par value of $1.00 per share. Effective March 18, 2015, upon approval of the Board of Directors and the Company’s sole member, RSL, the Company effected a stock split of the authorized, issued and outstanding shares of the Company at a ratio of 100,000 -to-1. The stock split increased the total number of authorized shares from 10,000 to 1,000,000,000 , increased the total number of shares issued and outstanding from 750 to 75,000,000 , and decreased par value per share from $1.00 to $0.00001 .

[2] Transactions:

On June 16, 2015, the Company completed its initial public offering (“IPO”) of common shares. The Company sold 24,150,000 shares at a price of $15.00 per share, which included 3,150,000 common shares issued upon the full exercise of the underwriters’ option to purchase additional shares, for gross proceeds of $362,250,000 . The Company received net proceeds of approximately $334,502,000 , net of underwriting discounts and commissions and offering expenses of approximately $27,748,000 . The cash proceeds from the IPO are currently deposited with three banking institutions and are substantially in excess of federally insured levels.

In April 2015, RSL made a cash capital contribution of $750,000 . No additional common shares of the Company were issued in connection with this capital contribution.

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Note G—Share-Based Compensation

Stock Options:

In March 2015 , the Company adopted its 2015 Equity Incentive Plan (the ‘‘2015 Plan’’), under which 7,500,000 of the Company’s common shares were originally reserved for grant. In May 2015, the Company’s Board of Directors amended the 2015 Plan to increase the number of common shares authorized for issuance thereunder to 9,500,000 common shares. The amendment of the 2015 Plan became effective upon the execution of the underwriting agreement relating to the Company’s IPO (Refer to Note F[2]).

At December 31, 2015 , a total of 3,801,182 common shares were available for future issuance under the 2015 Plan.

During the nine months ended December 31, 2015 , the Company granted a total of 1,761,317 options with a weighted average exercise price of $12.05 under the 2015 Plan. At December 31, 2015 , there were 5,698,817 options outstanding with a weighted average exercise price of $4.34 . At December 31, 2015 there were no vested options.

For the three and nine months ended December 31, 2015 the Company recorded share-based compensation expense related to stock options issued to employees and directors of $4,315,823 and $11,876,110 , respectively. For the three and nine months ended December 31, 2015 the Company recorded $726,597 and $1,299,694 of share-based compensation expense related to stock options issued to non-employees (Note E[2]). This share-based compensation expense is included in research and development and general and administrative expenses in the accompanying condensed consolidated statement of operations.

Prior to the IPO, the fair value of the Company’s common shares underlying our stock options was estimated on each grant date by the Board of Directors. In order to determine the fair value of the Company’s common shares underlying granted stock options, the Board of Directors considered, among other things, timely valuations of the common shares prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In connection with the Company’s IPO and after preliminary discussions with the underwriters, the Company reassessed the determination of the fair value of the common shares underlying 4,012,500 stock options granted in March 2015 and 527,500 stock options granted in April 2015. As a result, the Company determined that the fair value of the common shares as of April 13, 2015 was $15.00 per share, which was higher than the fair values of $0.90 per share and $1.04 per share as initially determined by the Board of Directors on the dates of grant in March 2015 and April 2015, respectively. The use of this higher share price increased both recognized and unrecognized share-based compensation expense and also impacted the valuation of the BVC restricted share compensation expense discussed in Note E[1].

At December 31, 2015 , total unrecognized compensation expense related to non-vested options was $66,132,960 and is expected to be recognized over the remaining weighted-average service period of 3.28 years .

Note H—Income Taxes

The Company's provision for income taxes is based on Federal, New York State and New York City income taxes. The effective income tax rate for the Company for U.S for the three and nine months ended December 31, 2015 was (1.29)% and (0.88)% , respectively. The effective tax rate for the period October 31, 2014 (date of inception) to December 31, 2014 was 0% .

On a quarterly basis the Company evaluates the realizability of its deferred tax assets and consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance will be required to reduce the deferred tax asset to the amount that is more likely than not to be realized in future periods.

As of December 31, 2015 , the Company did not have any significant uncertain tax positions.

ASI filed its initial Federal, state and local income tax returns for the fiscal year ended March 31, 2015 in December 2015. The Company is subject to tax examinations for fiscal year 2015 and forward in all applicable tax jurisdictions.

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Note I—Commitments and Contingencies

The Company has entered into commitments under the asset purchase agreement with GSK and Arena (Refer to Note C) and a Services Agreement with RSI (Refer to Note E[1]). In addition, the Company has entered into services agreements with third parties for pharmaceutical manufacturing and research activities. The manufacturing agreements can be terminated by the Company with 30 days written notice. The Company expects to enter into other commitments as the business further develops.

Under the terms of the asset purchase agreement with GSK (Please refer to Note C[1]), the Company is obligated to pay GSK an additional $5 million upon the earliest to occur of one of three specified events. The Company believes it will not have dosed the first patient in a second Phase 3 trial for RVT-101 within six months following the dosing of the first patient in the first Phase 3 trial for RVT-101. As such, the Company deems it probable that the contingent payment of $5 million will be made before June 30, 2016. The Company has recorded the obligation as a contingent payment liability in the accompanying balance sheet.

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

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the unaudited interim condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended March 31, 2015 included in our final prospectus dated June 10, 2015, filed with the Securities and Exchange Commission, or the SEC, on June 11, 2015 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act (File No. 333-204073).

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the SEC. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a clinical-stage biopharmaceutical company focused on acquiring, developing and commercializing novel therapeutics for the treatment of dementia. We intend to develop a pipeline of product candidates to comprehensively address the cognitive, functional and behavioral aspects of dementia and related neurological disorders. Our vision is to become the leading company focused on the treatment of dementia by addressing all forms and aspects of the disease.

Our near-term focus is to develop our lead product candidate, RVT-101, a selective 5HT ₆ receptor antagonist, for the treatment of Alzheimer's disease and dementia with Lewy bodies, or DLB, and to develop nelotanserin, our second product candidate, a highly potent and selective 5HT _2A inverse agonist, for the treatment of REM behavior disorder, or RBD in DLB patients, and visual hallucinations in patients with Lewy body dementia.

We were founded in October 2014 and our operations to date have been limited to organizing and staffing our company, raising capital, acquiring our product candidates and preparing for and advancing our product candidates, RVT-101 and nelotanserin, into clinical development. In June 2015, we completed our initial public offering, or IPO, from which we raised $334.5 million. We intend to use these proceeds to fund our planned clinical development programs. To date, we have not generated any revenue and we recorded net losses of $63.4 million and $103.5 million for the three and nine months ended December 31, 2015, respectively.

Our Pipeline:

RVT-101 for the Treatment of Alzheimer’s Disease

Our lead product candidate, RVT-101, is currently being developed for the treatment of Alzheimer’s disease. We acquired the worldwide rights to RVT-101 from Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited, collectively GSK, under an asset purchase agreement entered into in December 2014, or the GSK Agreement.

Alzheimer’s disease, a form of dementia, is a progressive neurodegenerative disorder that results in significant impairments in cognition, function and behavior. According to the Alzheimer’s Association, Alzheimer’s disease affects approximately 5.3 million people in the United States. It is estimated that between 70% and 90% of Alzheimer’s disease patients age 65 and older are classified as having mild-to-moderate Alzheimer’s disease. No new chemical entity has been approved by the FDA for the treatment of Alzheimer’s disease since 2003.

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In October 2015, we commenced a global, multi-center, double-blind, placebo-controlled confirmatory Phase 3 clinical study of RVT-101, called MINDSET, for the treatment of mild-to-moderate Alzheimer’s disease. The MINDSET study will evaluate the safety, tolerability and efficacy of RVT-101 over a 24-week period and will compare 35-mg, once-daily oral doses of RVT-101 to placebo in approximately 1,150 patients with mild-to-moderate Alzheimer's disease on a stable background of donepezil therapy. The primary efficacy evaluations are the Alzheimer's Disease Assessment Scale - cognitive subscale (ADAS-cog) and the Alzheimer's Disease Cooperative Study - Activities of Daily Living scale (ADCS-ADL), each of which have been used as endpoints to obtain regulatory approval of currently-marketed Alzheimer's disease treatments in the United States and Europe. Subjects completing the MINDSET study will be eligible to enroll in a 12-month, open-label extension in which other medications for the treatment of Alzheimer’s disease, including memantine and other cholinesterase inhibitors, may be administered in combination with RVT-101. We have received a Special Protocol Assessment, or SPA, agreement from the FDA for the MINDSET study. The SPA agreement states that the design and planned analysis of this study adequately address the objectives necessary to support an application for marketing approval.

The MINDSET trial seeks to confirm the results of a 684-patient international, multi-center, double-blind placebo-controlled Phase 2 clinical trial in which patients on a stable background of donepezil therapy receiving 35 mg RVT-101 were observed to have statistically significant improvements on the ADAS-cog and ADCS-ADL as compared to patients receiving donepezil alone. If the results of MINDSET are favorable, we plan to seek regulatory approval and commercialize RVT-101.

Asset Purchase Agreement with GlaxoSmithKline for RVT-101

Under the GSK Agreement, we made an upfront payment of $5 million and are obligated to pay GSK an additional $5 million upon the earliest to occur of the following events:


•	we have determined in good faith that we have received definitive guidance from the FDA that a single Phase 3 trial of RVT-101 for Alzheimer’s disease will be sufficient for approval of a NDA;


•	our submission of an new NDA for RVT-101 for Alzheimer’s disease incorporating data from one Phase 3 trial for Alzheimer’s disease; and


•	our not having dosed the first patient in a second Phase 3 trial of RVT-101 within six months following the dosing of the first patient in our first Phase 3 trial for RVT-101.

We consider it probable that we will make this contingent payment of $5 million before June 30, 2016.

We are also obligated to pay GSK $35 million, $25 million and $10 million upon the receipt of marketing approval of RVT-101 in the United States, the European Union and Japan, respectively, as well as an additional one-time payment of $85 million for the first calendar year in which we achieve global net sales of $1.2 billion for RVT-101.

Under the GSK Agreement we are also obligated to pay a fixed 12.5% royalty based on net sales of RVT-101, subject to reduction on account of expiration of patent and regulatory exclusivity or upon generic entry.

RVT-101 for the Treatment of Dementia with Lewy Bodies

In addition to evaluating RVT-101 in patients with mild-to-moderate Alzheimer's disease, we intend to develop RVT-101 to address other forms of dementia, such as dementia with Lewy bodies, or DLB. Dementia with Lewy bodies, is a subset of Lewy body dementia, or LBD, a progressive neurodegenerative disorder, which is pathologically characterized by the aggregation of alpha synuclein and other proteins in the brain, known as Lewy bodies, causing disruption in cognition, function and behavior. DLB is the second most prevalent cause of neurodegenerative dementia in elderly patients. It has been estimated that DLB affects approximately 1.1 million people in the United States.

Currently, there are no drugs approved by the FDA or EMA for the treatment DLB. In addition to suffering from impaired cognition and cognitive fluctuations, DLB patients often suffer from visual hallucinations, muscular rigidity, tremors, sensitivity to neuroleptic (antipsychotic) medications and REM behavior disorder, or RBD, in which people physically act out their dreams.

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DLB patients are often treated off-label with cholinesterase inhibitors. Cholinergic neurotransmission is thought to be even more dysfunctional in DLB than in Alzheimer's disease. This suggests that neurotransmitter-targeted therapies that work by increasing the inter-synaptic concentration of acetylcholine, much like RVT-101 in Alzheimer's disease, may also be effective in improving cognition and function in DLB patients. While cholinesterase inhibitors are not approved by the FDA or EMA for the treatment of DLB, donepezil was approved in September 2014 in Japan for this indication. We believe that the addition of a 5-HT6 receptor antagonist, such as RVT-101, may augment the efficacy of cholinesterase inhibitors in DLB patients by promoting the synaptic release of acetylcholine and other neurotransmitters essential to cognition. In addition, RVT-101 has antagonist activity against the 5HT _2A receptor, which has been implicated in the pathophysiology of visual hallucinations and other behavioral disturbances affecting patients with DLB. We are not aware of any drugs in late-stage clinical development for the treatment of DLB. As such, we believe that RVT-101 has the potential to be the first drug approved by the FDA and EMA for the treatment of DLB.

Following the FDA's acceptance of our Investigational New Drug or IND, application in December 2015, we began a Phase 2b clinical trial of RVT-101, called the HEADWAY-DLB Study, in patients with DLB in the first quarter of calendar year 2016. In addition to the 35 mg dose of RVT-101 used in the MINDSET study we will utilize a 70 mg dose of RVT-101 in this trial, which we believe could have greater activity against the 5HT _2A receptor to potentially address visual hallucinations and behavioral disturbances in this population. If the results of this study are favorable, we believe that it, in combination with positive MINDSET study results, could serve as the basis for seeking approval of RVT-101 in DLB.

Nelotanserin for the Treatment of Lewy Body Dementia

In October 2015, we acquired the global rights, title, interest and obligations in and to to nelotanserin, a highly potent and selective 5HT _2A receptor inverse agonist. Initially, we intend to develop nelotanserin to address hallucinations and behavioral disturbances in Lewy body dementia. We may also develop nelotanserin for the treatment of Parkinson's disease psychosis, or PDP and Alzheimer’s disease psychosis, or ADP.

LBD includes two similar conditions, DLB and Parkinson’s disease dementia, or PDD. There is significant overlap in the pathology and clinical presentation of both conditions; however, the primary difference generally depends on the timing of the onset of cognitive decline relative to the onset of movement-related symptoms. In DLB, the cognitive decline typically occurs within one year of the onset of movement disorder symptoms. In PDD, movement disorder symptoms typically precede cognitive decline by more than one year. The Lewy Body Dementia Association estimates that there are 1.4 million patients with Lewy body dementia in the United States.

Nelotanserin has been observed to be a highly potent and selective inverse agonist of the 5HT _2A receptor, which has been implicated in the pathophysiology of visual hallucinations and behavioral disturbances in Lewy body dementia. Nelotanserin has been evaluated in seven clinical studies to date with nearly 800 human subjects exposed to the drug candidate and has been observed to be well tolerated.

Following the FDA's acceptance of our IND in December 2015, we began a Phase 2 clinical trial of nelotanserin in DLB and PDD patients suffering from visual hallucinations and we expect to receive results from this pilot study in the second half of calendar year 2016. We also expect to initiate a second clinical study with nelotanserin in the first quarter of calendar year 2016. The second study will be a Phase 2 study in DLB patients experiencing REM behavior disorder, with results expected in the first half of 2017.

Arena Development Agreement for Nelotanserin

In October 2015, we exercised an option to acquire global rights, title, interest and obligations in and to nelotanserin from our parent company Roivant Sciences Ltd., or RSL. In May 2015, RSL entered into a development, marketing and supply agreement for nelotanserin with Arena Pharmaceuticals, GmbH, or Arena, and we entered into a Waiver and Option Agreement with RSL. Upon the exercise of our option, we assumed RSL’s rights and obligations under the development, marketing and supply agreement with Arena, or the Arena Development Agreement. Under the Waiver and Option Agreement, we recorded $5.3 million , as research and development expense which was 110% of any payments made to Arena by RSL, and any costs incurred by RSL in connection with the development of nelotanserin. We will be responsible for future contingent payments under the Arena Development Agreement, including up to $4.0 million in potential development milestones, up to $37.5 million in potential regulatory milestones and up to $60.0 million in potential commercial milestones. Under the Arena Development Agreement we are also obligated to purchase finished drug product under a fixed price equal to 15% of net sales of nelotanserin.

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Services Agreement with Roivant Sciences, Inc., or RSI

We and our wholly-owned subsidiary, Axovant Sciences, Inc., or ASI, have entered into a services agreement with Roivant Sciences Inc., or RSI, a wholly-owned subsidiary of RSL, or the Services Agreement, pursuant to which RSI provides us with services in relation to the identification of potential product candidates, project management of clinical trials and other development, administrative and financial activities. We and ASI amended and restated our Services Agreement with RSI on October 13, 2015 for the fiscal year commencing April 1, 2015. Under the terms of our Services Agreement with RSI, we are obligated to pay or reimburse RSI for the costs it, or third parties acting on its behalf, incurs in providing services to us, including administrative and support services as well as research and development services. In addition, we are obligated to pay to RSI at a pre-determined mark-up on the costs incurred in connection with any general and administrative and research and development services.

We expect that our reliance on RSI will decrease over time as we, ASI and any other future subsidiary of ours continue to hire the necessary personnel to manage the development and potential commercialization of our product candidates. For the three and nine months ended December 31, 2015 , we incurred expenses of $2.1 million and $5.4 million , respectively, inclusive of the mark-up, under the Services Agreement. For the period from October 31, 2014 (date of inception) to December 31, 2014 we incurred expenses of approximately $691,436 inclusive of the mark-up, under the services agreement. We have recorded these charges as research and development expense and general and administrative expense in our condensed consolidated statement of operations.

Financial Operations Overview

Revenue

We have not generated any revenue from the sale of any products, and we do not expect to generate any revenue unless and until we obtain regulatory approval of and begin to commercialize one of our product candidates in development.

Research and Development Expense

Since our inception, our operations have primarily been focused on organizing and staffing our Company, raising capital, acquiring acquiring our product candidates and preparing for and advancing our product candidates, RVT-101 and nelotanserin, into clinical development. Our research and development expenses include:


•	employee-related expenses, such as salaries, share-based compensation, benefits and travel expense for research and development personnel;


•	costs allocated to us under the Services Agreement;


•	expenses incurred under agreements with contract research organizations, or CROs, as well as consultants who assist in the development of our product candidate;


•	manufacturing costs in connection with producing materials for use in conducting preclinical and clinical studies;


•	costs for planning and for the development of clinical studies for Alzheimer's disease and other forms of dementia including evaluating RVT-101 for patients with DLB;


•	costs for planning and for the development of clinical studies for nelotanserin for patients with Lewy body dementia;


•	milestone payments and other costs that we incur under the GSK Agreement and the Arena Development Agreement;


•	costs for sponsored research; and


•	depreciation expense for assets used in research and development activities.

Research and development activities will continue to be central to our business model. We expect our research and development expense to increase significantly primarily as a result of our ongoing Phase 3 MINDSET Study for RVT-101, our initiation of the RVT-101 HEADWAY-DLB study in patients with DLB, and in other forms of dementia, and commencement of our development program for nelotanserin in Lewy body dementia. These increases will be partially offset by decreases in our share-based compensation expense primarily as a result of the RSL private financing and recapitalization. We also expect our share-based compensation expense attributable to RSL common share awards to become less variable because of the BVC Merger.

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Product candidates in later stages of clinical development, such as RVT-101 and nelotanserin, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

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


•	number of trials required for approval;


•	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 trial is 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 agencies;


•	the duration of patient follow-up;


•	timing and receipt of regulatory approvals; and


•	the efficacy and safety profile of the product candidate.

In addition, the probability of success of our products in development and any other product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval of our product candidates for any indication in any country. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of any clinical trial we conduct, or when and to what extent we will generate revenue from the commercialization and sale of our products in development or other product candidates, if at all.

General and Administrative Expense

General and administrative expenses consist primarily of share-based compensation, legal and accounting fees, consulting services, services received under the Services Agreement and employee salaries and related benefits for general and administrative personnel.

We anticipate that our general and administrative expenses will increase in the future to support our growth and our operations as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. We also expect to incur additional expenses associated with maintaining compliance with NYSE rules and SEC requirements, insurance, and investor relations costs. In addition, we expect to incur expenses associated with building a sales, commercial and marketing team before our products in development obtain regulatory approval for marketing. These increases will be partially offset by decreases in our share-based compensation expense primarily as a result of the RSL private financing and recapitalization. We also expect our share-based compensation expense attributable to RSL common share awards to become less variable because of the BVC Merger.

Results of Operations for the Three and Nine Months Ended December 31, 2015 and Period from Inception to December 31, 2014

The following table summarizes our results of operations for the three and nine months ended December 31, 2015 and period from October 31, 2014 (date of inception to December 31, 2014 (in thousands):

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	Three Months Ended		Nine Months Ended		Period From October 31, 2014 (Date Of Inception) To December 31, 2014
	December 31, 2015		December 31, 2015
Operating expenses:
Research and development expenses
(includes $14,599 and $24,421 of share-based compensation expense for the three and nine months ended December 31, 2015, respectively and $457 of share-based compensation expense for period from October 31, 2014 (Date of inception) to December 31, 2014)	$	34,324	$	53,209	$	10,538
General and administrative expenses
(includes $24,457 and $39,537 of share-based compensation expense for the three and nine months ended December 31, 2015, respectively and $146 of share-based compensation expense for period from October 31, 2014 (Date of inception) to December 31, 2014)	28,230		49,364		224
Total operating expenses	62,554		102,573		10,762

Research and Development Expenses

Research and development expenses were $34.3 million for the three months ended December 31, 2015 , and consisted primarily of share-based compensation expense of $14.6 million , contract research organization (CRO) fees of approximately $8 million, expenses of approximately $5.3 million for the acquisition of nelotanserin, contract manufacturing organization (CMO) fees, employee salaries and benefits and payments made to consultants and other third party vendors engaged in the pursuit of developing our product candidates. The share-based compensation expense for the three months ended December 31, 2015 was impacted by share-based compensation expense of $11.4 million related to the RSL common share awards issued by RSL to RSI employees.

On December 4, 2015, BVC, a non-public entity, which held a non-controlling ownership interest in RSL, our parent Company, was merged with and into RSL ("BVC Merger"), with RSL as the surviving entity. The compensation amounts of $11.4 million include share based compensation expense for BVC awards issued to RSI employees prior to the BVC Merger. Prior to the BVC Merger, we recorded share-based compensation expense, in relation to the share-based awards issued by BVC to RSI employees based on the changes in fair value of BVC share-based awards. As these BVC share based awards were not based on our or RSL’s shares, they were remeasured at each reporting period date until performance was completed.

As a result of the BVC Merger, all outstanding BVC share-based awards were converted into RSL common share awards, with the same vesting and forfeiture terms as the original grant. The RSL common share awards are fair valued on the date of grant and that fair value is recognized over the requisite service period. At the time of the BVC Merger on Dec 4, 2015, the unvested BVC awards that were converted into common shares of RSL were remeasured at the estimated fair value of RSL and that fair value is recognized over the remaining requisite service period. On December 8, 2015 following the BVC Merger, RSL had a recapitalization in conjunction with a private financing.

Research and development expenses were $53.2 million for the nine months ended December 31, 2015 , and consisted primarily of share-based compensation expense of $24.4 million , CRO fees of approximately $10.8 million, expenses of approximately $5.3 million for the acquisition of nelotanserin, employee salaries and benefits, payments to CMOs, consultants and other third party vendors engaged in the pursuit of developing our product candidates. The share-based compensation expense for the nine months ended December 31, 2015 was impacted by share-based compensation expense of $15.9 million for RSL common share awards issued to RSI employees. These compensation amounts include share based compensation expense for BVC awards issued to RSI employees as described above.

Research and development expenses were $10.5 million for the period from October 31, 2014 (date of inception) to December 31, 2014 and were primarily for an up front payment of $5.0 million and a contingent payment of $5.0 million to be made, to GSK in connection with our asset purchases for RVT-101 and the related professional fees associated with it.

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General and Administrative Expenses

General and administrative expenses were $28.2 million for the three months ended December 31, 2015 , and consisted primarily of share-based compensation expense of $24.5 million and employee salaries and related benefits, legal and professional fees, and direct and indirect costs allocated to us under the Services Agreement. The share based compensation expense for the three months ended December 31, 2015 includes share-based compensation expense of $22.2 million for RSL common share awards issued to RSI employees. These compensation amounts include share-based compensation expense for BVC awards issued to RSI employees prior to the BVC Merger. Prior to the BVC Merger we recorded share-based compensation expense in relation to the share-based awards issued by BVC to RSI employees based on the changes in fair value of share-based awards which were remeasured at each reporting period date until performance was completed as described above.

General and administrative expenses were $49.4 million for the nine months ended December 31, 2015 , and consisted primarily of share-based compensation expense of $39.5 million . The remainder consisted of employee salaries and related benefits, legal and professional fees, and direct and indirect costs allocated to us under the Services Agreement. The share-based compensation expense for the nine months ended December 31, 2015 includes share-based compensation expense of $33.5 million for RSL common share awards issued to RSI employees. These compensation amounts include share based compensation expense for BVC awards issued to RSI employees as described above.

General and administrative expenses were $0.2 million for the period from October 31, 2014 (date of inception) to December 31, 2014 and were primarily for legal fees related to our formation and corporate matters, consulting services and services received under our services agreement with RSI.

Liquidity and Capital Resources

Overview

We completed our IPO in June 2015, in which we sold 24,150,000 common shares at a price of $15.00 per share, including 3,150,000 common shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares, for gross proceeds of $362.3 million. We received net proceeds of $334.5 million, after deducting underwriting discounts and commissions and offering expenses of $27.7 million. As of December 31, 2015 , our principal source of liquidity was our cash balance totaling $300.0 million .

For the nine months ended December 31, 2015 , we used $30.1 million and $4.8 million of cash in our operating and investing activities, respectively. We have incurred and expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate revenue unless and until we successfully complete development and obtain regulatory approval for one of our products in development. Our cash utilization may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase substantially as we:


•	continue our planned Phase 3 MINDSET trial of RVT-101 for the treatment of mild-to-moderate Alzheimer’s disease designed to support regulatory approval in the United States and Europe, and initiate additional registrational studies to support regulatory approval in Japan;


•	commence a twelve month open-label extension study of RVT-101 for patients completing the MINDSET study;


•	commence the RVT-101 HEADWAY-DLB Study for the development of RVT-101 for dementia with Lewy bodies;


•	commencement of potential future studies of RVT-101 for the treatment of severe Alzheimer’s disease and other forms of dementia, such as, Parkinson’s disease dementia and vascular dementia;


•	commence the development of nelotanserin in Lewy body dementia and other indications;


•	seek to identify, acquire, develop and commercialize additional product candidates;


•	integrate acquired technologies into a comprehensive regulatory and product development strategy;


•	achieve milestones under our agreements with third parties that will require us to make substantial payments to those parties;


•	maintain, expand and protect our intellectual property portfolio;


•	hire scientific, clinical, regulatory, manufacturing, quality control, commercial and administrative personnel;

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•	add operational, financial and management information systems and personnel, including personnel to support our drug development efforts;


•	seek regulatory approvals for any product candidates that successfully complete clinical trials;


•	scale up external manufacturing capabilities to commercialize our product candidates;


•	ultimately establish a sales, marketing and distribution infrastructure for drug candidates for which we may obtain regulatory approval; and


•	operate as a public company.

Under the terms of the GSK asset property purchase agreement, we are obligated to pay GSK an additional $5 million upon the earliest to occur of one of the specified events (a) we have determined in good faith that we have received definitive guidance from the FDA that a single Phase 3 trial with RVT-101 for Alzheimer’s disease will be sufficient for NDA approval, (b) filing of an NDA for RVT-101 for Alzheimer’s disease incorporating data from one Phase 3 trial for Alzheimer’s disease, and (c) us not having dosed the first patient in a second Phase 3 trial for RVT-101 within six months following the dosing of the first patient in our first Phase 3 trial for RVT-101. We deem it probable that the contingent payment of $5 million will be made before June 30, 2016.

Our primary use of cash is to fund the research and development of our products in development. We expect that our existing cash, including net proceeds from our IPO, will be sufficient to fund our operating expenses and capital expenditure requirements through the calendar year 2017. However, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Our existing funds will not be sufficient to enable us to complete all necessary development and to commercially launch all of our products. Accordingly, we may be required to obtain further funding through other public or private offerings of our capital stock, debt financing, collaboration and licensing arrangements or other sources. Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our products or potentially discontinue operations.

Until such time, if ever, as we can generate substantial revenue from sales of our products in development, we expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaboration, license or development agreements. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our shareholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our shareholders’ rights. Debt financing and preferred equity 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. Taking any of these actions could harm our business, results of operations, financial condition and future prospects.

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

Cash Flows

The following table sets forth a summary of our cash flows for the nine months ended December 31, 2015 and for the period from October 31, 2014 (date of inception) to December 31, 2014 (in thousands):



	Nine Months Ended December 31, 2015			Period From October 31, 2014 (Date Of Inception) To December 31, 2014
Net cash used in operating activities	$	(30,131	)	$	—
Net cash used in investing activities	(4,815		)	(5,000		)
Net cash provided by financing activities	334,944			5,000

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Operating Activities

Cash flows from operating activities consist of net loss adjusted for non-cash items, including depreciation and share-based compensation expense, as well as the effect of changes in working capital and other activities.

For the nine months ended December 31, 2015 , net cash used in operating activities was $30.1 million and was primarily attributable to a net loss of $103.5 million which includes costs incurred for research and development activities, including CRO fees, manufacturing, regulatory and other clinical trial costs and our general and administrative expenses, partially offset by $64.0 million of non-cash share-based compensation expense.

Investing Activities

For the nine months ended December 31, 2015 , net cash used in investing activities was $4.8 million for the payment made to RSL for nelotanserin. For the period from October 31, 2014 (date of inception) to December 31, 2014, net cash used in investing activities was $5 million for the payment made to GSK in connection with our asset purchases for RVT-101.

Financing Activities

For the nine months ended December 31, 2015 , net cash provided by financing activities was $334.9 million , which was primarily attributable to the net proceeds from the initial public offering of our common shares of $336.9 million . For the period from October 31, 2014 (date of inception) to December 31, 2014, net cash provided by financing activities was $5.0 million which reflects the capital contribution from RSL.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the SEC’s rules. Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

Critical Accounting Policies and Significant Judgments and Estimates

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of some of our costs incurred under our services agreement with RSI and ASI, which costs are charged to research and development and general and administrative expense, as well as assumptions used to estimate the fair value of our common shares. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We define our critical accounting policies as those under U.S. GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

We believe the estimates and judgments involved in our contingent payment liability, valuation of share-based compensation and income taxes have the greatest potential impact on our condensed consolidated financial statements, and consider these to be our critical accounting policies and estimates.

There have been no material changes to our critical accounting policies and significant judgments and estimates as compared to the critical accounting policies and significant judgments and estimates described in our final prospectus dated June 10, 2015, filed with the SEC on June 11, 2015 pursuant to Rule 424(b)(4) under the Securities Act.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and market prices such as interest rates, foreign currency exchange rates, and changes in the market value of equity instruments. We do not believe we are currently exposed to any material market risk. As of December 31, 2015 , we had cash of $300.0 million , consisting of non-interest bearing deposits dominated in the U.S. dollar.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer, our Principal Financial Officer and our Principal Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) prior to the filing of this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2015 , our Principal Executive Officer and our Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.

Remediation Efforts on Previously Identified Material Weakness

During the nine months ended December 31, 2015 , we began to implement a remediation plan to enhance our accounting department and policies and procedures to address material weaknesses in our internal control over financial reporting that existed as of March 31, 2015. In connection with the preparation of our financial statements as of and for the period from October 31, 2014 (date of inception) to March 31, 2015, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We did not design or maintain an effective control environment because we did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience and training commensurate with our financial reporting requirements. This material weakness resulted in material audit adjustments related to the affiliate charge for share-based compensation. Our limited personnel also resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, our insufficient segregation of duties in our finance and accounting functions.

We have begun our remediation plan, and have hired additional resources and are in the process of implementation of more robust review, supervision and monitoring of the financial reporting process intended to mitigate the identified material weakness. We are increasing our level of training, education, and accounting reviews, and when necessary accessing additional accounting and financial personnel, to ensure that all relevant financial personnel have the appropriate level of technical expertise to effectively interpret and apply accounting standards. Neither we, nor our independent registered public accounting firm, has performed an evaluation of our internal control over financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act of 2002. In light of the material weakness that was identified as a result of the limited procedures performed, we believe that it is possible that, had we and our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act of 2002, additional material weaknesses or significant control deficiencies may have been identified.

Changes in Internal Control over Financial Reporting

Other than as described above, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.

Item 1A. Risk Factors

You should carefully consider the following risk factors, in addition to the other information contained in this quarterly report on Form 10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the following risk factors and the risks described elsewhere in this report occurs, our business, operating results and financial condition could be seriously harmed and the trading price of our common shares could decline. This quarterly report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

Risks Related to Our Business, Financial Position and Capital Requirements

We have a limited operating history and have never generated any product revenues.

We are a clinical-stage biopharmaceutical company with a limited operating history. We were formed in October 2014, and our operations to date have been organizing and staffing our company, raising capital, acquiring drug development programs and preparing for and advancing our product candidates, RVT-101 and nelotanserin, into clinical development. We have not yet demonstrated an ability to successfully complete a large-scale, pivotal clinical trial, obtain marketing approval, manufacture a commercial scale product, or arrange for a third-party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, we have no meaningful operations upon which to evaluate our business and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

Our ability to generate revenue and become profitable depends upon our ability to successfully complete the development of our product candidates and other forms of dementia and obtain the necessary regulatory approvals for their commercialization. We have never been profitable, have no products approved for commercial sale and to date have not generated any revenue from product sales.

Even if we receive regulatory approval for our product candidates, we do not know when those candidates will generate revenue, if at all. Our ability to generate product revenue depends on a number of factors, including our ability to:


•	successfully complete clinical trials and obtain regulatory approval for the marketing of our product candidates;


•	set an acceptable price for our product candidates and obtain coverage and adequate reimbursement from third- party payors;


•	establish sales, marketing and distribution systems for our product candidates;


•	add operational, financial and management information systems and personnel, including personnel to support our clinical, manufacturing and planned future commercialization efforts and operations as a public company;


•	initiate and continue relationships with third-party manufacturers and have commercial quantities of our product candidates manufactured at acceptable cost levels;


•	attract and retain an experienced management and advisory team;


•	achieve broad market acceptance of our products in the medical community and with third party payors and consumers;


•	launch commercial sales of our products, whether alone or in collaboration with others; and


•	maintain, expand and protect our intellectual property portfolio.

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Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses, or when, or if, we will be able to achieve or maintain profitability. Our expenses could increase beyond expectations if we are required by the FDA, European Medicines Agency, or EMA, Japan’s Pharmaceutical and Medical Devices Agency or PMDA, and comparable regulatory authorities in other countries, to perform studies or clinical trials in addition to those that we currently anticipate. Even if our product candidates are approved for commercial sale, we anticipate incurring significant costs associated with their commercial launch. If we cannot successfully execute any one of the foregoing, our business may not succeed and your investment will be adversely affected.

We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We have never generated any revenues, and we cannot estimate with precision the extent of our future losses. We do not currently have any products that are available for commercial sale and we may never generate revenue from selling products or achieve profitability. We expect to continue to incur substantial and increasing losses through the projected commercialization of our product candidates. Our product candidates have not been approved for marketing in the United States or any other jurisdiction, and we may never receive any such approvals. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. Our ability to produce revenue and achieve profitability is dependent on our ability to complete the development of our product candidates, obtain necessary regulatory approvals, and have our product candidates manufactured and successfully marketed and commercialized. We cannot assure you that we will be profitable even if we successfully commercialize our product candidates. If we do successfully obtain regulatory approval to market our product candidates, our revenues will be dependent, in part, upon, among other things, the size of the markets in the territories for which we gain regulatory approval, the number of competitors in such markets, the accepted price for our product candidates and whether we own the commercial rights for that territory. If the indication approved by regulatory authorities is narrower than we expect, or the treatment population is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of our product candidates, even if approved. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Failure to become and remain profitable may adversely affect the market price of our common shares and our ability to raise capital and continue operations.

We expect our research and development expenses to be significant in connection with our Phase 3 MINDSET trial of RVT-101 in patients with mild-to-moderate Alzheimer's disease, and continue to increase as we conduct clinical trials of RVT-101 for DLB and clinical trials of our second product candidate, nelotanserin, for the treatment of multiple aspects of LBD. In addition, if we obtain regulatory approval for RVT-101, we expect to incur increased sales and marketing expenses. As a result, we expect to continue to incur significant and increasing operating losses and negative cash flows for the foreseeable future. These losses have had and will continue to have an adverse effect on our financial position and working capital.

We are heavily dependent on the success of RVT-101 and nelotanserin, our only product candidates, which are still in clinical development, and if either of these product candidates does not receive regulatory approval or is not successfully commercialized, our business may be harmed.

We currently have no products that are approved for commercial sale and may never be able to develop marketable drug products. We expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to RVT-101 and nelotanserin. Accordingly, our business currently depends heavily on the successful development, regulatory approval and commercialization of these product candidates. We cannot be certain that our product candidates will receive regulatory approval or be successfully commercialized even if we receive regulatory approval. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of drug products are and will remain subject to extensive regulation by the FDA, the EMA, the PMDA and other comparable regulatory authorities that each have differing regulations. We are not permitted to market our product candidates in the United States or in any foreign countries until they receive the requisite approvals from the FDA or comparable regulatory authorities in other countries. We have not submitted marketing applications to the FDA or foreign regulatory authorities and do not expect to be in a position to do so for the foreseeable future. Obtaining marketing approval is an extensive, lengthy, expensive and inherently uncertain process, and regulatory authorities, may delay, limit or deny approval of our product candidates for many reasons, including:


•	we may not be able to demonstrate that a product candidate is safe and effective as a treatment for our targeted indications to the satisfaction of the applicable regulatory authorities;


•	the regulatory authorities, may require additional preclinical studies or registrational studies of the product candidate in mild-to-moderate Alzheimer’s disease, which would increase our costs and prolong our development;

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•	the results of our clinical trials may not meet the level of statistical or clinical significance required for marketing approval;


•	the regulatory authorities, may disagree with the number, design, size, conduct or implementation of our clinical trials;


•	the CROs that we retain to conduct clinical trials may take actions outside of our control that materially adversely impact our clinical trials;


•	the regulatory authorities, may not find the data from preclinical studies and clinical trials sufficient to demonstrate that the clinical and other benefits of the product candidate outweigh its safety risks;


•	the regulatory authorities, may disagree with our interpretation of data from our preclinical studies and clinical trials or may require that we conduct additional studies;


•	the regulatory authorities, may not accept data generated at our clinical trial sites;


•	the regulatory authorities may require, as a condition of approval, limitations on approved labeling or distribution and use restrictions;


•	in the United States, the FDA may require development of a risk evaluation and mitigation strategy, or REMS, as a condition of approval;


•	the regulatory authorities may identify deficiencies in the manufacturing processes or facilities of our third-party manufacturers; or


•	the regulatory authorities may change their approval policies or adopt new regulations.

We may require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our product candidates.

We expect to spend substantial amounts to complete the development of, seek regulatory approvals for and commercialize our product candidates. These expenditures will include costs to GSK under the GSK Agreement, and costs to Arena under the Arena Development Agreement. Under the terms of these agreements, we are obligated to make significant cash payments upon the achievement of specified development, regulatory and sales performance milestones, as well as payments in connection with the sale of resulting products.

Even with the net proceeds from our IPO in June 2015, we will require additional capital to complete the development and potential commercialization of our product candidates. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our development program or any future commercialization efforts. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and harm our product candidate development efforts.

Based upon our current operating plan, we believe that the net proceeds from our IPO will be sufficient to fund our operating expenses and capital expenditure requirements through the calendar year 2017. This estimate is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because the length of time and activities associated with successful development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:


•	the initiation, progress, timing, costs and results of our planned clinical trials for our product candidates;


•	the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA, or the PMDA, and other comparable foreign regulatory authorities;


•	the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;


•	the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates or any future product candidates;


•	the effect of competing technological and market developments;


•	the cost and timing of completion of commercial-scale manufacturing activities;

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•	the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our products on our own; and


•	the initiation, progress, timing and results of our commercialization of our product candidates, if approved for commercial sale.

We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or potentially discontinue operations.

We may be required to make significant payments to third parties under the agreements pursuant to which we acquired our product candidates.

In December 2014, we acquired the rights to RVT-101 under the GSK Agreement, and in October 2015, we acquired the rights to nelotanserin and assumed the obligations under the Arena Development Agreement. Under these agreements, we are subject to significant obligations, including payment obligations upon achievement of specified milestones and payments based on product sales, as well as other material obligations. If these payments become due under the terms of the agreements, we may not have sufficient funds available to meet our obligations and in which case our development efforts would be substantially harmed.

Raising additional funds by issuing securities may cause dilution to existing shareholders, and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

We expect that significant additional capital will be needed in the future to continue our planned operations. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, strategic alliances and license and development agreements in connection with any collaborations. We do not have any committed external source of funds. To the extent that we raise additional capital by issuing equity securities, our existing shareholders’ ownership may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common shareholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. Any debt financing we enter into may involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our shares or make investments. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise develop and market ourselves.

We currently have a limited number of employees who are employed by our wholly-owned subsidiary, Axovant Sciences, Inc., and we rely on Roivant Sciences, Inc. to provide various administrative, research and development and other services.

As of December 31, 2015 , we had three employees and our wholly-owned subsidiary, Axovant Sciences, Inc., had 26 employees. We rely on the administrative support and research and development services provided by our affiliate, Roivant Sciences, Inc., a wholly-owned subsidiary of Roivant Sciences Ltd. We and Axovant Sciences, Inc., have entered into a services agreement with Roivant Sciences, Inc. Personnel and support staff that provide services to us under this services agreement are not required to, and we do not expect that they will, have as their primary responsibility the management and administration of our business or act exclusively for us. Under this services agreement, Roivant Sciences, Inc. has the discretion to determine which of its employees will perform services under the agreement. Further, both Vivek Ramaswamy and Lawrence T. Friedhoff, M.D., Ph.D. are employees of Roivant Sciences, Inc., and Marianne L. Romeo is an employee of Roivant Sciences Ltd. As a result, such individuals are unlikely to allocate all of their time and resources to us.

Roivant Sciences, Inc. or RSI has limited financing and accounting and other resources. If RSI fails to perform its obligations in accordance with the terms of the services agreement, it could be difficult for us to operate our business. In addition, the termination of our relationship with RSI. and any delay in appointing or finding a suitable replacement provider (if one exists) could make it difficult for us to operate our business. Any failure by RSI to effectively manage our administrative, research and development or other services could harm our business, financial condition and results of operations.

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We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

We expect to hire, either directly or through our wholly owned subsidiary, Axovant Sciences, Inc. or ASI, additional employees for our managerial, clinical, scientific and engineering, operational, sales and marketing teams. We may have operational difficulties in connection with identifying, hiring and integrating new personnel. Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and grow revenues could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Many of the other pharmaceutical companies that we compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates and consultants than what we have to offer. If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and our business will be limited.

Our employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on our results of operations.

We are exposed to the risk that our employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; federal and state healthcare fraud and abuse and health regulatory laws and other similar foreign fraudulent misconduct laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter third-party misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

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

Our computer systems, as well as those of ASI, RSI and our CROs and other contractors and consultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. 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 preclinical or clinical trial data from completed, ongoing or planned trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and the further development of our product candidates could be delayed.

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Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop.

The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, health care providers, pharmaceutical companies or others selling or otherwise coming into contact with our products. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated adverse effects. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:


•	impairment of our business reputation and significant negative media attention;


•	withdrawal of participants from our clinical trials;


•	significant costs to defend the related litigation and related litigation;


•	distraction of management’s attention from our primary business;


•	substantial monetary awards to patients or other claimants;


•	inability to commercialize our product candidates or any future product candidate;


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


•	decreased demand for our product candidates or any future product candidate, if approved for commercial sale; and


•	loss of revenue.

The product liability insurance we currently carry, and any additional product liability insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and in the future we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for our product candidates, we intend to acquire insurance coverage to include the sale of commercial products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business, including preventing or limiting the commercialization of any product candidates we develop.

Risks Related to Clinical Development, Regulatory Approval and Commercialization

Clinical trials are very expensive, time-consuming, difficult to design and implement and involve an uncertain outcome.

Our product candidates are still in development and will require extensive clinical testing before we are prepared to submit an application for marketing approval to regulatory authorities. We cannot predict with any certainty if or when we might submit any such application for regulatory approval for our product candidates or whether any such application will be approved by the applicable regulatory authority in our target markets. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. For instance, regulatory authorities may not agree with our proposed endpoints for any clinical trials of our product candidates, which may delay the commencement of our clinical trials. The clinical trial process is also time-consuming. We estimate that clinical trials of our product candidates will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials, and the results of early clinical trials therefore may not be predictive of the results of our planned clinical programs. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.

The commencement and completion of clinical trials may be delayed by several factors, including:


•	failure to obtain regulatory approval to commence a trial;

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•	unforeseen safety issues;


•	determination of dosing issues;


•	lack of effectiveness during clinical trials;


•	inability to reach agreement on acceptable terms with prospective CROs and clinical trial sites;


•	slower than expected rates of patient recruitment or failure to recruit suitable patients to participate in a trial;


•	failure to manufacture sufficient quantities of a drug candidate or placebo or failure to obtain sufficient quantities of concomitant medication for use in clinical trials;


•	inability to monitor patients adequately during or after treatment; and


•	inability or unwillingness of medical investigators to follow our clinical protocols.

Further, by way of example, we, the FDA or an institutional review Board, or IRB, at a clinical trial site may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice, or GCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug, or IND, submissions or the conduct of these trials. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our product candidates could be harmed, and our ability to generate revenues may be delayed. In addition, any delays in our clinical trials could increase our costs, slow down the approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and results of operations.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

In addition, we recently acquired worldwide rights to our product candidates and were not involved in the development of prior to such acquisitions. Any difficulties we experience in the transitioning and integrating such product candidates into our operations may result in delays in clinical trials as well as problems in our development efforts and regulatory filings, particularly if we do not receive all of the necessary drug products, information, reports and data from third parties in a timely manner. More particularly, we have had no involvement with or control over the preclinical and clinical development of either of our product candidates prior to acquiring the rights of them. We are dependent on GSK and Arena, as applicable having conducted such research and development in accordance with the applicable protocol, legal, regulatory and scientific standards, having accurately reported the results of all clinical trials and other research conducted prior to our acquisition of the product candidates, having correctly collected and interpreted the data from these trials and other research and having supplied us with information, data sets and reports required to adequately demonstrate the results reported through the date of our acquisition of these assets. These problems could result in increased costs and delays in the development of our product candidates, which could adversely affect any future revenues.

The results of our clinical trials may not demonstrate that our product candidates are safe and effective.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support the safety and effectiveness of our product candidates for the particular indications for which they are being developed. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and preclinical testing. Failure of a clinical trial to meet its predetermined endpoints would likely cause us to abandon a product candidate and may delay development of any other product candidates. Any delay in, or termination of, our clinical trials will delay the submission of our applications for marketing approval and, ultimately, our ability to commercialize our product candidates and generate product revenues.

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Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control.

We may encounter delays in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be unable to retain a sufficient number of patients to complete any of our trials. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of the trial protocol, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites and the eligibility criteria for the study. Furthermore, any negative results we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain patients in other clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop our product candidates, or could render further development impossible. In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance.

We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

Drug development is highly competitive and subject to rapid and significant technological advancements. As a significant unmet medical need exists for the treatment of Alzheimer’s disease and other dementias, there are several large and small pharmaceutical companies focused on delivering therapeutics for the treatment of these diseases. Further, it is likely that additional drugs will become available in the future for the treatment of our target indications.

We are aware of several companies that are working to develop drugs that would compete against RVT-101 and nelotanserin. Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the United States and in foreign countries. Our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, drugs that are more effective or less costly than any product candidate that we may develop.

We will face competition from other drugs or from other non-drug products currently approved or that will be approved in the future for the treatment of Alzheimer’s disease and other dementias, including Lewy body dementia. Therefore, our ability to compete successfully will depend largely on our ability to:


•	develop and commercialize medicines that are superior to other products in the market;


•	demonstrate through our clinical trials that our product candidates are differentiated from existing and future therapies;


•	attract qualified scientific, product development and commercial personnel;


•	obtain patent or other proprietary protection for our medicines;


•	obtain required regulatory approvals;


•	obtain coverage and adequate reimbursement from, and negotiate competitive pricing with, third-party payors; and


•	successfully collaborate with pharmaceutical companies in the discovery, development and commercialization of new medicines.

The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any product candidate we develop. The inability to compete with existing or subsequently introduced drugs would have an adverse impact on our business, financial condition and prospects.

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Established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make our product candidates less competitive. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. Accordingly, our competitors may succeed in obtaining patent protection, discovering, developing, receiving regulatory and marketing approval for or commercializing medicines before we do, which would have an adverse impact on our business and results of operations.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

The activities associated with the development and commercialization of our product candidates, including their design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA, PDMA and similar regulatory authorities outside the United States. Failure to obtain marketing approval for our product candidates will prevent us from commercializing them.

We have not received approval from regulatory authorities to market any product candidate in any jurisdiction, and we will need to complete pivotal clinical trials for our product candidates before we can submit any application for regulatory approval. It is possible that our product candidates in the future will ever obtain the appropriate regulatory approvals necessary for us to commence product sales.

We expect to rely on third-party CROs and consultants to assist us in filing and supporting the applications necessary to gain marketing approvals. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information for our product candidates to regulatory authorities for each therapeutic indication to establish safety and efficacy of the product candidate for that indication. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.

Our product candidates may cause adverse effects or have other properties that could delay or prevent its regulatory approval or limit the scope of any approved label or market acceptance.

Adverse events caused by our product candidates could cause us, other reviewing entities, clinical trial sites or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval. If an unacceptable frequency or severity of adverse events are reported in our clinical trials for our product candidates or any future product candidates, our ability to obtain regulatory approval for such product candidates may be negatively impacted.

Furthermore, if any of our products are approved and then cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including:


•	regulatory authorities may withdraw their approval of the product or require a REMS to impose restrictions on its distribution or other risk management measures;


•	regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;


•	we may be required to change the way the product is administered or to conduct additional clinical trials;


•	we could be sued and held liable for harm caused to patients;


•	we could elect to discontinue the sale of our product; and


•	our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates.

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Even if we obtain FDA approval for our product candidates in the United States, we may never obtain approval for or commercialize it in any other jurisdiction, which would limit our ability to realize its full market potential.

In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. We do not have any product candidates approved for sale in any jurisdiction, including in international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized.

Even if we obtain regulatory approval for our product candidates, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA, EMA, PMDA and other comparable foreign regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and drug listing requirements, continued compliance with current Good Manufacturing Practice, or cGMP, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping and current GCP requirements for any clinical trials that we conduct post-approval. 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, including any requirement to implement a REMS. If any of our product candidates receives marketing approval, the accompanying labels for such products may limit the approved use of the drug, which could limit sales.

Regulatory authorities may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. These authorities closely regulate the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. We will be subject to stringent restrictions on manufacturers’ communications regarding off-label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of the Federal Food, Drug, and Cosmetic Act in the United States, and other comparable regulations in foreign jurisdictions, relating to the promotion of prescription drugs may lead to enforcement actions and investigations alleging violations of U.S. federal and state health care fraud and abuse laws, as well as state consumer protection laws, as well as actions for violations of comparable laws in foreign jurisdictions.

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


•	restrictions on manufacturing such products;


•	restrictions on the labeling or marketing of a product;


•	restrictions on product distribution or use;


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


•	warning letters;


•	withdrawal of the products from the market;


•	recall of products;


•	fines, restitution or disgorgement of profits or revenues;

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•	suspension or withdrawal of marketing approvals;


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


•	product seizure; or


•	injunctions or the imposition of civil or criminal penalties.

Government regulations may change and additional government regulations may be enacted, either of which could prevent, limit or delay regulatory approval of our product candidates or any future product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.

Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.

If 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. If they not achieve an adequate level of acceptance, we may not generate significant product revenues and become profitable. The degree of market acceptance for our product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to:


•	the efficacy and potential advantages compared to alternative treatments;


•	effectiveness of sales and marketing efforts;


•	the cost of treatment in relation to alternative treatments, including any similar generic treatments;


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


•	the convenience and ease of administration compared to alternative treatments;


•	the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;


•	the strength of marketing and distribution support;


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


•	the prevalence and severity of any side effects; and


•	any restrictions on the use of our product together with other medications.

Because we expect sales of our product candidates, if approved, to generate substantially all of our product revenues for the foreseeable future, the failure of these products, especially RVT-101, to find market acceptance would harm our business and could require us to seek additional financing.

If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third-parties, we may not be successful in commercializing our product candidates, if approved.

We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. In order to market any product that may be approved, we must build our sales, distribution, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. To achieve commercial success for any product for which we have obtained marketing approval, we will need a sales and marketing organization.

We plan to commercialize our product candidates in the United States, the European Union, Japan and other major markets. If our product candidates are approved for marketing, we may build a focused sales, distribution and marketing infrastructure to market them. There are significant expenses and risks involved with establishing our own sales, marketing and distribution capabilities, including our ability to hire, retain and appropriately incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities could delay any product launch, which would adversely impact the commercialization of our product candidates. For example, if the commercial launch of our product candidates 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 retain or reposition our sales and marketing personnel.

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


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


•	the inability of sales personnel to obtain access to physicians or attain adequate numbers of physicians to prescribe any drugs; and


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

We do not anticipate having the resources in the foreseeable future to allocate to the sales and marketing of our product candidates in certain markets overseas. Therefore, our future success will depend, in part, on our ability to enter into and maintain collaborative relationships for such capabilities, the collaborator’s strategic interest in the product and such collaborator’s ability to successfully market and sell the product. To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, and there can be no assurance that such efforts will be successful.

If we are unable to build our own sales force or negotiate a collaborative relationship for the commercialization of our product candidates we may be forced to delay the potential commercialization of such products or reduce the scope of our sales or marketing activities for our product candidates. If we elect to increase our expenditures to fund commercialization activities ourselves, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our product candidates to market or generate product revenue. We could enter into arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to one or more of our product candidates or otherwise agree to terms unfavorable to us, any of which may have an adverse effect on our business, operating results and prospects.

If we are unable to establish adequate sales, marketing and distribution capabilities, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates and may not become profitable. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

If we obtain approval to commercialize any products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

If our product candidates are approved for commercialization, we may enter into agreements with third parties to market them in certain jurisdictions outside the United States. We expect that we will be subject to additional risks related to international operations or entering into international business relationships, including:


•	different regulatory requirements for drug approvals and rules governing drug commercialization in foreign countries;


•	reduced protection for intellectual property rights;


•	unexpected changes in tariffs, trade barriers and regulatory requirements;


•	economic weakness, including inflation, or political instability in particular foreign economies and markets;


•	compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;


•	foreign reimbursement, pricing and insurance regimes;


•	foreign taxes;


•	foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;


•	workforce uncertainty in countries where labor unrest is more common than in the United States;


•	potential noncompliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and similar anti-bribery and anticorruption laws in other jurisdictions;


•	production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

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•	business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

Our current and future relationships with investigators, health care professionals, consultants, third-party payors, and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.

Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our products for which we obtain marketing approval. Such laws include:

•

the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;

•

the federal false claims laws, including the civil False Claims Act, impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for 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;

•

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;


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

•

the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (covered manufacturers are required to submit reports to the government by the 90th day of each calendar year); and

•

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

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Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable healthcare laws. If our operations are found to be in violation of any of these or any other health regulatory laws that may apply to us, we may be subject to significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

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 that could, among other things, prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any products for which we obtain marketing approval.

For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, collectively the Affordable Care Act, was enacted to 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. Although it is too early to determine the full effect of the Affordable Care Act, the law has continued the downward pressure on pharmaceutical pricing, especially under the Medicare program, and increased the industry’s regulatory burdens and operating costs. Among the provisions of the Affordable Care Act of importance to our potential drug candidates are the following:


•	an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents;


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


•	a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;


•	a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;


•	extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;


•	expansion of eligibility criteria for Medicaid programs in certain states;


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


•	a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and


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

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, 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 included further reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2024 unless additional Congressional action is taken. Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers.

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Moreover, the Drug Supply Chain Security Act, which was enacted in 2012 as part of the Food and Drug Administration Safety and Innovation Act, imposes new obligations on manufacturers of pharmaceutical products related to product tracking and tracing. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We are not sure whether additional legislative changes will be enacted, or whether the current regulations, guidance or interpretations will be changed, or what the impact of such changes on our business, if any, may be.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Coverage and adequate reimbursement may not be available for our product candidates, which could make it difficult for us to sell our products profitably.

Market acceptance and sales of any product candidates that we develop, will depend in part on the extent to which reimbursement for these products and related treatments will be available from third-party payors, including government health administration authorities and private health insurers. Third-party payors decide which drugs they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a plan-by-plan basis. One payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Additionally, a third-party payor’s decision to provide coverage for a drug does not imply that an adequate reimbursement rate will be approved. Each plan determines whether or not it will provide coverage for a drug, what amount it will pay the manufacturer for the drug, and on what tier of its formulary the drug will be placed. The position of a drug on a formulary generally determines the co-payment that a patient will need to make to obtain the drug and can strongly influence the adoption of a drug by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize any product candidates that we develop.

Additionally, there have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions that could affect our ability to sell any future drugs profitably. These legislative and regulatory changes may negatively impact the reimbursement for any future drugs, following approval.

Risks Related to Our Dependence on Third Parties

We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of our product candidates.

We have no experience in drug formulation or manufacturing and do not own or operate, and we do not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. While RVT-101 was being developed by GSK, it was also being manufactured by GSK. We expect that the drug substance transferred from GSK under the GSK Agreement will be sufficient for us to complete our planned Phase 3 pivotal program, and we have contracted with third parties to fill, finish, supply, store and distribute RVT-101 for this program. We also will rely on third-party manufacturers to supply us with sufficient quantities of RVT-101 to be used, if approved, for the commercialization of RVT-101. Under the Arena Development Agreement, subject to specified exceptions. Arena remains the sole and exclusive manufacturer of nelotanserin, and we will depend on Arena to manufacture sufficient quantities of nelotanserin for our planned clinical trials.

If we are unable to initiate or continue our relationship with Arena or these other third-party contractors or if Arena is unable to manufacture nelotanserin for any reason, we could experience delays in our development efforts as we locate and qualify new manufacturers.

Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including:

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•	inability to meet our product specifications and quality requirements consistently;


•	delay or inability to procure or expand sufficient manufacturing capacity;


•	manufacturing and product quality issues related to scale-up of manufacturing;


•	costs and validation of new equipment and facilities required for scale-up;


•	failure to comply with cGMP and similar foreign standards;


•	inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;


•	termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;


•	reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our product candidates or any future product candidate in a timely fashion, in sufficient quantities or under acceptable terms;


•	lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier;


•	operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or regulatory sanctions related to the manufacture of our or other company’s products;


•	carrier disruptions or increased costs that are beyond our control; and


•	failure to deliver our products under specified storage conditions and in a timely manner.

Any of these events could lead to clinical trial delays, failure to obtain regulatory approval or impact our ability to successfully commercialize our products. Some of these events could be the basis for FDA action, including injunction, recall, seizure, or total or partial suspension of production.

We intend to rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

We intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials, and we expect to have limited influence over their actual performance.

We intend to rely upon CROs to monitor and manage data for our clinical programs, as well as the execution of future nonclinical studies. We expect to control only certain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.

We and our CROs will be required to comply with the Good Laboratory Practices and GCPs, which are regulations and guidelines enforced by the FDA and are also required by the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities in the form of International Conference on Harmonization guidelines for any of our product candidates that are in preclinical and clinical development. The Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or

comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat clinical trials, which would delay the regulatory approval process.

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Our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and nonclinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate that we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

If our relationship with these CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial condition and prospects.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our drug development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries for our product candidates and any future product candidates. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our development programs and product candidates. The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our current product candidates or any future product candidate in the United States or in other foreign countries.

There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated, or held unenforceable. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates or companion diagnostic that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate and companion diagnostic under patent protection could be reduced.

If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, future drugs. Any such outcome could have a materially adverse effect on our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty

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whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Recent 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. On September 16, 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 United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The United States Patent Office recently 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 on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, 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 an adverse effect on our business and financial condition.

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

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however the life of a patent, and the protection it affords, is limited. Without patent protection for our current or future product candidates, we may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

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 on any issued patent are due to be paid to the USPTO and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, 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. Non-compliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have an adverse effect on our business.

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Third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, may delay or prevent the development and commercialization of our product candidates.

Our commercial success depends in part on our avoiding infringement and other violations of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, derivation and administrative law proceedings, inter party review, and post-grant review before the USPTO, as well as oppositions and similar processes in foreign jurisdictions. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we and our collaborators are developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our product candidates or other business activities may be subject to claims of infringement of the patent and other proprietary rights of third parties. Third parties may assert that we are infringing their patents or employing their proprietary technology without authorization. We have conducted searches for information in support of patent protection and otherwise evaluating the patent landscape for our product candidates, and, based on these searches and evaluations to date, we do not believe that there are valid patents which contain granted claims that could be asserted with respect to our product. However, we may be incorrect.

There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patent may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all. In addition, we may be subject to claims that we are infringing other intellectual property rights, such as trademarks or copyrights, or misappropriating the trade secrets of others, and to the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

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 employee resources from our business. In the event of a successful infringement or other intellectual property claim against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our affected products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our product candidates, which could harm our business significantly.

We cannot provide any assurances that third-party patents do not exist which might be enforced against our drugs or product candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

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

Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors 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 or interpreted narrowly and could put our patent applications at risk of not issuing. The

initiation of a claim against a third party may also cause the third party to bring counter claims against us such as claims asserting that our patents are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future product candidates. Such a loss of patent protection could harm our business.

We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Our business could be harmed if in litigation the prevailing party does not offer us a license on commercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result in substantial costs and distract our management and other employees.

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. There could also 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 an adverse effect on the price of our common shares.

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

The United States has recently enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening 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 actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world, which could impair our business.

Filing, prosecuting and defending patents covering our product candidates throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain patent protection, but where patent enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

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Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

Because we expect to rely on third parties to manufacture our product candidates, and we expect to collaborate with third parties on the development of our product candidates, we must, at times, share trade secrets with them. We also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of

these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our business and results of operations.

In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators. A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

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

We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. Although we seek to protect our ownership of intellectual property rights by ensuring that our agreements with our employees, collaborators and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, 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 our employees’ former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

Risks Related to Our Common Shares

The public market for our common shares may not be liquid enough for you to sell your shares quickly or at market price.

Prior to our IPO, there was no public market for our common shares. An active trading market for our common shares may not develop, and you may not be able to sell your shares quickly or at the market price. An inactive market may also impair our ability to raise capital to continue to fund operations by selling common shares and may impair our ability to acquire other companies or technologies by using our common shares as consideration.

The market price of our common shares is likely to be highly volatile, and you may lose some or all of your investment.

The market price of our common shares is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following:


•	any delay in the commencement, enrollment and ultimate completion of clinical trials;


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


•	any delay in filing applications for marketing approval and any adverse development or perceived adverse development with respect to applicable regulatory authorities’ review of those applications;


•	failure to successfully develop and commercialize our current product candidates or any future product candidate;

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•	inability to obtain additional funding;


•	regulatory or legal developments in the United States and other countries applicable to our product candidates;


•	adverse regulatory decisions;


•	changes in the structure of healthcare payment systems;


•	inability to obtain adequate product supply for our current product candidates or any future product candidate, or the inability to do so at acceptable prices;


•	introduction of new products, services or technologies by our competitors;


•	failure to meet or exceed financial projections we provide to the public;


•	failure to meet or exceed the estimates and projections of the investment community;


•	changes in the market valuations of similar companies;


•	market conditions in the pharmaceutical and biotechnology sectors, and the issuance of new or changed securities analysts’ reports or recommendations;


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


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


•	additions or departures of key scientific or management personnel;


•	sales of our common shares by us or our shareholders in the future;


•	trading volume of our common shares;


•	general economic, industry and market conditions; and


•	the other factors described in this “Risk Factors” section.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our common shares, regardless of our actual operating performance.

Volatility in our share price could subject us to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant share price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

We are a “controlled company” within the meaning of the applicable rules of the New York Stock Exchange and, as a result, qualify for exemptions from certain corporate governance requirements. If we rely on these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to such requirements.

RSL controls a majority of the voting power of our outstanding common shares. As a result, we are a “controlled company” within the meaning of the New York Stock Exchange, or NYSE, corporate governance requirements. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements:


•	that a majority of the Board of Directors consists of independent directors;


•	for an annual performance evaluation of the nominating and corporate governance and compensation committees;

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•	that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and


•	that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibility.

We have elected to use certain of these exemptions and we may continue to use all or some of these exemptions in the future. As a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.

RSL owns a significant percentage of our common shares and is able to exert significant control over matters subject to shareholder approval.

Based on common shares outstanding as of December 31, 2015, RSL beneficially owns approximately 75% of the voting power of our outstanding common shares, and has the ability to substantially influence us through this ownership position. For example, RSL 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. RSL’s interests may not always coincide with our corporate interests or the interests of other shareholders, and it may act in a manner with which you may not agree or that may not be in the best interests of our other shareholders. So long as RSL continues to own a significant amount of our equity, it will continue to be able to strongly influence or effectively control our decisions.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our common shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If our financial performance fails to meet analyst estimates or one or more of the analysts who cover us downgrade our common shares or change their opinion of our common shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

Because we do not anticipate paying any cash dividends on our common shares in the foreseeable future, capital appreciation, if any, would be your sole source of gain.

We have never declared or paid any cash dividends on our common shares. 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. As a result, capital appreciation, if any, of our common shares would be your sole source of gain on an investment in our common shares for the foreseeable future. Additionally, we are subject to Bermuda legal constraints that may affect our ability to pay dividends on our common shares and make other payments.

Future sales of our common shares, or the perception that such sales may occur, could depress our share price, even if our business is doing well.

Sales of a substantial number of our common shares in the public market, or the perception by investors that our stockholders intend to sell substantial amounts of our common stock in the public market, could depress the market price of our common shares, even if our business is doing well. Such a decrease in our share price could in turn impair our ability to raise capital through the sale of additional equity securities.

All of the shares sold in our IPO are freely transferable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act. The remaining 75,000,000 shares outstanding, representing a majority of our common stock, are held by RSL. If RSL were to sell a substantial portion of these shares, or if the market perceived that RSL intends to sell these shares, it could negatively affect our share price. Prior to RSL’s corporate reorganization and recapitalization in December 2015, any decision by RSL to sell or otherwise dispose of our shares required the unanimous agreement of all of the directors of RSL, including Vivek Ramaswamy, our principal executive officer. Subsequent to RSL’s corporate reorganization and recapitalization in December 2015, all or a portion of the shares of our common stock held by RSL may be sold without Vivek Ramaswamy’s consent. However, any such sales must be made in compliance with the Securities Act and the rules and regulations thereunder, which could limit the number of our shares that RSL could sell in any 90-day period.

We have filed a registration statement on Form S-8 under the Securities Act to register the 9,500,000 common shares that may be issued under our equity incentive plans.

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We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses. The Sarbanes- Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel expect to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors’ and officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our Board of Directors.

We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations; in which case, our shareholders and other investors could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our common shares.

In connection with the preparation of our financial statements as of and for the period from October 31, 2014 (date of inception) to March 31, 2015, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design or maintain an effective control environment because we did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience and training commensurate with our financial reporting requirements. This material weakness resulted in material audit adjustments related to the affiliate charge for stock compensation. Our limited personnel also resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, our insufficient segregation of duties in our finance and accounting functions. We rely on RSI for information systems and financial and accounting support. RSI has limited staff and performed nearly all aspects of our financial reporting process, including, but not limited to, accessing the underlying accounting records and systems, posting and recording journal entries and taking responsibility for the preparation of the financial statements. This material weakness could result in a material misstatement of our interim or annual financial statements that would not be prevented or detected.

As the adoption of the appropriate resources becomes economically feasible, we have taken and intend to take additional steps to remediate this material weakness through the hiring of additional resources and implementation of more robust review, supervision and monitoring of the financial reporting process. Due to our size, segregation of conflicting duties has not always been possible and may not be economically feasible. We are just beginning the process of implementing processes and procedures intended to mitigate the identified material weakness and the measures we have taken to date, or any measures we may take in the future, may not be sufficient to remediate these material weaknesses or to avoid potential future material weaknesses.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and disclosure controls and procedures quarterly. In particular, beginning with the fiscal year ending on March 31, 2017, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes- Oxley Act of 2002, or Section 404. If other material weaknesses are identified in the future or we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated or could be restated, we could receive an adverse opinion regarding our controls from our accounting firm, we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources and the market price of our common shares could decline.

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As a public company, we will be obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common shares.

We will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the fiscal year ending March 31, 2017. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC following the date we are no longer an emerging growth company, as defined in the JOBS Act. We will be required to disclose significant changes made in our internal control procedures on a quarterly basis.

We are beginning the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, and we may not be able to complete our evaluation, testing and any required remediation in a timely fashion. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

During the evaluation and testing process of our internal control, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common shares could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

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 shares less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act. For as long as we continue to be an 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 exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (1) March 31, 2021, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.0 billion, (3) the date on which we are deemed to be a large accelerated filer, which means the market value of our common shares that are held by non-affiliates exceeds $700.0 million as of the prior September 30, the end of our second fiscal quarter, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, under the JOBS Act, emerging growth companies can 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, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

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We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers.

We are a Bermuda exempted company. As a result, the rights of our shareholders are governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in another jurisdiction. It may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against us based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.

Bermuda law differs from the laws in effect in the United States and may afford less protection to our shareholders.

We are organized under the laws of Bermuda. As a result, our corporate affairs are governed by the Bermuda Companies Act 1981, as amended, or the Companies Act, which differs in some material respects from laws typically applicable to U.S. corporations and shareholders, including the provisions relating to interested directors, amalgamations, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. Generally, the duties of directors and officers of a Bermuda company are owed to the company only. Shareholders of Bermuda companies typically do not have rights to take action against directors or officers of the company and may only do so in limited circumstances. Shareholder class actions are not available under Bermuda law. The circumstances in which shareholder derivative actions may be available under Bermuda law are substantially more proscribed and less clear than they would be to shareholders of U.S. corporations. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than those who actually approved it.

When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. Additionally, under our bye-laws and as permitted by Bermuda law, each shareholder has waived any claim or right of action against our directors or officers for any action taken by directors or officers in the performance of their duties, except for actions involving fraud or dishonesty. In addition, the rights of our shareholders and the fiduciary responsibilities of our directors under Bermuda law are not as clearly established as under statutes or judicial precedent in existence in jurisdictions in the United States, particularly the State of Delaware. Therefore, our shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction within the United States.

There are regulatory limitations on the ownership and transfer of our common shares.

Common shares may be offered or sold in Bermuda only in compliance with the provisions of the Companies Act and the Bermuda Investment Business Act 2003, which regulates the sale of securities in Bermuda. In addition, the Bermuda Monetary Authority must approve all issues and transfers of shares of a Bermuda exempted company. However, the Bermuda Monetary Authority has, pursuant to its statement of June 1, 2005, given its general permission under the Exchange Control Act 1972 and related regulations for the issue and free transfer of our common shares to and among persons who are non-residents of Bermuda for exchange control purposes as long as the shares are listed on an appointed stock exchange, which includes the NYSE. This general permission would cease to apply if we were to cease to be listed on the NYSE.

We have anti-takeover provisions in our bye-laws that may discourage a change of control.

Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our Board of Directors. These provisions provide for:


•	a classified Board of Directors with staggered three-year terms;


•	directors only to be removed for cause;


•	an affirmative vote of 66 2/3% of our voting shares for certain “business combination” transactions that have not been approved by our Board of Directors;


•	restrictions on the time period in which directors may be nominated; and

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•	our Board of Directors to determine the powers, preferences and rights of our preference shares and to issue the preference shares without shareholder approval.

These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company and may prevent our shareholders from receiving the benefit from any premium to the market price of our common shares offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common shares if the provisions are viewed as discouraging takeover attempts in the future. These provisions could also discourage proxy contests, make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.

We may reduce the voting power of your common shares without your consent.

Under our amended and restated bye-laws, in the event that any U.S. person holds, directly, indirectly or constructively, 9.5% or more of the total voting power of our issued share capital, excluding any U.S. person that held, directly, indirectly or constructively, 9.5% or more of the total voting power of issued share capital immediately prior to the closing of our IPO, the aggregate votes conferred by the common shares held by such person (or by any person through which such U.S. person indirectly or constructively holds shares) will be reduced by our Board of Directors to the extent necessary such that the common shares held, directly, indirectly or constructively, by such U.S. person will constitute less than 9.5% of the voting power of all issued and outstanding shares. Roivant Sciences Ltd., certain of its affiliates, and Vivek Ramaswamy, our principal executive officer, will not be subject to these provisions. Further, our Board of Directors may determine that shares shall carry different or no voting rights as it reasonably determines, based on the advice of counsel, to be appropriate to (1) avoid the existence of any U.S. person who holds 9.5% or more of the total voting power of our issued share capital or (2) avoid adverse tax, legal or regulatory consequences to us, any subsidiary of ours or any holder of our common shares or its affiliates.

These provisions may discourage potential investors from acquiring a stake or making a significant investment in our company as well as discourage a takeover attempt, which may prevent our shareholders from receiving the benefit of any such transactions as well as adversely affect the prevailing market price of our common shares if viewed as discouraging takeover attempts in the future.

We may become subject to unanticipated tax liabilities.

We are incorporated under the laws of, and managed and controlled from, Bermuda. We may, however, become subject to income, withholding or other taxes in certain jurisdictions by reason of our activities and operations, and it is also possible that taxing authorities in any such jurisdictions could assert that we are subject to greater taxation than we currently anticipate. Any such non-Bermudan tax liability could materially adversely affect our results of operations.

Taxing authorities could reallocate our taxable income among our subsidiaries, which could increase our overall tax liability.

We and RSL, our principal shareholder, are based in Bermuda, and we currently have a subsidiary in the United States. If we succeed in growing our business, we expect to conduct increased operations through our subsidiaries in various tax jurisdictions pursuant to transfer pricing arrangements between us, our parent company and our subsidiaries. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arms’ length and that appropriate documentation is maintained to support the transfer prices. While we believe that we operate in compliance with applicable transfer pricing laws and intend to continue to do so, our transfer pricing procedures are not binding on applicable tax authorities.

If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arms’ length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, resulting in double taxation. If tax authorities were to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase our consolidated tax liability, which could adversely affect our financial condition, results of operations and cash flows.

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Changes in our effective tax rate may reduce our net income in future periods.

Our tax position could be adversely impacted by changes in tax rates, tax laws, tax practice, tax treaties or tax regulations or changes in the interpretation thereof by the tax authorities in Europe, the United States, Bermuda and other jurisdictions as well as being affected by certain changes currently proposed by the OECD and their action plan on Base Erosion and Profit Shifting. Such changes may become more likely as a result of recent economic trends in the jurisdictions in which we operate, particularly if such trends continue. If such a situation was to arise, it could adversely impact our tax position and our effective tax rate. Failure to manage the risks associated with such changes, or misinterpretation of the laws providing such changes, could result in costly audits, interest, penalties and reputational damage, which could adversely affect our business, results of our operations and our financial condition.

Our actual effective tax rate may vary from our expectation and that variance may be material. A number of factors may increase our future effective tax rates, including: (1) the jurisdictions in which profits are determined to be earned and taxed; (2) the resolution of issues arising from any future tax audits with various tax authorities; (3) changes in the valuation of our deferred tax assets and liabilities; (4) increases in expenses not deductible for tax purposes, including transaction costs and impairments of goodwill in connection with acquisitions; (5) changes in the taxation of share-based compensation; (6) changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles; and (7) challenges to the transfer pricing policies related to our structure.

U.S. holders of our common shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company.

Generally, if, for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce passive income or are held for the production of passive income, including cash, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. For purposes of these tests, passive income includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. If we are characterized as a PFIC, U.S. holders of our common shares may suffer adverse tax consequences, including having gains realized on the sale of our common shares treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our common shares by individuals who are U.S. holders, and having interest charges apply to distributions by us and the proceeds of sales of our common shares.

Our status as a PFIC will depend on the composition of our income and the composition and value of our assets (which, assuming we are not a “controlled foreign corporation,” or a CFC, under Section 957(a) of the Code for the year being tested, may be determined in large part by reference to the market value of our common shares, which may be volatile) from time to time. Our status may also depend, in part, on how quickly we utilize the cash proceeds from our IPO in our business. We believe that we were not a CFC prior to our IPO in the current taxable year which will end on March 31, 2016. Based on this belief, with respect to the taxable year beginning in 2014 and foreseeable future taxable years, we presently do not anticipate that we will be a PFIC based upon the expected value of our assets, including any goodwill, and the expected composition of our income and assets. However, our status as a PFIC is a fact-intensive determination made on an annual basis and we cannot provide any assurances regarding our PFIC status for the current or future taxable years.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Equity Securities

None.

(b) Use of Proceeds

On June 16, 2015, we closed our initial public offering, or IPO, in which we issued and sold 24,150,000 common shares at a public offering price of $15.00 per share, including 3,150,000 common shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares, for gross proceeds of $362.2 million. All of the common shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (Registration No. 333-204073), which was declared effective by the SEC on June 10, 2015. Jefferies LLC, Evercore Group L.L.C., RBC Capital Markets LLC, JMP Securities LLC and Robert W. Baird & Co. acted as underwriters. The net proceeds to us were approximately $334.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Substantially all of the cash proceeds are currently deposited in three banking institutions and are substantially all in excess of insured levels.

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No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates.

As of December 31, 2015, we have used $34.5 million of the net proceeds from the IPO primarily to fund the preclinical and clinical development of RVT-101 and nelotanserin , to expand our internal research and development capabilities, and for general corporate purposes.

Such uses are consistent with the planned use of proceeds described in our prospectus dated June 10, 2015 filed with the SEC on June 11, 2015 pursuant to Rule 424(b) under the Securities Act.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed in the Exhibit Index to this Quarterly Report on Form 10-Q are incorporated herein by reference.

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SIGNATURES

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



	AXOVANT SCIENCES LTD.


	By:	/s/ Gregory Weinhoff
		Gregory Weinhoff (Duly Authorized Officer and Principal Financial Officer)

Date: February 9, 2016

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Exhibit Index



Exhibit Number		Description of Document

3.1		Certificate of Incorporation. (1)

3.2		Memorandum of Association. (2)

3.3		Amended and Restated Bye-laws. (3)

10.1		Services Agreement Amended and Restated, dated as of October 13, 2015 by and among Roivant Sciences, Inc., Axovant Sciences, Inc. and the Registrant.

10.2		Development, Marketing and Supply Agreement, dated May 8, 2015, between Roivant Sciences Ltd. and Arena Pharmaceuticals GmbH.

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL		Instance Document

101.SCH XBRL		Taxonomy Extension Schema

101.CAL XBRL		Taxonomy Extension Calculation Linkbase

101.DEF XBRL		Taxonomy Extension Definition Linkbase

101.LAB XBRL		Taxonomy Extension Label Linkbase

101.PRE XBRL		Taxonomy Extension Presentation Linkbase

(1) Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-204073), originally filed on May 11, 2015, as amended.

(2) Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-204073), originally filed on May 11, 2015, as amended.

(3) Incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K (File No. 001-37418), filed on June 22, 2015.

* These certifications are being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Exhibit 10.1

Execution Copy

AMENDED AND RESTATED SERVICES AGREEMENT

This Amended and Restated Services Agreement (the “ Agreement ”) is entered into effective as of October 13, 2015 (the “ Effective Date ”), by and between Roivant Sciences, Inc., a corporation organized under the laws of the State of Delaware (“ Service Provider ”), Axovant Sciences Ltd. (f/k/a Roivant Neurosciences Ltd.), an exempted limited company organized under the laws of the country of Bermuda (“ RNL ”), and Axovant Sciences, Inc. (f/k/a Roivant Neurosciences, Inc.), a corporation organized under the laws of the State of Delaware and a wholly owned subsidiary of RNL (“ RNI ”, and together with RNL, the “ Service Recipients ” and each a “ Service Recipient ”).

RECITALS

WHEREAS, RNL is a biotechnology company focused on acquiring, developing and commercializing late-stage neuroscience drug candidates, including non-strategic neuroscience assets from large pharmaceutical companies, distressed neuroscience drug candidates from small biotech companies, neuroscience drugs or novel approaches from universities, and high-risk neuroscience projects abandoned by conventional biopharmaceutical firms;

WHEREAS, RNI has agreed to provide certain preparatory services in relation to the identification of potential neuroscience drug asset candidates, managing the performance of clinical trials or other research and development activities, performing or evaluating scientific and statistical analyses, and various administrative matters pursuant to a Services Agreement between RNI and RNL dated as of March 7, 2015 (the “ RNI-RNL Services Agreement ”);

WHEREAS, Service Provider is capable of providing preparatory services in relation to the identification of potential neuroscience drug asset candidates, managing the performance of clinical trials or other research and development activities, performing or evaluating scientific and statistical analyses, and various administrative matters and is also capable of assisting RNI in providing such services in connection with the RNI-RNL Services Agreement;

WHEREAS, RNI is in the early stages of operations and may, in some circumstances, not yet be able to provide all of the services required by RNL in connection with the RNI-RNL Services Agreement;

WHEREAS, Service Recipients desire to engage the services of Service Provider until such time as RNI is able to provide all of the services required by RNL in connection with the RNI-RNL Services Agreement, and the Service Provider is willing to provide such services in consideration for a fee;

WHEREAS, Service Provider and RNL entered into the Services Agreement effective as of October 31, 2014, and effective as of March 7, 2015, by and between the Service Provider, RNL and RNI (the “ Original Services Agreement ”) which was amended by the Amendment to the Original Services Agreement dated as of September 30, 2015 (the “ First Amendment ”) and the Second Amendment to the Original Services Agreement dated as of the date hereof and effective as of October 31, 2014 (the “ Second Amendment ”); and

WHEREAS, Service Provider and Service Recipients now wish to amend and restate the Original Services Agreement in its entirety as set forth herein to reflect the amendments to the Original Services Agreement as set forth in the First Amendment and the Second Amendment.

NOW, THEREFORE, in consideration of the mutual covenants, rights and obligations set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS


1.1	Affiliate . “Affiliate” shall mean any Person, whether de jure or de facto, other than a Party, that directly or indirectly owns, is owned by or is under common ownership with a Party to the extent of at least 50 percent of the equity having the power to vote on or direct the affairs of the entity, and any Person actually controlled by, controlling, or under common control with a Party.

1.2

Costs . “Costs” shall mean the fully-burdened cost incurred by the Service Provider and its Affiliates during any applicable month to provide the Services. For purposes of this definition, the fully-burdened cost includes without limitation: (i) the costs of any materials used in providing the Services; (ii) the salary, benefits (if any) (including without limitation, medical plans and 401(k) or other retirement plans), and employment taxes (if any) of all the Service Provider’s employees involved in providing such services (excluding, however, any compensation that is provided to an employee or independent contractor in the form of equity instruments, options to acquire stock (stock options), rights with respect to (or determined by reference to) equity instruments or stock options, or any non-cash compensation provided by a third party to an employee or independent contractor); (iii) related overhead expenses (including, without limitation, cost of facilities and utilities costs, insurance, and the cost of all general support, operational and business services); (iv) any and all licensing fees paid or payable to Third Parties for any intellectual property incorporated into such services; and (v) any depreciation, amortization or other cost recovery for financial accounting purposes related to assets of the Service Provider to the extent such assets are used in providing the Services; provided, however, that the fully-burdened cost shall not include costs incurred by the Service Provider to engage a Third Party for the purpose of providing Services pursuant to Section 3.4 of the Agreement.


1.3	Marks . “Marks” shall mean and include trademarks, service marks, trade names, domain names, trade dress, logos, and similar designations, whether registered or unregistered, and all applications and registrations therefor.

1.4 Party . “Party” shall mean Service Provider or either Service Recipient, and “Parties” shall mean

Service Provider and Service Recipients collectively.


1.5	Person . “Person” shall mean and include any individual, corporation, trust, estate, partnership, joint venture, company, association, governmental bureau or agency, or any other entity regardless of the type or nature thereof.

1.6 Third Party . “Third Party” shall mean any entity other than a Party or an Affiliate.

1.7

Works . “Works” shall mean any work product, technical knowledge, creations, know-how, formulations, recipes, specifications, rights, devices, drawings, instructions, expertise, trade practices, customer lists, computer data, source codes, analytical and quality control data, Marks, copyrights, commercial information, inventions, works of authorship, designs, methods, processes, technology, patterns, techniques, data, Confidential Information, patents, trade secrets, copyrights, and the like, and all other intellectual property created, authored, composed, invented, discovered, performed, perfected, provided, acquired or learned by the Service Provider, whether solely or jointly with others, whether patented, patentable or not, whether in written form or otherwise, whether disclosed to Service Provider by either Service Recipient or otherwise, in performing its obligations under this Agreement.

1.8 Year . “Year” shall mean the 12-month period ending on March 31.

2. ENGAGEMENT.

Subject to the terms of this Agreement, the Service Recipients hereby engage the Service Provider to perform the services set forth on Exhibit A attached hereto (the “Services”). Any additional services requested by a Service Recipient that are not included within the Services shall, if mutually agreed upon by the Parties, each in its sole discretion, be negotiated and included in this Agreement through amendments to Exhibit A hereto. The scope of the Service Provider’s authority shall be specifically limited to those activities outlined in this Agreement.

3. RELATIONSHIP OF THE PARTIES.

3.1

The Service Provider and the Service Recipients are each independent contractors and not joint venturers, partners, agents, or representatives of the other. The Service Provider shall perform the Services for the Service Recipients under this Agreement as an independent contractor and neither the Service Provider nor its employees, subcontractors or agents shall be deemed to be agents, servants or employees of either of the Service Recipients, nor shall the Service Provider and any of the Service Recipients be deemed or construed solely by this Agreement to be partners or joint venturers. The Service Provider shall have exclusive control over the direction and conduct of its employees in carrying out the activities required under this Agreement.

3.2

Neither the Service Provider nor its employees, subcontractors or agents shall have the authority to (i) negotiate the terms of or execute contracts and agreements of either of the Service Recipients (including letters of intent, even if non-binding), provided the Service Provider may suggest incorporating certain non-core agreement terms within the parameters and guidelines provided by the applicable Service Recipient; (ii) hire personnel for either of the Service Recipients; (iii) exercise binding authority with respect to the operations of either of the Service Recipients; (iv) make binding recommendations to either of the Service Recipients; (v) make decisions or have decision-making rights with respect to either of the Service Recipients; (vi) hold itself out as representing either of the Service Recipients or as having the authority to negotiate the terms of or conclude contracts on behalf of either of the Service Recipients or (vii) perform services for either of the Service Recipients that are not covered by this Agreement.

3.3

The Service Provider and its employees, subcontractors or agents shall have the authority to (i) provide advice, assistance, direction and recommendations to the Service Recipients with respect to the operation of RNL; (ii) make recommendations on key points of contracts, without having the power to negotiate the terms of or conclude contracts or agreements on behalf of either of the Service Recipients; (iii) participate in discussions on contracts and agreements; (iv) arrange transactions between a Service Recipient and other parties, provided that the Service Provider does not make any actual decisions or participate in substantive activities, such as negotiations with respect to the terms of such transactions, provided the Service Provider may suggest incorporating certain non-core agreement terms within the parameters and guidelines provided by the applicable Service Recipient; and (v) contact banks in connection with raising capital for the Service Recipient, without having, in any circumstance, the power to negotiate the terms of or conclude contracts or agreements on behalf of either of the Service Recipients in connection with raising capital for RNL.

3.4

Engagement of Third Parties . The Service Provider may, with the prior consent of the applicable Service Recipient, engage such persons, corporations, or other entities as it reasonably deems necessary for the purpose of performing Services under this Agreement; provided, however, that the Service Provider shall remain responsible for the performance of all such Services and shall be considered to engage with such persons, corporations, or other entities in its own name and on its own behalf.

4. FEES AND EXPENSES.

4.1

Each Service Recipient shall pay the Service Provider a fee in accordance with Exhibit B attached hereto for the Services provided to such Service Recipient hereunder. The rates specified in Exhibit B attached hereto shall be reviewed and may be updated from time to time by the Parties. Fees for Services performed by the Service Provider will be billed by the Service Provider to the applicable Service Recipient on a monthly basis. All other costs for Third Party services shall be billed, by or on behalf of the Service Provider, to the applicable Service Recipient, in such manner and format and with such supporting information as the Parties may reasonably agree from time to time. Payment for undisputed invoices received by the applicable Service Recipient shall be due within sixty (60) days after the billing date. Any fees and expenses not paid by the due date thereof shall accrue interest at the safe harbor interest rate based on the applicable Federal rate as set forth in U.S. Treasury Regulations Section 1.482-2(a)(2)(iii)(B). All fees and expenses shall be invoiced and payable in U.S. dollars.


4.2	Yearly Reconciliation . The Parties shall perform a yearly reconciliation for the compensation amounts paid as follows:

a. Administrative Services Yearly Reconciliation .

As soon as reasonably practicable following the close of each Year, the Parties shall also calculate the total amount of service fees actually paid by each Service Recipient for the Year under Section 4.1 with respect to the activities listed in Exhibit A, subsection 1 (“Administrative and Support Services”), adding the amount of any third-party costs reimbursable under Exhibit B paragraph (c) that relate to such services (the “Actual Administrative Services Fees”).

ii.

If, for any Year, the total Actual Administrative Services Fees paid by a Service Recipient is greater than the Exhibit B Administrative Services Fees for such Service Recipient, there shall be deemed to exist an excess of service fee in an amount equal to the difference between the total Actual Administrative Services Fees paid by such Service Recipient and the total Exhibit B Administrative Services Fees for such Service Recipient for the Year (hereinafter “Administrative Services Excess”).

iii.

If, for any Year, the total Actual Administrative Services Fees paid by a Service Recipient is less than the total Exhibit B Administrative Services Fees for such Service Recipient, there shall be deemed to exist a shortfall in an amount equal to the difference between the total Exhibit B Administrative Services Fees for such Service Recipient and the total Actual Administrative Services Fees paid by such Service Recipient (hereinafter “Administrative Services Shortfall”).

b. Other Services Yearly Reconciliation .

As soon as reasonably practicable following the close of each Year during the Term of this Agreement, the Parties will calculate the total service fee with respect to the activities listed in Exhibit A, subsection 2 (“Other Services”) owing under this Agreement by each Service Recipient for the Year (the “Exhibit B Other Services Fees”) by calculating the Service Provider’s Costs with respect to such services provided to the applicable Service Recipient and applying the mutually agreed mark-up percentage for such services determined in accordance with Exhibit B, and adding the amount of any third-party costs reimbursable under Exhibit B paragraph (c) that relate to such services. As soon as reasonably practicable following the close of each Year, the Parties shall also calculate the total amount of service fees actually paid by each Service Recipient for the Year under Section 4.1 with respect to the activities listed in Exhibit A, subsection 1 (“Other Services”), adding the amount of any third-party costs reimbursable under Exhibit B paragraph (c) that relate to such services (the “Actual Other Services Fees”).

ii.

If, for any Year, the total Actual Other Services Fees paid by a Service Recipient is greater than the Exhibit B Other Services Fees for such Service Recipient, there shall be deemed to exist an excess of service fee in an amount equal to the difference between the total Actual Other Services Fees paid by such Service Recipient and the total Exhibit B Other Services Fees for such Service Recipient for the Year (hereinafter “Other Services Excess”).


iii.	If, for any Year, the total Actual Other Services Fees paid by a Service Recipient is less than the total Exhibit B Other Services Fees for such Service Recipient, there shall be deemed to exist a shortfall in an amount equal to the difference between the total Exhibit B Other Services Fees

for such Service Recipient and the total Actual Other Services Fees paid by such Service Recipient (hereinafter “Other Services Shortfall”).

c. Settlement of Excess or Shortfall Amounts .

If, for any Year, (1) the sum of the Administrative Services Shortfall for a Service Recipient and the Other Services Shortfall for such Service Recipient exceeds (2) the sum of the Administrative Services Excess for such Service Recipient and the Other Services Excess for such Service Recipient (such excess amount, the “Net Shortfall”), such Service Recipient shall pay such Net Shortfall to Service Provider within thirty (30) days after the Exhibit B Administrative Services Fees, Exhibit B Other Services Fees, Actual Administrative Services Fees, and Actual Other Services Fees have been calculated for such Year.

ii.

If, for any Year, (1) the sum of the Administrative Services Excess for a Service Recipient and the Other Services Excess for such Service Recipient exceeds (2) the sum of the Administrative Services Shortfall for such Service Recipient and the Other Services Shortfall for such Service Recipient (such excess amount, the “Net Excess”), the Service Provider may (x) treat such Net Excess, in whole or in part, as a contribution to the capital of the Service Provider; or (y) treat such Net Excess, in whole or in part, as an overpayment to the Service Provider that must be repaid to such Service Recipient within 30 days after the end of the Year.

4.3

Withholding . The Service Recipients shall be entitled to deduct from any payments to Service Provider the amount of any withholding taxes with respect to such amounts payable, or any taxes in each case required to be withheld by the applicable Service Recipient to the extent that such Service Recipient pays to the appropriate governmental authority on behalf of Service Provider such taxes, levies, or charges. Such Service Recipient shall, upon the request of Service Provider, deliver to Service Provider proof of payment of all such taxes, levies, and other charges and the appropriate documentation that is necessary to obtain a tax credit, to the extent such tax credit can be obtained.

5. ACCESS TO BOOKS AND RECORDS.

Service Provider shall maintain books and records pertaining to the Services provided in any Year pursuant to this Agreement for seven (7) Years following the performance of such Services and shall make them available for inspection and audit, at the applicable Service Recipient’s expense, by a mutually acceptable independent certified public accounting firm during normal business hours upon reasonable prior written notice to Service Provider.

6. CONFIDENTIAL INFORMATION

6.1

Obligations . The Parties acknowledge that, from time to time, one Party (the “Disclosing Party”) may disclose to another Party (the “Receiving Party”) information that is marked as “proprietary,” or “confidential,” or which would, under the circumstances, be understood by a reasonable person to be proprietary and nonpublic (“Confidential Information”). The Receiving Party shall retain such Confidential Information in confidence. Each Party shall use at least the same procedures and degree of care that it uses to protect its own Confidential Information of like importance, including those procedures used when disclosing Confidential Information to Third Parties, and in no event less than reasonable care.


6.2	Exceptions . Nothing in this Agreement shall prevent the disclosure by the Receiving Party or its employees of Confidential Information that:

a. Prior to the transmittal thereof to Receiving Party was of general public knowledge;


b.	Becomes, subsequent to the time of transmittal to Receiving Party, a matter of general public knowledge otherwise than as a consequence of a breach by Receiving Party of any obligation under this Agreement;

c. Is made public by Disclosing Party;


d.	Was in the possession of Receiving Party in documentary form prior to the time of disclosure thereof to Receiving Party by Disclosing Party, and is held by Receiving Party free of any obligation of confidence to Disclosing Party or any Third Party; or


e.	Is received in good faith from a Third Party having the right to disclose it, who, to the best of Receiving Party’s knowledge, did not obtain the same from Disclosing Party and who imposed no obligation of secrecy on Receiving Party with respect to such information.


6.3	No Unauthorized Use . The Receiving Party shall refrain from using or exploiting any and all Confidential Information for any purposes or activities other than those contemplated in this Agreement or any other written agreement entered into by and between the Parties.

6.4 Survival . The Parties’ obligations under this Article 6 shall survive the termination of this Agreement for any reason whatsoever.

7. OWNERSHIP OF INTANGIBLE PROPERTY

Service Provider agrees that all right, title and interest in and to any and all Works will be owned exclusively by the Service Recipient for which Service Provider performed Services using such Works. All Works, as applicable, shall be considered “works made for hire” to the extent permitted under applicable copyright law and will be considered the sole property of the Service Recipient for which Service Provider performed Services using such Works. To the extent such Works are not considered “works made for hire,” all right, title, and interest to such Works, including, but not limited to, all copyrights, patents, trademarks, rights of publicity, and trade secrets, is hereby assigned by Service Provider to the applicable Service Recipient and the Service Provider agrees, at such Service Recipient’s expense, to execute any documents requested by such Service Recipient or any successor in interest to such Service Recipient, at any time in relation to such assignment. Service Provider acknowledges and agrees that the applicable Service Recipient is and will be the sole and absolute owner of all Marks, patents, copyrights, trade secrets, business names, rights of publicity, inventions, proprietary know-how and information of any type, whether or not in writing, and all other intellectual property used by such Service Recipient or held for use in the business of such Service Recipient, including all Works. Service Provider further acknowledges and agrees that any and all derivative works, developments, or improvements based on the Works, shall also be deemed Works and all right, title and interest therein shall be exclusively owned by the applicable Service Recipient. Service Provider shall cooperate with the applicable Service Recipient and any of its Affiliates, at no additional cost to such parties (whether during or after the term of this Agreement), in the confirmation, registration, protection and enforcement of the rights and property of such Service Recipient and its successors in interest in such Works. The Service Provider shall be entitled to use the Works only for purposes of performing the Services. The Service Provider shall not at any time do or cause to be done, or fail to do or cause to be done, any act or thing, directly or indirectly, contesting or in any way impairing either Service Recipient’s right, title, or interest in the Intangible Property. Every use of any Works (and any derivative works, developments, or improvements based on the Works) by Service Provider shall inure to the benefit of the Service Recipient for which the Service Provider performed Services using such Works.

8. USE OF TRADEMARKS

Each Service Recipient shall grant the Service Provider a right to use its Marks only in connection with the Services, provided that if a Service Recipient provides the Service Provider with reasonable written trademark guidelines governing the use of such Service Recipient’s Marks (which guidelines may be updated by such Service Recipient from time to time with prior written notice to the Service Provider), the Service Provider’s use of such Marks shall be subject to such written guidelines so provided. Notwithstanding the foregoing, the Service Provider will comply with all of such Service Recipient’s reasonable instructions and quality control requirements regarding such Service Provider’s use of its Marks. The Service Provider acknowledges that any of a Service Recipient’s Marks are owned and licensed solely and exclusively by such Service Recipient, and agrees to use such Marks only in the form and with appropriate legends as described by such Service Recipient. All use of a Service Recipient’s Marks and associated goodwill will inure to the benefit of such Service Recipient. All rights not expressly granted are reserved to the applicable Service Recipient. The Service Provider shall not remove, cover, or modify any proprietary rights notice or legend placed by the other party on materials used in connection with this Agreement.

9. INDEMNIFICATION; LIMITATION OF LIABILITY

9.1

The Service Provider, to the maximum extent permitted by law, shall defend, protect, indemnify and hold the Service Recipients and their officers, employees and directors, as the case may be (“ Indemnified Parties ”), harmless from and against any and all losses, demands, damages (including, without limitation, special, consequential and punitive damages awarded to Third Parties), claims, liabilities, interest, awards, actions or causes of action, suits, judgments, settlements and compromises relating thereto, and all reasonable attorney’s fees and other fees and expenses in connection therewith (“ Losses ”) which may be incurred by an Indemnified Party, arising out of, due to, or in connection with, directly or indirectly, the provision of the Services or failure to provide the Services under this Agreement, except to the extent that such Losses are the result of the gross negligence or willful misconduct of an Indemnified Party.

9.2

The Service Provider’s liability for aggregate Losses under this Agreement for any cause whatsoever, and regardless of the form of action, whether in contract or in tort, shall be limited to the payments made by the Service Recipients under this Agreement for the specific Service that allegedly caused or was related to the Losses during the period in which the alleged Losses were incurred. In no event shall the Service Provider be liable for any Losses caused by a Service Recipient’s failure to perform such Service Recipient’s obligations under this Agreement.

9.3

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR AT LAW OR IN EQUITY, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES TO THE OTHER PARTY OR ANY OTHER PERSON (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, ACTIONS OF THIRD PARTIES OR ANY OTHER LOSS) ARISING FROM OR RELATING TO ANY CLAIM MADE UNDER THIS AGREEMENT OR THE PROVISION OR THE FAILURE TO PROVIDE THE SERVICES.

10. TERM AND TERMINATION

10.1

Term . This Agreement shall commence on the Effective Date and continue until terminated by a Party in accordance with this Section 10.1. A Party may terminate this Agreement at its discretion by giving written notice to the other Parties at least sixty (60) days before the proposed termination date. Section 12.14 and Article 6 shall survive the termination of this Agreement. The Service Recipients hereby specifically agree and acknowledge that all obligations of the Service Provider to provide any and all Services shall immediately cease upon termination of this Agreement. The Service Provider hereby specifically agrees and acknowledges that all of its rights to use Marks pursuant to Article 8 of this Agreement shall immediately cease upon termination of this Agreement. To the extent permitted by applicable law, no Party shall be liable to another Party for, and each Party hereby expressly waives any right to, any termination compensation of any kind or character whatsoever, to which such Party may be entitled solely by virtue of termination of this Agreement.


10.2	Rights and Duties on Termination . Upon termination of this Agreement for any reason, each Party shall cease all use of the other Party’s Confidential Information, and the Service Recipients shall pay Service Provider all accrued and unpaid fees for Services performed through the date of termination.

11. COMPLIANCE WITH LAWS

11.1

General Compliance . The Parties shall at all times strictly comply with all applicable laws, rules, regulations, and governmental orders, now or hereafter in effect, relating to their performance of this Agreement. Each Party further agrees to make, obtain, and maintain in force at all times during the term of this Agreement, all filings, registrations, reports, licenses, permits, and authorizations (collectively, “ Authorizations ”) required under applicable law, regulation, or order for such Party to perform its obligations under this Agreement. The Service Recipients shall provide Service Provider with such assistance as Service Provider may reasonably request in making or obtaining any such Authorizations.

12. GENERAL PROVISIONS

12.1

Notices . Any and all notices, elections, offers, acceptances, and demands permitted or required to be made under this Agreement shall be in writing, signed by the Party giving such notice, election, offer, acceptance, or demand and shall be delivered personally, by messenger, courier service, telecopy, first class mail or similar transmission, to the Party, at its address on file with the Party giving such notice, election, offer, acceptance or demand or at such other address as may be supplied in writing. The date of personal delivery or the date of mailing, as the case may be, shall be the date of such notice, election, offer, acceptance, or demand.

12.2

Force Majeure . If the performance of any part of this Agreement by a Party, or of any obligation under this Agreement, is prevented, restricted, interfered with, or delayed by reason of any cause beyond the reasonable control of the Party liable to perform, unless conclusive evidence to the contrary is provided, the Party so affected shall, on giving written notice to the other Parties, be excused from such performance to the extent of such prevention, restriction, interference, or delay, provided that the affected Party shall use its reasonable best efforts to avoid or remove such causes of nonperformance and shall continue performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the Parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution.

12.3

Successors and Assigns . This Agreement may not be assigned or otherwise conveyed by any Party without the prior written consent of the other Parties; provided however that such prior written consent will not be required for an assignment to an Affiliate of a Party. This Agreement shall be binding on and inure to the benefit of the Parties hereto and their respective successors, successors in title and assigns to the extent that such assignment is permitted under this paragraph.

12.4

Entire Agreement, Amendments . This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior agreements, understandings, and communications between the Parties, whether oral or written, relating to the same subject matter. No change, modification, or amendment of this Agreement shall be valid or binding on the Parties unless such change or modification shall be in writing signed by the Party or Parties against whom the same is sought to be enforced.


12.5	Remedies Cumulative . The remedies of the Parties under this Agreement are cumulative and shall not exclude any other remedies to which the Party may be lawfully entitled.


12.6	Other Persons . Nothing in this Agreement shall be construed to prevent or prohibit the Service Provider from providing services to any other Person or from engaging in any other business activity.


12.7	Not for the Benefit of Third Parties . This Agreement is for the exclusive benefit of the Parties to this Agreement and not for the benefit of any Third Party.


12.8	Further Assurances . Each Party hereby covenants and agrees that it shall execute and deliver such deeds and other documents as may be required to implement any of the provisions of this Agreement.


12.9	No Waiver . The failure of any Party to insist on strict performance of a covenant hereunder or of any obligation hereunder shall not be a waiver of such Party’s right to demand strict compliance therewith in the future, nor shall the same be construed as a novation of this Agreement.

12.10 Integration . This Agreement constitutes the full and complete agreement of the Parties.

12.11 Captions . Titles or captions of articles and paragraphs contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend, or describe the scope of this Agreement or the intent of any provision hereof.

12.12 Number and Gender . Whenever required by the context, the singular number shall include the plural, the plural number shall include the singular, and the gender of any pronoun shall include all genders.

12.13 Counterparts . This Agreement may be executed in multiple copies, each one of which shall be an original and all of which shall constitute one and the same document, binding on the Parties, and each Party hereby covenants and agrees to execute all duplicates or replacement counterparts of this Agreement as may be required.

12.14 Governing Law and Jurisdiction . THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICT OF LAWS RULES. THE COURTS LOCATED WITHIN THE STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY AND THE PARTIES CONSENT TO AND AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE PARTIES HEREBY WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (C) ANY LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

12.15 Computation of Time . Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall on a Saturday, Sunday, or any public or legal holiday, whether local or national, the Party having such privilege or duty shall have until 5:00 p.m. (EST or, if in effect in New York, EDT) on the next succeeding business day to exercise such privilege, or to discharge such duty.

12.16 Severability . In the event any provision, clause, sentence, phrase, or word hereof, or the application thereof in any circumstances, is held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder hereof, or of the application of any such provision, sentence, clause, phrase, or word in any other circumstances.

12.17 Costs and Expenses . Unless otherwise provided in this Agreement, each Party shall bear all fees and expenses incurred in performing its obligations under this Agreement.

12.18 Provisions of Law . A reference in this Agreement to a provision of law, regulation, rule, official directive, request, or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory, or other authority or organization is a reference to that provision as amended or re-enacted currently or in the future.

12.19 Meaning in Notices . Unless a contrary indication appears, a term used in any notice given under or in connection with this Agreement has the same meaning in that notice as in this Agreement.

(The remainder of this page has been intentionally left blank)

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first above written.



AXOVANT SCIENCES LTD.		ROIVANT SCIENCES, INC.
By:	/s/ Marianne L. Romeo	By:	/s/ Alan S. Roemer
Name:	Marianne L. Romeo	Name:	Alan S. Roemer
Title:	Head, Global Transactions & Risk Management	Title:	SVP, Finance & Operations
Date:	October 14, 2015	Date:	October 14, 2015


AXOVANT SCIENCES, INC.
By:	/s/ Vivek Ramaswamy
Name:	Vivek Ramaswamy
Title:	CEO
Date:	October 16, 2015

EXHIBIT A

SERVICES PROVIDED


1.	Administrative and Support Services . Various administrative and supportive services, which may include, but are not limited to:

(a) Payroll

(b) Accounts Receivable

(d) General Administrative

(e) Corporate and Public Relations (including advertising, investor relations and/or financial marketing)

(f) Meeting Coordination and Travel Planning

(g) Accounting and Auditing

(h) Tax

(i) Budgeting

(j) Treasury Activities

(k) Staffing and Recruiting

(l) Training and Employee Development

(m) Benefits

(n) Information and Technology Services

(o) Legal Services

(p) Insurance Claims Management

(q) Purchasing

And other similar services.

2. Other Services

Research and development services, including, but not limited to:


(a)	Preparatory assistance in respect of the identification/location of potential drug asset candidates


(b)	Perform/oversee due diligence to evaluate a drug candidate (including, but not limited to, studying the compound, market demand, potential opportunities and competitive landscape with respect to such drug candidate and probability of commercial success of such drug candidate)


(c)	Manage and oversee external consultants in connection with in-depth analyses of potential drug investment opportunities


(d)	Form recommendations regarding potential drug investment opportunities and deliver recommendations to the board of directors of either of the Service Recipients


(e)	Provide the board of directors of either of the Service Recipients with advice in connection with the acquisition of drug assets and, if necessary, assist in communications between the board of directors of the applicable Service Recipient and the sellers of the relevant drug asset in order for RNL to negotiate and conclude agreements to acquire drug assets and related intellectual property


(f)	Participate in meetings with regulatory authorities related to drug assets of RNL (within the parameters and guidelines provided by RNL)


(g)	Develop a plan for clinical testing with respect to a drug asset, identify appropriate contract research organizations to be used in connection with such clinical testing and contract with such contract research organizations (within the parameters and guidelines provided by RNL)


(h)	Select manufacturers to manufacture small batch sample of drug product for purposes of clinical trials and contract with such manufactures (within the parameters and guidelines provided by RNL)


(i)	Manage and oversee clinical trials and drug manufacturing to the extent such clinical trials and drug manufacturing costs do not exceed established cost parameters set by RNL


(j)	Gather and analyze data obtained in connection with clinical trials and present such information to the board of directors of RNL

(k) Conduct final filings to obtain regulatory approvals with respect to a drug asset

The Service Provider shall provide such other services as are agreed with the Service Recipients from time to time.

EXHIBIT B

CALCULATION OF COMPENSATION FOR SERVICES PROVIDED

The fees set forth in this Exhibit B represent the entire amount to be paid by the Service Recipients in connection with the Service Provider’s provision of the Services, and any and all other costs and expenses associated with the Services or the Agreement. In addition, the fees set forth in this Exhibit B include any and all applicable federal, state or local sales or use tax payable in connection with the Services or the Agreement.

Except as otherwise agreed to by the Parties from time to time, the Service Recipients shall compensate Service Provider for its Services rendered and Costs incurred under this Agreement in accordance with the following:

(a)

The applicable Service Recipient shall reimburse Service Provider for its Costs, excluding third-party costs as provided in (c), incurred in providing the Administrative and Support Services described in Exhibit A to such Service Recipient or in making, obtaining, and maintaining in force the Authorizations as described in Section 11.1 for such Service Recipient and shall further pay Service Provider a mark-up on such costs. The mark-up shall be based on the mark-up percentage that the Parties mutually agree is consistent with the financial returns of independent companies performing similar services. The Parties shall review and (if necessary) update the mark-up percentage on an annual basis.

(b)

The applicable Service Recipient shall reimburse Service Provider for its Costs, excluding third-party costs as provided in (c), incurred in providing the Other Services described in Exhibit A to such Service Recipient, and shall further pay Service Provider a mark-up on such costs. The mark-up shall be based on the mark-up percentage that the Parties mutually agree is consistent with the financial returns of independent companies performing similar services. The Parties shall review and (if necessary) update the mark- up percentage on an annual basis.


(c)	If the Service Provider engages a third party pursuant to Section 3.4 hereof, the applicable Service Recipient shall reimburse the Service Provider for all reasonable and actual out-of-pocket costs incurred by the Service Provider in connection with such engagement to the extent such Service Recipient is the beneficiary of the services performed by such third party .

Exhibit 10.2

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Section 240.24b-2

Execution Copy

Development, Marketing and Supply Agreement

by and between

Arena Pharmaceuticals GmbH and

Roivant Sciences Ltd.

dated

May 8, 2015

DEVELOPMENT, MARKETING AND SUPPLY AGREEMENT

This Development, Marketing and Supply Agreement (the “Agreement”) is made and entered into as of May 8, 2015 (the “Effective Date”) by and between Arena Pharmaceuticals GmbH, a company organized under the laws of Switzerland having a principal place of business at Untere Brühlstrasse 4, 4800, Zofingen, Switzerland (“Arena”), and Roivant Sciences Ltd., a Bermuda Exempted Limited Company having a principal place of business at 2 Clarendon House, Hamilton HM11, Bermuda (“Roivant”). Each of Arena and Roivant may be referred to in this Agreement individually as a “Party” and collectively as the “Parties”.

In consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Arena and Roivant, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following capitalized terms have the meanings set out in this Article 1.

1.1 “ Additional Product ” means a particular pharmaceutical product (other than the Initial Product) with a [***], that contains a Compound, which product is added to this Agreement as provided in Section 3.2(b) for development and Commercialization in accordance with this Agreement. For clarity, an Additional Product may be a Combination Product.

1.2 “ Additional Product Minimum Purchase Price ” has the meaning set forth in Section 7.3(d)(ii).

1.3 “ Affiliate ” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person, as the case may be, but for only so long as such control exists. As used in this definition, the term “control” (with correlative meanings for the terms “controlled by” and “under common control with”) means (a) direct or indirect beneficial ownership of more than 50% of the voting share capital or other equity interest in such Person able to elect the directors or management of such Person or (b) the power to direct the management and policies of such Person by contract or otherwise.

1.4 “ Agreement ” has the meaning set forth in the opening paragraph hereto.

1.5 “ Applicable Laws ” means the applicable provisions of any and all national, supranational, regional, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits (including Regulatory Approvals) of or from any court, arbitrator, Regulatory Authority or other governmental agency or authority having jurisdiction over or related to the subject activity or item as they may be in effect from time to time.

1.6 “ Arena ” has the meaning set forth in the opening paragraph hereto.

1.7 “ Arena Indemnitees ” has the meaning set forth in Section 11.1.

1.8 “ Arena Know-How ” means all Know-How that (a) is Controlled by Arena or any of its Affiliates as of the Effective Date, or at any time during the Term, and (b) is reasonably necessary for the development, manufacture or Commercialization of the Compounds or the Initial Product in the Field in accordance with this Agreement, but excluding [***].

1.9 “Arena Patent” means any Patent pending or issued that (a) is Controlled by Arena or any of its Affiliates as of the Effective Date, or at any time during the Term, and (b) is reasonably necessary for the development, manufacture or Commercialization of the Compounds or the Initial Product in the Field, including each Patent that is listed on Exhibit B or claims priority to a Patent listed on Exhibit B , but excluding [***].

1.10 “ Auditor ” has the meaning set forth in Section 7.7(a).

*** This portion has been redacted pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of this document has been filed separately with the Securities and Exchange Commission.

1.11 “ Batch ” means the total amount of a particular Finished Product or Compound resulting from one complete production run conducted by or on behalf of Arena using the applicable Master Batch Records and Manufacturing SOPs.

1.12 “ Batch Records ” means, with respect to a particular production run conducted by or on behalf of Arena for manufacturing one Batch of a particular Finished Product or Compound, the completed batch records, in the form of the Master Batch Records, for such production run containing all the relevant manufacturing details and information for the run, including any deviations.

1.13 “ Calendar Quarter ” means a period of three consecutive months during a Calendar Year beginning on and including January 1 ^st , April 1 ^st , July 1 ^st or October 1 ^st ; provided, that the last Calendar Quarter shall end on the last day of the Term.

1.14 “ Calendar Year ” means a period of 12 consecutive months beginning on and including January 1 ^st ; provided, that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31, 2015, and the last Calendar Year shall end on the last day of the Term.

1.15 “ Certificate of Analysis ” means a written certificate of analysis, in reasonable and customary form, which confirms (i) the purity of Compound manufactured by or on behalf of Arena for use in Finished Product, (ii) that the quantity of the Compound in the Finished Product manufactured by or on behalf of Arena meets the applicable Specifications, (iii) the purity of Finished Product manufactured by or on behalf of Arena, or (iv) that the quantity or lot number of the Finished Product manufactured by or on behalf of Arena meets the applicable Specifications. The Certificate of Analysis will include the results of all Product Acceptance Tests performed by or on behalf of Arena on the particular Batch of such Compound or Finished Product.

1.16 “ cGMP ” means the then-current good manufacturing practices required by the FDA, as set forth in the FFDCA for the manufacture and testing of pharmaceutical materials, including as set forth in 21 U.S.C. section 351 and 21 C.F.R. Parts 210 and 211. Good Manufacturing Practices shall include applicable quality guidelines promulgated under the ICH.

1.17 “ Chairman ” means the chairman of the Joint Steering Committee.

1.18 “Change of Control” means, with respect to either Party, the occurrence of any of the following:

(a) any “person” or “group” (as such terms are defined below) is or becomes the “beneficial owner” (as defined below), directly or indirectly, in a transaction or series of related transactions, of shares of capital stock or other interests (including partnership or LLC membership interests) of such Party (or any of its Controlling Affiliates) then-outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (“ Voting Stock ”) (or its Controlling Affiliate, as applicable) of such Party representing 50% or more of the total voting power of all outstanding classes of Voting Stock of such Party (or its Controlling Affiliate, as applicable); or

(b) such Party (or any of its Controlling Affiliates) enters into a merger, consolidation or other form of business combination, share exchange, reorganization, recapitalization or other similar extraordinary transaction with another Person (whether or not such Party (or its Controlling Affiliate, as applicable) is the surviving entity) and as a result of such merger, consolidation or other form of business combination, share exchange, reorganization, recapitalization or similar extraordinary transaction (i) the members of the board of directors or similar governing body (as the case may be, “ Board of Directors ”) of such Party (or its Controlling Affiliate, as applicable) immediately prior to such transaction constitute less than a majority of the members of the Board of Directors of such Party (or its Controlling Affiliate, as applicable) or, if not such Party (or its Controlling Affiliate, as applicable), such surviving Person immediately following such transaction or (ii) the Persons that beneficially owned, directly or indirectly, the shares of Voting Stock of such Party (or its Controlling Affiliate, as applicable) immediately prior to such transaction cease to beneficially own, directly or indirectly, shares of Voting Stock representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving Person immediately following such transaction; or

(c) such Party (or any of its Controlling Affiliates) sells or transfers to any Third Party, in one or more related transactions, properties or assets representing all or substantially all of the consolidated total assets of such Party and its Affiliates.

For the purpose of this definition: (x) “person” and “group” have the meanings given such terms under Section 13(d)(3) and 14(d)(2) of the Exchange Act and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act; (y) “beneficial owner” shall be determined in accordance with Rule 13d-3 under the Exchange Act; and (z) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial ownership”.

1.19 “Combination Product” means any Finished Product that either (a) contains a Compound as an active agent formulated together with at least one other clinically active agent that is not a Compound; or (b) is a combination of a Product and at least one other therapeutic or prophylactic product (other than a Product) where such products are not formulated together but are sold together as a single product and invoiced as one product.

1.20 “ Commercial Year ” means each period of 12 consecutive months beginning on (a) the first day of the first full month that occurs after the date of the First Commercial Sale and (b) each anniversary of the date specified in the foregoing clause (a); provided, that the first Commercial Year of the Term shall also include the period beginning on and including the date of the First Commercial Sale and ending on the day immediately prior to the first day of the first full month that occurs after such date, and the last Commercial Year shall end on the last day of the Term.

1.21 “ Commercialization ” means marketing, promoting, detailing, offering for sale, selling, importing and distributing Product in the Field, and other similar activities related to the commercial sale of Product in the Field, but excluding for clarity all activities relating to research, development, preclinical and clinical testing (including post-approval clinical testing of any kind) or manufacturing of Compound, Product or Finished Product. When used as a verb, “ Commercializing ” means to engage in Commercialization and “ Commercialize ” and “ Commercialized ” have corresponding meanings.

1.22 “ Commercially Reasonable Efforts ” means, with respect to a particular Party’s specific obligations under this Agreement with respect to Product at the relevant point in time, that level of efforts and application of resources that is consistent with the usual practice followed by that Party in conducting similar activities with respect to other prescription pharmaceutical products owned or licensed by it or to which it has exclusive rights, in each case that have comparable market potential, probability of technical success, and technical and regulatory profile and patent protection to the Product, and are at a stage of development or product life comparable to, Product, but in no event less than the level of efforts and resources generally applied within the pharmaceutical industry in conducting such activities with respect to such comparable prescription pharmaceutical products.

1.23 “ Competing Product ” means a pharmaceutical product (whether an ethical pharmaceutical, over the counter drug, botanical product or other type of product) containing a compound that acts primarily by being a centrally acting (i.e. designed and thought to act primarily in the central nervous system) inverse agonist or antagonist of 5HT _2A and 5HT _2A is the target for which such compound has the highest potency and selectivity (as determined reasonably and in good faith by the party Controlling the compound), other than any Compound or Reverted Compound.

1.24 “ Compound ” means the Initial Compound and the Related Compounds.

1.25 “ Confidential Information ” has the meaning set forth in Section 8.1.

1.26 “ Control ” (including any variations such as “ Controlled ” and “ Controlling ”), in the context of Materials, Patents, Know-How, Domain Names, Trademarks or regulatory filings (including specific Confidential Information), means that the applicable Party or its Affiliate owns or has a license (but excluding license rights granted to such Party by the other Party) to such Materials, Patents, Know-How, Domain Names, Trademarks or regulatory filings and has the ability to grant to the other Party the applicable license (or sublicense, as applicable) or right to access or use such Materials, Patents, Know-How, Domain Names, Trademarks or regulatory filings under this Agreement without violating the terms of an agreement with a Third Party.

1.27 “ Development Data ” means, with respect to clinical trials and other development work conducted on Product, all data, results, information and other Know-How generated from or related to such clinical trials and development work, including preclinical, non-clinical and clinical data, reports and information, protocols, statistical analysis plans, methods, and Batch Records for all Products used in such work.

1.28 “ Development Plan ” means, with respect to a specific Product, the plan for conducting the clinical trials and other development work (including any preclinical and non-clinical studies) pursuant to this Agreement to generate data for use in obtaining, maintaining or expanding Regulatory Approval of the Product.

1.29 “ Disclosing Party ” has the meaning set forth in Section 8.1.

1.30 “ Dispute ” has the meaning set forth in Section 12.7(a).

1.31 “ Domain Name ” means a combination of alpha-numeric characters with a top level domain.

1.32 “ Effective Date ” has the meaning set forth in the preamble of this Agreement.

1.33 “ EMA ” means the European Medicines Agency or any successor agency for the European Union.

1.34 “ Excess Order ” has the meaning set forth in Section 6.2(c).

1.35 “ Exchange Act ” means the Securities Exchange Act of 1934, as it may be amended from time to time.

1.36 “ Excluded Claim ” has the meaning set forth in Section 12.7(j).

1.37 “ Excluded List ” means any of the United States Department of Health and Human Service’s List of Excluded Individuals/Entities or the United States General Services Administration’s Lists of Parties Excluded from Federal Procurement and Non-Procurement Programs.

1.38 “ Existing Arena Patents ” has the meaning set forth in Section 10.2(a).

1.39 “ Extended Term ” has the meaning set forth in Section 12.1.

1.40 “ Facility ” has the meaning set forth in Section 6.12.

1.41 “ Facility Licenses ” has the meaning set forth in Section 6.12.

1.42 “ FCPA ” has the meaning set forth in Section 16.1.

1.43 “ FDA ” means the United States Food and Drug Administration or its successor.

1.44 “ FFDCA ” means the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301, et. seq., as it may be amended from time to time, and the rules, regulations, guidances, guidelines, and requirements promulgated or issued thereunder.

1.45 “ Field Infringement ” has the meaning set forth in Section 9.3(b).

1.46 “ Field ” means the prevention or treatment of any disease, state or condition in humans.

1.47 “ Finished Product ” means, with respect to a particular Product: (a) if the Product is to be sold to end-users, Product in final form ready for sale to the end-user, (b) if Product is to be used for clinical trials or other development work, Product in final form ready for such clinical trials or other development work, (c) if the Product is to be used as a sample, Product in final form ready for distribution as a sample, or (d) if the Product is to be used as part of a compassionate use, named patient use or indigent patient program, Product in final form ready for such compassionate use, named patient use or indigent patient program, in each case ((a) - (d)), in appropriate final packaging and labeling.

1.48 “ First Commercial Sale ” means the first bona fide , arm’s length sale of Product by Roivant, its Sub-distributors, or any of its or their Affiliates to a Third Party (other than a Sub-distributor or its Affiliate). Sales of a Product for use as registration samples, compassionate use sales, named patient use, inter-company transfers to Affiliates of Roivant or Sub-distributors or their Affiliates and the like shall not constitute a First Commercial Sale.

1.49 “ Fiscal Semester ” means a period of six consecutive months during a Calendar Year beginning on and including July 1 ^st or January 1 ^st ; provided, that the first Fiscal Semester of the Term shall commence on the Effective Date and end on December 31, 2015, and the last Fiscal Semester shall end on the last day of the Term.

1.50 “For Cause” means, with respect to an audit, that the audit is prompted by a regulatory agency critical finding or recall or a critical finding in an audit conducted by or on behalf of Roivant pursuant to Section 6.8, where “a critical finding” is a finding that would result in a regulatory action or is otherwise defined in the Quality Agreement.

1.51 “ Force Majeure ” has the meaning set forth in Section 15.1.

1.52 “ Forecast ” has the meaning set forth in Section 6.2(b).

1.53 “FTE ” means the equivalent of the work of one full-time qualified employee of Arena for one year (constituting [ *** ] working hours). An individual contributing work for less than [ *** ] hours per year shall be deemed a fraction of an FTE on a pro-rata basis. Each FTE shall be placed in a category of FTEs based on such individual’s position.

1.54 “ FTE Costs ” means the sum, for each category of FTE, of the applicable FTE Rate times the number of FTEs in such category expended during the applicable financial period. The FTE Costs shall be determined based on time (as calculated in pro-rated FTEs) actually spent performing the applicable activities, unless another basis is expressly specified herein or otherwise agreed in advance by the Parties in writing.

1.55 “ FTE Rate ” means, with respect to a particular category of FTEs, the monetary rate at which such FTEs expended during the applicable financial reporting period accrue. As of the Effective Date, such annual rates are (a) US$ [ *** ] per FTE for department head, director or equivalent level or above, (b) US$ [ *** ] per FTE for team leader, scientist or equivalent level (up to director or equivalent level), and (c) US$ [ *** ] per FTE for below team leader, scientist or equivalent level. Commencing January 1, 2016, each FTE Rate shall adjust annually, effective January 1 of the applicable Calendar Year, to reflect any year-to-year percentage increase or decrease (as the case may be) in the U.S. Bureau of Labor Statistics Employee Cost Index (“ ECI ”) (based on the change in the ECI from the most recent index available as of the Effective Date to the most recent index available as of the date of the calculation of such adjusted FTE Rate).

1.56 “ GAAP ” means generally accepted accounting principles in the United States and means international financial reporting standards (“ IFRS ”) at such time as IFRS becomes the generally accepted accounting standard in the United States.

1.57 “ Good Clinical Practices ” or “ GCP ” means the then-current standards, practices and procedures promulgated or endorsed by the applicable Regulatory Authority (applying the standards, practices or procedures of the FDA for this definition where such standards, practices or procedures are more strict) for designing, conducting, recording, analyzing and reporting clinical trials that involve the participation of human subjects, including as set forth in 21 C.F.R. part 50, 54, 56 and 312 and in the ICH guidelines entitled “Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance,” and comparable regulatory standards, practices and procedures in other countries and jurisdictions, as they may be updated from time to time.

1.58 “ Good Laboratory Practices ” or “ GLP ” means the then-current good laboratory practice standards promulgated or endorsed by the applicable Regulatory Authority (applying the standards, practices or procedures of the FDA for this definition where such standards, practices or procedures are more strict) for nonclinical laboratory studies that support or are intended to support applications to conduct research on human subjects or to obtain regulatory approval, including as set forth in 21 C.F.R. Part 58, and comparable regulatory standards, practices and procedures in other countries and jurisdictions, as they may be updated from time to time.

1.59 “ ICC ” has the meaning set forth in Section 12.7(a).

1.60 “ ICC Rules ” has the meaning set forth in Section 12.6(a).

1.61 “ ICH ” means the International Conference on Harmonization (of Technical Requirements for Registration of Pharmaceuticals for Human Use).

1.62 “ IND ” means an Investigational New Drug Application (including any amendments thereto) filed with the FDA pursuant to 21 C.F.R. §312 before commencement of clinical trials of a pharmaceutical product and its equivalent in other countries or regulatory jurisdictions outside the United States.

1.63 “ Indemnitee ” has the meaning set forth in Section 11.3(a).

1.64 “ Indemnitor ” has the meaning set forth in Section 11.3(a).

1.65 “Indication” means a separate and distinct disease, disorder or medical condition that a Product is intended to treat, prevent, cure, or ameliorate, or that is the subject of a clinical trial on a Product and where it is intended that the data and results of such clinical trial (if successful) will be used to support a regulatory submission and approval that is intended to result in distinct labeling within the indications section of the label relevant to usage in the disease, disorder or medical condition that is separate and distinct from another disease, disorder or medical condition. Examples of three distinct Indications are Alzheimer’s Disease Psychosis, Dementia with Lewy Bodies Psychosis and Parkinson’s Disease Psychosis.

1.66 “Initial Compound” means the compound known as 1-[3-(4-Bromo-2-methyl-2H-pyrazol-3-yl)-4-methoxy-phenyl]-3-(2,4-difluoro-phenyl)-urea, the structure of which is set forth in Exhibit A .

1.67 “ Initial Compound Patents ” has the meaning set forth in Section 9.2(b).

1.68 “ Initial Product ” means the pharmaceutical product that contains the Initial Compound, [ ***] with the formulation described in IND 73405, but in doses of up to 40 mg.

1.69 “ Initial Product Minimum Purchase Price ” has the meaning set forth in Section 7.3(d)(i).

1.70 “ Initial Purchase Price Payment ” has the meaning set forth in Section 7.3(b)(ii).

1.71 “ Initial Term ” has the meaning set forth in Section 12.1.

1.72 “ Joint Manufacturing Committee ” or “ JMC ” has the meaning set forth in Section 4.1(a).

1.73 “ Joint Steering Committee ” or “ JSC ” has the meaning set forth in Section 4.1(a).

1.74 “ Know-How ” means all tangible and intangible scientific, technical, trade, financial or business information and materials, including compounds, compositions of matter, formulations, techniques, processes, methods, trade secrets, formulae, procedures, tests, data, results, analyses, documentation, reports, information (including pharmacological, toxicological, non-clinical (including chemistry, manufacturing and control)), and clinical test design, methods, protocols, data, results, analyses, and conclusions, quality assurance and quality control information, regulatory documentation, information and submissions pertaining to, or made in association with, filings with any Regulatory Authority, product life cycle management strategies, knowledge, know‑how, skill, and experience, and all other discoveries, developments, inventions (whether or not confidential, proprietary, patented or patentable), and tangible embodiments of any of the foregoing.

1.75 “ Knowledge ” means, with respect to a particular statement to which such term is attributed, that none of the applicable Party’s respective officers or the officers of its Affiliates, are aware of any facts or information that make such statement untrue after performing a reasonable investigation with respect to such statement.

1.76 “ Losses ” has the meaning set forth in Section 11.1.

1.77 “ MAA ” means (a) a marketing authorization application filed with (i) the EMA under the centralized EMA filing procedure or (ii) a Regulatory Authority in any European country if the centralized EMA filing procedure is not used; or (b) any other equivalent or related regulatory submission, in either case to gain approval to market a Product in any country in the European Union, in each case including, for the avoidance of doubt, amendments thereto and supplemental applications.

1.78 “ Major Market Country ” has the meaning set forth in Section 5.2.

1.79 “ Manufacturing Know-How ” means any and all Know-How Controlled, discovered, identified, conceived, reduced to practice or otherwise made by or on behalf of Arena or its Affiliates prior to or during the term of this Agreement, in each case to the extent such Know-How relates to the manufacture of pharmaceutical products generally, but excluding Know-How that relates solely to, or to the extent it is specifically tailored for use in, the manufacture of any Compound or Product.

1.80 “ Manufacturing Patent ” means any Patent to the extent it claims or covers any invention within the Manufacturing Know-How.

1.81 “ Manufacturing SOPs ” means, with respect to a particular Finished Product being supplied by Arena to Roivant under Article 6 and the Compound contained therein, the specific methods, techniques, processes and standard operating procedures (including Quality Control Procedures) that are established in accordance with the Quality Agreement and are used by or on behalf of Arena in manufacturing such Finished Product or such Compound.

1.82 “ Master Batch Records ” means the master batch records for Arena’s (or its designee’s) manufacturing of a specific Finished Product or Compound, as established in accordance with the Quality Agreement, including the applicable Manufacturing SOPs, the in-process testing and QA/QC testing for such Finished Product or such Compound, which records are to be used in (a) the manufacture by or on behalf of Arena of such Finished Product pursuant to this Agreement or (b) the manufacture by or on behalf of Arena of such Compound for use in the manufacture of Finished Product pursuant to this Agreement.

1.83 “ Materials ” has the meaning set forth in Section 3.6.

1.84 “ Minimum Product Purchase Price ” for each Product means either the Initial Product Minimum Product Purchase Price or the applicable Additional Product Minimum Purchase Price.

1.85 “ NDA ” means a New Drug Application (including an Abbreviated New Drug Application) as described in 21 C.F.R. § 314.50, et seq., and all amendments and supplements thereto, that is filed with the FDA, and its equivalent in other countries and regulatory jurisdictions outside the United States, in each case including all documents, data, and other information concerning the applicable product filed therewith.

1.86 “ Net Sales ” means, with respect to a Finished Product during any period, the gross invoiced sales price in US Dollars (as converted into US Dollars for sales made in other currency) for all quantities of such Finished Product sold by Roivant, its Sub-distributors, or any of its or their Affiliates to a Third Party (other than a Sub-distributor or its Affiliates) during such period, less the following deductions to the extent actually incurred, allowed, or paid with respect to such sale by the selling party, using GAAP applied on a consistent basis:

(a) [ ***] included in the gross invoiced sales price;

(b) pharmaceutical excise taxes (such as those imposed by the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and other comparable laws), in each [*** ] ;

(d) [ *** ] ,

(e) [ ***], to the extent separately set forth in the applicable invoice;

(f) [ *** ] , in amounts not exceeding [ *** ] ; and

(g) [ ***], in amounts not exceeding usual and customary amounts and calculated in accordance with GAAP.

If Roivant proposes to develop or commercialize one or more Combination Products, Roivant will propose to Arena adjustments to Net Sales calculations for such Combination Products. Arena will reasonably consider such proposal and the Parties will negotiate in good faith to agree upon a reasonable adjustment. Any adjustments agreed by the Parties will be set forth in a writing signed by authorized officers of the Parties. If notwithstanding the Parties’ good faith discussions, the Parties are unable to agree on such adjustment [***] in the case of [***] will [***].

In no event shall any particular amount of deduction identified above, be deducted more than once in calculating Net Sales (i.e., no “double counting” of reductions). Each of the above deductions shall be substantially consistent with Roivant’s, its Sub-distributors’ and its and their Affiliates’ internal accounting policies as consistently applied by Roivant, its Sub-distributors or its or their Affiliates in the applicable country across its products at the time of sale. In no event shall the deductions with respect to [***] (set forth in part (c) above) for any Calendar Quarter exceed [***]% of the amount arrived at after deducting the items described in clauses (a), (b), (d) and (e) above from the gross invoiced sales price in US Dollars (as converted into US Dollars for sales made in other currency) for all quantities of such Product sold by Roivant, its Sub-distributors or its or their Affiliates to a Third Party during such Calendar Quarter; provided , that any deductions for [*** ] pursuant to this sentence shall be [ *** ] . Roivant shall [ *** ] of a Product [ *** ] by Roivant, its Sub-distributors or its or their Affiliates. Sales of a Product between Roivant and any of its Sub-distributors or its or their Affiliates for resale shall be excluded from the computation of Net Sales, but the subsequent resale of such Product to a Third Party (other than a Sub-distributor or its Affiliates) shall be included within the computation of Net Sales.

1.87 “ Non-Conforming Finished Product ” has the meaning set forth in Section 6.9.

1.88 “ Notice Date ” has the meaning set forth in Section 12.7(b).

1.89 “ Order Acceptance ” has the meaning set forth in Section 6.2(c).

1.90 “ Order Commitment ” has the meaning set forth in Section 6.2(b).

1.91 “ Panel ” has the meaning set forth in Section 12.7(b).

1.92 “ Paragraph IV Notice ” has the meaning set forth in Section 9.3(c).

1.93 “ Party ” and “ Parties ” has the meaning set forth in the opening paragraph of this Agreement.

1.94 “ Patent(s) ” means (a) all patents, certificates of invention, applications for certificates of invention, priority patent filings and patent applications, including provisional patent applications, and (b) any renewal, division, continuation (in whole or in part), or request for continued examination of any of such patents, certificates of invention and patent applications, and any all patents or certificates of invention issuing thereon, and any and all reissues, reexaminations, extensions, divisions, renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing.

1.95 “ Patent Term Extension ” means any term extensions, supplementary protection certificates, regulatory exclusivity and equivalents thereof offering patent protection beyond the initial term with respect to any issued Patents.

1.96 “ Payee Party ” has the meaning set forth in Section 7.5.

1.97 “ Paying Party ” has the meaning set forth in Section 7.5.

1.98 “ Payment ” has the meaning set forth in Section 7.5.

1.99 “ Person ” means any individual, corporation, partnership, limited liability company, trust, governmental entity, or other legal entity of any nature whatsoever.

1.100 “ Phase 2 Trial ” means a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(b).

1.101 “ Phase 3 Trial ” means a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(c).

1.102 “ Pricing Approval ” means such governmental approval, agreement, determination or decision establishing prices for a Product that can be charged and/or reimbursed in regulatory jurisdictions where the applicable governmental authorities approve or determine the price and/or reimbursement of pharmaceutical products and where such approval, agreement, determination or decision establishes prices for a Product that are acceptable to Roivant or its Sub-distributor or its or their Affiliate, as applicable.

1.103 “ Product ” means (a) the Initial Product or (b) an Additional Product.

1.104 “ Product Acceptance Tests ” means, with respect to a particular Compound or Finished Product being manufactured by or on behalf of Arena pursuant to this Agreement, the specific tests (including release tests) to be used to determine whether such Compound or Finished Product conforms to the terms of this Agreement and the Quality Agreement, including the Specifications for such Compound or Finished Product, which tests the Parties shall establish (and amend from time to time if required) in accordance with the terms of the Quality Agreement.

1.105 “Product Domain Names” means the Domain Names listed on Exhibit C , and any other Domain Names that are specific to one or more Compounds or Products, and that are Controlled by Roivant.

1.106 “ Product Liability Claim ” means any Third Party Claim brought against any Arena Indemnitee or Roivant Indemnitee arising from, based on or occurring as a result of personal injury, death or property damage (to the extent resulting from personal injury or death) caused by or resulting from the use of a Product sold, distributed, dispensed or otherwise administered, except to the extent caused by any failure of the Product manufactured by or on behalf of Arena or its Affiliates (including any Product manufactured by a Third Party contractor of Arena or its Affiliates) to meet the Product Warranty.

1.107 “ Product Purchase Price ” has the meaning set forth in Section 7.3(a) with respect to each Product.

1.108 “ Product Purchase Price Adjustment Payment ” has the meaning set forth in Section 7.3(g).

1.109 “ Product Trademark ” has the meaning set forth in Section 9.10.

1.110 “ Product Warranty ” has the meaning set forth in Section 6.11.

1.111 “ Program Know-How ” means any and all Know-How discovered, identified, conceived, reduced to practice or otherwise made in the course of or as a result of activities conducted under this Agreement, including (i) Development Data and (ii) pursuant to a Development Plan, or any Commercialization activities to the extent such Know-How relates to [***] and is not applicable to [*** ] , either (a) solely by one or more employees of or subcontractors (including Sub-distributors) or consultants to Roivant, its Sub-distributors, Arena or any of their respective Affiliates, or (b) jointly by one or more employees of or subcontractors or consultants to Arena or any of its Affiliates, on the one hand, and one or more employees of or subcontractors (including Sub-distributors) or consultants to Roivant, its Sub-distributors, or any of their respective Affiliates, on the other hand; [ *** ] .

1.112 “ Program Patent ” means any Patent to the extent it claims or covers any invention within the Program Know-How, excluding any Patents to the extent related to Reverted Compounds.

1.113 “ Prosecution ” has the meaning set forth in Section 9.2(a)(i).

1.114 “ Purchase Order ” means a written order submitted by Roivant to Arena, in a form reasonably acceptable to Arena, for Arena to manufacture (or have manufactured) and deliver, and Roivant to purchase, a specific quantity of a particular Finished Product, as provided in Section 6.2(c).

1.115 “ Quality Agreement(s) ” means each agreement containing or referring to the agreed policies, procedures, and standards, which shall be customary and reasonable, by which the Parties will coordinate and implement the operational and quality assurance activities needed to efficiently achieve regulatory compliance objectives with respect to manufacturing and supply by Arena of the Finished Products.

1.116 “ Quality Control Procedures ” has the meaning set forth in Section 6.6.

1.117 “ Receiving Party ” has the meaning set forth in Section 8.1.

1.118 “ Recipient ” has the meaning set forth in Section 8.1.

1.119 “ Regulatory Approval ” means, with respect to a Product to be sold for use in a particular country: all approvals, registrations, authorizations, licenses and permits by the Regulatory Authorities in such country necessary to market or sell such Product, but specifically not including Pricing Approvals, or regulatory approvals relating to the manufacture of a Product.

1.120 “ Regulatory Authority ” means, as to a particular country, any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity whose review, approval or authorization is necessary for the manufacture, packaging, use, storage, import, export, distribution, promotion, marketing, offer for sale or sale of a Product in such country.

1.121 “ Regulatory Filings ” means all applications, approvals, licenses, notifications, registrations, submissions and authorizations made to or received from a Regulatory Authority specific to and necessary for the development, manufacture or commercialization of a pharmaceutical product, including any INDs, NDAs and Regulatory Approvals.

1.122 “ Regulatory Standards ” has the meaning set forth in Section 6.6.

1.123 “Related Compound” means (a) any compound in the chemical scope of [*** ] , or (b) any [ ***] described in (a); provided however that Related Compound shall not include the Initial Compound or any Reverted Compound.

1.124 “Reverted Compound” means a former Related Compound that Roivant has lost all rights to under this Agreement pursuant to Section 3.4 or a Compound for which Roivant has terminated its rights pursuant to Section 12.3.

1.125 “ Roivant ” has the meaning set forth in the opening paragraph hereto.

1.126 “ Roivant Indemnitees ” has the meaning set forth in Section 11.2.

1.127 “ Roivant Know-How ” means any and all Know-How that is Controlled by Roivant or its Affiliate as of the Effective Date.

1.128 “ SEC ” has the meaning set forth in Section 8.5(a).

1.129 “ Secondary Purchase Price Payment ” has the meaning set forth in Section 7.3(b)(ii).

1.130 “ Senior Executives ” means, with respect to Roivant, the Chief Executive Officer of Roivant and with respect to Arena, the Chairman of the Managing Directors of Arena.

1.131 “ Specifications ” means, with respect to a particular Finished Product to be sold or otherwise used in a particular country or with respect to a particular Compound to be used in the manufacture of Finished Product, the specifications, characteristics, qualities and labeling and packaging requirements established in writing for such Finished Product or Compound in the Quality Agreement and in conformance with the Regulatory Approval in such country for the applicable Finished Product or Compound and Applicable Laws in such country, with which such Finished Product must conform (including release criteria and associated analytical methods) when delivered pursuant to this Agreement or with which such Compound must conform (including release criteria and associated analytical methods) for use by or on behalf of Arena for manufacture into Finished Product, and as the same may be amended from time to time under the terms of the Quality Agreement.

1.132 “ Sub-distributor ” means any Person other than Roivant or its Affiliate that Roivant appoints or grants the right, for its own account (rather than on behalf of Roivant), to (i) develop Product, (ii) obtain and maintain Regulatory Approval for Product, and/or (iii) market, promote, sell, distribute or otherwise Commercialize one or more Products in a country (or countries), pursuant to the terms of Section 5.7.

1.133 “ Taxes ” has the meaning set forth in Section 7.5.

1.134 “ Term ” has the meaning set forth in Section 12.1.

1.135 “ Testing Laboratory ” has the meaning set forth in Section 6.10.

1.136 “ Third Party ” means any Person other than Arena, Roivant, and their respective Affiliates.

1.137 “ Third Party Claim ” has the meaning set forth in Section 11.1.

1.138 “ Three Year Forecast ” has the meaning set forth in Section 6.2(b).

1.139 “ Trademark ” means any word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, brand mark, service mark, trade name, brand name, logo or business symbol, whether or not registered.

1.140 “ United States ” means the United States of America and its territories and possessions, including Puerto Rico and the District of Columbia.

1.141 “ United States Dollar ” and “ US$ ” means the official currency of the United States.

1.142 “Upfront Payment” has the meaning set forth in Section 7.1.

ARTICLE 2

EXCLUSIVE DISTRIBUTORSHIP

2.1 Appointment of Roivant as Exclusive Distributor. Subject to the terms and conditions of this Agreement, Arena hereby appoints Roivant as the exclusive worldwide distributor during the Term of Products in the Field and grants to Roivant during the Term the exclusive rights to Commercialize Products worldwide. Pursuant to such appointment, subject to the terms and conditions of this Agreement, Roivant shall have the exclusive right during the Term to invoice and book all Product sales in the Field and may exercise such right, in its discretion, through its Sub-distributors and its and their Affiliates. For clarity, as between the Parties, Arena and its Affiliates shall retain exclusively all rights to Products other than the rights granted to Roivant in the foregoing appointment or otherwise in this Agreement.

2.2 Supply of Product for Distributorship. Arena shall supply (or have supplied) to Roivant, and Roivant shall purchase exclusively from Arena, Roivant’s, its Sub-distributors’ and its and their Affiliates’ requirements of Products for sale by Roivant its Sub-distributors and its and their Affiliates pursuant to Section 2.1, subject to and under the provisions of Article 6.

2.3 Negative Covenants.

(a) Compounds. [ ***] hereby covenants and agrees that during the Term, neither [ *** ] nor any of its Affiliates shall [ *** ] any Third Party [ *** ] (except to the extent reasonably necessary to perform [ *** ] obligations, if any, under any [ *** ] or to [ *** ] obligations to [ *** ] under this Agreement) [ *** ] a (i) [ *** ] (other than [ *** ] ) or (ii) any [ *** ] of the [ *** ] or any [ *** ] for which [ *** ] (other than [ *** ] ). [ *** ] additionally hereby covenants and agrees that during the Term, neither [ *** ] nor any of its Affiliates currently has as of the Effective Date, or shall [ *** ] any Third Party [ *** ] of a [ *** ] (other than [ *** ] ). For the purpose of this Section 2.3(a), a “ [ *** ] means any [ *** ] that (1) [ *** ] in the [ *** ] through a [ *** ] , such as [ *** ] of an [ *** ] , and (2) [ *** ] and is [ *** ] to be [ *** ] through such [ *** ] .

(b) Competing Products .

(i) Arena hereby covenants and agrees that neither Arena nor any of its Affiliates shall clinically develop, market, sell, distribute or commercialize, prior to the fifth anniversary of the Effective Date of this Agreement (the “Arena Non-Compete Period” ), or [ *** ] during the Non-Compete Period, any Competing Product for the treatment of behavioral disturbances in patients with dementia, including but not limited to agitation and psychosis; provided there are [ *** ] (such prohibited activities, “ Competing Arena Program ”). “ [ *** ] ” shall be [ *** ] of such [ *** ] . For clarity, [ ***] provided such [ *** ] does not [*** ] during the Non-Compete Period. [ *** ] (including any [ *** ] ) to a [ *** ] . Notwithstanding anything to the contrary in this Agreement (including this subsection), Roivant agrees that (i) [ *** ] (including [ *** ] in the [ *** ] )) to [ *** ] , and/or other [ *** ] and (ii) any Third Party [ *** ] without any [ *** ] .

(ii) Notwithstanding Section 2.3(b)(i):

(A) if any Person with a Competing Arena Program becomes an Affiliate of Arena or succeeds Arena through a Change of Control of Arena during the Arena Non-Compete Period (which Arena agrees to notify Roivant in writing promptly after the closing of such Change of Control of Arena), then such Person shall be permitted to continue such Competing Arena Program and the continuation of such Competing Arena Program shall not be a breach of Section 2.3(b)(i), provided that the level of efforts required by Commercially Reasonable Efforts shall not be take into account such Competing Arena Program; and

(B) if during the Arena Non-Compete Period (1) any [ *** ] of such [ *** ] or any of its Affiliates or [ *** ] with such [ *** ] (including [ *** ] of such [ *** ] ) by [ *** ] or any of its Affiliates, which [ *** ] in a [ *** ] or (2) [ *** ] or any of its Affiliates [ *** ] of the [ *** ] of a [ ***], then in each case ((1) and (2)) [ *** ] (whether by a [ *** ] in a [ *** ] in the [ *** ] , or otherwise) [ *** ] ; provided, that in any case [ *** ] , as the case may be, shall [ *** ] during such [ *** ] ; and provided, further, that [ *** ] under this Agreement shall [ *** ] , and the [ *** ] of such [ *** ] shall not be a breach of Section 2.3(b)(i) if it complies with the terms of this Section 2.3(b)(ii)(B).

(iii) Roivant hereby covenants and agrees that prior to the first expiration of an Initial Term for a Product under this Agreement (the “ Roivant Non-Compete Period ”), neither Roivant nor any of its Affiliates shall clinically develop, market, sell, distribute or commercialize, or license, authorize or appoint any Third Party to clinically develop, market, sell, distribute or commercialize any Competing Product for the treatment of any neurodegenerative or neuropsychiatric disorder ( “Competing Roivant Program” ). If a Sub-distributor or its Affiliates has a Competing Roivant Program then [*** ] .

(iv) Notwithstanding Section 2.3(b)(iii):

(A) if any Person with a Competing Roivant Program becomes an Affiliate of Roivant or succeeds Roivant through a Change of Control of Roivant during the Roivant Non-Compete Period (which Roivant agrees to notify Arena of in writing promptly after the closing of such Change of Control of Roivant), then such Person shall be permitted to continue such Competing Roivant Program and the continuation of such Competing Roivant Program shall not be a breach of Section 2.3(b)(iii), provided that the level of efforts required by Commercially Reasonable Efforts shall not take into account such Competing Roivant Program; and

(B) if during the Roivant Non-Compete Period (1) any [ *** ] of such [ *** ] or any of its Affiliates or [ *** ] with such [ *** ] (including [ *** ] of such [ *** ] ) by [ *** ] or any of its Affiliates, which [ *** ] in a [ *** ] or (2) [ *** ] or any of its Affiliates [ *** ] of the [ *** ] of a [ *** ] , then in each case ((1) and (2)) [ *** ] (whether by a [ *** ] in a [ *** ] in the [ *** ] , or otherwise) [ *** ] ; provided, that in any case [ *** ] , as the case may be, shall [ *** ] during such [ *** ] ; and provided, further, that [ *** ] under this Agreement shall [ *** ] , and the [ *** ] of such [ *** ] shall not be a breach of Section 2.3(b)(iii) if it complies with the terms of this Section 2.3(b)(iv)(B).

(c) Purchasing Product. Roivant hereby covenants and agrees that during the Term it shall not, and it shall cause its Sub-distributors and its and their Affiliates not to, purchase any Compound or Product from any Third Party, or Commercialize, or conduct other similar activities related to the commercial sale of, any Product or any other product containing Compound during the Term other than Compound or Finished Product that was purchased and Commercialized in accordance with the terms of this Agreement.

2.4 Acknowledgement. Roivant acknowledges that Arena is engaged in research and development in psychosis and related areas, and Arena has the right to continue to engage in such research and development and to commercialize products in such areas, subject to [ *** ] Sections 2.3(a) and 2.3(b) and further subject to the limitation with respect to [ *** ] set forth in Section [ *** ] .

ARTICLE 3

PRODUCT DEVELOPMENT AND REGULATORY ACTIVITIES

3.1 Product Development. Roivant shall have the exclusive right and responsibility to conduct, or cause its Affiliates or a Third Party to conduct, or pay Arena to conduct, in accordance with the terms of this Agreement, all preclinical and clinical activities with respect to the Products, in accordance with this Agreement, in each case, as between the Parties, at Roivant’s sole expense.

3.2 Development Plans.

(a) All clinical trials and other development work for Products conducted by or on behalf of Roivant or its Affiliates will be conducted pursuant to a Development Plan. Each such Development Plan shall: (i) describe in appropriate detail the clinical trials or other development work to be conducted (including the protocol, the statistical analysis plan and related documents for any clinical trials); (ii) establish an anticipated timeline for such clinical trials or other development work; (iii) include sufficient details for Arena to determine the activities required for development of manufacturing processes and capabilities for Arena to manufacture clinical and commercial supply of the Product, and (iv) address any other material matter relating to such clinical trials or other development work.

(b) For purposes of this Section, “ Arena Plan Obligations ” shall mean obligations of Arena and its Affiliates under any proposed Development Plans and under any proposed material modifications to existing Development Plans to perform any manufacturing, process development or other work that is (i) [ *** ] to a [ *** ] , to which Arena has not previously agreed under this Agreement, or (ii) not [***] a Compound or Product. Roivant shall provide to Arena each Development Plan that contains Arena Plan Obligations in draft form (with at least [ *** ] the Development Plan provided to Arena prior to the Effective Date with respect to the Initial Product) at least [ *** ] prior to the JSC meeting at which they will be discussed (or such shorter period of time as Arena agrees in writing with respect to a particular draft Development Plan). The JSC shall review and discuss any such proposed Development Plans. The consent of Arena, which shall not be unreasonably conditioned, withheld or delayed, is required solely with respect to all such proposed Arena Plan Obligations, provided, that it would be unreasonable for Arena to condition, withhold or delay consent if (A) it has [ *** ] , or can reasonably [ *** ] to the [ *** ] such other [ *** ] in such [ *** ] and (B) it has [ *** ] with the [ *** ] and other [ *** ] , or can reasonably [ *** ] to the [ *** ] and other [ *** ] such [ *** ] . If Arena conditions, withholds or delays its consent with respect to any Arena Plan Obligations, Arena shall provide [ *** ] and shall work in good faith with [ *** ] to achieve the [ *** ] . For clarity, Arena’s consent is not needed with respect to those portions of any proposed Development Plans or [ *** ] Development Plans that [ *** ] . Roivant shall keep the JSC updated at its regularly scheduled meetings regarding the status of activities under each Development Plan and any material Development Plan modifications made by Roivant that do not require Arena’s consent. Upon [ *** ] Development Plan concerning [ *** ] (which shall include [ *** ] as described in this Section 3.2(b)), the [ *** ] such Development Plan shall [ *** ] within the scope of this Agreement.

3.3 Conduct of Development Activities.

(a) Compliance with Development Plan and Applicable Laws. Roivant shall conduct its clinical trials and other development work with respect to Products (i) in accordance with the applicable Development Plan and (ii) in compliance with all Applicable Laws, including in accordance with GLP and GCP, of the country in which the activities are conducted. Arena shall conduct all development work allocated to it under any Development Plan (1) in accordance with the applicable Development Plan and (2) in compliance with all Applicable Laws, including in accordance with GLP and GCP, of the country in which the activities are conducted.

(b) Information Regarding Development Activities. Each Party shall maintain, or cause to be maintained, records of all the clinical trials and other development work conducted by or on behalf of such Party hereunder on Product, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved by or on behalf of such Party in the performance of such clinical trials and other development work under the Development Plans. Each Party shall retain such records for at least three (3) years after the Term, or for such longer period as may be required by Applicable Laws. Each Party shall keep the other Party appropriately informed of the status and results of the clinical trials and other development work with respect to Product under any Development Plan, including, if requested by the other Party, disclosing to such other Party all Development Data and other results of such development work. Roivant shall have the right to inspect and copy any such records and notebooks reflecting the work done and results achieved under a Development Plan by or on behalf of Arena in the performance of clinical trials and other development work with respect to Product under the Development Plans. It is understood and agreed that any and all research, development and Commercialization work conducted by or on behalf of Roivant, its Sub-distributors, Arena or their respective Affiliates, on Compound or Product in accordance with the Development Plan shall be deemed activities conducted under this Agreement.

(i) Subject to the terms and conditions of this Agreement, Arena hereby grants to Roivant and its Affiliates a worldwide, non-exclusive, royalty-free, limited license under the applicable Arena Know-How and Arena Patents to conduct the clinical trials and other development work under the Development Plans to develop Product worldwide in the Field pursuant to this Agreement (all such development work to be conducted in accordance with the applicable Development Plan), and to perform the regulatory activities for Product worldwide. Roivant may grant sublicenses under the foregoing license to subcontractors and Sub-distributors solely for activities under a Development Plan. Promptly following the Effective Date, Arena will conduct a reasonable search of its records to locate the documentation and data set forth on Exhibit E , and provide Roivant with a copy of such documentation and data as is accessible to Arena following such search.

(ii) Subject to the terms and conditions of this Agreement, Roivant hereby grants to Arena and its Affiliates a worldwide, non-exclusive, royalty-free, limited license under the applicable Program Know-How and Program Patents to conduct the development work under the Development Plans to develop Product worldwide in the Field for Roivant, its Sub-distributors and its and their Affiliates pursuant to this Agreement (all such development work to be conducted in accordance with the applicable Development Plan). Arena may grant sublicenses under the foregoing license solely to subcontractors approved by Roivant in writing.

(d) IND Transfer. Within ten (10) days of the Effective Date, (a) Arena shall submit to the FDA letters (substantially set forth on Exhibit F ) transferring sponsorship of IND No 73405 to Roivant and (b) Roivant shall submit to the FDA letters (substantially in the form set forth on Exhibit F ) accepting transfer of sponsorship of IND No 73405 from Arena.

3.4 Development Diligence .

(a) Development Plans. Roivant will develop Products in accordance with Development Plans and will use Commercially Reasonable Efforts to do so according to the timelines in Development Plans. Without limiting the generality of the foregoing, Roivant or its Affiliate shall commence a Phase 2 Trial regarding the Initial Compound prior to January 1, 2017; provided, that such date shall automatically be extended to account for any delay in Arena’s provision of conforming Finished Product pursuant to Section 3.9(b) or Arena’s fulfillment of its obligations pursuant to Section 3.3(c)(i) and 3.3(d). Roivant may fulfill any of its obligations (which obligations do not include manufacturing of Products) under this Section 3.4 itself or with or through any of its Sub-distributors or its or their Affiliates.

(b) Related Compounds .

(i) Roivant will use Commercially Reasonable Efforts to develop, obtain Regulatory Approval of, and Commercialize at least one Related Compound.

(ii) Without limiting the foregoing, if neither Roivant nor any of its Sub-distributors or its or their Affiliates files an IND in the United States prior to the 4th anniversary of the Effective Date with respect to at least one Related Compound, then Roivant’s rights with respect to all Related Compounds, other than Related Compounds that are pharmaceutical acceptable salts, hydrates, solvates, bases, acids, enantiomers, diastereomers, tautomers, racemates or polymorphs of the Initial Compound, shall terminate and all rights granted by Arena to Roivant with respect to such terminated Related Compounds shall revert to Arena. Any termination of Related Compound rights under this Section 3.4(b) shall be made by written notice from Arena to Roivant. The Related Compounds for which Arena has terminated Roivant’s rights shall be “Reverted Compounds” hereunder. There are [ *** ] with respect to Reverted Compounds. The Parties acknowledge and agree that neither Roivant nor its Affiliates have any obligation to file an [***] anniversary of the Effective Date with respect to at least one Related Compound. For clarity, any failure by Roivant and/or its Affiliates to file an IND in the United States prior to the 4th anniversary of the Effective Date with respect to at least one Related Compound, shall not be a breach of this Agreement and Arena’s sole right with respect to any such failure shall be the termination of the Related Compound rights. For further clarity, [ *** ] under this Section 3.4(b)(ii) [ *** ] shall not include, any [ *** ] of the [***] and in the event of a termination of Related Compounds pursuant to this Section 3.4(b), Roivant shall not thereafter, notwithstanding Section 3.4(b)(i), have any obligation to use Commercially Reasonable Efforts to develop, obtain Regulatory Approval for or Commercialize any [*** ] of the [ *** ] .

3.5 Use of Subcontractors. Roivant may subcontract clinical trials and other development work under a Development Plan to one or more subcontractors; provided, that such subcontracting is in accordance with Section 15.4(b).

3.6 Materials Transfer. In order to facilitate the clinical trials and other development work contemplated by this Agreement, Arena may (but is not required to except as set forth herein) provide Roivant certain biological materials or chemical compounds (other than Compound or Product) (collectively, “ Materials ”) for use by Roivant in furtherance of such clinical trials or other development work; at Roivant’s reasonable request, Arena shall provide Roivant with reference standards and impurity samples. Except as otherwise provided for under this Agreement, all Materials delivered to Roivant will remain the sole property of Arena. Roivant shall: (a) only use such Materials in furtherance of the clinical trials and other development work under a Development Plan, (b) not use or deliver any Materials to or for the benefit of any Third Party, except for subcontractors pursuant to Section 3.5, without the prior written consent of Arena, and (c) use the Materials in compliance with all Applicable Laws. Roivant shall use the Materials supplied under this Agreement with prudence and appropriate caution in any experimental work because not all of their characteristics may be known. Except as otherwise expressly set forth in this Agreement, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

3.7 Product Regulatory Activities. Roivant, its Sub-distributors and its and their Affiliates shall have the right to perform and have performed all regulatory activities for obtaining the Regulatory Approval(s) of Product. Roivant shall keep Arena reasonably informed, at JSC meetings, of the planning and conduct of such activities and the material decisions with respect thereto. Arena shall cooperate reasonably with Roivant with respect to activities for obtaining Regulatory Approval, including responding promptly to all of Roivant’s reasonable requests for information and comments as necessary or useful to conduct such regulatory activities, provided, that if such assistance requires more than a nominal amount of time of an Arena employee or consultant or requires Arena to incur out of pocket cost, Arena shall notify Roivant in advance and if Roivant maintains its request for such assistance, then Arena’s actual costs of providing such assistance shall be at Roivant’s expense. In no event shall Arena be required to undertake at its expense any specific activities with respect to any Regulatory Authority meetings or other such regulatory activities. Except as otherwise provided below, Roivant shall hold all Regulatory Filings made by Roivant and all Regulatory Approvals, and shall provide to Arena copies of all such filings and approvals if requested by Arena. Each Party shall conduct all of its regulatory activities with respect to Product in compliance with all Applicable Laws.

3.8 Pharmacovigilance. Roivant shall be responsible, at its own expense, for all safety reporting with respect to development and Commercialization of Product.

3.9 Manufacturing Development.

(a) Clinical Development and Process Development. Roivant is responsible for all manufacturing costs relating to clinical trials and development of the commercial manufacturing process. Such work includes, without limitation, active pharmaceutical ingredient development and acquisition, technical transfer costs, drug product formulation and development, stability testing, related analytical work, quality assurance review and batch release. Some (if not all) of these activities may be performed or overseen by Arena, at Roivant’s request and Roivant agrees that it will pay Arena for such requested activities an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs, without markup, or such other amount as the Parties agree, which payment shall be invoiced and paid in accordance with Section 3.11.

(b) Initial Clinical Supply Order. Using Initial Compound existing as of the Effective Date, Arena shall manufacture for the quantities and formats of Finished Product and placebo specified in Exhibit D (which Finished Product shall be Initial Product in final form ready for clinical trials) and deliver such Finished Product and placebo to Roivant no later than five (5) months after the Effective Date. Arena will invoice Roivant in accordance with Section 3.11 for (i) Arena’s FTE Costs; and (ii) Arena’s out-of-pocket costs without markup; in each of the foregoing sections (i) and (ii), to the extent incurred after the Effective Date, which amount is due within thirty (30) days of receipt of invoice.

(c) Other Clinical Supply. Except as set forth in Section 3.9(b) above, details of the orders placed by Roivant with Arena for Finished Product and placebo for use in clinical trials will be agreed in writing in advance. The Parties will negotiate in good faith to reach agreement upon such details that will satisfy, in a timely manner, those quantities and formats of Finished Products and placebo that are reasonably requested by Roivant for use in clinical trials.

(d) Warranty . Arena warrants that at the time of delivery to Roivant all Finished Product and placebo delivered to Roivant under this Section 3.9: (i) will have been manufactured, tested, and packaged in accordance with cGMP, applicable Manufacturing SOPs and the Quality Agreement; and (ii) will meet the applicable Specifications [ *** ] with respect to [ *** ] of the [ *** ] or, in the case [ *** ] of the [ *** ] . Each of the foregoing warranties is subject to the limitation that Arena shall have no liability or responsibility under the foregoing for any defects, damage or harm to the Finished Product or placebo to the extent resulting from improper storage, transportation, mishandling or any other cause occurring after delivery by or on behalf of Arena.

(e) Other Applicable Supply Terms . All Finished Product and placebo delivered to Roivant under this Section 3.9 shall be subject to the (i) title and risk of loss and export and import license provisions set forth in Section 6.3, (ii) the acceptance and rejection provisions set forth in Section 6.9, (iii) the rejection dispute provisions set forth in Section 6.10, and (iv) the supply problem provisions set forth in Section 6.15.

(f) Batch Records and Certificates. Prior to the first manufacture of Finished Product under this Section 3.9 by or on behalf of Arena, Arena shall provide Roivant with a copy of the Master Batch Record for such Finished Product for Roivant’s review and approval. Arena shall consider in good faith any reasonable comments Roivant provides regarding the Master Batch Record for such Finished Product. To the extent required for inclusion in a Regulatory Filing to be made by Roivant, its Sub-distributors or its or their Affiliates, Arena shall provide to Roivant: (a) a copy of the Batch Records for each Batch of Compound covered by the Regulatory Filing, (b) a completed and accurate Certificate of Analysis as to such Batch of Compound, and (c) copies of all other documentation required for Compound release as provided in the Quality Agreement. Arena shall provide to Roivant, accompanying each delivery of Finished Product under this Section 3.9 by Arena: (i) the Batch number of the delivered Finished Product, (ii) a copy of the Batch Records for such Finished Product, (iii) a completed and accurate Certificate of Analysis as to such Batch of Finished Product, and (iv) copies of all other documentation required for Finished Product release as provided in the Quality Agreement.

(g) Clinical Supply Costs. Except as set forth in Section 3.9(b) above, Arena will manufacture and supply Roivant, its Sub-distributors and its and their Affiliates with Finished Product and placebo for use in clinical trials at an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs without markup, or such other amount as the Parties agree, which amount shall be invoiced and paid in accordance with Section 3.11. If there [ *** ] the Effective Date after Arena satisfies its obligations under Section 3.9(b), Arena shall not charge Roivant for [*** ] of any [ *** ] . The [ ***] as of the Effective Date is [*** ] and [ *** ] .

(h) Development and Manufacture of Additional Products. If Roivant desires to develop any Additional Products, it shall first discuss the Additional Products with Arena. The Parties will discuss in good faith the terms (which shall include a commercially reasonable Additional Product Minimum Product Purchase Price) pursuant to which each Additional Product will be manufactured and sold to Roivant by or on behalf of Arena pursuant to this Agreement.

3.10 Engagement and Qualification of Third Party Manufacturers. For purposes of supplying Product to Roivant pursuant to Section 3.9 and Article 6, (i) the active pharmaceutical ingredients used in the manufacture of Products (Initial Compound and Related Compounds) and (ii) Finished Products, may be sourced by Arena from Third Party manufacturers.

(a) Primary Manufacturer of Initial Compound. Subject to the oversight of the JMC, promptly after the Effective Date, Arena (in consultation with Roivant) shall perform diligence assessments of one or more Third Party manufacturers, which assessments shall include obtaining a bid, to identify a Third Party manufacturer to manufacture and supply to Arena the Initial Compound. Arena will consider Roivant’s comments and suggestions with respect to the selection of the Third Party manufacturer, and the selection of such Third Party manufacturer shall be subject to the prior consent of Roivant (which consent shall not be unreasonably withheld, delayed or conditioned). Arena shall seek to negotiate a supply agreement with such Third Party manufacturer for the supply of the Initial Compound to Arena for use in the manufacture of Finished Product pursuant to this Agreement. Arena shall use Commercially Reasonable Efforts to negotiate with such Third Party manufacturer an agreement that includes the right for Arena to perform quality audits on such Third Party manufacturer consistent with the terms of Section 6.8 of this Agreement. Arena shall keep Roivant apprised of the status of its negotiations, shall provide Roivant with copies of the draft agreement and shall use good faith efforts to implement Roivant’s reasonable comments with respect thereto. Arena shall provide Roivant with a copy of the final, executed supply agreement. At Roivant’s reasonable request, Arena will take action to enforce the supply agreement. After entry into such supply agreement, Arena shall use diligent efforts to qualify such Third Party manufacturer no later than a reasonable time after such entry. Arena shall keep Roivant apprised of the status of its efforts to get such Third Party manufacturer qualified and shall implement Roivant’s reasonable comments with respect thereto, including reasonable requests regarding validation batches. Roivant agrees that it will pay Arena for the diligence, engagement and qualification activities undertaken pursuant to this Section 3.10(a) in an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs without markup, or such other amount as the Parties agree, which payment shall be invoiced and paid in accordance with Section 3.11.

(b) Primary Manufacturer for Related Compounds. Subject to the oversight of the JMC, at Roivant’s reasonable request after the adoption of a Development Plan for a Related Compound, Arena (in consultation with Roivant) shall perform diligence assessments of one or more Third Party manufacturers, which assessments shall include obtaining a bid, to identify a Third Party manufacturer to manufacture and supply to Arena such Related Compound. Arena will consider Roivant’s comments and suggestions with respect to the selection of the Third Party manufacturer, and the selection of such Third Party manufacturer shall be subject to the prior consent of Roivant (which consent shall not be unreasonably withheld, delayed or conditioned). Arena shall seek to negotiate a supply agreement with such Third Party manufacturer for the supply of such Related Compound to Arena for use in the manufacture of Finished Product pursuant to this Agreement. Arena shall use Commercially Reasonable Efforts to negotiate with such Third Party manufacturer an agreement that includes the right for Arena to perform quality audits on such Third Party manufacturer consistent with the terms of Section 6.8 of this Agreement. Arena shall keep Roivant apprised of the status of its negotiations, shall provide Roivant with copies of the draft agreement and shall use good faith efforts to implement Roivant’s reasonable comments with respect thereto. Arena shall provide Roivant with a copy of the final, executed supply agreement. At Roivant’s reasonable request, Arena will enforce the supply agreement. After entry into such supply agreement, Arena shall use diligent efforts to qualify such Third Party manufacturer no later than a reasonable time after the establishment of a manufacturing process for the Related Compound. Arena shall keep Roivant apprised of the status of its efforts to get such Third Party manufacturer qualified and shall implement Roivant’s reasonable comments with respect thereto, including reasonable requests regarding validation batches. Roivant agrees that it will pay Arena for the diligence, engagement and qualification activities undertaken pursuant to this Section 3.10(b) in an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs without markup, or such other amount as the Parties agree, which payment shall be invoiced and paid in accordance with Section 3.11.

(c) Additional Source Manufacturers of Compounds. Subject to the oversight of the JMC, at Roivant’s reasonable request after the primary Third Party manufacturer for a Compound has been qualified in accordance with Section 3.10(a) or Section 3.10(b), as applicable, Arena (in consultation with Roivant) shall perform diligence assessments of one or more additional source Third Party manufacturers, which assessments shall include obtaining a bid, to identify additional source Third Party manufacturers to manufacture and supply to Arena such Compound. Arena will consider Roivant’s comments and suggestions with respect to the selection of additional source Third Party manufacturers, and the selection of such Third Party manufacturers shall be subject to the prior consent of Roivant (which consent shall not be unreasonably withheld, delayed or conditioned). Arena shall seek to negotiate a supply agreement with such Third Party manufacturers for the supply of such Compound to Arena for use in the manufacture of Finished Product pursuant to this Agreement. Arena shall use Commercially Reasonable Efforts to negotiate with such Third Party manufacturer an agreement that includes the right for Arena to perform quality audits on such Third Party manufacturers consistent with the terms of Section 6.8 of this Agreement. Arena shall keep Roivant apprised of the status of its negotiations, shall provide Roivant with copies of the draft agreement and shall use good faith efforts to implement Roivant’s reasonable comments with respect thereto. Arena shall provide Roivant with a copy of the final, executed supply agreement. At Roivant’s reasonable request, Arena will enforce the supply agreement. After entry into such supply agreement, Arena shall use diligent efforts to qualify such Third Party manufacturer no later than a reasonable time after such entry. Arena shall keep Roivant apprised of the status of its efforts to get such Third Party manufacturer qualified and shall implement Roivant’s reasonable comments with respect thereto, including reasonable requests regarding validation batches. Roivant agrees that it will pay Arena for the diligence, engagement and qualification activities undertaken pursuant to this Section 3.10(c) and the costs of maintaining such Third Party manufacturer, in an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs without markup, or such other amount as the Parties agree, which payment shall be invoiced and paid in accordance with Section 3.11.

(d) Additional Source Manufacturer of Finished Product. Subject to the oversight of the JMC, at Roivant’s reasonable request after first Regulatory Approval of Finished Product, Arena (in consultation with Roivant) shall perform diligence assessments of one or more additional source Third Party manufacturers, which assessments shall include obtaining a bid, to identify additional source Third Party manufacturers to manufacture and supply to Arena such Finished Product. Arena will consider Roivant’s comments and suggestions with respect to the selection of additional source Third Party manufacturers, and the selection of such Third Party manufacturers shall be subject to the prior consent of Roivant (which consent shall not be unreasonably withheld, delayed or conditioned). Arena shall seek to negotiate a second source supply agreement with such Third Party manufacturer for the supply of such Finished Product to Arena. Arena shall use Commercially Reasonable Efforts to negotiate with such Third Party manufacturer an agreement that includes the right for Arena to perform quality audits on such second source Third Party manufacturer consistent with the terms of Section 6.8 of this Agreement. Arena shall keep Roivant apprised of the status of its negotiations, shall provide Roivant with copies of the draft agreement and shall use good faith efforts to implement Roivant’s reasonable comments with respect thereto. Arena shall provide Roivant with a copy of the final, executed supply agreement. At Roivant’s reasonable request, Arena will enforce the supply agreement. After entry into such supply agreement, Arena shall use diligent efforts to qualify such Third Party manufacturer no later than a reasonable time after such entry. Arena shall keep Roivant apprised of the status of its efforts to get such Third Party manufacturer qualified and shall implement Roivant’s reasonable comments with respect thereto, including reasonable requests regarding validation batches. Roivant agrees that it will pay Arena for the diligence, engagement and qualification activities undertaken pursuant to this Section 3.10(d) and the costs of maintaining such Third Party manufacturer, in an amount equal to Arena’s FTE Costs plus 37%, plus Arena’s out-of-pocket costs without markup, or such other amount as the Parties agree, which payment shall be invoiced and paid in accordance with Section 3.11; provided, however, that the Parties shall share equally such diligence, engagement, qualification and maintenance costs if Roivant requested the engagement of such Third Party manufacturer to address Arena’s capacity constraints occurring [***] after the First Commercial Sale based on Roivant’s good faith long term forecasts that exceed Arena’s capacity at the Facility.

3.11 Payment of FTE cost and Out-of-Pocket Cost .

(a) Invoice and Payment. Within [***] days after the end of each Calendar Quarter during which Arena has incurred any FTE Costs or out-of-pocket costs that Roivant is obligated to pay, Arena shall submit to Roivant a reasonably detailed invoice setting forth such FTE Costs (including markup where applicable) and out-of-pocket costs for such Calendar Quarter. Such invoice shall include reasonably detailed supporting documents, such as time entry for FTE Costs and receipts for out-of-pocket costs. Arena shall provide additional information and documentation reasonably requested by Roivant. Roivant shall pay the undisputed invoiced amount within thirty (30) days after the receipt of such invoice. In the event Roivant disputes one or more items in an invoice, Roivant will promptly notify Arena in writing and such notice shall contain a reasonably detailed description of the item(s) being disputed and the basis therefor. Arena will promptly respond to Roivant and the Parties will use good faith efforts to promptly resolve the dispute. Amounts determined to be owed following resolution will be paid to Arena within [***] days of resolution of the dispute.

(b) Records and Audit .

(i) Arena shall keep complete, true and accurate books of accounts and records for the purpose of determining the amounts of FTE Costs and out-of-pocket costs payable to Arena under this Section 3.11. Such books and records shall be kept for such period of time required by Applicable Laws, but no less than at least three (3) years following the end of the Calendar Quarter to which they pertain. Such records shall be subject to inspection in accordance with this Section 3.11(b).

(ii) Upon not less than [***] days’ prior written notice, Arena shall permit an independent, certified public accountant of international recognition selected by Roivant and reasonably acceptable to Arena, which acceptance shall not be unreasonably conditioned, withheld or delayed, to audit or inspect those books and records of Arena that relate to the amounts of FTE Costs and out-of-pocket costs payable to Arena under this Section 3.11 for the sole purpose of verifying such payments. Prior to any such audit, the auditor shall execute a confidentiality agreement that is reasonably acceptable to Arena.

(iii) The auditor shall send a copy of the report to Arena at the same time it is sent to Roivant. Such audits or inspections [ *** ] (unless [ *** ] , in which case [ *** ] ), during normal business hours and upon reasonable advance notice. If such report shows that the amounts paid by Roivant for the period audited are more than the amounts actually payable by Roivant to Arena during the period audited, then (absent manifest error or fraud in such audit report) Arena shall refund to Roivant the amount of such overpayment plus interest under Section 7.8, from the date such amounts were originally paid until refund is made, Roivant shall deliver to Arena an invoice for such overpaid amount, and Arena shall pay such invoice within thirty (30) days of receipt of such invoice. If such report shows that the amounts paid by Roivant for the period audited are less than the amounts actually owed by Roivant to Arena for the period audited, then (absent manifest error or fraud in such audit report) Arena shall deliver to Roivant an invoice for such underpaid amount, and Roivant shall pay such invoiced underpaid amount within thirty (30) days of receipt of such invoice. Such [ *** ] subject to [ *** ] with respect to [ *** ] such Calendar Quarter. Audits and inspections conducted under this Section 3.11(b) shall be at the expense of Roivant, unless such an audit or inspection demonstrates an overpayment in amounts paid by Roivant exceeding an amount equal to [ *** ] of the amount actually due for a period covered by the audit or inspection, in which case all reasonable and verifiable costs relating to the audit or inspection for such period and any overpaid amounts that are discovered shall be paid by Arena, based on invoices delivered by Roivant. Roivant shall endeavor in any such audit not to unreasonably disrupt the normal business activities of Arena.

ARTICLE 4

MANAGEMENT OF DEVELOPMENT

4.1 Joint Steering Committee.

(a) Establishment. Promptly after the Effective Date, the Parties shall establish a joint steering committee (the “ Joint Steering Committee ” or “ JSC ”), under the terms of this Article 4.

(b) Duties. The JSC shall:

(i) generally oversee the relationship and activities of the Parties under the Agreement;

(ii) serve as a forum for discussion and exchange of information regarding activities contemplated by the Agreement;

(iii) review, coordinate and discuss the overall development and regulatory strategies for obtaining Regulatory Approval, and supply chain and manufacturing strategies, for Products;

(iv) review and discuss each Development Plan proposed by Roivant and any material changes to each Development Plan;

(v) appoint other subcommittees as the JSC deems appropriate, which subcommittees shall consist of equal numbers of appropriately qualified representatives appointed by the respective Parties, and to oversee, and attempt to resolve disputes arising on, such subcommittees; and

(vi) perform such other duties as are specifically assigned by the Parties to the Joint Steering Committee pursuant to this Agreement or in a writing executed by each Party.

(c) Joint Steering Committee Membership; Procedure. The JSC shall be composed of four members, two of whom shall be appointed by Arena and two of whom shall be appointed by Roivant. Each Party may appoint employees of its Affiliates to serve as JSC members; provided, that at least one representative of such Party on the JSC shall be an employee of such Party (and not any of its Affiliates) and that each representative must be an employee of the applicable Party or one of its Affiliates. One of Roivant’s two JSC members shall serve as Chairman of the JSC. The Chairman shall act to lead the meetings of the JSC, to prepare the agenda for each meeting (based on the comments and suggestions of each Party, with each such agenda to contain all agenda items requested by a Party to be included) and to prepare the minutes of each meeting for review and approval by the JSC at the next meeting. The draft minutes shall be sent to all members of the JSC for comment promptly after each such meeting (but in no event more than [***] days after each such meeting). All actions noted in the minutes shall be reviewed and approved at the next meeting of the JSC; provided, that if the Parties cannot agree as to the content of the minutes by the time the JSC next meets, such minutes shall be finalized to reflect any areas of disagreement. Any member of the JSC may designate a substitute (who is an employee of the Party or any of its Affiliates) to attend and perform the functions of that member at any meeting of the JSC. Each Party may, with the consent of the other Party, such consent not to be unreasonably conditioned, withheld or delayed, invite non-member representatives of such Party (who must be employees of such Party or any of its Affiliates unless otherwise agreed in writing by the other Party, such agreement not to be unreasonably conditioned, withheld or delayed) to attend meetings of the JSC.

(d) Meetings. The JSC shall hold meetings as often as the members may determine, but in any event JSC meetings shall occur not less than twice per Calendar Year when [***] and no less than once per Calendar Year at other times. The Chairman shall provide the other JSC members at least 20 days prior written notice of the day, time and location of each JSC meeting. Such JSC meetings may be held in person, or by any means of telecommunications or video conference, as the members deem necessary or appropriate. A quorum for JSC meetings shall be all four members, with two members from each Party. Each Party shall bear its own costs to attend and participate in the JSC meetings, including expenses incurred by the members nominated by it in connection with their activities as members of the JSC.

(e) Joint Steering Committee Decisions. Actions to be taken by the JSC shall be taken only following unanimous vote, with each Party having one (1) vote. If the JSC fails to reach unanimous agreement on a matter before it for decision for a period in excess of [***] days, the JSC shall submit the respective positions of the Parties with respect to such matter for discussion in good faith by the Senior Executives in accordance with Section 14.1. If such individuals are not able to mutually agree upon the resolution to such matter within the timeframe set forth in such Section 14.1, then instead of resolution in accordance with either Section 12.7 or Section 14.2, as applicable:

(i) [ ***] shall have final decision making authority with respect to all matters relating to the [ *** ] , provided that such decision does not [*** ] under this Agreement; and

(ii) Matters not subject to Section 4.1(e)(i) shall be subject to the dispute resolution procedures set forth in Section 12.7 or Section 14.2, as applicable.

4.2 Joint Manufacturing Committee .

(a) Establishment. Within thirty (30) days after the Effective Date, the Parties shall establish a joint manufacturing committee (the “ Joint Manufacturing Committee ” or “ JMC ”) as a subcommittee of the JSC. The JMC shall only have the powers expressly assigned to it pursuant to this Section 4.2.

(b) Duties. The Parties acknowledge and agree that one of the goals of this Agreement is to provide for the efficient ordering, manufacture and supply by or on behalf of Arena of the Finished Products ordered by Roivant on a timely basis and meeting all requirements of this Agreement, so that each Party benefits from such manufacturing and Roivant’s subsequent Commercialization. In support of achieving such goals, the role of the JMC shall be to discuss and coordinate the implementation of the global plans for the manufacturing of Compounds and Finished Products and the introduction of manufacturing process improvements for Compounds or Finished Products.

(c) Joint Manufacturing Committee Membership; Procedure. The JMC shall be composed of four members, two of whom shall be appointed by Arena and two of whom shall be appointed by Roivant. Each Party may appoint employees of its Affiliates to serve as JMC members; provided, that at least one representative of such Party on the JMC shall be an employee of such Party (and not any of its Affiliates) and that each representative must be an employee of the applicable Party or one of its Affiliates. One of Arena’s two JMC members shall serve as chairman of the JMC. The chairman of the JMC shall act to lead the meetings of the JMC, to prepare the agenda for each meeting (based on the comments and suggestions of each Party, with each such agenda to contain all agenda items requested by a Party to be included) and to prepare the minutes of each meeting for review and approval by the JMC at the next meeting. The draft minutes shall be sent to all members of the JSC for comment promptly after each such meeting (but in no event more than 15 days after each such meeting). All items noted in the minutes shall be reviewed and approved at the next meeting of the JMC; provided, that if the Parties cannot agree as to the content of the minutes by the time the JMC next meets, such minutes shall be finalized to reflect any areas of disagreement. Any member of the JMC may designate a substitute (who is an employee of the Party or any of its Affiliates) to attend and perform the functions of that member at any meeting of the JMC. Each Party may, with the consent of the other Party, such consent not to be unreasonably conditioned, withheld or delayed, invite non-member representatives of such Party (who must be employees of such Party or any of its Affiliates unless otherwise agreed in writing by the other Party, such agreement not to be unreasonably conditioned, withheld or delayed) to attend meetings of the JMC.

(d) Meetings. The JMC shall hold meetings as often as the members may determine, but in any event JMC meetings shall occur not less than two times per Calendar Year. The first meeting of the JMC shall occur within thirty (30) days of the Effective Date. The chairman of the JMC shall provide the other JMC members at least 20 days prior written notice of the day, time and location (New York or Switzerland) of each JMC meeting. Such JMC meetings may be held in person, or by any means of telecommunications or video conference, as the members deem necessary or appropriate. A quorum for JMC meetings shall be all four members, with two members from each Party. Each Party shall bear its own costs to attend and participate in the JMC meetings, including expenses incurred by the members nominated by it in connection with their activities as members of the JMC.

(e) Joint Manufacturing Committee Decisions. The JMC shall be forum for discussion and information exchange only and shall not have any decision-making authority.

4.3 Scope of Governance. Notwithstanding the creation of the JSC and the JMC, each Party shall retain the rights, powers and discretion granted to it under this Agreement, and neither the JSC nor the JMC shall be delegated or vested with any rights, powers or discretion unless such delegation or vesting is expressly provided in this Agreement, or the Parties expressly so agree in writing. Neither the JSC nor the JMC shall have any power to amend or modify this Agreement or to determine compliance or non-compliance with this Agreement, and no decision of the JSC shall be enforceable to the extent it is in contravention of any terms and conditions of this Agreement.

ARTICLE 5

COMMERCIALIZATION OF PRODUCTS

5.1 Commercialization Rights and Responsibility. Roivant shall be solely responsible, and has the exclusive rights, for Commercializing Products worldwide in the Field, whether directly or with or through its Sub-distributors and its and their Affiliates, in each case such Commercialization to be in accordance with the terms and conditions of this Agreement. In connection with such Commercialization, Roivant shall purchase all of its and its Sub-distributors’ and its and their Affiliates’ requirements of Product from Arena pursuant to Article 6.

5.2 Commercialization Plans and Communication. Within a reasonable time (no shorter than [ *** ] months) prior to the anticipated date of the First Commercial Sale of each Product in [ ***] (each, a “ Major Market Country ” ), Roivant shall prepare and deliver to Arena a plan setting forth the commercialization plan for the Commercialization of the Product in such country, which plan shall be in reasonable scope and detail, shall include the resources and timing therefor, and shall reflect the information such as [*** ] . Roivant shall provide such plans to Arena on an annual basis and shall provide any interim material updates thereto at the regularly scheduled JSC meetings.

5.3 Roivant Commercialization Commitments. Roivant shall use Commercially Reasonable Efforts to Commercialize Products in each country in which it has received Regulatory Approval for such Product. Without limiting the foregoing, after receiving Regulatory Approval for a Product in each country, Roivant shall (a) use Commercially Reasonable Efforts to [ *** ] commercially reasonable Product Commercialization activities in such country, (b) [ *** ] Products in such country [ *** ] with respect to Product, (c) use Commercially Reasonable Efforts to conduct all activities necessary to [ *** ] ; and (d) use Commercially Reasonable Efforts to [ *** ] . Roivant may fulfill any of its obligations under this Section 5.3 itself or with or through any of its Sub-distributors or its or their Affiliates. The Parties acknowledge and agree that a commercially reasonable Commercialization strategy might involve delaying launch of a Product until Pricing Approval is obtained in such country or not launching such Product if Pricing Approval is not obtained.

5.4 Commercialization Standards of Conduct.

(a) Roivant shall, and shall cause its Sub-distributors and its and their Affiliates to, in all respects comply with all Applicable Laws in Commercializing Products, including to the extent applicable all federal, state and local “fraud and abuse,” consumer protection and false claims statutes and regulations.

(b) Roivant shall, and shall cause its Sub-distributors and its and their Affiliates to, ensure that all sales representatives promoting Products (i) have skills, training and experience generally consistent with industry standards in the applicable country applicable to the promotion, marketing and sale of a prescription pharmaceutical product in such country and (ii) have satisfactorily completed all Products-specific training and ethics and compliance training required by Roivant.

(c) Roivant shall not, and shall cause its Sub-distributors and its and their Affiliates and its and their respective sales representatives not to, (i) make any statement, representation or warranty, oral or written, concerning a Product in any country, or use any labeling, literature or promotional or marketing material for Product in any country that (A) is contrary to or inconsistent with Regulatory Approval in such country of such Product in a manner that violates any Applicable Laws or (B) otherwise violates any Applicable Laws in such country or (ii) make any arrangements with, make payments to or provide gifts or other incentives to any healthcare professionals in violation of Applicable Laws relating thereto in such country. Roivant shall, and shall cause its Sub-distributors and its and their Affiliates to, ensure that its and their sales representatives are familiar with the procedures, obligations, rights, and responsibilities imposed by the terms of this Agreement as applicable to the performance of promotional activities hereunder.

5.5 [***]. [ *** ] hereby covenants and agrees that it and its Affiliates shall not, directly or indirectly, [ *** ] the manufacture [ *** ] Product [ *** ] in accordance with the terms of this Agreement.

5.6 Recalls. In the event that any Regulatory Authority issues or requests a recall or takes similar action in connection with Product, or in the event either Party determines that an event, incident or circumstance has occurred that may result in the need for a recall or market withdrawal, the Party notified of or desiring such recall or similar action shall, within 24 hours, advise the other Party thereof by telephone (and confirmed by email or facsimile), email or facsimile. Roivant shall, to the extent practicable, endeavor to provide notice to Arena regarding any Roivant assessment whether to recall or withdraw Product; provided, that if providing such notice is not practicable within an appropriate time period (recognizing the exigencies of the situation), then Roivant shall decide whether to recall or withdraw Product without first providing notice of the situation to Arena. Roivant shall be responsible for conducting, at its sole expense, any such recall or withdrawal, and shall keep Arena fully informed of all actions taken in conducting such recall or withdrawal. Notwithstanding the foregoing, Arena shall be responsible for the expenses of such recall or withdrawal to the extent that such recall or withdrawal is due to Arena’s breach of the Product Warranty or the gross negligence or willful misconduct of Arena or its Affiliates.

5.7 Sub-distributors of Roivant. If Roivant grants a Sub-distributor the right to develop, market, promote, sell and/or distribute a Product in a country, Roivant shall promptly notify Arena in writing thereof. Roivant may grant a Sub-distributor such right to develop, market, promote, sell and/or distribute Product in a country subject to (a) Roivant’s agreement with the Sub-distributor meeting the requirements for subcontractors in Section 15.4(b) and (b) such Sub-distributor agreeing to provide timely reports to Roivant regarding Product sales data, and agreeing that Roivant is permitted to disclose such data to Arena. Roivant will disclose such Product sales data information to Arena. Any agreement between Roivant and a Sub-distributor shall be subject to and consistent with the terms of this Agreement.

5.8 Returned Product. Roivant shall have the sole responsibility under this Agreement to accept any returned Product. Arena shall be reimburse Roivant for the expenses of accepting such returned Product to the extent that such return is due to Arena’s breach of its obligations hereunder or the negligence or willful misconduct of Arena or its Affiliates.

ARTICLE 6

MANUFACTURE AND SUPPLY – COMMERCIAL

6.1 Manufacture and Supply Commitment. In accordance with the terms and conditions of this Agreement, Arena shall be solely responsible and has exclusive rights, for supplying, or causing to be supplied, to Roivant the Product ordered by Roivant in accordance with this Article 6. Roivant shall purchase all of its (and its Sub-distributors’ and its and their Affiliates’) requirements for Finished Products from Arena for Commercialization, pursuant to the terms of this Article 6. If either Party anticipates that demand for any Finished Product would exceed Arena’s actual manufacturing capacity, such Party shall promptly notify the other Party, and the Parties shall meet, discuss in good faith and agree upon a plan for addressing such demand.

6.2 Forecasting and Ordering.

(a) Safety Stock. At Roivant’s reasonable request, after the primary Third Party manufacturer for a Compound has been qualified in accordance with Section 3.10(a) or Section 3.10(b), Arena shall establish and maintain in inventory at the Facility (or such other appropriate storage facility as approved by Roivant, which approval shall not be unreasonably withheld, delayed or conditioned) at least such quantities of safety stock of such Compound as reasonably requested by Roivant and to which Arena does not reasonably object. At Roivant’s reasonable request, Arena shall establish and maintain in inventory at the Facility (or such other appropriate storage facility as approved by Roivant, which approval shall not be unreasonably withheld, delayed or conditioned) at least such quantities of safety stock of such Finished Product as reasonably requested by Roivant and to which Arena does not reasonably object; provided that, with respect to any such safety stock made by or on behalf of Arena prior to [*** ] such Finished Product, such Finished Product shall not be released until [*** ] . Arena will manufacture Finished Product using safety stock of Compound, will fulfill Purchase Orders for Finished Product out of safety stock of Finished Product on a “first to expire, first out” basis, and will accordingly replace the consumed inventory of safety stock on a timely basis as appropriate. Arena will be responsible for the inventory of Finished Products and Compounds described in this Section 6.2(a) until ownership of a particular quantity of Finished Product transfers to Roivant in accordance with Section 6.3. Upon release of Compound needed to establish or replenish safety stock, Arena will invoice Roivant, and Roivant will pay Arena within thirty days of receipt of invoice, for an amount equal to thirty-five percent (35%) of the Minimum Product Purchase Price for corresponding quantity of the applicable Finished Product comprising such Compound (at the specified concentration and dosage), which amount will be credited against [ the invoiced price for such Finished

Product at the time of delivery. Upon release of Finished Product needed to establish or replenish safety stock [*** ] , Arena will invoice Roivant, and Roivant will pay Arena within [ *** ] days of receipt of invoice, for an amount equal to an [***] for such Finished Product, which aggregate amount will be credited against the invoiced price for the Finished Product at the time of delivery. To the extent Roivant does not place an order for which such Compound may be used to produce Finished Product so that such Finished Product may be delivered while it still has sufficient shelf life to meet the Product Warranty and Roivant does not waive such shelf life requirement or (unless the Parties otherwise mutually agree in writing) upon termination of this Agreement, Roivant will pay the costs associated with the destruction of the Compound. To the extent Roivant does not place an order for which such Finished Product may be delivered while it still has sufficient shelf life to meet the Product Warranty and Roivant does not waive such shelf life requirement or (unless the Parties otherwise mutually agree in writing) upon termination of this Agreement, Roivant will pay the costs associated with the destruction of the Finished Product. Risk of loss for all safety stock of Finished Product and Compound shall remain with Arena until such Finished Product is delivered to Roivant and risk of loss transfers pursuant to Section 6.3. Arena shall promptly replace, free of charge to Roivant, any safety stock of Finished Product and/or Compound that is lost or damaged while held by or on behalf of Arena as safety stock.

(b) Forecasts. At the time of application for Regulatory Approval of a Product in a country, and [***] thereafter, Roivant shall provide Arena a good faith 18-month rolling forecast of anticipated orders of such Product, in Finished Product form, to be placed during each month of such period (broken down (A) on a country-by-country and packaging configuration-by-packaging configuration basis and (B) by quantities to be sold commercially or distributed as samples or as part of a compassionate use, named patient use or indigent patient program) (each, a “ Forecast ” for such Product). Each Forecast will specify, [***] during the 18-month period covered by the particular Forecast, the amounts of Finished Product to be ordered in each month and the requested delivery dates for each such order of Finished Product anticipated to be placed. Prior to the due date for the first Forecast for each Product in each country, the Parties will negotiate in good faith and reasonably agree [ ***] upon [ *** ] such Product in that country, and [ *** ] the Product in such country. If Roivant provides the Three Year Forecast commencing at least [***] months prior to the anticipated launch date and [ *** ] of such Three Year Forecast (the first month of which shall be the launch order), such [ *** ] such Three Year Forecast (and [ *** ] ), subject to [ *** ] therein. The requested delivery dates for each order covered by a Forecast shall not be sooner than [ *** ] months, or later than [ *** ] months, after the order date specified in the Forecast (such [ *** ] month window, the “ Delivery Window ”); provided , that, if the Parties agree, Finished Product may be delivered sooner than [ *** ] months after the order date. The first [ *** ] months of each such Forecast shall be a binding commitment (the “ Order Commitment ” for the applicable Finished Product for such months) on Roivant to place Purchase Orders, in each such month, to order the applicable Finished Product in amounts [ *** ] the amounts forecast to be ordered in such month in such Forecast (and with delivery dates within the applicable Delivery Window), which commitment [*** ] . Roivant shall not (a) increase or decrease the quantity estimated for the [*** ] of each Forecast from the quantity estimated for the [***] of the previous Forecast, or (b) increase or decrease the quantity estimated for the [***] of each Forecast by more than [***] of the quantity estimated for the [***] of the [*** ] Forecast, respectively, without the prior express written consent of Arena. Each such Forecast shall otherwise be non-binding, except as provided above, but shall reflect Roivant’s good faith expectation (at the time of submitting the Forecast) of the orders of Finished Product and projected delivery dates during the 18-month period. In addition to the Forecasts described above in this Section 6.2(b), Roivant shall provide Arena, at the time [ *** ] , with a good-faith three-year forecast of anticipated orders of such Product, which forecast shall be nonbinding and used by Arena for capacity planning purposes (each, a “ Three Year Forecast ”).

(c) Orders. To order Finished Product for supply by Arena under this Article 6, Roivant shall submit to Arena a Purchase Order (which is deemed binding on Roivant) complying with the other applicable terms of this Article 6 and specifying the amount of Finished Product ordered (broken down (A) on a country-by-country and packaging configuration-by-packaging configuration basis and (B) by quantities (separate quantities for each different packaging configuration ordered) to be sold commercially or distributed as samples or as part of a compassionate use, named patient use or indigent patient program) and the requested delivery date (which shall be within the applicable Delivery Window, unless otherwise agreed by Arena). Not later than [***] days after receipt of a Purchase Order, Arena shall confirm in writing its receipt and acceptance of the Purchase Order (“ Order Acceptance ”) and Arena’s proposed delivery date, which shall be within the applicable Delivery Window. Roivant shall notify Arena within [***] days after receipt of the Order Acceptance if such proposed delivery date is unworkable for Roivant, and in such event the Parties shall promptly discuss in good faith and seek to agree on an alternative delivery date, which if the Parties fail to agree shall be the half-way point between the requested delivery date and the proposed delivery date. If Roivant does not respond within such [***]-day period, the proposed date will be the confirmed delivery date. For any Purchase Order that contains an Excess Order, Arena shall notify Roivant in the Order Acceptance whether Arena will be able to fulfill such Excess Order (or part thereof) and the expected delivery date for fulfillment. For any such Purchase Order submitted by Roivant, Arena shall supply to Roivant the amount of Finished Product covered by such Purchase

Order by the confirmed delivery date in the aggregate up to [ *** ] of the quantity forecasted for the applicable month of the most recent Forecast. In the event that such ordered amount, when combined with the total amounts of such Finished Product previously ordered by Roivant during the same month, exceeds [ *** ] of the Order Commitment for such Finished Product in such month (such excess amount, the “ Excess Order ”), Arena shall not be obligated to fill any Purchase Orders to the extent of the Excess Orders therein, but Arena shall use good faith efforts to fill such Excess Orders (i.e., those order amounts that exceed [ *** ] of the Order Commitment for such month). If there is any conflict between a Purchase Order or an Order Acceptance and the terms and conditions of this Agreement, this Agreement prevails and such conflicting terms are rejected and of no effect, unless the Parties mutually agree otherwise in writing.

6.3 Delivery and Purchase. Roivant shall engage a common carrier, at Roivant’s expense, to ship Finished Product to Roivant. Upon Roivant’s request, Arena shall assist Roivant in identifying a suitable common carrier. Title and risk of loss with respect to Finished Product shall pass to Roivant, and delivery to Roivant shall be made for purposes of this Agreement when Arena tenders such Finished Product to Roivant’s designated common carrier at [***] (or such other location [***] designated by Arena in writing [ *** ] to the [ *** ] ). Arena, at its own expense, shall be responsible for [ *** ] . Roivant, at its own expense, shall be responsible for [ *** ] . Upon delivery to Roivant (but subject to Section 6.9), except as set forth in Section 7.3(e) Roivant shall have the obligation to pay Arena the Initial Purchase Price Payment pursuant to Section 7.3(c) for such delivered Finished Product.

6.4 Labeling and Packaging. Arena and Roivant shall discuss and reasonably agree on all packaging configurations, packaging and labeling (including package inserts) used with Finished Product in each country, with Roivant having the final decision with respect thereto provided that the configuration, packaging and labeling chosen by Roivant are consistent with all legal and regulatory requirements and within Arena’s capabilities using Arena’s existing equipment. Arena shall label and package (in appropriate primary, secondary and tertiary packaging) Finished Product to be supplied in accordance with the foregoing, the applicable Manufacturing SOPs, and Applicable Laws of each applicable country, for delivery in final form to Roivant under this Agreement. Roivant shall be responsible for providing to Arena (or its designees, including printed packaging material vendors utilized by Arena) all artwork for all such labeling and packaging on a timely basis, for each applicable packaging configuration for each country, as necessary for Arena to perform such labeling and packaging, and in formats as reasonably agreed by the Parties and reasonably acceptable to Arena. It is agreed that Arena’s obligations to manufacture and supply Finished Product shall be delayed to the extent Roivant does not timely decide on all packaging and labeling used with Finished Product (which must be compatible with Arena’s equipment) and deliver such necessary artwork. Arena shall have the right to subcontract the manufacture of all printed packaging materials, including labels, and Arena shall be responsible for all such subcontractors as provided in Section 15.4(b).

6.5 Quality Agreement. No later than 120 days after the Effective Date, the Parties shall enter into a Quality Agreement with respect to clinical trial supply of the Initial Product. Such Quality Agreement shall provide Roivant with the following rights with respect to Compound and Product [ *** ] . The Parties shall amend such Quality Agreement (or enter into a new Quality Agreement) (i) [ *** ] , and (ii) to address commercial supply of each Finished Product, in each case within [ *** ] days after the agreement of the Parties that all applicable information regarding the [ *** ] Finished Product, necessary to reach an agreement with respect to all quality issues, has been obtained. Each Party shall duly and punctually perform all of its obligations under and pursuant to the Quality Agreement. Arena shall release all Finished Products in accordance with the terms of the Quality Agreement.

6.6 Quality Control. Arena shall maintain and follow a quality control and quality assurance testing program consistent with the Specifications, the Quality Agreement, and all other requirements of Applicable Laws and reasonably consistent with industry standards (the “ Quality Control Procedures ”), which shall include performing the applicable Product Acceptance Tests on each Batch of Compound before release and subsequent use to manufacture Finished Product and on each Batch of Finished Product prior to delivery to Roivant. Arena shall ensure that all Compound and Finished Product manufactured by or on behalf of Arena pursuant to this Agreement is manufactured in accordance with the applicable Manufacturing SOPs, the Quality Agreement, and all other Applicable Laws, and all other applicable requirements of Regulatory Authorities (collectively, “ Regulatory Standards ”) and conforms to the applicable Product Warranty. Arena shall ensure that the Third Party manufacturers engaged by Arena pursuant to Section 3.10 manufacture Finished Product and Compound (as applicable) in accordance with Regulatory Standards and, with respect to Finished Product, conforming to the applicable Product Warranty.

6.7 Batch Records and Certificates. Prior to the first manufacture of a Finished Product under Article 6 of this Agreement by or on behalf of Arena, Arena shall provide Roivant with a copy of the Master Batch Record for such Finished Product for Roivant’s review and approval. Arena shall consider any reasonable comments Roivant provides regarding the Master Batch Record for the Finished Product. Arena shall provide to Roivant, accompanying each delivery of Finished Product by or on behalf of Arena: (i) the Batch number and Purchase Order number (if included on the applicable Purchase Order) of the delivered Finished Product, and (ii) a completed and accurate Certificate of Analysis as to such Batch. [ *** ] , Arena shall also provide to Roivant, accompanying each such delivery: (A) a copy of the Batch Records for the Finished Product, and (B) copies of all other documentation required for release of the Finished Product as provided in the Quality Agreement.

6.8 Quality Audits. Arena shall maintain all quality control documentation and Product Acceptance Test results for each Batch of Finished Product for a period and in a manner consistent with Regulatory Standards and the Quality Agreement. Roivant may periodically (but no more frequently than [***], unless [*** ] review such documentation and results, and, as provided for in the Quality Agreement, audit and verify the adherence of Arena to the Quality Control Procedures and Regulatory Standards. Such review and audit shall be on reasonable prior notice and conducted during business hours and in a manner that does not unreasonably disrupt Arena’s business or operations.

6.9 Acceptance/Rejection. Roivant (or its authorized representative) shall perform a reasonable and customary visual inspection in accordance with its quality policies of a statistical sampling of Finished Product delivered by Arena and shall report to Arena any Finished Product that is reasonably discernible upon such visual inspection not to conform to the Product Warranty (“ Non-Conforming Finished Product ”) within [***] days of receipt by Roivant. Roivant shall report to Arena Non-Conforming Finished Product with hidden defects within [***] days of Roivant’s discovery of the same. A defect is hidden if it could not reasonably have been discovered by a reasonable and customary visual inspection upon receipt of the Finished Product. If any Finished Product is found to be Non-Conforming Finished Product and is reported by Roivant to Arena in the above time frame, then Arena shall, at Roivant’s request and option (to be exercised by Roivant promptly), either: (a) (i) if conforming safety stock of Finished Product is available, replace such Non-Conforming Finished Product within [***] days or (ii) if conforming safety stock of Finished Product is not available, use Commercially Reasonable Efforts to replace such Non-Conforming Finished Product as soon as reasonably practicable, and at no additional charge to Roivant; (b) refund within [***] days to Roivant Product Purchase Price paid (if already paid) to Arena for such Non-Conforming Finished Product or cancel the applicable Purchase Order if not paid; or (c) credit Roivant’s account within [***] days in an amount equal to Product Purchase Price paid for such Non-Conforming Finished Product, and in any case ((a), (b) or (c)) Arena shall reimburse all shipping, insurance, taxes, import licensure and customs charges (in each case that are non-refundable) for the Non-Conforming Finished Product from the point of delivery [ *** ] to the destination of the original shipment, subject to receipt of invoice. Arena shall reimburse Roivant for the reasonable costs incurred by Roivant in properly disposing of or shipping to Arena (as instructed by Arena) such Non-Conforming Finished Product, subject to receipt of invoice. Any notice given under this Section 6.9 shall specify the reason why such Finished Product was found to be Non-Conforming Finished Product. If Roivant does not report any defect or non-conformity of any Finished Product that could reasonably have been discovered by a reasonable and customary visual inspection upon receipt as described above within [***] days of receipt by Roivant or any hidden defect within [***] days after discovery thereof, then Roivant shall be deemed to have accepted such Finished Product.

6.10 Dispute Regarding Rejection. If the Parties disagree as to whether a particular delivery of Finished Product contains Non-Conforming Finished Product, and cannot resolve such disagreement within [***] days, the Parties shall appoint an independent testing laboratory or other appropriate expert mutually acceptable to the Parties (the “ Testing Laboratory ”) to (a) review data that are in question or (b) to oversee the evaluation and testing of a sample of such Finished Product at the Testing Laboratory. The Testing Laboratory will conduct testing in accordance with the methods established for testing as set forth in the applicable Specifications. The Party whose position in the dispute was not supported by the Testing Laboratory’s findings shall bear the costs of the Testing Laboratory. Arena shall address all amounts of Non-Conforming Finished Product as determined by the Testing Laboratory as provided in Section 6.10.

6.11 Product Warranty. Arena warrants that at the time of delivery to Roivant, all Finished Product delivered to Roivant under this Article 6: (a) will have been manufactured, tested, and packaged in accordance with cGMP, applicable Manufacturing SOPs and the Quality Agreement; and (b) will meet the applicable Specifications and, solely with respect to the Initial Product, will have for a minimum shelf life period equal to [ *** ] or, in the case the Initial Product has achieved Regulatory Approval, [*** ] or the shelf life for the Initial Product (such warranty, collectively the “ Product Warranty ”). Each of the foregoing warranties is subject to the limitation that Arena shall have no liability or responsibility under the foregoing for any defects, damage or harm to the Finished Product to the extent resulting from improper storage, transportation, mishandling or any other cause occurring after delivery by or on behalf of Arena to Roivant.

6.12 Facility Licenses; Storage.

(a) Arena shall maintain for the facility(ies) at which Arena manufactures Finished Product for supply to Roivant (each, a “ Facility ”), at Arena’s sole cost, all permits, licenses and approvals (including facilities licenses) needed for Arena to be able to manufacture and supply Finished Product in compliance with the Product Warranty (the “ Facility Licenses ”), in a timely manner such that Arena is able to meet its manufacturing and supply obligations under this Agreement. Arena shall keep Roivant regularly informed about the status of Facility Licenses for each Facility and shall provide Roivant copies thereof upon reasonable request. Arena shall ensure that each Facility complies with Applicable Laws (including environmental laws) with regard to its manufacturing and supply of Finished Product. Arena shall use Commercially Reasonable Efforts to resolve as soon as possible any issues that arise in seeking or maintaining Facility Licenses for any Facility, including completely addressing and rectifying any deviations or other issues raised in any Warning Letter from the FDA or any similar warning or objection by any other Regulatory Authority. Arena shall have the right to subcontract with Third Parties for storage services and storage facilities for Finished Products manufactured for supply to Roivant hereunder, subject to Roivant’s approval of each such Third Party which approval will not be unreasonably withheld, delayed or conditioned and Arena shall be responsible for all such subcontractors as provided in Section 15.4(b).

(b) Arena shall ensure that each Third Party manufacturer maintains for the facility(ies) at such Third Party manufactures Compounds or Finished Product hereunder, at Arena’s and/or such Third Party’s cost, all permits, licenses and approvals (including facilities licenses) needed for such Third Party to be able to manufacture and supply Compound or Finished Product, as applicable, in compliance with the Specifications or Product Warranty, in a timely manner such that Arena is able to meet its manufacturing and supply obligations under this Agreement. Arena shall keep Roivant regularly informed about the status of such permits, licenses and approvals (including facilities licenses) for each such Third Party facility. Arena shall ensure that each such Third Party facility complies with Applicable Laws (including environmental laws) with regard to its manufacturing and supply of Compound or Finished Product. Arena shall ensure that such Third Party manufacturers use Commercially Reasonable Efforts to resolve as soon as possible any issues that arise in seeking or maintaining such permits, licenses and approvals (including facilities licenses) for such Third Party facility, including completely addressing and rectifying any deviations or other issues raised in any Warning Letter from the FDA or any similar warning or objection by any other Regulatory Authority.

(c) If despite the Commercially Reasonable Efforts of Arena or the Third Party manufacturer, the issues that arise in seeking or maintaining such permits, licenses and approvals (including facilities licenses) for such Arena or Third Party facility, including completely addressing and rectifying any deviations or other issues raised in any Warning Letter from the FDA or any similar warning or objection by any other Regulatory Authority, are not resolved within a reasonable time, then at Roivant’s request, Arena will engage and qualify a Third Party manufacturer in accordance with Section 3.10 and [ *** ]

6.13 Inspection by Roivant. Arena agrees that Roivant and its respective agents (but no more than a total of three persons per inspection) shall have the right, pursuant to a reasonable confidentiality agreement with Arena, no more than [***] (unless any such inspection reveals a material compliance issue or a compliance issue is raised by a Regulatory Authority, in which event Roivant and its respective agents shall have the right to conduct such additional inspections during [*** ] as necessary to verify that such issue has been remedied), upon reasonable prior notice to Arena and during business hours, and in a manner that does not unreasonably disrupt Arena’s manufacturing operations, to inspect the portion of the Facility where Finished Product is manufactured or stored as well as the manufacturing of the Finished Products, including inspection of (a) the raw materials used in the manufacture of the Finished Products, (b) the holding facilities for such raw materials, (c) the equipment used in the manufacture of the Finished Products, and (d) all material records reasonably relating to such manufacturing at the Facility, to the extent they relate to the Finished Products (which records may be copied by Roivant or its agent, at Roivant’s expense, but to the extent of the actual expense incurred only). Following such inspection, Roivant shall discuss its observations and conclusions with Arena and if Roivant believes that any corrective actions are necessary for Arena to comply with the terms and conditions of this Article 6, then within 15 days after such discussion, Roivant shall prepare a schedule that sets forth the corrective actions that Roivant reasonably believes in good faith are required, and Arena will consider such actions in good faith and use Commercially Reasonable Efforts to implement such corrective actions that Arena reasonably and in good faith determines to be required. Roivant’s agents participating in inspections shall execute a confidentiality agreement that is reasonable acceptable to Arena. Roivant shall endeavor in any such inspection not to unreasonably disrupt the normal business activities of Arena. Arena shall promptly provide Roivant with a copy of each report for its inspection of the facility of a Third Party manufacturer of Compound or Finished Product.

6.14 Regulatory Inspections.

(a) Inspection by Regulatory Authority .

(i) Upon the request of the Regulatory Authority from whom a preapproval inspection or Regulatory Approval for a Product has been requested by Roivant, Arena shall provide such Regulatory Authority reasonable access to observe and inspect (including pre-approval inspections) the Facility and the procedures used for the manufacture, release and stability testing, or warehousing of Finished Product and to audit the Facility for compliance with applicable Regulatory Standards. Arena shall notify Roivant promptly of any inspection at the Facility by a Regulatory Authority that is scheduled in advance and shall provide Roivant with an opportunity to be present, but not participate, during such inspection. Arena specifically agrees to cooperate with any inspection by such a Regulatory Authority at the Facility, whether prior to or after Regulatory Approval of the applicable Product, and to provide Roivant a copy of any inspection or audit report resulting from any such inspection.

(ii) Arena shall ensure that any Third Party that manufactures Finished Product or any active pharmaceutical ingredient contained in Finished Product to provide each Regulatory Authority, from whom a preapproval inspection or Regulatory Approval for a Product has been requested by Roivant, reasonable access to observe and inspect (including pre-approval inspections) the facility at which such Third Party manufacturers the Finished Product or such active pharmaceutical ingredient and the procedures used for the manufacture, release and stability testing, or warehousing of such Finished Product or active pharmaceutical ingredient, and to audit such Third Party’s facility for compliance with all applicable Regulatory Standards. Promptly upon Arena’s receipt thereof, Arena shall provide to Roivant notice of inspections at such Third Party’s facility by a Regulatory Authority that is scheduled in advance. Arena shall ensure that such Third Party manufacturer cooperates with any inspection by such a Regulatory Authority at such Third Party’s facility, whether prior to or after Regulatory Approval of the applicable Product, and to provide Arena a copy of any inspection or audit report resulting from any such inspection.

(b) Remedial Actions. Arena shall notify Roivant promptly in writing in the event Arena receives notification that any action is taken or threatened by a Regulatory Authority relating to the manufacture or storage of Compound or the manufacture or storage of Finished Product by Arena (or relating to the manufacture or storage of Compound or Finished Product by a Third Party manufacturer of Compound or Finished Product), or relating to the Facility or the facility of a Third Party manufacturer of Compound or Finished Product, as applicable, that would reasonably be expected to impair the ability of Arena or such Third Party manufacturer to manufacture and supply Finished Product to Roivant, or in the case of the Third Party Manufacturer, to supply Compound or Finished Product to Arena (including any impairment to Arena’s or such Third Party manufacturer’s ability to manufacture Finished Product conforming to the Product Warranty, or in the case of the Third Party manufacturer, to supply Compound according to the applicable Specifications), in each case in accordance with this Agreement. Notwithstanding the foregoing, Arena shall notify Roivant promptly in writing of any FDA Form 483 notices received by Arena (or such Third Party manufacturer, as applicable) with respect to the Facility (or facility of a Third Party manufacturer). In any event, Arena shall use Commercially Reasonable Efforts to address and resolve as soon as reasonably practicable any issues, concerns or warnings from the Regulatory Authority that would reasonably be expected to affect Arena’s (or such Third Party manufacturer’s, as applicable) ability to manufacture and supply to Roivant Compound and Finished Product in accordance with this Agreement. If despite the Commercially Reasonable Efforts of Arena or the Third Party manufacturer, such issues, concerns or warnings have not been resolved within a reasonable time, then at Roivant’s request, Arena will engage and qualify a Third Party manufacturer in accordance with Section 3.10 [ *** ]

6.15 Supply Problems.

(a) If due to Arena not supplying to Roivant amounts of Finished Product by the applicable confirmed delivery date(s) under a Purchase Order complying with the terms of Section 6.2(c) (other than amounts that are Excess Orders), there is a back-order of more than twenty days under pending Purchase Orders of more than [ *** ] of the amount of Finished Product ordered by Roivant pursuant to such Purchase Orders (without regard to whether a Force Majeure event has caused such supply delays), then the Parties shall meet as soon as practicable (but in any event within [ *** ] hours) to discuss the situation and seek to find resolution, and in any event Arena shall continue to use good faith diligent efforts to deliver to Roivant such back-ordered amounts of Finished Product as soon as possible. Roivant will continue to order all its requirements for supply by Arena, in accordance with the supply commitments of this Agreement.

(b) For purposes of Section 6.15(a), delivery of any quantity of Non-Conforming Finished Product shall be deemed a failure to supply such quantity of Finished Product by the confirmed delivery date if Roivant has timely given Arena notice of such failure under the terms of Section 6.9.

ARTICLE 7

PAYMENTS

7.1 Initial Payment. In partial consideration for the rights granted under this Agreement, Roivant shall pay to Arena within five (5) days of the Effective Date a one-time upfront payment in the amount of US$4,000,000 (the “Upfront Payment” ). The Upfront Payment is not refundable or creditable against any other payments owed or payable by Roivant to Arena under this Agreement.

7.2 Milestone Payments. In further consideration for entering into this Agreement, Roivant shall pay to Arena each milestone payment set out below within thirty (30) days following the first achievement of the corresponding milestone event. The payments set forth in this Section 7.2 shall not be refundable or creditable against any other payments owed or payable by Roivant to Arena under this Agreement. Each milestone payment set forth in this Section 7.2 shall be payable only once. For clarity, the total amount payable under this Sections 7.2 shall not exceed US$41,500,000.



Milestone Event	Milestone Payment
(a) Initiation of dosing in the first Phase 3 trial involving a Product in a first Indication	US$2,000,000
(b) Initiation of dosing in the first Phase 3 trial involving a Product in a second Indication	US$2,000,000
(c) Upon the first submission of an NDA for a Product by the FDA	US$5,000,000
(d) Upon the first submission of a Marketing Authorization Application (MAA) for a Product by the EMA	US$2,500,000
(e) Upon the first NDA approval for a Product	US$20,000,000
(f) Upon the first MAA approval for a Product	US$10,000,000

7.3 Product Purchase Price Payments for Commercial Supply of Product.

(a) Product Purchase Price Calculations. In consideration of the commercial supply of a Product under this Agreement to Roivant by Arena, except as set forth in Section 7.3(e), Roivant shall pay to Arena a purchase price for Roivant’s purchase of each unit of Finished Product (the “ Product Purchase Price ”) equal to the greater of (i) the Minimum Product Purchase Price (set forth in Section 7.3(d) below) and (ii) (x) during the Initial Term for such Product in such `Product’s country of sale, 15% of the Net Sales of such Product and (y) during the Extended Term for such Product in such Product’s country of sale, 10% of the Net Sales of such Product. The Product Purchase Price shall be determined as provided in subclause (b) below.

(b) Payment of Product Purchase Prices; Reports.

(i) Initial Purchase Price Payment. For all amounts of Product purchased by Roivant in a Fiscal Semester for commercial sale, promptly after Arena delivers such Product to Roivant, Arena shall invoice Roivant an amount equal to the Minimum Product Purchase Price for all units of such Product delivered by Arena to Roivant (the “ Initial Purchase Price Payment ”). Roivant shall pay all undisputed amounts in such invoice no later than 30 days after receipt of the invoice. In the event Roivant disputes one or more items in an invoice, Roivant will promptly notify Arena in writing and such notice shall contain a reasonably detailed description of the item(s) being disputed and the basis therefor. Arena will promptly respond to Roivant and the Parties will use good faith efforts to promptly resolve the dispute. Amounts determined to be owed following resolution will be paid to Arena within thirty (30) days of resolution of the dispute.

(ii) Secondary Purchase Price Reports and Payments. Within [***] days after the end of each Calendar Quarter after the First Commercial Sale of the first Product, Roivant shall prepare and send to Arena a report stating: (a) the total amount of Net Sales of each Product during such Calendar Quarter, and the detailed and total deductions from gross amounts invoiced (or otherwise charged) to arrive at such Net Sales; (b) the sales in units of each Product and gross amounts invoiced for such sales, on a Product-by-Product basis during such Calendar Quarter; (c) the total amount of Product used as samples or as part of compassionate use, named patient use or indigent patient program (and specifying the total amount of Product used in each such way); (d) the total amount of Initial Purchase Price Payments paid by Roivant to Arena upon invoice (as provided above under Section 7.3(b)(ii)) for the delivery of such Products to Roivant; (e) a detailed description of the inventory of Product being held at distributors at the end of such Calendar Quarter; and (f) the total amount of the Secondary Purchase Price Payments (as defined below) for such Calendar Quarter owed by Roivant to Arena, if any. The Parties agree that each of the quarterly reports to be provided by Roivant to Arena pursuant to this Section shall be broken down to report all gross invoiced sales and Net Sales on a Product-by-Product and country-by-country basis. Within [***] days after the end of the first and second months of each such Calendar Quarter, Roivant shall prepare and send to Arena a report containing the information described in clauses (a)-(f) above for the applicable month for sales by Roivant and its Affiliates and, to the extent available to Roivant for sales by each Sub-distributor and its Affiliates; Roivant shall use Commercially Reasonable Efforts to obtain such information from its Sub-distributors on a timely basis. Within [***] days after the end of each Calendar Quarter after the First Commercial Sale of the first Product, Roivant shall pay Arena an amount equal to the following (provided that such following amount is a positive number): the sum of the applicable Product Purchase Price for each unit of Product sold during such Calendar Quarter, minus the sum of the applicable Initial Purchase Price Payment made for each unit of Product sold during such Calendar Quarter (the portion of such payment attributable to each unit of Product, the “ Secondary Purchase Price Payment ”). For clarity, the Parties acknowledge and agree that in any event for each unit of Product delivered by Arena to Roivant under this Agreement and sold by Roivant, Sub-distributors or its or its Sub-distributors’ Affiliates, to generate Net Sales, the Initial Purchase Price Payment for such unit of Product plus the Secondary Purchase Price Payment for such unit of Product shall equal the Product Purchase Price for such Product. Roivant shall be responsible for payment of any sales or value added tax applicable to the sale of Finished Product by Arena to Roivant.

(c) Purchase Price for Products Not Sold . The Parties hereby agree that, for any particular Finished Product delivered to Roivant per Section 7.3(b), other than Non-Conforming Finished Product, that is not and cannot be subsequently resold by Roivant, its Sub-distributors, or its or their Affiliates, because it reaches the end of its shelf life prior to sale, or it is destroyed or is damaged, the Product Purchase Price that Roivant shall pay Arena for such Finished Product shall be [***] at the time of purchase.

(d) Minimum Product Purchase Price.

(i) Initial Product. Notwithstanding anything to the contrary in this Agreement, in no event will Product Purchase Price for any Initial Product sold by Roivant, or its Sub-distributors or its or their Affiliates, and included in Net Sales, after applying the applicable purchase price calculations under this Agreement (including any applicable deductions), be less on a per tablet basis than US$0.50 (the “Initial Product Minimum Product Purchase Price” ), which amount shall be (A) reasonably adjusted to account for any packaging specifications or packaging requirements different than standard (as of the Effective Date) packaging, labels (including package inserts), bottles and closures, and (B) annually adjusted to account for any increased costs (i) of raw materials and components (to the extent that such increase exceeds the CPI Adjustment made pursuant to Section 7.3(d)(iii)), packaging or regulatory compliance activities, or (ii) resulting from changes to the Specifications requested by Roivant.

(ii) Additional Products. The Parties will negotiate in good faith to agree upon a commercially reasonable minimum product purchase price on a per unit basis for each Additional Product sold by Roivant or its Sub-distributors, or its or their Affiliates (the “Additional Product Minimum Product Purchase Price” ), which amount shall be [***] adjusted to account for any increased or decreased costs (i) of raw materials and components (to the extent that [*** ] pursuant to Section 7.3(d)(iii) ] ), [ *** ] , or [ ***] . The Parties shall also agree [ *** ] applicable for such Additional Product.

(iii) CPI-U Adjustments. The Minimum Product Purchase Price for each Product shall be adjusted annually to reflect any year-to-year percentage increase or decrease (as the case may be) in the U.S. Bureau of Labor Statistics’ All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, 1982-84 = 100. The annual adjustment to the Minimum Product Purchase Price for CPI-U changes shall first occur as of [ *** ] based on the percentage increase or decrease (as the case may be) in the CPI-U from the most recent index available as of [ *** ] .

(e) Non-Commercial Product Purchase Price. With respect to any units of Finished Products delivered by Arena to Roivant that are used in commercially reasonable and customary quantities as samples or as part of a compassionate use, named patient use or indigent patient program and thus are disposed of by Roivant (or its Sub-distributor or its or their Affiliates) without charge, the Product Purchase Price therefor shall be [*** ] , payable within 30 days of receipt of invoice.

(f) Product Purchase Price Adjustment Payments. The Product Purchase Prices owed by Roivant for its purchase of Product from Arena for commercial sale in a particular Commercial Year are subject to adjustment by the payment by Roivant of one-time purchase price adjustment payments, as provided below (each, a “ Product Purchase Price Adjustment Payment ”) for the first achievement of Net Sales in any Commercial Year above each threshold Net Sales amount set forth below:



Aggregate Products Net Sales for a Commercial Year	Product Purchase Price Adjustment Payment
(1) at least US$300,000,000	US$10,000,000
(2) at least US$600,000,000	US$20,000,000
(2) at least US$900,000,000	US$30,000,000

If Roivant (including its Sub-distributors and its and their Affiliates) has sold (for the first time) an amount of Product in excess of one or more threshold Net Sales amounts in the above table, then Roivant shall pay to Arena, as an adjustment to the Product Purchase Price paid by Roivant for its purchase of Products, a one-time Product Purchase Price Adjustment Payment in the amount listed above for each such threshold exceeded, such payment to be made within thirty (30) days of the end of the Calendar Quarter during such Commercial Year when such threshold amount is first reached. For clarity, the total amount payable under this Section 7.3(f) shall not exceed US$60,000,000.

7.4 Payment Method; Currency. Unless otherwise expressly stated in this Agreement, invoices shall be issued for all services and goods provided pursuant to this Agreement. All payments to the Payee Party under this Agreement shall be made by bank wire transfer in immediately available funds to an account in the name of the Payee Party designated in writing by the Payee Party. Payments hereunder shall be considered to be made as of the day on which they are received by the Payee Party’s designated bank. Unless otherwise expressly stated in this Agreement, all amounts specified to be payable under this Agreement are in United States Dollars and shall be paid in United States Dollars. For Net Sales outside the United States received in a currency other than United States Dollars, the rate of exchange to be used in computing the amount of currency equivalent in Dollars shall be made at the rate of exchange published in Reuters or Bloomberg on the last business day of the applicable Calendar Quarter.

7.5 Taxes. The Upfront Payment, milestones, Product Purchase Price, FTE Costs, reimbursements and other amounts payable by one Party (the “ Paying Party ”) to the other Party (the “ Payee Party ”) pursuant to this Agreement (each, a “ Payment ”) shall not be reduced by any deduction or withholding for any present or future taxes, levies, imposts, duties, fees, charges or liabilities imposed by any governmental authority, including any interest, additions to tax or penalties applicable to any of the foregoing (collectively, “ Taxes ”); provided, however, if it is required by Applicable Laws to impose an obligation on the Paying Party to deduct or withhold Taxes directly from any amount paid to the Payee Party, then the Paying Party will deduct or withhold the required amount and will timely pay the full amount deducted or withheld to the relevant governmental authority in accordance with the Applicable Laws, and the amount paid to the Payee Party will be decreased by the amount so deducted or withheld. Notwithstanding the foregoing, to the extent Roivant or its Affiliates (i) assigns or otherwise transfers this Agreement or its obligations hereunder to an Affiliate or Third Party, (ii) changes its location of incorporation from Bermuda to another location, or (iii) makes payments from an entity other than the Bermuda entity originally entering into this Agreement, in each case that results in a Tax being required to be withheld under Applicable Laws that would not have been required to be withheld if such action had not been taken (each, a “Tax Changing Decision”) such that as a result of a Tax Changing Decision, Roivant is required by Applicable Laws to deduct or withhold Taxes directly from any amount paid to Arena, then (A) Roivant will increase the amount paid to Arena by the required amount such that the net amount actually received by Arena equals the full amount originally invoiced or stated by Arena to be payable and (B) Roivant will timely pay the applicable Taxes to the relevant governmental authority in accordance with Applicable Laws. In the event Applicable Laws require Taxes be deducted or withheld, the Paying Party will provide reasonable assistance and documentation to allow the Payee Party to receive a refund or credit for Taxes paid.

7.6 Records. Roivant shall keep, and cause its Sub-distributors and its and their Affiliates to keep, complete, true and accurate books of accounts and records for the purpose of determining the amounts payable to Arena under this Agreement. Such books and records shall be kept for such period of time required by Applicable Laws, but no less than at least [ *** ] years following the end of the Calendar Quarter to which they pertain. Such records shall be subject to inspection in accordance with Section 7.7.

7.7 Audits.

(a) Upon not less than [***] days’ prior written notice, Roivant shall permit an independent, certified public accountant of international recognition (for the purposes of this Section 7.7, the “ Auditor ”) selected by Arena and reasonably acceptable to Roivant, which acceptance shall not be unreasonably conditioned, withheld or delayed, to audit or inspect those books and records of Roivant and its Sub-distributors and its and their Affiliates that relate to Net Sales for the sole purpose of verifying Product Purchase Price payments. Prior to any such audit, the Auditor shall execute a confidentiality agreement that is reasonably acceptable to Roivant.

(b) The Auditor shall send a copy of the report to Roivant at the same time it is sent to Arena. Such audits or inspections may be made no more than [*** ] (unless an audit or inspection reveals a material inaccuracy in reports made or amounts invoiced under this Agreement, in which case [***]), during normal business hours and upon reasonable advance notice. If such report shows that the amounts paid by Roivant for the period audited are less than the amounts actually payable by Roivant to Arena during the period audited, then (absent manifest error or fraud in such audit report) Roivant shall pay to Arena the amount of such underpayment plus interest under Section 7.8, from the date such amounts were originally owed until payment is made, Arena shall deliver to Roivant an invoice for such underpaid amount, and Roivant shall pay such invoice within [***] days of receipt of such invoice. If such report shows that the amounts paid by Roivant for the period audited exceed the amounts actually owed by Roivant to Arena for the period audited, then (absent manifest error or fraud in such audit report) Roivant shall deliver to Arena an invoice for such excess amount, and Arena shall pay such invoiced excess amount, within thirty (30) days of receipt of such invoice. Such [ *** ] subject to no more than [*** ] with respect to [ *** ] such Calendar Quarter. Audits and inspections conducted under this Section 7.7 shall be at the expense of Arena, unless an audit or inspection pursuant to subsection (a) demonstrates an underpayment in amounts payable by Roivant exceeding an amount equal to [ *** ] of the amount paid for a period covered by the audit or inspection, in which case all reasonable and verifiable costs relating to the audit or inspection for such period and any unpaid amounts that are discovered shall be paid by Roivant, based on invoices delivered by Arena. Arena shall endeavor in any such audit not to unreasonably disrupt the normal business activities of Roivant.

7.8 Payment Due Dates; Late Payments. Unless otherwise expressly stated in this Agreement, all Payments under this Agreement are due within thirty (30) days of receipt of invoice. If any Payment is due on a day when banks in New York, New York, USA, are generally closed, then such Payment shall not be considered late if made on the next day on which such banks are generally open. In the event that any Payment due under this Agreement is not made when due, such Payment shall accrue interest from the date due at a rate per annum equal to 2% above the U.S. Prime Rate (as set forth in The Wall Street Journal, Eastern Edition) for the date on which payment was originally due until the date such Payment plus accrued interest hereunder is actually made, calculated daily on the basis of a 365-day year, or similar reputable data source; provided, that in no event shall such rate exceed the maximum legal annual interest rate. The payment of such interest shall not limit the Party entitled to receive such payment from exercising any other rights it may have as a consequence of the lateness of any Payment.

ARTICLE 8

CONFIDENTIALITY

8.1 Confidential Information. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, and subject to the other applicable terms of this Article 8, the Parties agree that the receiving Party (the “ Receiving Party ”) shall keep confidential and not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Know-How, information or materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) that is disclosed to it by the other Party (the “ Disclosing Party ”) pursuant to this Agreement, including all information concerning any Product or Compound and any other technical or business information of whatever nature concerning the Disclosing Party or its technology or business (collectively, “ Confidential Information ” of the Disclosing Party), except that the Receiving Party may disclose Confidential Information of the Disclosing Party to its Affiliates and its and its Affiliates’ respective officers, directors, employees, agents, subcontractors and consultants (and in the case of Roivant as the Receiving Party, Sub-distributors) with a need to know such Confidential Information to assist the Receiving Party with (or in the case of Sub-distributors, to perform) the activities contemplated or required of it by this Agreement (and who shall be advised of the Receiving Party’s obligations hereunder and who are bound by confidentiality and non-use obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) (each, a “ Recipient ”). For clarity, all Program Know-How and all preclinical and clinical data provided by Arena to Roivant under this Agreement is deemed to be the Confidential Information of Roivant and shall be deemed to have been disclosed by Roivant to Arena for purposes of Sections 8.1 and 8.2, regardless of whether developed or made by Roivant or Arena. Notwithstanding the foregoing, the Parties acknowledge the practical difficulty of policing the use of information in the unaided memory of the Receiving Party or its Recipients, and as such each Party agrees that the Receiving Party shall not be liable for the use by any of its Recipients of specific Confidential Information of the Disclosing Party that is retained in the unaided memory of such Recipient; provided, that (a) such Recipient is not aware that such Confidential Information is the confidential information of Disclosing Party at the time of such use; (b) the foregoing is not intended to grant, and shall not be deemed to grant, the Receiving Party, its Affiliates, or its Recipients (i) a right to disclose the Disclosing Party’s Confidential Information or (ii) a license under any Patents or other intellectual property right of the Disclosing Party; and (c) such Recipient has not intentionally memorized such Confidential Information for use outside this Agreement. For the purpose of Article 8, the term “Disclosing Party” shall include each Party and its Affiliates and its and their respective officers, directors, employees, agents, subcontractors and consultants who are directed or authorized to disclose such Party’s and/or its Affiliates’ Confidential Information, and the term “Receiving Party” shall include each Party and its Affiliates.

8.2 Exceptions. Notwithstanding Section 8.1, the obligations of Section 8.1 shall not apply to any specific Confidential Information that the Receiving Party thereof can demonstrate, in each case by competent evidence:

(a) was already known to the Receiving Party or any of its Recipients, other than under an obligation of confidentiality, at the time of disclosure;

(b) was generally available to the public or was otherwise part of the public domain at the time of its disclosure to the Receiving Party;

(c) became generally available to the public or otherwise part of the public domain after its disclosure by the Disclosing Party and other than through any act or omission of the Receiving Party or any of its Recipients in breach of this Agreement;

(d) was subsequently lawfully disclosed to the Receiving Party or any of its Recipients without any obligation of confidentiality or non-use by a Person other than the Disclosing Party, and who, to the knowledge of the Receiving Party or such Recipient, did not directly or indirectly receive such information from the Disclosing Party or any of its Affiliates under an obligation of confidence; or

(e) was independently developed by the Receiving Party or any of its Recipients without use of or reference to any information or materials disclosed by the Disclosing Party.

Information specific to the use of certain compounds, methods, conditions or features shall not be deemed to be within the foregoing exceptions merely because such information is embraced by general disclosures in the public domain or in the possession of the Receiving Party or its Recipients. In addition, a combination of information will not be deemed to fall within the foregoing exceptions, even if all of the components fall within an exception, unless the combination itself and its significance are in the public domain or in the possession of the Receiving Party prior to the disclosures hereunder. Notwithstanding anything to the contrary herein, neither the act of using information in a clinical trial nor the filing of information with a governmental authority shall, for the purpose of this Article 8, in and of itself be deemed to place such information in the public domain.

8.3 Permitted Disclosures. Notwithstanding the provisions of Section 8.1 or Section 8.2, the Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement or if and to the extent such disclosure is reasonably necessary or useful in the following instances:

(a) the performance by the Receiving Party of its obligations or exercise of its rights as contemplated by this Agreement; provided, that wherever reasonable and practicable in the circumstances the recipient of any such Confidential Information shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 8;

(b) filing or prosecuting Patents as permitted by this Agreement;

(c) seeking, obtaining or maintaining any Regulatory Approval as permitted by this Agreement; provided, that the Receiving Party shall take reasonable measures to assure confidential treatment of such Confidential Information, to the extent such treatment is available;

(d) prosecuting or defending litigation with respect to a Party or its Affiliates as permitted by this Agreement, provided, that a protective order or any similar measures are sought by such Party with respect to the information to be disclosed, to the extent reasonably possible;

(e) complying with Applicable Laws;

(f) disclosure to Third Parties in connection with due diligence or similar investigations by or on behalf of a Third Party in connection with an actual or potential marketing, distribution or supply agreement with, or license to, or collaboration with such Third Party or an actual or potential merger or acquisition or investment by such Third Party, or in connection with performance of any such license, collaboration or merger agreement, and disclosure to actual or potential Third Party investors in confidential financing documents, provided, in each case, that any such Third Party agrees to be bound by obligations of confidentiality and non-use substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 8, but of shorter duration if customary under the circumstances;

provided that wherever reasonable and practicable in the circumstances the recipient of any such Confidential Information shall be subject to reasonable and customary obligations of confidentiality with respect to such Confidential Information.

Notwithstanding the foregoing, in the event the Receiving Party or a Recipient is required to make a disclosure of the Disclosing Party’s Confidential Information pursuant to Section 8.3(d) or Section 8.3(e) to comply with a subpoena or other legal order, it shall, except where impracticable, give reasonable advance notice to the Disclosing Party of such disclosure and give the Disclosing Party a reasonable opportunity to quash such subpoena or order and to obtain a protective order requiring that the Confidential Information and documents that are the subject of such subpoena or order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which such subpoena or order was issued; and provided, further, that if such subpoena or order is not quashed or a protective order

is not obtained, the Confidential Information disclosed in response to such subpoena or order shall be limited to the Disclosing Party’s Confidential Information that is legally required to be disclosed in response to such subpoena or order and shall still be subject to the restrictions on use set forth in this Article 8.

8.4 Confidentiality of this Agreement and its Terms. Except as otherwise provided in this Article 8, each Party agrees not to disclose to any Third Party the existence of this Agreement or the terms and conditions of this Agreement without the prior written consent of the other Party, except that each Party may disclose the terms and conditions of this Agreement that are not otherwise made public as contemplated by Section 8.5 as permitted under Section 8.3.

8.5 Public Announcements .

(a) As soon as practicable following the Effective Date, each Party may issue a mutually agreed to press release announcing the entry into this Agreement. The Parties may make disclosures as required by Applicable Laws (including disclosure requirements of the U.S. Securities and Exchange Commission (“ SEC ”) (including disclosure requirements of a Party’s Affiliate), the NASDAQ stock exchange or any other stock exchange on which securities issued by a Party or any of its Affiliates are or are proposed to be traded). In the event of a public announcement required under Applicable Laws, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party with a copy of the proposed text of such announcement at least [***] business days in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment upon the proposed text.

(b) The Parties shall reasonably coordinate in advance with each other in connection with the filing of this Agreement (including, if applicable, redaction of certain provisions of this Agreement) with the SEC or any other governmental agency, the NASDAQ stock exchange or any other stock exchange on which securities issued by a Party or any of its Affiliates are traded, and each Party shall reasonably consider seeking confidential treatment for the terms reasonably requested by the other Party to be redacted; provided that such request is made within [ *** ] business days after the other Party’s receipt of a draft redacted agreement and further provided, that each Party shall ultimately retain control over what information to seek confidential treatment for and what information to disclose to the SEC or any other governmental agency, the NASDAQ stock exchange or any other stock exchange, as the case may be, and nothing in this Agreement shall prevent a Party from taking all actions it reasonably considers necessary to comply with Applicable Laws with respect to any such filings or disclosures; and provided, further, that the Parties shall use their reasonable efforts to file redacted versions with any governing bodies that are consistent with redacted versions previously filed with any other governing bodies. Except as provided in the preceding sentence, neither Party nor any of their respective Affiliates shall be obligated to consult with the other Party with respect to any filings to the SEC, the NASDAQ stock exchange or any other stock exchange or governmental agency.

8.6 Use of Name. Neither Party shall use the name, insignia, symbol, Trademark, trade name or logotype of the other Party (or any abbreviation or adaptation thereof) in any publication, press release or marketing and promotional material or other form of publicity without the prior written approval of such other Party in each instance, which approval shall not be unreasonably conditioned, withheld or delayed, or except as expressly permitted in this Agreement. The restrictions imposed by this Section 8.6 shall not prohibit either Party from making any disclosure (a) identifying the other Party as a counterparty to this Agreement to its actual or potential subcontractors, licensees, collaborators, merger partners, or investors (or in the case of Roivant, Sub-distributors), (b) that is required by Applicable Laws or the requirements of a national securities exchange or another similar regulatory body (provided, that any such disclosure shall be governed by this Article 8), (c) that is necessary for the performance by Roivant or Arena of its obligations or exercise of its rights as contemplated by this Agreement or (d) with respect to which written consent has previously been obtained. Further, the restrictions imposed on each Party under this Section 8.6 are not intended, and shall not be construed, to prohibit a Party from identifying the other Party in its internal business communications; provided, that any Confidential Information in such communications remains subject to this Article 8.

8.7 Publication of Product Information. At least [ *** ] days prior to Roivant publicly presenting at a scientific conference or submitting for written publication in a scientific journal a manuscript, abstract or the like that includes technical information relating to any Compound or any Product that has not been previously published, Roivant shall provide Arena a draft copy thereof for its review. In addition, if Roivant materially changes, prior to submission, the version of the manuscript, abstract or the like provided to Arena for review, Roivant shall provide Arena with such updated version and Arena shall have [ *** ] business days to review and comment on such updated version.

8.8 Financial Information. From and after the Effective Date, Arena shall reasonably cooperate with Roivant and/or its Affiliates and their respective accountants and auditors, including by providing access to information, books and records related to the Products as Roivant may reasonably request in connection with the preparation by Roivant and/or its Affiliates of historical and pro forma financial statements related to the Products as may be required to be included in any filing made by Roivant and/or any of its Affiliates under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder, including Regulation S-X. Roivant will be responsible for all costs incurred by Arena or its Affiliates in connection therewith.

ARTICLE 9

INTELLECTUAL PROPERTY

9.1 Ownership of Intellectual Property.

(a) Arena Intellectual Property Rights. Arena and its Affiliates have, and shall retain, all right, title and interest in and to the Arena Know-How and Arena Patents and any other intellectual property rights owned by Arena or its Affiliates as of the Effective Date or developed by Arena or its Affiliates during the Term, excluding the Program Patents and the Program Know-How.

(b) Manufacturing Intellectual Property Rights. Arena and its Affiliates have, and shall retain, all right, title and interest in and to the Manufacturing Know-How and Manufacturing Patents.

(c) Roivant Intellectual Property Rights. Roivant and its Affiliates have, and shall retain, all right, title and interest in and to the Roivant Know-How and any other intellectual property rights owned by Roivant or its Affiliates as of the Effective Date.

(d) Program Intellectual Property Rights. Roivant shall have and own the entire right, title and interest in and to all Program Know-How and Program Patents and shall have and retain the right to use, disclose and exploit the Program Know-How and Program Patents for any and all purposes, including the right to disclose the Program Know-How to its Affiliates and Sub-distributors and to use and grant to its Sub-distributors and its and their Affiliates the right to use, disclose and exploit the Program Know-How for developing and commercializing Products. Arena shall promptly disclose to Roivant in writing the discovery, identification, conception, reduction to practice or other making of any Program Know-How or Program Patents by or on behalf of Arena. Arena shall acquire from its employees, officers, directors, consultants and subcontractors any and all rights in the Program Know-How and Program Patents in accordance with any applicable work-for-hire laws and rules, and hereby does, assign, and shall cause its Affiliates to so assign, to Roivant or an Affiliate of Roivant designated by Roivant in writing, without additional compensation (beyond the payments made to Arena under this Agreement), all its right, title and interest in and to the Program Know-How and Program Patents as well as any intellectual property rights with respect thereto to fully effect the ownership by Roivant provided for in this Section 9.1(d). If applicable, Arena shall cause all subcontractors and consultants of Arena to assign all of their right, title and interest in and to the Program Know-How and Program Patents as well as any intellectual property rights with respect thereto to Roivant or its designee. Arena and its Affiliates, as well as their respective subcontractors and consultants, shall execute all documents and take all actions reasonably requested by Roivant to fully effect the ownership by Roivant provided for in this Section 9.1(d).

9.2 Patent Prosecution and Maintenance.

(a) Subject to the provisions of this Section 9.2, [ *** ] shall have the first right, but not the obligation, for the preparation, filing, prosecution and maintenance (“ Prosecution ”) of all [ *** ] Patents and all [ *** ] Patents, at its discretion and expense. If [ *** ] chooses to exercise such right, it shall do so in good faith.

(b) Provided that [ *** ] on a [ *** ] , and with [ *** ] Patents and [ *** ] Patents, or [ ***] regarding a Product, [ *** ] shall have the first right, but not the obligation, for the Prosecution of all [ *** ] Patents related to the Initial Compound (the “ Initial Compound Patents ”) and all [ *** ] Patents, at its discretion and expense. If [***] chooses to exercise such right, it shall do so in good faith.

(c) Provided that [ *** ] on a [ *** ] , and with [ *** ] Patents and [ *** ] Patents, or [ ***] regarding a Product, [ *** ] shall have the first right, but not the obligation, for the Prosecution of all [ *** ] Patents related to the Related Compounds [*** ] covered or claimed by such [ *** ] Patent, at its discretion and expense. If [ *** ] chooses to exercise such right, it shall do so in good faith.

(d) The Party controlling the Prosecution of any Patents within the [ *** ] Patents or the [ *** ] Patents shall keep the other Party reasonably informed of progress with regard to the Prosecution of such Patents in a timely manner, but not less frequently than once per Calendar Quarter. To that end, the controlling Party shall: (i) provide the other Party with a copy of the final draft of any proposed application for such Patents at least [ *** ] days prior to filing the same, unless otherwise agreed by patent counsel for each Party, and shall consider in good faith any reasonable comments or revisions suggested by the other Party or its counsel; (ii) promptly provide the other Party with a copy of each such patent application, as filed, together with a notice of its filing date and serial number; (iii) provide the other Party with a copy of any action, communication, letter, or other correspondence issued by the applicable patent office within at least [ *** ] days of receipt thereof, and shall consult with the other Party regarding responding to the same and shall consider in good faith any reasonable comments, strategies, and the like proposed by the other Party or its counsel; (iv) provide the other Party with a copy of any response, amendment, paper, or other correspondence filed with the applicable patent office within [ *** ] days of the controlling Party’s receipt of the as-filed document; and (v) promptly notify the other Party of the allowance, grant, or issuance of such Patents. If the controlling Party elects to abandon or cease Prosecution of any specific Patents described above, the controlling Party shall provide reasonable prior written notice to the other Party of such intention to abandon (which notice shall, to the extent possible, be given no later than [ *** ] days prior to the next deadline for any action that must be taken with respect to any such Patent in the applicable patent office). In such case, at the other Party’s sole discretion, upon written notice to the controlling Party, the other Party may elect to continue Prosecution of such Patent, and the controlling Party shall execute such documents and take such actions (or shall cause its Affiliates, as applicable, to execute such documents and take such actions) as may be reasonably necessary to enable the other Party to do so. If the other Party elects to continue Prosecution of any such Patent, then it shall do so in good faith.

(e) [ *** ] shall have the sole right, but not the obligation, to control the Prosecution and enforcement of all [ *** ] Patents and all [***] Patents that claim or cover Reverted Compounds (but not any other Compounds) or the manufacture or use thereof, at its sole discretion and expense. Upon the written request of [ *** ] promptly shall transfer to [ *** ] all files (including all outside counsel files) relating thereto, and shall execute and deliver all documents and instruments reasonably requested by [ *** ] to effectuate the foregoing.

9.3 Infringement by Third Parties.

(a) Notice. In the event that either Arena or Roivant becomes aware of any infringement or threatened infringement by a Third Party of any Arena Patents or Program Patents, it shall notify the other Party in writing to that effect. Any such notice shall include any evidence that such notifying Party has in its possession and is legally able to disclose that supports such allegation of infringement or threatened infringement by such Third Party.

(b) Enforcement Procedures. Roivant shall have the first right, but not the obligation, (subject to the following) to bring and maintain any action or proceeding with respect to infringement of any Arena Patent or Program Patent by a Third Party (a “ Field Infringement ”), using counsel of its choosing. Roivant shall keep Arena reasonably informed of any actions or proceedings it takes with respect to any Field Infringement, and the Parties shall cooperate and consult with each other in strategizing regarding any such action or proceeding, provided that Roivant shall control and have the final decisions (regardless of whether or not Roivant is a party to such action or proceeding) regarding all matters in the preparation and conduct of any action or proceeding as to a Field Infringement; Roivant shall make such decisions in good faith. Arena shall cooperate fully with Roivant with respect to such actions or proceedings, including being joined as a party plaintiff in any such action or proceeding against a Third Party with respect to such Field Infringement (or, to the extent required under Applicable Laws and at the request and direction of Roivant, bringing such action or proceeding directly against a Third Party with respect to such Field Infringement) and providing access to relevant documents and other evidence and making its employees available at reasonable business hours. The Parties’ reasonable and documented out-of-pocket costs and expenses of conducting any such action or proceeding against a Field Infringement, shall be entirely borne by Roivant. Roivant shall promptly inform Arena if it elects not to exercise such first right and Arena shall thereafter have the right to initiate any action or proceeding with respect to such Field Infringement in its name and Roivant shall cooperate fully with Arena with respect to such action or proceeding. Each Party shall have the right to be represented by counsel of its own choice. Any monetary recovery resulting from such actions or proceedings will be allocated as follows: each of Roivant and Arena first will be reimbursed, out of such recovery, for its reasonable and verifiable costs and expenses with respect to such action or proceeding (such reimbursement to be pro-rata based on the Parties’ relative costs and expenses if the recovery is not sufficient to reimburse both Parties fully) with any remainder being shared by the Parties as follows: [ *** ] .

(c) Paragraph IV Notices. If either Party receives a notice under 21 U.S.C. §355(b)(2)(A)(iv) or 355(j)(2)(A)(vii)(IV) concerning an Arena Patent or a Program Patent, or any similar notice under the Applicable

Laws of a particular country (each, a “ Paragraph IV Notice ”), then it shall provide a copy of such notice to the other Party within [ *** ] days after its receipt thereof. Patent infringement litigation based on a Paragraph IV Notice concerning an Arena Patent or Program Patent shall be brought as provided in Section 9.3(b), with such Paragraph IV Notice being deemed a Field Infringement.

9.4 Third Party Intellectual Property Rights. If either Party becomes aware of a Patent owned by a Third Party that it believes will, or may, be infringed by the manufacture, importation, development or Commercialization of any Product as contemplated by this Agreement, such Party shall promptly notify the other Party of such Patent. The Parties then shall discuss the matter, consider any design-arounds or alternative technologies, and if a license under such Patent is necessary, [***] obtain such license under such Patent. With respect to any such license, [ *** ] the Third Party, [***] such that [ *** ] under this Agreement. The [ *** ] . If a reasonable design-around or alternative technology is identified, then [***], Arena and its Affiliates shall and shall ensure that its Third Party manufacturers cease use of the allegedly infringing technology and implement the design around or alternative technology instead, in each case as soon as practicable. In any event Arena and its Affiliates shall and shall ensure that its Third Party manufacturers cease use of the allegedly infringing technology as soon as practicable [ ***].

9.5 Invalidity or Unenforceability Defenses or Actions.

(a) Third Party Defense or Counterclaim. If a Third Party asserts, as a defense or as a counterclaim in any action or proceeding with respect to a Field Infringement under Section 9.3, that any Arena Patent or Program Patent is invalid or unenforceable, then Roivant, through the counsel engaged by Roivant pursuant to Section 9.3, shall respond to such defense or defend against such counterclaim (as applicable); provided, that the Parties shall fully discuss and seek to agree on the strategy of such response, considering and accommodating Arena’s and Roivant’s global intellectual property litigation positions in all such decisions that may impact such global positions. The Parties’ reasonable and documented out-of-pocket costs and expenses of conducting any such action or proceeding shall be entirely borne by Roivant.

(b) Third Party Declaratory Judgment or Similar Action. If a Third Party asserts, in a declaratory judgment action or similar action or claim filed by such Third Party, that any Arena Patent or Program Patent is invalid or unenforceable, then the Party first becoming aware of such action or claim shall promptly give written notice to the other Party. With respect to such Arena Patent and Program Patent, Roivant shall engage counsel to defend against such action or claim. The Parties shall consult fully with each other in strategizing, preparing, presenting and conducting any such defense, with Roivant having the final decision (regardless of whether or not Roivant is a party to such defense), which it shall exercise in good faith. Each Party shall cooperate fully with the other Party with respect to such defense, including being joined as a party defendant or joining the other Party as a party defendant in such defense and providing access to relevant documents and other evidence and making its employees available at reasonable business hours. The Parties’ reasonable and documented out-of-pocket costs and expenses of defending any such action or proceeding shall be [***].

9.6 Consent for Settlement. Except as set forth in this Section 9.6, neither Party shall enter into any settlement or consent judgment or other voluntary final disposition of an action or proceeding under Section 9.3 or Section 9.5 without the prior written consent of the other Party, which consent shall not be unreasonably conditioned, withheld or delayed. A settlement or consent judgment or other voluntary final disposition of an action or proceeding brought by a Party under Section 9.3 or Section 9.5 may be entered into without the consent of the other Party if (a) such settlement, consent judgment, or other final disposition does not admit the invalidity or unenforceability of any Arena Patent or Program Patent, and (b) any rights granted to a Third Party to continue any activity upon which such action or proceeding was based in such settlement, consent judgment, or other final disposition is limited to the Third Party’s product or activity that was the subject of such action.

9.7 Patent Term Extensions. The Parties shall discuss and recommend for which, if any, of the Patents within the Arena Patents and the Program Patents the Parties should seek Patent Term Extensions. Roivant shall have the final decision-making authority with respect to applying for any such Patent Term Extensions for the Arena Patents and the Program Patents, and shall act with reasonable promptness in light of the development stage of each Product to apply for any such Patent Term Extensions, where it so elects; provided, that (a) Roivant shall consult with Arena in good faith to determine which such Arena Patent or Program Patent should be the subject of efforts to obtain a Patent Term Extension, and (b) with respect to seeking exclusivity for a Product under FFDCA Section 505A(b) or (c) or any similar laws or regulations of a country, Roivant shall be responsible for seeking and using Commercially Reasonably Efforts to obtain such exclusivity and have final decision-making with respect thereto. Arena shall cooperate fully with Roivant in making such filings or actions, for example and without limitation, by making available all required regulatory

data and information and executing any required authorizations to apply for such Patent Term Extension. All expenses incurred in connection with activities of each Party with respect to the Arena Patents and Program Patents for which Roivant seeks Patent Term Extensions pursuant to this Section 9.7 shall be [*** ].

9.8 Patent Listings. Roivant shall consult with Arena in the planning and decisions regarding listing the applicable Arena Patents and the applicable Program Patents with the applicable Regulatory Authorities for Product and shall consider in good faith comments from Arena regarding such listing, including all so-called “Orange Book” listings required under the Hatch-Waxman Act in the United States and equivalent listings in other countries; provided, that Roivant shall have final decision-making authority regarding which Arena Patents and Program Patents to list and shall maintain such listings. The costs of all “Orange Book” (and any equivalent) filings with respect to any Product shall be [***].

9.9 Product Domain Names. Within sixty (60) days following the Effective Date, Arena shall transfer the Product Domain Names to Roivant. Roivant shall have the right, but not the obligation, at its sole cost to maintain the registration of the Product Domain Names, and to register and maintain any additional domain names related to Compound or Product in its sole discretion. Roivant shall notify Arena prior to abandoning any of the Product Domain Names and Arena shall have the right, at its own cost, to continue maintaining such Product Domain Names; provided, that if Roivant does abandon any of the Product Domain Names, Roivant shall no longer have the right to use such Product Domain Names under this Agreement.

9.10 Product Trademarks. Roivant shall have the responsibility to select Trademarks for the Commercialization of Product (each, a “ Product Trademark ”). Roivant or its Affiliates shall own all right, title, and interest in and to Product Trademarks, all corresponding trademark applications and registrations thereof, and all common law rights thereto. All goodwill of the business associated with or symbolized by Product Trademarks shall inure to the benefit of Roivant. Roivant shall, control the registration, prosecution, maintenance and enforcement of Product Trademarks with respect to each Product at Roivant’s expense. Arena may display Product Trademarks on Arena’s and its Affiliates’ websites, press releases, presentations and SEC filings in a form consistent with Roivant’s brand style guidelines provided that each such web site content, press release, presentation or SEC filing is made in accordance with the applicable provisions of Sections 8.3, 8.5 and 8.6.

ARTICLE 10

REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1 Mutual Representations, Warranties and Covenants. Each Party hereby represents and warrants to the other Party, as of the Effective Date, and covenants as follows:

(a) Duly Organized. Such Party (i) is a corporation or limited liability company, with restricted liability, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and (ii) is qualified to do business and is in good standing as a foreign corporation or organization in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and failure to have such qualification would prevent such Party from performing its obligations under this Agreement.

(b) Due Authorization; Binding Agreement. The execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary corporate or organizational action. This Agreement is a legal and valid obligation binding on such Party and enforceable in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered in the proceeding at law or equity. The execution, delivery and performance of this Agreement by such Party does not: (i) violate any law, rule, regulation, order, writ, judgment, decree, determination or award of any court, governmental body or administrative or other agency having jurisdiction over such Party; or (ii) conflict with, or constitute a default under, any agreement, instrument or understanding a court or administrative order, oral or written, to which such Party is a party or by which it is bound.

(c) Consents. Such Party has obtained, or is not required to obtain, or prior to performance will obtain, the consent, approval, order or authorization of any Third Party, or has completed, or is not required to complete, or prior to performance will complete, any registration, qualification, designation, declaration, or filing with, any Regulatory Authority or other governmental authority, in connection with the execution and delivery of this Agreement and the performance by such Party of its obligations under this Agreement.

(d) No Conflicting Grant of Rights. Such Party has the right to grant (or cause its Affiliates to grant) the rights granted by such Party to the other Party under this Agreement and has not granted any rights to any Person that are in conflict with the rights granted by such Party to the other Party under this Agreement.

(e) Debarment. Such Party is not debarred under the FFDCA or listed on either Excluded List and it does not, and shall not during the Term, employ or use the services of any Person who is debarred or listed on either Excluded List, in connection with the development, manufacture or Commercialization of Product. In the event that either Party becomes aware of the debarment or threatened debarment of, or listing or threatened listing on either Excluded List of, any Person providing services to such Party, including the Party itself and its Affiliates, contractors, licensees, or distributors, that directly or indirectly relate to activities under this Agreement, the other Party shall be immediately notified in writing.

10.2 Representations, Warranties and Covenants of Arena. Arena represents and warrants to Roivant, as of the Effective Date, and hereby (where applicable) covenants to Roivant:

(a) Patent Rights. The Arena Patents existing as of the Effective Date are set forth on Exhibit B attached hereto (“ Existing Arena Patents ”). Arena’s Affiliate, Arena Pharmaceuticals, Inc., is the sole and exclusive owner of the Existing Arena Patents. Arena and its Affiliates have the exclusive right under the Arena Patents to develop, manufacture and Commercialize Compounds and Products in the Field, subject to the rights granted to Roivant pursuant to this Agreement. The Existing Arena Patents are not subject to any liens, mortgages, encumbrances, pledges or security interests, or, to the Knowledge of Arena, claims of ownership, by any Third Party. To the Knowledge of Arena, the Existing Arena Patents have been and are being diligently prosecuted before the patent office in each applicable country in accordance with Applicable Laws. To the Knowledge of Arena, the Existing Arena Patents have been filed and maintained in accordance with Applicable Laws. All applicable fees owed with respect to the prosecution and maintenance of the Existing Arena Patents have been paid on or before the due date for payment to the extent necessary to prevent the irrevocable abandonment of the Existing Arena Patents. To the Knowledge of Arena, there is no infringement or threatened infringement of the Existing Arena Patents by any Person.

(b) Patent Status. As of the Effective Date, (i) all issued Arena Patents are in full force and effect and subsisting, and have not been declared or adjudicated to be invalid or unenforceable; (ii) to the Knowledge of Arena, none of the Arena Patents is currently involved in any interference, reissue, reexamination, or opposition proceeding; and (iii) neither Arena nor any of its Affiliates has received any written notice from any Person, or has Knowledge, of any such actual or threatened proceeding.

(c) Non-Action or Claim. As of the Effective Date, there are no pending, or threatened in writing, adverse actions, suits, claims, or formal governmental investigations by or against Arena or any of its Affiliates in or before any court, Regulatory Authority or other governmental authority with respect to a Compound, including in connection with the conduct of any clinical trials or manufacturing activities with respect thereto. As of the Effective Date, there are no material unsatisfied judgments or outstanding orders, injunctions, decrees, stipulations or awards (whether rendered by a court, an administrative agency or by an arbitrator) against Arena (or any of its Affiliates) with respect to a Compound.

(d) No Conflicting Agreement. Neither Arena nor any of its Affiliates has entered into any contract, whether written or oral, that granted any Third Party the right to develop, promote, market or sell a Compound or otherwise assigned, transferred, licensed, conveyed or otherwise encumbered in a manner that would prevent Roivant from exercising its rights under this Agreement.

(e) Authority . Arena and/or its Affiliates have the full and legal right and authority to grant Roivant the license under Section 3.3(c) and to appoint Roivant as the exclusive distributor for the Product under Section 2.1.

(f) Prior Development and Manufacture . To the Knowledge of Arena, the preclinical and clinical development of the Initial Compound and Initial Product prior to the Effective Date and the manufacture of the Initial Compound and Initial Product used in such development was performed in compliance in all material respects with Applicable Laws.

(g) No Blocking Patents. To the actual knowledge of Arena’s and its Affiliates’ in-house patent attorneys and patent agents, no issued Patent owned by a Third Party as of the Effective Date would be infringed by the development, manufacturing or commercialization activities of the Initial Product contemplated to be conducted under this Agreement as of the Effective Date.

(h) Government Funding. None of the Arena Patents or Arena Know-How existing as of the Effective Date is subject to any funding agreement with any government or governmental agency.

(i) Additional Legal Compliance. No governmental authority has commenced or, to the Knowledge of Arena, threatened to initiate any action to enjoin production of a Compound at any Facility, nor has Arena or any of its Affiliates or, to the Knowledge of Arena, any of its contractors, received any written notice thereof.

10.3 Representations, Warranties and Covenants of Roivant. Roivant represents and warrants to Arena that, as of the Effective Date, and hereby (where applicable) covenants to Arena:

(a) No Conflicting Agreement. Neither Roivant nor any of its Affiliates has entered into any contract that would, and shall not enter into during the Term any such agreement that would, conflict with its obligations, or prevent or impair its performance, under this Agreement.

(b) Non-Action or Claim. As of the Effective Date, there are no pending, or threatened in writing, adverse actions, suits, claims, or formal governmental investigations by or against Roivant or any of its Affiliates in or before any court, Regulatory Authority or other governmental authority with respect to Roivant’s marketing, promotion or sale of pharmaceutical products that would materially negatively affect Roivant’s ability to perform its obligations under this Agreement.

(c) No Blocking Patents. To Roivant’s Knowledge, Roivant does not own or control any Patents as of the Effective Date that would be infringed by Arena’s conduct of the development or manufacturing activities contemplated to be conducted under this Agreement as of the Effective Date.

10.4 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL SUCH OTHER WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY OF PATENTS, OR THE PROSPECTS OR LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OF THE PRODUCT.

ARTICLE 11

INDEMNIFICATION

11.1 Indemnification of Arena. Roivant shall defend, indemnify and hold harmless each of Arena, its Affiliates, and its and their respective directors, officers, stockholders and employees (collectively, the “ Arena Indemnitees ”) from and against any and all losses, liabilities, damages, penalties, fines, costs and expenses (including reasonable attorneys’ fees and other expenses of litigation) (“ Losses ”) from any claims, actions, suits or proceedings brought by a Third Party, including investigation by a Regulatory Authority, (each, a “ Third Party Claim ”) against any Arena Indemnitee to the extent arising from, based upon or occurring as a result of: (a) the (i) negligence or willful misconduct of or (ii) violation of Applicable Laws by, in each case ((i) and (ii)), Roivant or any of its Affiliates or its or their respective subcontractors in performing any activity contemplated or permitted by this Agreement; (b) any breach or default by Roivant (or any of its Sub-distributors or its or their Affiliates) of this Agreement or the Quality Agreement; (c) any Product Liability Claim, (d) Roivant’s or any of its Sub-distributors’ or its or their Affiliates’ Commercialization, development, use, handling, storage, administration or other exploitation of Product; (e) subject to Section 9.4, infringement or violation of any Patents or other intellectual property rights of any Third Party relating to any Compound or Product by or behalf of Arena or its Affiliates and occurring after the Effective Date with respect to the performance of Arena’s obligations under this Agreement (other than by the manufacturing activities undertaken by or on behalf of Arena that (i) are generally applicable to pharmaceutical products and not specific to a Compound or Product or (ii) are not requested or approved by Roivant); or (f) Product manufactured according to the Product Warranty by or on behalf of Arena or its Affiliates (including by a Third Party contractor of Arena or its Affiliates); except, in each case, that the foregoing indemnification obligations shall not apply to the extent any such Third Party Claim falls within the scope of the indemnification obligations of Arena set forth in Section 11.2, as to which Third Party Claim each Party shall indemnify the other Party to the extent of its liability with respect to the Losses applicable to such Third Party Claim.

11.2 Indemnification of Roivant. Arena shall defend, indemnify and hold harmless each of Roivant, its Affiliates, and its and their respective directors, officers, stockholders and employees (collectively, the “ Roivant Indemnitees ”) from and against any and all Losses from any Third Party Claims against any Roivant Indemnitee to the extent arising from, based on or occurring as a result of: (a) the (i) negligence or willful misconduct of or (ii) violation of Applicable Laws by, in each case ((i) and (ii)), Arena or any of its Affiliates or its or their respective subcontractors in performing any activity contemplated or permitted by this Agreement (for clarity, other than related to Product Liability); or (b) any breach or default by Arena (or any of its Affiliates) of this Agreement or the Quality Agreement, including failure of any Product manufactured by or behalf of Arena or its Affiliates (including by a Third Party contractor of Arena or its Affiliates) to comply with the Product Warranty; except, in each case, that the foregoing indemnification obligations shall not apply to the extent any such Third Party Claim falls within the scope of the indemnification obligations of Roivant set forth in Section 11.1, as to which Third Party Claim each Party shall indemnify the other Party to the extent of its liability with respect to the Losses applicable to such Third Party Claim.

11.3 Procedure.

(a) A Party that intends to exercise its rights to defense, indemnity or hold harmless under this Article 11 (the “ Indemnitee ”) shall promptly notify the indemnifying Party (the “ Indemnitor ”) in writing of any Third Party Claim in respect of which the Indemnitee intends to exercise such rights. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim shall only relieve the Indemnitor of its obligations under this Article 11 if and to the extent the Indemnitor is actually prejudiced thereby. The Indemnitee shall provide the Indemnitor with reasonable assistance, at the Indemnitor’s expense, in connection with the defense of the Third Party Claim. The Indemnitor shall have the right to assume and conduct the defense of the Third Party Claim with counsel of its choice. The Indemnitee may participate in and monitor such defense with counsel of its choice, which shall be at its own expense. The Indemnitor shall not settle any Third Party Claim without the prior written consent of the Indemnitee, not to be unreasonably conditioned, withheld or delayed, unless the settlement involves only the payment of money by the Indemnitor and does not involve any admission of liability or wrongdoing on the part of any Arena Indemnitees or Roivant Indemnitees, as applicable. So long as the Indemnitor is defending the Third Party Claim, the Indemnitee shall not settle such Third Party Claim without the prior written consent of the Indemnitor, unless Indemnitee releases Indemnitor for all liability for such settlement.

(b) The assumption of a defense by the Indemnitor shall not be deemed an admission that the Indemnitor has an obligation to defend, indemnify or hold harmless an Arena Indemnitee or Roivant Indemnitee, as applicable, from and against any Loss from a Third Party Claim. If the Indemnitor assumes and conducts the defense

of a Third Party Claim as provided above, and if it is ultimately determined that the Indemnitor was not obligated to indemnify, defend, or hold harmless an Arena Indemnitee or Roivant Indemnitee, as applicable, from and against any Loss from such Third Party Claim, the Indemnitee shall reimburse the Indemnitor for any and all reasonable and verifiable costs and expenses (including attorneys’ fees and costs of suit) and all other Losses incurred by the Indemnitor in connection with such Third Party Claim.

(c) If the Indemnitor does not assume and conduct the defense of a Third Party Claim as provided above, (i) the Indemnitee may defend against such Third Party Claim; provided, that the Indemnitee shall not settle any Third Party Claim without the prior written consent of the Indemnitor, not to be unreasonably conditioned, withheld or delayed and (ii) if it is ultimately determined that the Indemnitor was obligated to indemnify, defend, or hold harmless an Arena Indemnitee or Roivant Indemnitee, as applicable, from and against any Loss from such Third Party Claim, the Indemnitor shall reimburse the Indemnitee for any and all reasonable and verifiable costs and expenses (including attorneys’ fees and costs of suit) and all other Losses incurred by the Indemnitee in connection with such Third Party Claim.

11.4 Insurance. Each Party, at its own expense, shall maintain insurance required by this section with an insurance carrier(s) that has a minimum rating of A.M. Best’s rating of A-7. Each party shall maintain general liability insurance in the minimum amount of [***] per occurrence and [ *** ] in the aggregate, and [ *** ] umbrella coverage. In addition, commencing no later than the first enrollment of a patient in a clinical trial sponsored by Roivant for a Product, Roivant shall maintain clinical and product liability insurance in the minimum amount of [ *** ] per occurrence and in the aggregate: Clinical trial insurance shall be required to be maintained at the same level for [ *** ] years after the last clinical trial for a Product is conducted; product liability insurance shall be maintained at the same level for not less than [ *** ] years after termination of this Agreement. Each Party shall provide the other Party with written notice at least [ *** ] days prior to any cancellation, nonrenewal or material change in the insurance and, commencing no later than the first enrollment of a patient in a clinical trial sponsored by Roivant for a Product, shall name the other Party as an additional insured with respect to such insurance. Each Party shall provide a certificate of insurance evidencing such coverage to the other Party upon request. It is understood that such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under this Article 11.

ARTICLE 12

TERM AND TERMINATION

12.1 Term. Unless earlier terminated pursuant to this Article 12, this Agreement shall commence on the Effective Date and shall continue in full force and effect on a Product-by-Product and country-by-country basis until the later of (i) expiration of all issued Arena Patents and Program Patents covering such Product in such country and (ii) 12 years after the First Commercial Sale of such Product in such country (such period, the “ Initial Term ”). Upon expiration of the Initial Term, this Agreement shall continue in full force and effect on a Product-by-Product and country-by-country basis until the Agreement is terminated pursuant to this Article 12 (such period, the “ Extended Term ” and the Initial Term together with the Extended Term, the “ Term ”).

12.2 Termination by Mutual Agreement. This Agreement may be terminated by mutual written agreement of the Parties.

12.3 Termination for Convenience. Roivant may terminate this Agreement on a Compound-by-Compound basis or in its entirety upon 90 days’ prior written notice to Arena.

12.4 Termination for Material Breach. This Agreement may be terminated by a Party upon written notice by such Party to the other Party if the other Party is in material breach of this Agreement and has not cured such breach within [ *** ] days (or [ *** ] days with respect to any payment breach) after notice from the terminating Party detailing the specific material breach that is alleged. Any such termination shall become effective at the end of such [ ***] day (or [ ***]-day with respect to any payment breach) period unless the breaching Party has cured any such breach prior to the end of such period.

12.5 Termination for Bankruptcy. This Agreement may be terminated by a Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however, in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within [ *** ] days after the filing thereof.

12.6 Termination for Patent Challenge. Arena shall have the right to terminate this Agreement immediately upon written notice to Roivant if Roivant or any of its Affiliates directly or indirectly commences, or knowingly and materially assists or encourages any Third Party to commence or conduct, any interference, observation, inter-partes review, re-examination, opposition or other proceeding with respect to, challenges the validity, enforceability or claim construction (other than disputes under this Agreement between the Parties solely with respect claim coverage for Compounds and Products) of, or opposes any extension of or the grant of a market exclusivity or supplementary protection certificate with respect to, any Arena Patent. Arena shall also have the right to terminate this Agreement immediately upon written notice to Roivant if (a) a Sub-distributor of Roivant directly or indirectly commences, or knowingly and materially assists or encourages any Third Party to commence or conduct, any interference, observation, inter-partes review, re-examination, opposition or other proceeding with respect to, challenges the validity, enforceability or claim construction of, or opposes any extension of or the grant of a market exclusivity or supplementary protection certificate with respect to, any Arena Patent and (b) Roivant does not, promptly after becoming aware of such circumstances, terminate the Sub-distributor’s rights with respect to Compounds and Products if such challenge or other proceeding has not been withdrawn or terminated within [ *** ] days thereafter.

12.7 Adjudication of Material Breach.

(a) In the event of any dispute, controversy or claim arising from or related to a material breach of this Agreement or termination pursuant to Section 12.4 (in each case, a “ Dispute ”), the Parties shall attempt to resolve such Dispute in accordance with Section 14.1. If such Dispute is not resolved in accordance with Section 14.1 and a Party wishes to pursue the matter, each such Dispute that is not an Excluded Claim shall be resolved by binding arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ ICC ”) as then in effect (the “ ICC Rules ”) as such rules may be modified by this Section 12.7 or agreement of the Parties, and judgment on the arbitration award may be entered in any court having jurisdiction thereof. The decision rendered in any such arbitration will be final and not appealable, absent manifest error. If either Party intends to commence binding arbitration of such Dispute, such Party shall file a request for arbitration with the ICC and provide written notice to the other Party informing the other Party of such intention and the issues to be resolved, including the amount of damages that the non-breaching Party is entitled to receive if it elects to terminate this Agreement or the amount of damages that the non-breaching Party is entitled to receive if it does not elect to terminate this Agreement. Within [ *** ] days after the receipt of such notice, the other Party may, by written notice to the Party initiating binding arbitration, add any related issues to be resolved.

(b) The arbitration shall be conducted by a panel of three arbitrators experienced in the pharmaceutical business, each of whom shall not be a current or former employee, consultant or director, or a then-current stockholder, of either Party or any of its Affiliates (the “ Panel ”). Within [ *** ] days after receipt of the original notice of binding arbitration (the “ Notice Date ”), each Party shall nominate one arbitrator for the ICC’s confirmation (with the right to nominate a replacement arbitrator until an arbitrator nominated by such Party is confirmed by the ICC) and such two arbitrators shall jointly nominate the third arbitrator for the ICC’s confirmation; provided that if the two arbitrators nominated by the Parties are unable or fail to agree upon the third arbitrator within such period, the third arbitrator shall be appointed by the ICC. The place of arbitration shall be New York, New York, USA. The language of the arbitration shall be English.

(c) Within [ *** ] days after the appointment and selection of the Panel, the Parties shall reach an agreement upon and thereafter shall follow the arbitration procedures, including limits on discovery, ensuring that the arbitration will be concluded and the award rendered as expeditiously as possible, but in any event within [ *** ] months from appointment and selection of the Panel. In the event the Parties fail to reach an agreement on procedures, procedures meeting such time limits shall be determined by the Panel and adhered to by the Parties.

(d) All rulings of the Panel shall be in writing and shall be delivered to the Parties within [ *** ] days of the conclusion of the arbitration.

(e) The Panel shall, in rendering its decision, apply the substantive law of the laws of the State of New York, United States, without reference to its conflicts of law principles with the exception of sections 5-1401 and 5-1402 of New York General Obligations Law, and without giving effect to any rules or laws relating to arbitration.

(f) The Panel, in rendering its decision, shall not modify or amend the terms and conditions of this Agreement or determine any issue in a manner that would conflict with the express terms and conditions of this Agreement.

(g) Either Party may apply to the Panel 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 provisional relief necessary to protect the rights or property of that Party pending the arbitration award. Subject to Section 11.3 each Party shall bear its own costs and expenses and attorneys’ fees, and the non-prevailing Party shall pay the full costs of the Panel’s fees and any administrative fees of arbitration.

(h) All proceedings and decisions of the Panel shall be deemed Confidential Information of each of the Parties, and shall be subject to Article 8. Except to the extent necessary to confirm or enforce an award or as may be required by Applicable Laws, neither a Party nor any member of the Panel may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties.

(i) In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the Dispute would be barred by the applicable New York statute of limitations.

(j) As used in this Section, the term “ Excluded Claim ” means a Dispute that concerns (i) the validity, enforceability, claim construction or infringement of a Patent; (ii) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory; or (iii) whether a Party is obligated to indemnify, defend or hold harmless an Arena Indemnitee or Roivant Indemnitee, as applicable, from and against a Third Party Claim under Section 11.1 or Section 11.2, as applicable.

(k) Any relevant time period under this Agreement related to any Dispute, including any cure period with respect thereto, shall be tolled during any dispute resolution proceeding pursuant to this Section 12.7.

ARTICLE 13

EFFECT OF TERMINATION

13.1 Accrued Obligations. The termination of this Agreement, in whole or part, for any reason shall not release either Party from any liability or obligation that, at the time of such termination, has already accrued to such Party or that is attributable to a period prior to such termination, nor will any 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.

13.2 Effects of Termination. If this Agreement is terminated by a Party pursuant to 12.2 (mutual agreement), 12.3 (convenience), 12.4 (material breach), 12.5 (bankruptcy), or 12.6 (patent challenge) the following shall apply to the extent set forth below (in addition to any other rights and obligations under this Agreement with respect to such termination):

(a) Winding-Down of Development Activities. In the event there are any on-going clinical trials or other development work with respect to a Product, Roivant shall wind-down such clinical trials or other development work in an orderly fashion or, at Arena’s election and subject to Section 13.2(c) (and any agreement required under Section 13.2(c)(ii), if applicable), promptly transition such clinical trials or other development work activities to Arena or its designee, including the transfer to Arena of any Development Data then in Roivant’s or its Affiliate’s possession that has not previously been transferred (or developed) by Arena, with due regard for patient safety and the rights of any subjects that are participants in any clinical trials of a Product, and take any actions it deems reasonably necessary or appropriate to avoid any human health or safety problems and in compliance with all Applicable Laws. All expenses incurred from the winding-down or transitioning of the clinical trials or other development work shall be borne by (i) [***] in the event this Agreement is terminated [***]; (ii) [***] in the event this Agreement is terminated [***]; (iii) [***] in the event this Agreement is terminated [*** ].

(b) Inventory .

(i) If Roivant terminates this Agreement pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), at Roivant’s election Roivant and its Sub-distributors, and its and their Affiliates, shall have the right, subject to Section 13.2(b)(ii), to sell off any inventory of Product in its or their possession as of the termination date during a sell-off period of [ *** ] days after the effective date of such termination. Any sales of Product by Roivant and its Sub-distributors, and its and their Affiliates, under this Section 13.2(b)(i) shall be taken into account in calculating Net Sales for purposes of calculating Product Purchase Price under Section 7.3. For clarity, Roivant and its Sub-distributors, and its and their Affiliates, shall not be the sole distributors to sell Product upon the effective date of any termination of this Agreement.

(ii) Upon termination of this Agreement, except in the case of termination by Roivant pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), Arena shall have the right, but not obligation, on written notice to Roivant, to repurchase from Roivant and its Sub-distributors, and its and their Affiliates, quantities of Product remaining in inventory as of the effective date of such termination of this Agreement at the applicable Initial Product Purchase Price paid by Roivant for such Product.

(iii) If Roivant elects not to sell off its remaining inventory of Product in accordance with clause (i) above and provides written notice thereof to Arena within [ *** ] days after the effective date of such termination, Arena shall have the right, but not the obligation, on written notice to Roivant, to repurchase from Roivant and its Sub-distributors, and its and their Affiliates, quantities of Product remaining in inventory as of the effective date of such termination of this Agreement (or, if later, as of the date of receipt by Arena of such notice from Roivant that it elects not to sell of its remaining inventory) at the applicable Initial Product Purchase Price paid by Roivant for such Product.

(c) License to Program Patents, Program Know-How and Product Trademarks; Assignment of Regulatory Filings (including Regulatory Approvals) and Domain Names.

(i) In the event this Agreement is terminated by Roivant pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), then Roivant shall maintain [ ***] any right, title or interest in or to any Program Patents, Program Know-How, Product Trademarks or any Regulatory Filings for Products.

(ii) In the event this Agreement is terminated, except in the case of termination by Roivant pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), then upon Arena’s written request (which request may be given upon notice of termination but in any event prior to the effective date of such termination), promptly after the effective date of such termination, Roivant grants to Arena [ *** ] :

(A) [ *** ] license to Arena (with the right to sublicense [ *** ] to the extent pertaining to Products) under all Program Patents and Program Know-How solely to develop, make, use, sell and commercialize Products. Promptly after Arena’s written request, Roivant shall [*** ].

(B) an assignment and transfer to Arena or its designees (or to the extent not so assignable, Roivant shall take all reasonable actions to make available to Arena or its designee the benefits) of (i) all Regulatory Filings (including INDs, NDAs and Regulatory Approvals) for Products, including any such Regulatory Filings made or owned by Roivant or any of its Sub-distributors, and its and their Affiliates, and (ii) all Product Domain Names. Promptly after Arena’s written request, Roivant shall provide Arena with a complete copy of all Regulatory Filings assigned (or made available), as well as copies of all correspondence with Regulatory Authorities not already provided to Arena, pertaining to Products.

(C) an assignment and transfer to Arena or its designees (or to the extent not so assignable, Roivant shall take all reasonable actions to make available to Arena or its designee the benefits) of all Product Trademarks in connection with Arena’s commercialization of the Product (including all registrations thereof and the associated good will). Promptly after Arena’s written request, Roivant shall [***] and, if requested by Arena, Roivant will [*** ].

(iii) Upon any termination of this Agreement, Roivant promptly shall transfer to Arena all files [ ***] relating to the Arena Patents, and shall execute and deliver all documents and instruments reasonably requested by Arena to effectuate the foregoing.

(d) Commercialization Transition. In the event this Agreement is terminated, except in the case of termination by Roivant pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), Roivant shall, at Arena’s written request, and subject to any agreement required under Section 13.2(c)(ii), if applicable, use Commercially Reasonable Efforts to cooperate with Arena or its designee to effect a smooth and orderly transition of the Commercialization of Products following the effective date of any other termination of this Agreement.

(e) Customer Agreements. Upon the completion of the rights and obligations defined in this Section 13.2, at the written request of Arena, Roivant shall assign to Arena or its designee any Third Party distribution agreements that solely relate to Products, to the extent permitted under each such distribution agreement. In the event such assignment is not requested by Arena or is not permitted under any distribution agreement, then the rights of such Third Party with respect to each Product shall terminate upon termination of Roivant’s rights with respect thereto. Roivant shall use its good faith efforts to include provisions requiring compliance with the foregoing provision in the agreements with applicable Third Parties. Notwithstanding the foregoing, in the event that Roivant terminates this Agreement pursuant to Section 12.4 (material breach) or 12.5 (bankruptcy), Roivant shall have no obligations under this Section 13.2(e) unless and until the Parties agree upon commercially reasonable terms with respect to Roivant’s assignment to Arena or its designee of the Third Party distribution agreements that solely relate to Products.

13.3 Return of Confidential Information . Upon termination of this Agreement, each Party shall promptly return to the other Party, or delete or destroy, all relevant records and materials in such Party’s possession or control containing Confidential Information of the other Party; provided, that such Party may keep one copy of such materials for archival purposes only subject to continuing confidentiality and non-use obligations, and provided further all preclinical and clinical data provided by Arena to Roivant under this Agreement will be returned to Arena and deemed to be the Confidential Information of Arena (notwithstanding Section 8.1).

13.4 Purchase of Binding Order. Upon the termination of this Agreement, the Parties will discuss and negotiate in good faith and agree on the equitable division between the Parties of costs associated with any Product that is the subject of any then-pending Order Commitment that has not been otherwise fulfilled by Arena.

13.5 Survival. Upon termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate, except those described in the following Articles and Sections: Sections 3.3(b), 3.6 (last sentence only), 3.7 (penultimate sentence only), 3.11(b), 5.4, 5.5 (for Sections 5.4 and 5.5, solely with respect to any inventory sold by Roivant, its Sub-distributors or its or their Affiliates, after termination of this Agreement pursuant to Section 13.2(b)(i)), 5.6, 5.8 (for 5.6 and 5.8, solely to the extent related to Products sold by Roivant its Sub-distributors or its or their Affiliates), 6.9, 6.10, 6.11 (for 6.9, 6.10, and 6.11, solely with respect to Finished Product delivered prior to termination), 7.3 (with respect to Product delivered prior to termination only), 7.4, 7.5, 7.6, 7.7, 7.8, Article 8, 9.1, 10.4, 11.1, 11.2, 11.3, 11.4 (to the extent provided therein), 12.7, Article 13, Articles 14, 15.2, 15.3, 15.4(b) (last sentence only), 15.5, 15.6, 15.7, 15.8, 15.9, 15.10, 15.11, 15.12, 15.13, 15.14, 15.15, 15.16, 15.17 and 15.18.

ARTICLE 14

DISPUTE RESOLUTION AND GOVERNING LAW

14.1 Dispute Resolution Process. The Parties recognize that disputes as to certain matters may from time to time arise during the Term that relate to interpretation of a Party’s rights or obligations hereunder or any alleged breach of this Agreement. If the Parties cannot resolve any such dispute within [ *** ] days after written notice of a dispute from one Party to the other, either Party may, by written notice to the other Party, have such dispute referred to the Senior Executives. The Senior Executives shall negotiate in good faith to resolve the dispute within [ *** ] days. During such period of negotiations, any applicable time periods under this Agreement shall be tolled. If the Senior Executives are unable to resolve the dispute within such time period, except any Dispute required to be arbitrated pursuant to Section 12.7, either Party may pursue any remedy available to such Party at law or in equity, subject to the terms and conditions of this Agreement. Notwithstanding anything in this Article 14 to the contrary, Arena and Roivant shall each have the right to apply to any court of competent jurisdiction for appropriate injunctive or provisional relief, as necessary to protect its rights or property.

14.2 Governing Law; Litigation; Exclusive Venue and Service. This Agreement and all questions regarding its existence, validity, interpretation, breach or performance, shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, United States, without reference to its conflicts of law principles with the exception of sections 5-1401 and 5-1402 of New York General Obligations Law. Subject to Section 12.7, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts. Subject to Section 12.7, the Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 15.9 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court. Application of the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from this Agreement.

ARTICLE 15

GENERAL PROVISIONS

15.1 Force Majeure. If the performance of any part of this Agreement by a Party (other than making payment when due) is prevented, restricted, interfered with or delayed by any reason or cause beyond the reasonable control of such Party (including: fire, flood, volcano, embargo, power shortage or failure, acts of war, insurrection, riot, terrorism, strike, lockout or other labor disturbance, shortage of raw materials, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, or storm or like catastrophe, acts of God or any acts, omissions or delays in acting of the other Party or the other Party’s Affiliates) or by compliance with any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government (including changes in the requirements of a Regulatory Authority), whether or not it is later held to be invalid, except to the extent any such injunction, law, order, proclamation, regulation, ordinance, demand or requirement operates to delay or prevent the non-performing Party’s performance as a result of any breach by such Party or any of its Affiliates of any term or condition of this Agreement or the Quality Agreement (an event of “ Force Majeure ”), the Party so affected shall, upon giving written notice to the other Party, be excused from such performance to the extent of such Force Majeure event; provided, that the affected Party shall use good faith diligent efforts to avoid or remove such causes of non-performance and shall continue performance with the utmost dispatch whenever such causes are removed or it is otherwise able to perform its obligations.

(a) Notification. If either Party becomes aware that such an event of Force Majeure has occurred, is imminent or likely, it shall immediately notify the other Party.

(b) Keeping the Other Informed. The Party subject to an event of Force Majeure shall keep the other Party informed as to the progress of overcoming or avoiding the effects of such an event of Force Majeure and of recommending performing the affected obligation.

15.2 Waiver of Breach. Any condition or term of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof. No such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the waiving Party. No delay or waiver by either Party of any condition or term of this Agreement in any one or more instances shall be construed as a further or continuing waiver of such condition or term or of another condition or term of this Agreement. Notwithstanding anything to the contrary in this Section, where Roivant’s approval is required pursuant to this Agreement with respect to [ ***], and such approval is provided by Roivant, then to the extent that [ *** ] of this Agreement, Roivant shall [*** ] in this Agreement [ *** ].

15.3 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments, and to perform all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

15.4 Performance by Affiliates or Subcontractors.

(a) To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations. Either Party may contract with one or more of its Affiliates to perform its obligations hereunder; provided, that the Parties shall remain liable hereunder for the prompt payment and performance of all of their respective obligations hereunder.

(b) Each Party may subcontract its obligations under this Agreement subject to the provisions of this Agreement; provided, that: (i) none of the other Party’s rights hereunder are materially diminished or otherwise materially adversely affected as a result of such subcontracting; (ii) the subcontractor undertakes in writing reasonable and customary obligations of confidentiality and non-use no less stringent than those set forth in this Agreement; (iii) the subcontractor does not have the right to further subcontract such obligation unless agreed by the other Party; (iv) the applicable agreement with such subcontractor assigns all Know-How developed by such subcontractor under the applicable agreement to Roivant or its designee, and requires that all employees of such subcontractor be under written obligation to assign without any additional compensation all such Know-How to Roivant or its designee, (v) the subcontracting Party shall remain responsible and liable for the performance by any subcontractor of its obligations under this Agreement; and (vi) such permitted subcontracting shall not relieve the subcontracting Party of any liability or obligation under this Agreement, except to the extent satisfactorily performed by such subcontractor. In the event a Party performs any of its obligations under this Agreement through a subcontractor, then such Party shall at all times be fully responsible for the performance and payment of such subcontractor.

15.5 Modification. No amendment or modification of any provision of this Agreement shall be effective unless in a prior writing signed by authorized officers of both Parties. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance, or any other matter not set forth in an agreement in writing and signed by authorized officers of both Parties.

15.6 Severability. In the event any provision of this Agreement is held invalid, illegal or unenforceable in any jurisdiction, to the fullest extent permitted by Applicable Laws, (a) the Parties shall negotiate, in good faith and enter into a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and (b) if the rights and obligations of either Party will not be materially and adversely affected, all other provisions of this Agreement shall remain in full force and effect in such jurisdiction. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

15.7 Entire Agreement. This Agreement (including the Exhibits attached hereto) constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes and cancels all previous express or implied agreements and understandings, negotiations, writings and commitments, either oral or written, in respect to the subject matter hereof. Each of the Parties acknowledges and agrees that in entering into this Agreement, and the documents referred to in it, it does not rely on, and shall have no remedy in respect of, any statement, representation, warranty or understanding (whether negligently or innocently made) of any Person (whether party to this Agreement or not) other than as expressly set out in this Agreement. Nothing in this clause shall, however, operate to limit or exclude any liability for fraud.

15.8 Language. The language of this Agreement is English. Any translation of this Agreement in another language shall be deemed for convenience only and shall never prevail over the original English version. All reporting and provision to Arena of documents, including Regulatory Filings and the like, by Roivant shall include English translations of the applicable documents and writings, but provided that source data (e.g., case report forms, hospital records, clinical and office charts, laboratory notes, etc.) need not be translated and may be provided in the original language of the document.

15.9 Notices. Any notice or communication required or permitted under this Agreement shall be in writing in the English language, delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), or sent by internationally-recognized overnight courier to the following addresses of the Parties (or such other address for a Party as may be at any time thereafter specified by like notice):



To Arena: Arena Pharmaceuticals GmbH Untere Brühlstrasse 4 4800 Zofingen Switzerland Facsimile: 41 62 746 7505 Attention: General Manager	To Roivant: Roivant Sciences Ltd. 2 Clarendon House Hamilton HM11 Bermuda Facsimile: +1 (441) 292-4720 Attention: Senior Vice President, Finance and Operations
with a copy to: Arena Pharmaceuticals, Inc. 6154 Nancy Ridge Drive San Diego, CA 92121 USA Facsimile: (858) 677-0065 Attention: General Counsel

Any such notice shall be deemed to have been given: (a) when delivered if personally delivered, (b) on the third day after dispatch if sent by confirmed facsimile, or (c) on the sixth day after dispatch if sent by internationally-recognized overnight courier. Notices hereunder will not be deemed sufficient if provided only between or among each Party’s representatives on the Joint Steering Committee. This Section 15.9 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under this Agreement.

15.10 Assignment. This Agreement shall not be assignable or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party to any Third Party without the prior written consent of the other Party, except that either Party may assign or otherwise transfer this Agreement without the consent of the other Party to an Affiliate or to a successor in interest that acquires all or substantially all of the business or assets of the assigning Party to which this Agreement relates, whether by merger, acquisition, sale of stock, sale of assets or otherwise; provided that the successor in interest assumes this Agreement in writing or by operation of law. Subject to the foregoing, this Agreement shall inure to the benefit of each Party, its successors and permitted assigns. Any assignment of this Agreement in contravention of this Section 15.10 shall be null and void.

15.11 No Partnership or Joint Venture. Each Party is an independent contractor under this Agreement. Nothing contained herein shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties or any of their agents or employees, or any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party. The Parties shall operate their own businesses separately and independently and they shall hold themselves out as, act as, and constitute independent contractors in all respects and not as principal and agent, partners or joint venturers. The Parties shall each be responsible for fulfilling their own obligations under this Agreement, and they shall not have control or responsibility over the actions of the other Party. The Parties shall make and receive only such payments as are required under this Agreement, and shall not share in, or participate in, the business operations of the other Party. Neither Party shall have any express or implied power to enter into any contracts or commitments nor to incur any liabilities in the name of, or on behalf of, the other Party, nor to bind the other Party in any respect whatsoever.

15.12 Interpretation. The captions to the several Articles and Sections of this Agreement are not a part of this Agreement but are included for convenience of reference and shall not affect its meaning or interpretation. In this Agreement: (a) the word “including” shall be deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall include the plural and vice versa; (c) masculine, feminine and neuter pronouns and expressions shall be interchangeable; (d) except where the context requires otherwise, “or” has the inclusive meaning represented by the phrase “and/or”; and (e) a reference to any agreement includes any supplements and amendments to such agreement. Each accounting term used herein that is not specifically defined herein has the meaning given to it under GAAP consistently applied, but only to the extent consistent with its usage and the other definitions in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party. When this Agreement refers to actions performed or Know-How or intellectual property made, created, or discovered by a Party or its Affiliate under this Agreement, such reference is understood to apply also to actions performed or Know-How or intellectual property made, created, or discovered by one or more employees, consultants, agents or subcontractors (including, in the case of Roivant and its Sub-distributors, and its and their Affiliates) of such Party or its Affiliate.

15.13 References. Unless otherwise specified, (a) references in this Agreement to any Article, Section or Exhibit means references to such Article, Section or Exhibit of this Agreement and (b) references in any section to any clause are references to such clause of such section.

15.14 Counterparts; Electronic Signature Pages. This Agreement may be executed in any number of counterparts each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile or other electronic signatures and such signatures shall be deemed to bind each Party as if they were original signatures.

15.15 Limitation of Liability. EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 8, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; PROVIDED HOWEVER, THAT THIS SECTION 15.15 SHALL NOT BE CONSTRUED TO LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 11. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE AGGREGATE LIABILITY OF ARENA TO ROIVANT FOR ANY AND ALL CLAIMS AND LOSSES UNDER OR IN CONNECTION WITH THIS AGREEMENT (EXCEPT TO THE EXTENT CAUSED BY [***] SHALL NOT EXCEED THE AGGREGATE AMOUNT PAID BY ROIVANT TO ARENA UNDER THIS AGREEMENT [***].

15.16 Equitable Relief; Specific Performance.

(a) The Parties acknowledge and agree that the obligations and restrictions set forth in Article 8 are reasonable and necessary to protect the legitimate interests of the other Party and that such other Party would not have entered into this Agreement in the absence of such obligations and restrictions, and that any breach or threatened breach of any provision of Article 8 will result in irreparable injury to such other Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach of any provision of Article 8 the non-breaching Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such non-breaching Party may be entitled in law or equity. Each Party hereby waives any requirement that the other Party post a bond or other security as a condition for obtaining any such relief. Nothing in this Section 15.16 is intended, or should be construed, to limit either Party’s right to equitable relief or any other remedy for a breach of any other provision of this Agreement.

(b) Arena acknowledges and agrees that Arena’s obligations under Sections 3.9 and 3.10 and Article 6 are each unique and that Roivant would not have entered into this Agreement in the absence of such obligations, and that any breach or threatened breach of Section 3.9 or 3.10 or Article will result in irreparable injury to Roivant for which damages will not be an adequate remedy. Accordingly, Roivant shall be entitled to specific performance of Section 3.9 or 3.10 and Article 6.

15.17 No Benefit to Third Parties. The representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.

15.18 Cumulative Rights. Except as expressly provided herein, the Parties’ respective rights under the various provisions of this Agreement shall be construed as cumulative, and no one of them is exclusive of the other or exclusive of any rights allowed by Applicable Laws.

ARTICLE 16

COMPLIANCE WITH LAW

16.1 Generally. Each Party covenants that it shall, and shall cause its Affiliates to, comply with Applicable Laws with respect to performing its obligations or exercising its rights under this Agreement. Each Party shall, and shall cause its Affiliates (and, in the case of Roivant, Sub-distributors), to comply with the Foreign Corrupt Practices Act of 1977, as amended (“ FCPA ”), and all other applicable anti-corruption laws and regulations, and each Party represents and warrants that it and its Affiliates have (and, in the case of Roivant, that it will insure that its Sub-distributors have) adequate procedures in place to support their compliance with the FCPA and all other applicable anti-corruption laws and regulations.

16.2 Securities Laws. Each of the Parties acknowledges that it is aware that the securities laws of the United States and other countries prohibit any Person who has material non-public information about a publicly listed company from purchasing or selling securities of such company or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.

16.3 Certain Payments. Each of the Parties acknowledges that it is aware that the United States and other countries have stringent laws that prohibit persons directly or indirectly to make unlawful payments to, and for the benefit of, government officials and related parties to secure approvals or permission for their activities.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.



ARENA PHARMACEUTICALS GMBH		ROIVANT SCIENCES LTD.
By:	/s/ Daniel Müller	By:	/s/ Marianne L. Romeo
Name:	Daniel Müller	Name:	Marianne L. Romeo
Title:	General Manager & Managing Director	Title:	Head, Global Transactions & Risk Management



By:	/s/ Silke Heuser
Name:	Silke Heuser
Title:	Head Human Resources

[Signature Page to Marketing and Supply Agreement]

EXHIBIT A
Compound Structure

1- [ 3-(4-Bromo-2-methyl-2H-pyrazol-3-yl)-4-methoxy-phenyl ] -3-(2,4-difluoro-phenyl)-urea

EXHIBIT B
Existing Arena Patents

[***] PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]

]

[***]PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]

]

[***] PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]

[***] PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]			[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]

]

[***] PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]

[***] PATENT FAMILY



REF. NO.	COUNTRY	SERIAL NO.	PATENT NO.	ISSUE DATE	STATUS
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]
[***]	[***]	[***]			[***]

EXHIBIT C

Product Domain Names

Domain Names for nelotanserin existing as of the Effective Date:

[***]

EXHIBIT D

Product for Phase 2 Trials Under Section 3.9(b)

Finished Product: [***]

Placebo: [*** ]

EXHIBIT E

Documents and Data

All of the following to the extent not previously provided to Roivant:

[*** ]

EXHIBIT F

IND Transfer Letters

Arena Letterhead

May [ __ ] , 2015

[ ADDRESS ]

Re: IND No. 73405 ([***]);


•	Notice of IND Transfer of Ownership

Dear Dr. [ __ ] ,

Arena Pharmaceuticals, Inc. at 6154 Nancy Ridge Drive, San Diego, CA 92121 hereby transfers ownership of IND No. 73405, including any and all rights and responsibilities thereunder, to Roivant Sciences Ltd. (Clarendon House, 2 Church Street, Hamilton HM11, Bermuda) effective as of 12 Noon on May [ __ ] , 2015. Roivant Sciences Ltd., agrees to accept the transfer of ownership of all rights to this application and accepts all Sponsor responsibilities attendant to IND No. 73405 as described in 21 CRF 312 Part D.

Effective as of May [ __ ] , 2015, Roivant Sciences Ltd.’s US Agent and the regulatory contact for IND No. 73405 is provided below:

Roivant Sciences, Inc.

Attn : William Symonds, PharmD

SVP, Clinical Research

1441 Broadway, 3 ^rd Floor

New York, NY 10018 USA

(919) 597-0679

bill.symonds@roivant.com

This is an electronic submission and has been scanned for computer viruses using Symantec Anti-virus software. If you have technical questions on the electronic submission, please contact [ Name ] , [ Title ] at [ Telephone ] ( [ email ] ).

Sincerely,

[ Name ]

[ Title ]

[ Arena Pharmaceuticals, Inc. ]

[ Address and contact info ]]

[ROIVANT LETTERHEAD]

[ May [ __ ] , 2015

[ ADDRESS ]

Re: IND No. 73405 ([***]);


•	Notice of Acceptance of IND Transfer of Ownership

Dear Dr. [ __ ] :

Please reference IND No. 73405 ([***]), submitted on May [ __ ] , 2015. In that submission, Arena Pharmaceuticals, Inc. provided notice to the FDA that ownership of the IND was being transferred from Arena Pharmaceuticals, Inc. to Roivant Sciences Ltd.

This submission confirms the transfer of ownership of IND No. 73405 from Arena Pharmaceuticals, Inc. to Roivant Sciences Ltd., effective as of 12 Noon on May [ __ ] , 2015. Roivant Sciences Ltd., hereby accepts all rights to this application and accepts all Sponsor responsibilities attendant to IND No. 73405 as described in 21 CRF 312 Part D. We further state that we have received a complete copy of the IND application, including records that are required to be reported and kept under 21 CFR 312.33

Roivant Sciences Ltd. company information is given below:

Roivant Sciences Ltd.

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

Effective May [ __ ] , 2015, Roivant Sciences Ltd.’s US Agent and regulatory contact for IND No. 73405 is given below:

Roivant Sciences, Inc.

Attn : William Symonds, PharmD

SVP, Clinical Research

1441 Broadway, 3 ^rd Floor

New York, NY 10018 USA

(919) 597-0679

bill.symonds@roivant.com

[ If you have questions or require additional information regarding this submission, please do not hesitate to contact the Roivant Sciences Ltd.’s US agent and regulatory contact listed above using their phone number and e-mail address.

This submission is being provided electronically via the Electronic Submission Gateway (ESG). Please see the “Guide to FDA Reviewer” for complete details regarding the electronic submission. If you have technical questions on the electronic submission, please contact the Roivant Sciences Ltd.’s regulatory contact listed above using their phone number and e-mail address.

Sincerely,



Marianne Romeo Authorized Signatory For and On Behalf of Roivant Sciences Ltd.

Trade secret and/or confidential commercial information contained in this submission is exempt from public disclosure to the full extent provided under law.

Exhibit 31.1

CERTIFICATION

I, Vivek Ramaswamy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Axovant Sciences Ltd.;

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)) 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) 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

c) 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: February 9, 2016	By:	/s/ Vivek Ramaswamy
		Vivek Ramaswamy
		Principal Executive Officer

Exhibit 31.2

CERTIFICATION

I, Gregory Weinhoff, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Axovant Sciences Ltd.;

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: February 9, 2016	By:	/s/ Gregory Weinhoff
		Gregory Weinhoff
		Principal Financial 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 on Form 10-Q of Axovant Sciences Ltd. (the “Company”) for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Vivek Ramaswamy, Principal Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: February 9, 2016	By:	/s/ Vivek Ramaswamy
		Vivek Ramaswamy
		Principal Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Axovant Sciences Ltd. (the “Company”) for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gregory Weinhoff, Principal Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: February 9, 2016	By:	/s/ Gregory Weinhoff
		Gregory Weinhoff
		Principal Financial Officer