NABRIVA THERAPEUTICS PLC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS (form 10-K)

You should read the following discussion and analysis of our financial condition
and results of operations together with our historical consolidated financial
statements and the related notes thereto appearing elsewhere in this Annual
Report. The objective of the following discussion and analysis is to provide
material information relevant to your assessment of the financial condition and
results of operations of our company, including an evaluation of the amounts and
certainty of cash flows from operations and from outside sources, and to better
allow you to view our company from management’s perspective. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Annual Report, including information with respect to our plans and strategy
for our business and related financing, includes forward-looking statements that
involve risks and uncertainties. As a result of many factors, including those
factors set forth in the “Risk Factors” section of this Annual Report, our
actual results could differ materially from the results described in or implied
by the forward-looking statements contained in the following discussion and
analysis.

On December 2, 2020, our board of directors effected a one-for-ten reverse stock
split of our ordinary shares, or the Reverse Stock Split. As a result of the
Reverse Stock Split, every ten ordinary shares of $0.01 each (nominal value) in
the authorized and unissued and authorized and issued share capital of the
company were consolidated into one ordinary Share of $0.10 each (nominal value),
and the nominal value of each ordinary share was subsequently immediately
reduced from $0.10 to $0.01 nominal value per share. All outstanding stock
options, restricted stock units and warrants entitling their holders to purchase
or acquire ordinary shares were adjusted as a result of the Reverse Stock Split.
Accordingly, all ordinary share, common share, equity award, warrant and per
share amounts have been adjusted to reflect the Reverse Stock Split for all
prior periods presented.

Overview

We are a biopharmaceutical company engaged in the commercialization and research
and development of novel anti-infective agents to treat serious infections. We
have the commercial rights to two approved products, XENLETA and SIVEXTRO, as
well as one product candidate, CONTEPO. In August 2019, our first product was
approved by the U.S. Food and Drug Administration, or FDA, and we made it
available in the United States in September 2019 under the brand name XENLETA.
XENLETA (lefamulin) is a first-in-class semi-synthetic pleuromutilin antibiotic
for systematic administration in humans discovered and developed by our team. It
inhibits the synthesis of bacterial protein, which is required for bacteria to
grow by binding with high affinity, high specificity and at molecular targets
that are different than other antibiotic classes. Based on results from two
global, Phase 3 clinical trials, we believe that XENLETA is well-positioned for
use as a first-line monotherapy for the treatment of CABP due to its novel
mechanism of action, targeted spectrum of activity, resistance profile,
achievement of substantial drug concentration in lung tissue and fluid,
availability of oral and intravenous, or IV, formulations and a generally
well-tolerated safety profile. We believe XENLETA represents a potentially
important new treatment option for the five million adults in the United States
diagnosed with CABP each year.

On July 28, 2020, we announced that the European Commission, or EC, issued a
legally binding decision for approval of the marketing authorization application
for XENLETA™ (lefamulin) for the treatment of community-acquired pneumonia, or
CAP, in adults following a review by the European Medicines Agency, or EMA. The
EMA approval of XENLETA in CAP patients when it is considered inappropriate to
use antibacterial agents that are commonly recommended for initial treatment or
when these agents have failed paves the way for the potential launch of XENLETA,
across the European Economic Area, or EEA, and United Kingdom, or U.K. The EC
approved XENLETA for all countries of the EEA and U.K. We intend to work with a
commercial partner to make XENLETA available to patients in the EEA and U.K.

We submitted a new drug application, or NDA, for marketing approval of CONTEPO
for the treatment of cUTI in adults in the United States, utilizing the FDA’s
505(b)(2) pathway, in October 2018. The FDA has granted fast track designation
to CONTEPO under the Generating Antibiotics Incentives Now Act, or the GAIN Act.
In April 2019, the FDA issued a Complete Response Letter, or CRL, in connection
with our NDA for CONTEPO for the treatment of cUTI, including AP, stating that
is was unable to approve the application in its current form. Specifically, the
CRL requested that we address issues related to facility inspections and
manufacturing deficiencies at our API contract

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manufacturer. We held a “Type A” meeting with the FDA in July 2019 to discuss
its findings and resubmitted our NDA seeking marketing approval for CONTEPO in
December 2019. In June 2020, the FDA issued a second CRL. Although our European
contract manufacturing partners were prepared for regulatory authority
inspections, the second CRL cited observations at our manufacturing partners
that could not be resolved due to FDA’s inability to conduct onsite inspections
because of travel restrictions. In general, previously identified product
quality and facility inspection related observations at our contract
manufacturing partners are required to be satisfactorily resolved before the NDA
may be approved. The FDA did not request any new clinical data and did not raise
any other concerns with regard to the safety or efficacy of CONTEPO in the
second CRL. Our contract manufacturers continue to interact with FDA to discuss
its plans for conducting inspections at their sites. On October 30, 2020, we
participated in a Type A meeting with the FDA to obtain any new information
related to the FDA’s pending conduct of inspections of foreign manufacturers
during the COVID-19 pandemic that has negatively impacted a number of FDA
product reviews, including the CONTEPO NDA. The FDA informed us that it has not
yet determined how it will conduct international inspections during the COVID-19
pandemic. As a result, next steps and specific timing of the CONTEPO NDA
resubmission cannot be finalized until the FDA issues industry guidance. We and
others impacted in the industry await future communication from the FDA as it
continues to assess the options available under existing regulations and laws to
conduct these foreign facility inspections. CONTEPO has been granted Qualified
Infectious Disease Product (QIDP) and Fast Track designations by the FDA for the
treatment of serious infections, including cUTI. However, we cannot predict when
the CONTEPO NDA will be resubmitted, or when CONTEPO would receive marketing
approval, if at all.

Since inception, we have incurred significant operating losses. As of December
31, 2020
we had an accumulated deficit of $546.2 million. To date, we have
financed our operations primarily through equity offerings, convertible and term
debt financings and research and development support from governmental grants
and proceeds from our licensing agreements. We have devoted substantially all of
our efforts to research and development, including clinical trials as well as
preparing for the commercial launch of XENLETA. Our ability to generate profits
from operations and remain profitable depends on our ability to successfully
develop and commercialize drugs that generate significant revenue.

We expect to continue to incur significant expenses and have negative cash flows
for at least the next several years. Our expenses will increase if we suffer any
regulatory delays or are required to conduct additional clinical trials to
satisfy regulatory requirements. If we obtain marketing approval for CONTEPO or
any other product candidate that we develop, in-license or acquire, we expect to
incur significant commercialization expenses related to product sales,
marketing, distribution and manufacturing. In light of the COVID-19 pandemic,
the associated disruption to the healthcare delivery and the uncertainty of
resuming full direct physician promotion, the timing and amount of sales of
XENLETA, SIVEXTRO or any product candidates are uncertain. Under the
Distribution Agreement (defined below), we were required to secure a sales force
and the restrictions related to COVID-19 must be eased in a sufficient manner to
permit us to promote and distribute SIVEXTRO. Re-securing a sales force for the
promotion and distribution of SIVEXTRO will result in significant additional
expense and our efforts to secure a sales force may not be successful. Based on
our current forecasts and plans, we will need to obtain substantial additional
funding in connection with our continuing operations. Adequate additional
capital may not be available to us on acceptable terms, or at all. If we are
unable to raise capital when needed or on attractive terms, we could be forced
to delay, reduce or eliminate our research and development programs and
commercialization efforts.

Market conditions for antibiotic companies continue to be challenging as
evidenced by the bankruptcy of two organizations engaged in the research and
development and commercialization of antibiotics in 2019. The cost of capital
has risen significantly for others and us. On December 20, 2019, we issued
1,379,310 ordinary shares and accompanying warrants to purchase up to an
aggregate of 1,379,310 ordinary shares. Each share was issued and sold together
with an accompanying warrant at a combined price of $14.50 per security, that
generated gross proceeds of $20.0 million and $18.3 million net, after deducting
the placement agent’s fees and offering expenses. On May 29, 2020, we issued in
a registered direct offering an aggregate of 4,144,537 ordinary shares with
4,144,537 warrants at a combined price of $9.1686 per security. The proceeds to
us from the offering were $38.0 million gross and $35.2 million net, after
deducting the placement agent’s fees and offering expenses. Each warrant was
immediately exercisable and will expire on the two-year anniversary of the
exercise date. On December 10, 2020, we completed a registered public offering
in which we sold 6,000,000 ordinary shares. Each share was issued and sold at a
public offering price of $2.50. The proceeds to us from the offering were $15.0
million
gross and $13.3 million net, after deducting the placement agent’s

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fees and offering expenses. On March 1, 2021, we entered into a securities
purchase agreement with certain institutional investors pursuant to which we
agreed to issue and sell in a registered direct offering (1) an aggregate of
9,761,010 ordinary shares, $0.01 nominal value per share, and accompanying
warrants to purchase up to an aggregate of 4,880,505 ordinary shares and (2)
pre-funded warrants to purchase up to an aggregate of 600,000 ordinary shares
and accompanying ordinary share warrants to purchase up to an aggregate of
300,000 ordinary shares. Each share was issued and sold together with an
accompanying ordinary share warrant at a combined price of $2.4525, and each
pre-funded warrant was issued and sold together with an accompanying ordinary
share warrant at a combined price of $2.4425. The proceeds to us from the
offering were $25.4 million gross and $23.4 million net after deducting the
placement agent’s fees and estimated offering expenses. Each pre-funded warrant
had an exercise price per ordinary share equal to $0.01 and each pre-funded
warrant was exercised in full on the issuance date. Each ordinary share warrant
has an exercise price per ordinary share equal to $2.39, was exercisable on the
date of issuance and will expire on the five-year anniversary of the date of
issuance.

Business Update Regarding COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of
COVID-19, which continues to spread throughout the U.S. and the world, as a
pandemic. The outbreak is having an impact on the global economy, resulting in
rapidly changing market and economic conditions. National and local governments
around the world instituted certain measures, including travel bans,
prohibitions on group events and gatherings, shutdowns of certain non-essential
businesses, curfews, shelter-in-place orders and recommendations to practice
social distancing. The COVID-19 pandemic has presented a substantial public
health and economic challenge around the world and is affecting our employees,
communities and business operations, as well as the U.S. economy and financial
markets. The full extent to which the COVID-19 pandemic will directly or
indirectly impact our business, results of operations and financial condition
will depend on future developments that are highly uncertain and cannot be
accurately predicted, including new information that may emerge concerning
COVID-19, the actions taken to contain it or treat its impact and the economic
impact on local, regional, national and international markets. The full impact
of COVID-19 is unknown and may continue as the rates of infection have increased
in many states in the U.S., thus additional restrictive measures may be
necessary. Federal, state and local governmental policies and initiatives
designed to reduce the transmission of COVID-19 have resulted in, among other
things, a significant reduction in physician office visits, the cancellation of
elective medical procedures, and the adoption of work-from-home policies, all of
which have had, and we believe will continue to have, an impact on our
consolidated results of operations, financial position, and cash flows.

In response to the COVID-19 pandemic, we closed our administrative offices and
shifted to a remote working business model. We have implemented a work-from-home
policy for all of our employees, and we may take further actions that alter our
operations as may be required by federal, state, or local authorities, or which
we determine are in our best interests. The commercial and medical organizations
have suspended in-person interactions with physicians and customers and were
restricted to conducting educational and promotional activities virtually. The
impact of the COVID-19 pandemic could continue to have a material adverse effect
on our business, results of operations, financial condition, liquidity and
prospects in the near-term and beyond 2021. While we have used all currently
available information in our forecasts, the ultimate impact of the COVID-19
pandemic and our product sales for XENLETA and SIVEXTRO, on our results of
operations, financial condition and cash flows is highly uncertain, and cannot
currently be accurately predicted. Our results of operations, financial
condition and cash flows are dependent on future developments, including the
duration of the pandemic and the related length of its impact on the global
economy, such as a lengthy or severe recession or any other negative trend in
the U.S. or global economy and any new information that may emerge concerning
the COVID-19 outbreak and the actions to contain it or treat its impact, which
at the present time are highly uncertain and cannot be predicted with any
accuracy.

COVID-19 has demonstrated the devastating impact that infectious diseases can
have on public health and the economy. Similar to other acute respiratory virus
infections, including influenza virus, patients infected with SARS-CoV-2 are at
increased risk of developing concomitant bacterial pneumonia. In published
reports, bacterial pneumonia has been shown to affect nearly 50% of hospitalized
patients with COVID-19, with an associated mortality of almost 50%. As a result,
the World Health Organization currently recommends empiric antimicrobials to
treat all likely pathogens causing severe acute respiratory infections and
sepsis as soon as possible in patients with COVID-19.

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SIVEXTRO is approved for the treatment of acute bacterial skin and skin
structure infections, or ABSSSIs, caused by certain susceptible Gram-positive
microorganisms. Before we were permitted to sell SIVEXTRO under the Distribution
Agreement, we were required to secure a sales force of a certain size and the
restrictions related to COVID-19 must be eased in a sufficient manner to permit
us to promote and distribute SIVEXTRO. Re-securing a sales force of a certain
size for the promotion and distribution of SIVEXTRO will result in significant
additional expense and our efforts to secure a sales force may not be
successful. In September 2020, we began a small and focused sales effort for
SIVEXTRO and XENLETA, by utilizing 15 sales representatives and expanded this
effort to a total of 60 sales representatives in November 2020 and we may expand
it further in 2021.

XENLETA is approved for the treatment of CABP in adults in the United States. In
addition to XENLETA’s potential role in treating COVID-19 patients with
superimposed bacterial pneumonia, we are assessing the anti-inflammatory
activity of XENLETA and what role, if any, these characteristics may play in the
management of patients with COVID-19. The National Institute for Allergy and
Infectious Diseases
, or NIAID, has identified that secondary bacterial pneumonia
caused by common upper respiratory tract bacteria plays a predominant role in
the cause of death in pandemic influenza. NIAID recommends that the prevention,
diagnosis, prophylaxis, and treatment of secondary bacterial pneumonia, as well
as the stockpiling of antibiotics and bacterial vaccines, be high priorities for
pandemic planning. We believe there is a potential for XENLETA to be considered
for U.S. government stockpiling for pandemic preparedness.

Two ongoing pediatric Phase 1 clinical trials for lefamulin and IV fosfomycin
were temporarily closed for enrollment as hospitals suspended access and
non-essential clinical research to focus on health care delivery to COVID-19
patients. As of July 2020, both trials started to re-open, where allowed by the
institution, and initiated screening of potential subjects at sites.

In collaboration with the Global Antibiotic Research & Development Partnership,
we are assessing XENLETA for the treatment of sexually transmitted infections,
including N. gonorrhoeae, C. trachomatis, and M. genitalium. In preclinical
studies, XENLETA has been shown to possess potent in vitro activity against all
three of these organisms, which is maintained in the presence of resistance to
all standard of care treatment options (aminoglycoside, cephalosporin,
fluoroquinolone, macrolide, penicillin, and tetracycline antibiotic classes).
Importantly, XENLETA has been shown to be bactericidal in vitro against both N.
gonorrhoeae and M. genitalium.

Acquisition of Zavante

On July 24, 2018, we acquired Zavante, or the Acquisition, a biopharmaceutical
company focused on developing CONTEPO (fosfomycin for injection) to improve the
outcomes of hospitalized patients pursuant to the Agreement and Plan of Merger
dated July 23, 2018, or the Merger Agreement.

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

License Agreement with Sinovant Sciences, Ltd.

In March 2018, we entered into a license agreement, or the Sinovant License
Agreement, with Sinovant Sciences, Ltd. or Sinovant, an affiliate of Roivant
Sciences, Ltd.
, to develop and commercialize lefamulin in the greater China
region. As part of the Sinovant License Agreement, Nabriva Therapeutics Ireland
DAC and Nabriva

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Therapeutics GmbH, our wholly owned subsidiaries, granted Sinovant an exclusive
license to develop and commercialize, and a non-exclusive license to
manufacture, certain products containing lefamulin, or the Sinovant Licensed
Products, in the People’s Republic of China, Hong Kong, Macau, and Taiwan, which
we refer to as the Sinovant Territory. We retain development and
commercialization rights in the rest of the world.

Under the Sinovant License Agreement, Sinovant and our subsidiaries have
established a joint development committee, or the JDC, to review and oversee
development and commercialization plans in the Sinovant Territory. We received a
$5.0 million upfront payment pursuant to the terms of the Sinovant License
Agreement and were initially eligible for up to an additional $91.5 million in
milestone payments upon the achievement of certain regulatory and commercial
milestone events related to lefamulin for CABP, plus an additional $4.0 million
in milestone payments if any Sinovant Licensed Product receives a second or any
subsequent regulatory approval in the People’s Republic of China. The first
milestone was a $1.5 million payment for the submission of a Clinical Trial
Application, or CTA, by Sinovant to the Chinese Food and Drug Administration
that was received in February 2019. We received an additional $5.0 million
milestone payment from Sinovant in the third quarter of 2019 due to the receipt
of approval for XENLETA from the FDA in August 2019. The remaining milestone
payments of up to $86.5 million are tied to additional regulatory approvals and
annual sales targets. In addition, we are eligible to receive low double-digit
royalties on sales, if any, of Sinovant Licensed Products in the Sinovant
Territory. In December 2020, we announced the restructuring of our license
agreement with Sinovant Sciences for XENLETA in the greater China region. The
restructured agreement also accelerates a portion of the $5.0 million milestone
payment to us that was previously payable upon regulatory approval of XENLETA in
China, including a non-refundable upfront payment of $1.0 million which was
received in the fourth quarter of 2020. We will recognize the $1.0 million
payment received as collaboration revenue in the consolidated statements of
operations over the estimated period the manufacturing collaboration and
regulatory support will be provided to Sinovant. The future regulatory and
commercial milestone payments will be recorded during the period the milestones
become probable of achievement.

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

Unless earlier terminated, the Sinovant License Agreement will expire upon the
expiration of the last royalty term for the last Sinovant Licensed Product in
the Sinovant Territory, which we expect will occur in 2033. Following the
expiration of the last royalty term, the license granted to Sinovant will become
non-exclusive, fully-paid, royalty-free and irrevocable. The Sinovant License
Agreement may be terminated in its entirety by Sinovant upon 180 days’ prior
written notice at any time. Either party may, subject to specified cure periods,
terminate the Sinovant License Agreement in the event of the other party’s
uncured material breach. Either party may also terminate the Sinovant License
Agreement under specified circumstances relating to the other party’s
insolvency. We have the right to terminate the Sinovant License Agreement
immediately if Sinovant does not reach certain development milestones by certain
specified dates (subject to specified cure periods). The Sinovant License
Agreement contemplates that the we will enter into ancillary agreements with
Sinovant, including clinical and commercial supply agreements and a
pharmacovigilance agreement.

In recognition of the rising rates of bacterial resistance in China and because
CABP is commonly associated with acute respiratory viruses infections, including
influenza and coronavirus, and based on XENLETA’s robust safety and efficacy
data in the treatment of patients with CABP generated globally and in China,
Sinovant is in active discussions with China’s National Medical Products
Administration
to expedite development activities and regulatory filings for
lefamulin in mainland China. Despite the serious measures taken to control
COVID-19, which significantly impacted the treatment of bacterial pneumonia
patients, enrollment in a pivotal trial in China was completed in early February
2021
. The filing by Sinovant for regulatory approval in China is expected to
occur in the next 6 months.

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License Agreement with Sunovion Pharmaceutics Canada Inc.

In March 2019, we entered into a license and commercialization agreement, or the
Sunovion License Agreement, with Sunovion Pharmaceuticals Canada Inc., or
Sunovion. As part of the Sunovion License Agreement, Nabriva Therapeutics
Ireland DAC, our wholly owned subsidiary, granted Sunovion an exclusive license
under certain patent rights, trademark rights and know-how to commercialize
certain products containing lefamulin in the forms clinically developed by us or
any of our affiliates, or the Sunovion Licensed Products, in Canada in all uses
in humans in community-acquired bacterial pneumonia and in any other indication
for which the Sunovion Licensed Products have received regulatory approval in
Canada.

We have identified the delivery of the exclusive license to Sunovion as the one
material performance obligation at inception. We have determined that the
Sunovion License Agreement provides for a distinct license of functional
intellectual property that Sunovion has obtained control of. The non-refundable
upfront payment of $1.0 million that we received in connection with the Sunovion
License Agreement was allocated entirely to the delivery of the license.

On November 7, 2019, through Sunovion, we have submitted a New Drug Submission,
or NDS. Health Canada determined there was a screening deficiency in December
2019
and a response from us/Sunovion was provided on December 18, 2019 and
acknowledged by Health Canada on January 13, 2020. Following the NDS approval
that occurred on July 10, 2020, we have received a regulatory milestone payment
of $0.5 million from Sunovion. Any future regulatory and commercial milestone
payments under the Sunovion License Agreement will be recorded during the period
the milestone is probable of achievement.

Sales Promotion and Distribution Agreement with Merck & Co.

On July 15, 2020, we entered into a Sales Promotion and Distribution Agreement,
the Distribution Agreement, with MSD International GmbH, or MSD, and Merck Sharp
& Dohme Corp.
, or Supplier, each a subsidiary of Merck & Co., Inc., Kenilworth,
NJ
, USA. Under the Distribution Agreement, upon satisfaction of certain
specified conditions, MSD appointed us as its sole and exclusive distributor of
certain products containing tedizolid phosphate as the active ingredient
(marketed and sold by Supplier and MSD prior to the effective date of the
Distribution Agreement under the trademark SIVEXTRO®) for injection, intravenous
use and oral use, the Products, in final packaged form labeled with our National
Drug Code numbers in the United States and its territories, the Territory. We
expect to begin selling and reporting product revenue of our own brand of
SIVEXTRO early in the second quarter of 2021. SIVEXTRO is an oxazolidinone-class
antibacterial indicated in adults and patients 12 years of age and older for the
treatment of acute bacterial skin and skin structure infections caused by
certain susceptible Gram-positive microorganisms. Under the Distribution
Agreement and subject to the fulfillment of certain conditions, including us
having engaged sufficient sales representatives, restrictions relating to travel
and physician office access in the Territory due to COVID-19 having continued to
decrease in a sufficient portion of the Territory so as not to hinder the
successful detailing of SIVEXTRO, we were granted the right by MSD initially to
promote the Products in the Territory and, upon satisfaction of additional
conditions, including an increase in sales representatives, the right to
exclusively distribute the Products in the Territory, including the sole right
and responsibility to fill orders with respect to the Products in the Territory.
Subject to applicable law, we are entitled to determine the final selling prices
of the Products charged by us to its customers at its sole discretion, subject
to an overall annual limit on price increases, and will be solely responsible
for sales contracting and all market access activities, including bidding,
hospital listing and reimbursement. We are responsible for all costs related to
the promotion, sale and distribution of the Products by us, as well as all costs
required to meet our staffing obligations under the Distribution Agreement. We
are obligated to use commercially reasonable efforts to promote and distribute
the Products and to maximize the sales of the Products throughout the Territory.
We have agreed to employ a sales force or retain the services of a contract
sales organization to fulfill its obligations under the Distribution Agreement.
In September 2020, we began a small and focused sales effort, by utilizing 15
sales representatives in a virtual and in-person community-based sales effort
with Amplity Health. We expanded this effort to 60 sales representatives in
November 2020 and we may expand it further in 2021.

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Named Patient Program Agreement with WE Pharma Ltd.

On June 30, 2020, we announced that WE Pharma Ltd., or WEP Clinical, a
specialist pharmaceutical services company, had signed an exclusive agreement
with us to supply XENLETA on a named patient or expanded access basis in certain
countries outside of the US, China and Canada. The Named Patient Program, or
NPP, is designed to ensure that physicians, contingent on meeting the necessary
eligibility criteria and receiving approval, can request IV or oral XENLETA on
behalf of patients who live in certain countries where it is not yet available
and have an unmet medical need.

Financial Operations Overview

Revenue

In September 2019 we had our commercial launch of XENLETA. For the year ended
December 31, 2020, we recorded $0.5 million of product revenue, gross and $108
thousand
of product revenues, net of gross-to-net accruals and adjustments for
returns. Our adjustments for returns include a $0.4 million returns reserve
adjustments for slow moving inventory, representing 50% of XENLETA IV inventory
held at our Specialty Distributors, as well as an adjustment for returns from a
single mail order specialty pharmacy, partly offset by a $0.2 million reversal
of gross-to-net accruals. Collaboration revenues include a $0.5 million
regulatory milestone payment from Sunovion, a $1.0 million milestone payment
from Sinovant, as well as $1.8 million of our share of revenues associated with
the SIVEXTRO distribution agreement with Merck & Co., Inc. which commenced at
the end of September 2020. Future product revenues will be generated by the
amount and frequency of reorders from our wholesale customers based on the
ultimate consumption patterns from the end users of XENLETA and SIVEXTRO. Our
distribution partners continue to primarily utilize their existing inventory to
satisfy product demand for XENLETA which in turn impacted sales in 2020. In
response to the COVID-19 pandemic, we closed our administrative offices and
shifted to a remote working business model. We have implemented a work-from-home
policy for all of our employees, and we may take further actions that alter our
operations as may be required by federal, state, or local authorities, or which
we determine are in our best interests. The commercial and medical organizations
have suspended in-person interactions with physicians and customers and were
restricted to conducting educational and promotional activities virtually. In
addition, in April 2020, we announced a plan to restructure our hospital-based
commercial sales force and transition to a community-based sales effort. The
restructuring resulted in the termination of 66 employees, consisting of our
entire hospital-based sales personnel and certain members of our sales force
leadership team. Additional reductions in headcount occurred in the third
quarter of 2020 including the restructuring of the commercial organization,
which led to the elimination of the role of the Chief Commercial Officer. Our
commercial operations now report directly to our Chief Executive Officer. In
September 2020, we began a small and focused sales effort for SIVEXTRO and
XENLETA, by utilizing 15 sales representatives. We expanded this effort to 60
sales representatives in November 2020 and we may expand it further in 2021.

Our revenues for the year ended December 31, 2020 included governmental research
premiums, non-refundable government grants, collaboration revenues and the
benefit of government loans at below-market interest rates, which are more fully
described below under “Critical Accounting Policies”.

Research and Development Expenses

Research and development expenses represented 66.3%, 29.7% and 21.2% of our
total operating expenses for the years ended December 31, 2018, 2019 and 2020,
respectively.

For each of our research and development programs, we incur both direct and
indirect expenses. Direct expenses include third party expenses related to these
programs such as expenses for manufacturing services (prior to our products
receiving FDA approval, after which time these costs are capitalized in
inventory until product is sold), non-clinical and clinical studies and other
third party development services. Indirect expenses include salaries and related
costs, including stock-based compensation, for personnel in research and
development functions, infrastructure costs allocated to research and
development operations, costs associated with obtaining and maintaining
intellectual property associated with our research and development operations,
laboratory consumables, consulting fees related to

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research and development activities and other overhead costs. We utilize our
research and development staff and infrastructure resources across multiple
programs, and many of our indirect costs historically have not been specifically
attributable to a single program. Accordingly, we cannot state precisely our
total indirect costs incurred on a program-by-program basis.

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



                                           Year Ended December 31,
(in thousands)                          2018        2019         2020
Direct Costs
XENLETA                               $ 20,685    $   7,765    $  2,119
CONTEPO                                  3,423        2,977         450
FDA filing fee refund                        -      (2,589)           -
Other programs and initiatives              53        1,412       1,347
Indirect Costs                          26,079       16,850      11,186
In-process research and development     32,048            -           -
Total                                 $ 82,288    $  26,415    $ 15,102



We expect to continue to incur research and development expenses in connection
with required regulatory activities, our activities related to our ongoing
pediatric studies of lefamulin for the treatment of CABP and of CONTEPO for the
treatment of cUTI, and may incur costs related to the pursuit of the clinical
development of lefamulin and CONTEPO for additional indications including the
treatment of resistant bacterial infections in patients with cystic fibrosis and
engagement in earlier stage research and development activities. It is difficult
to estimate the duration and completion costs of our research and development
programs.

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

the efficacy and potential advantages of our product candidates compared to

? alternative treatments, including any standard of care, and our ability to

achieve market acceptance for any of our product candidates that receive

marketing approval;

the costs and timing of commercialization activities, including product sales,

? marketing, distribution and manufacturing, for any of our product candidates

that receive marketing approval;

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

? the scope, progress, costs and results of clinical trials and other research

and development activities; and

the costs and timing of preparing, filing and prosecuting patent applications,

? maintaining, enforcing and protecting our intellectual property rights and

defending against any intellectual property-related claims.

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

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Selling, General and Administrative Expenses

Selling, general and administrative expenses represented 33.7%, 70.3%, and 77.7%
of our total operating expenses for the years ended December 31, 2018, 2019 and
2020, respectively.

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

We expect selling, general and general administrative expenses to increase in
2021 compared to 2020 related to incurring a full year of expense for a
commercial sales force for the commercialization of XENLETA and SIVEXTRO.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which we have
prepared in accordance with generally accepted accounting principles in the
United States
, or U.S. GAAP. The preparation of our consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the end of the reporting period, as well as the
reported revenues and expenses during the reporting periods. We base our
estimates on our limited historical experience, known trends and events and
various other factors that we believe are 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 may differ from these estimates under different
assumptions or conditions.

Our significant accounting policies are described in more detail in the notes to
our consolidated financial statements appearing at the end of this filing.
However, we believe that the following accounting policies are the most critical
to aid you in fully understanding and evaluating our financial condition and
results of operations.

Revenue Recognition

Under Accounting Standards Codification, or ASC, 606, an entity recognizes
revenue when its customer obtains control of promised goods or services, in an
amount that reflects the consideration that the entity expects to receive in
exchange for those goods or services. We then recognize as revenue the amount of
the transaction price that is allocated to the respective performance obligation
when (or as) the performance obligation is satisfied as services are rendered.

The transaction price that we recognize as revenue reflects the amount we expect
with the sale and transfer of control of the product to our customers. Once the
customer takes control of the product, our performance obligation under the sale
contract is complete and revenue is recorded net of applicable reserves for
various types of variable consideration. The types of variable consideration are
as follows and are further described in Note 2 in our Consolidated Financial
Statements.

 ? Fees-for-service


 ? Product returns


 ? Chargebacks and rebates


 ? Government rebates


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? Commercial payer and other rebates

? Group Purchasing Organizations, or GPO, administration fees

? Voluntary patient assistance programs

In determining the amounts of variable consideration, we must make significant
judgments and estimates. In assessing the amount of net revenue to record, we
consider both the likelihood and the magnitude of the revenue reversal. Actual
amounts of consideration ultimately received may differ significantly from our
estimates. If actual results in the future vary from our estimates, we adjust
our estimates which would affect net product revenue and earnings in the period
such variances become known.


Inventory

Our inventory is stated at the lower of cost or net realizable value, with cost
determined on a first-in, first-out basis, and consists primarily of material
costs, third-party manufacturing costs, and related transportation costs in our
supply chain. Our inventory is subject to expiration dating, which can be
extended in certain circumstances. We continually review our inventory on hand
and record provisions for estimated excess, slow-moving and obsolete inventory
which takes into consideration our estimate forecasts of product sales. For the
year ended December 31, 2020, we recorded a $0.7 million non-cash reserve for
excess and obsolete inventory due to the uncertainty of commercial activities
underlying XENLETA product sales.

Results of Operations

Comparison of Years Ended December 31, 2019 and 2020


                                                 Year Ended December 31,
(in thousands)                                     2019            2020        Change
Consolidated Operations Data:
Revenues                                       $       9,481    $    5,027    $ (4,454)
Costs and Expenses:
Cost of product sales                                   (70)         (766)        (696)
Research and development expenses                   (26,415)      (15,102)       11,313

Selling, general and administrative expenses (62,485) (55,285) 7,200
Total operating expenses

                            (88,970)      (71,153)       17,817
Loss from operations                                (79,489)      (66,126)       13,363
Other income (expense):
Other income (expense), net                              215         1,187          972
Interest income (expense), net                       (3,389)       (1,649)        1,740
Loss on extinguishment of debt                             -       (2,757)      (2,757)
Loss before income taxes                            (82,663)      (69,345)       13,318
Income tax expense                                     (101)         (139)         (38)
Net loss                                       $    (82,764)    $ (69,484)    $  13,280




Revenues

Revenues decreased by $4.5 million from $9.5 million for the year ended
December 30, 2019 to $5.0 million for the year ended December 31, 2020,
primarily due to a $3.5 million decrease in collaboration revenue and a $1.4
million
decrease in product revenue, net, partially offset by a $0.4 million
increase in research premiums and government grants provided to us by the
Austrian government. The decrease in collaboration revenues was primarily due

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to the $5.0 million recognized in 2019 under our Sinovant license agreement,
partially offset by $1.8 million recognized in 2020 under our SIVEXTRO
distribution agreement with Merck & Co., Inc.

Cost of Product Sales

Cost of product sales primarily represents direct and indirect manufacturing
costs of our XENLETA product. Prior to the FDA approval of XENLETA on August 19,
2019
, the inventory costs for the product were expensed as research and
development expenses since the approval was outside of our control and therefore
not considered probable. As such, the majority of the expenses incurred for our
initial inventories of XENLETA has been previously expensed. As a result, we
anticipate that our cost of product sales will remain at relatively low levels
for a period of time until our initial pre-launch inventory stock has been
distributed by our customers based on end user consumption demand. For the year
ended December 31, 2020, cost of product sales included a $0.7 million non-cash
reserve for excess and obsolete inventory due to the uncertainty of commercial
activities underlying XENLETA sales.

Research and Development Expenses

Research and development expenses decreased by $11.3 million from $26.4 million
for the year ended December 31, 2019 to $15.1 million for the year ended
December 31, 2020. The decrease was primarily due to a $7.2 million decrease in
research materials and purchased services related to the development of
lefamulin, a $2.9 million decrease in staff costs due to the reduction of
employees, a $2.0 million decrease in research consulting fees, a $0.9 million
decrease in stock-based compensation expense and $0.4 million decrease in travel
expenses, partly offset by a $2.0 million increase in other fees due to a $2.6
million
NDA filing fee refund for CONTEPO in 2019.

Selling, General and Administrative Expenses

Selling, general and administrative expense decreased by $7.2 million from
$62.5 million for the year ended December 31, 2019 to $55.3 million for the year
ended December 31, 2020. The decrease was primarily due to a $4.2 million
decrease in staffing expense related to the termination of our sales force in
early 2020, $3.7 million decrease in stock-based compensation expense, a
$1.6 million decrease in travel expenses, a $0.7 million decrease in advisory
and external consultancy expenses primarily related to commercialization
activities and professional service fees, and a $0.1 million decrease in other
corporate costs, partly offset by a $1.2 million increase in insurance costs, a
$1.5 million increase in professional fees.

Other Income (Expense), net

Other income (expense), net increased by $1.0 million from $0.2 million of
income for the year ended December 31, 2019, to $1.2 million income for the year
ended December 31, 2020 primarily from $0.6 million income from the sublease of
our laboratory and office space in Vienna, Austria.

Interest Income (Expense), net

Interest income (expense), net decreased by $1.7 million due the repayment of
$30.0 million of indebtedness under our Loan Agreement with Hercules in March
2020
. See Note 8 to our consolidated financial statements included elsewhere in
this Form 10-K for further information.

Loss on Extinguishment of Debt

In connection with the repayment of our Loan Agreement with Hercules, we
recognized a non-cash $2.8 million loss on the extinguishment of debt during the
year ended December 31, 2020, which represents the excess of the reacquisition
price of the $30.0 million debt repaid over the net carrying amount of the
extinguished debt.

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Income Tax Expense

Our income tax expense was $101 thousand for the year ended December 31, 2019
compared to $139 thousand for the year ended December 31, 2020.

Comparison of Years Ended December 31, 2018 and 2019


                                                 Year Ended December 31,
(in thousands)                                     2018            2019         Change
Consolidated Operations Data:
Revenues                                       $       9,656    $    9,481    $    (175)
Costs and Expenses:
Cost of product sales                                      -          (70)          (70)
Research and development expenses                   (82,288)      (26,415)        55,873

Selling, general and administrative expenses (41,743) (62,485) (20,742)
Total operating expenses

                           (124,031)      (88,970)        35,061
Loss from operations                               (114,375)      (79,489)        34,886
Other income (expense):
Other income (expense), net                            (272)           215           487
Interest income (expense), net                          (84)       (3,389)       (3,305)
Loss before income taxes                           (114,731)      (82,663)        32,068
Income tax expense                                      (49)         (101)          (52)
Net loss                                       $   (114,780)    $ (82,764)    $   32,016




Revenues

Revenues decreased by $0.2 million from $9.7 million for the year ended December
30, 2018
to $9.5 million for the year ended December 31, 2019, primarily due to
a $1.4 million decrease in research premiums and government grants provided to
us by the Austrian government as a result of a decrease in our research and
development expenses for which we can receive grant revenue and a $0.3 million
decrease in collaboration revenue, partially offset by a $1.5 million increase
in product revenue, net.

Cost of Product Sales

Cost of product sales primarily represents direct and indirect manufacturing
costs of our XENLETA product. Prior to the FDA approval of XENLETA on August 19,
2019
, the inventory costs for the product were expensed as research and
development expenses since the approval was outside of our control and therefore
not considered probable. As such, the majority of the expenses incurred for our
initial inventories of XENLETA has been previously expensed. As a result, we
anticipate that our cost of product sales will remain at relatively low levels
for a period of time until our initial pre-launch inventory stock is sold by our
customers based on end user consumption demand.

Research and Development Expenses

Research and development expenses decreased by $55.9 million from $82.3 million
for the year ended December 31, 2018 to $26.4 million for the year ended
December 31, 2019. The decrease was primarily due to a charge of $32.0 million
for in process research and development expenses associated with the acquisition
of Zavante assets during the year ended December 31, 2018, a $4.6 million
decrease in research consulting fees, a $8.1 million decrease of filing and
other fees inclusive of a $2.6 million NDA filing fee refund for CONTEPO in
2019, a $10.6 million decrease in research materials and purchased services
related to the development of lefamulin, a $1.2 million decrease in staff costs
due to the reduction of employees and $0.1 million decrease in infrastructure
and other expenses, partly offset by a $0.7 million increase in stock based
compensation expense.

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Selling, General and Administrative Expenses

Selling, general and administrative expense increased by $20.7 million from
$41.7 million for the year ended December 31, 2018 to $62.5 million for the year
ended December 31, 2019. The increase was due to a $8.6 million increase in
staffing expense, primarily for our commercial sales force in connection with
the product launch of XENLETA in September 2019, a $5.9 million increase in
advisory and external consultancy expenses primarily related to pre
commercialization activities and professional service fees, a $3.9 million
increase in stock based compensation expense, a $1.1 million increase in legal
fees, a $1.0 million increase in travel expenses, and a $0.6 million increase in
infrastructure costs, partly offset by a $0.3 million decrease in other
corporate costs.

Other Income (Expense), net

Other income (expense), net decreased by $0.5 million from $0.3 million of
expense for the year ended December 31, 2018, to $0.2 million income for the
year ended December 31, 2019 primarily due to re measurements of our foreign
currency cash balances.

Interest Income (Expense), net

During the year ended December 31, 2019, net interest expense increased over the
prior year due to interest expense on our loan with Hercules that was entered
into in December 2018.

Income Tax Expense

Our income tax expense was $49,000 for the year ended December 31, 2018 compared
to $101,000 for the year ended December 31, 2019.

Liquidity and Capital Resources

Since our inception, we have incurred net losses and generated negative cash
flows from our operations. To date, we have financed our operations through the
sale of equity securities, convertible and term debt financings, research and
development support from governmental grants and loans and proceeds from
licensing agreements. As of December 31, 2020, we had cash and cash equivalents,
restricted cash and short-term investments of $41.6 million.

On March 1, 2021, we entered into a securities purchase agreement with certain
institutional investors pursuant to which we agreed to issue and sell in a
registered direct offering (1) an aggregate of 9,761,010 ordinary shares, $0.01
nominal value per share, and accompanying warrants to purchase up to an
aggregate of 4,880,505 ordinary shares and (2) pre-funded warrants to purchase
up to an aggregate of 600,000 ordinary shares and accompanying ordinary share
warrants to purchase up to an aggregate of 300,000 ordinary shares. Each share
was issued and sold together with an accompanying ordinary share warrant at a
combined price of $2.4525, and each pre-funded warrant was issued and sold
together with an accompanying ordinary share warrant at a combined price of
$2.4425. The proceeds to us from the offering were $25.4 million gross and $23.4
million
net after deducting the placement agent’s fees and estimated offering
expenses. Each pre-funded warrant had an exercise price per ordinary share equal
to $0.01 and each pre-funded warrant was exercised in full on the issuance date.
Each ordinary share warrant has an exercise price per ordinary share equal to
$2.39, was exercisable on the date of issuance and will expire on the five-year
anniversary of the date of issuance.

In December 2020, we completed a registered public offering in which we sold
6,000,000 ordinary shares at a public offering price of $2.50. The proceeds to
us from the offering were $15.0 million gross and $13.3 million net, after
deducting the placement agent’s fees and offering expenses.

In May 2020, we entered into a securities purchase agreement with certain
institutional investors, including Fidelity Management & Research Company, LLC,
pursuant to which we issued and sold in a registered direct offering an
aggregate of 4,144,537 ordinary shares and accompanying warrants to purchase up
to an aggregate of 4,144,537 ordinary shares. Each share was issued and sold
together with an accompanying warrant at a combined price of $9.1686

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per security. The proceeds to us from the offering were $38.0 million gross and
$35.2 million net, after deducting the placement agent’s fees and offering
expenses.

In December 2019, we entered into a securities purchase agreement with certain
institutional investors pursuant to which we agreed to issue and sell in a
registered direct offering an aggregate of 1,379,310 ordinary shares and
accompanying warrants to purchase up to an aggregate of 1,379,310 ordinary
shares. Each share in the offering was issued and sold together with an
accompanying warrant at a combined price of $14.50. The proceeds to us from the
offering were $20.0 million gross and $18.3 million net, after deducting the
placement agent’s fees and offering expenses.

In June 2019, we entered into an Open Market Sale AgreementSM, or the Jefferies
ATM Agreement, with Jefferies LLC, or Jefferies, as agent, pursuant to which,
from time to time, we may offer and sell ordinary shares for aggregate gross
sale proceeds of up to $50.0 million through Jefferies by any method permitted
that is deemed an “at the market offering” as defined in Rule 415(a)(4)
promulgated under the Securities Act of 1933, as amended. As of December 31,
2020
, we sold and issued an aggregate of 1,992,390 ordinary shares pursuant to
the Jefferies ATM Agreement and received gross proceeds of $21.9 million and net
proceeds of $20.4 million, after deducting commissions to Jefferies and other
offering expenses. From January 1, 2021 and through the date of this filing we
sold and issued an aggregate of 3,933,350 ordinary shares pursuant to the
Jefferies ATM Agreement and received gross proceeds of $11.8 million and net
proceeds of $11.5 million, after deducting commissions to Jefferies and other
offering expenses.

In December 2018, we announced the closing of up to a $75.0 million term loan
with Hercules, or the Loan Agreement, $25.0 million of which was funded on the
day of closing. Under the terms of the loan, in addition to the $25.0 million
received at closing, we borrowed an additional $10.0 million in connection with
the approval by the FDA of the NDA for XENLETA. In March 2020, we repaid
Hercules $30.0 million of the $35.0 million in aggregate principal amount of
debt outstanding under the Loan Agreement. See Note 8 to the consolidated
financial statements included elsewhere in this Form 10-K for additional
information on the terms associated with the remaining term loans potentially
available to us and the costs and other conditions associated with this funding
source.

In July 2018, we completed an underwritten public offering and issued 1,818,181
ordinary shares at a public offering price of $27.50 per share, resulting in
gross proceeds of $50.0 million and net proceeds to us of $46.3 million, after
deducting underwriting discounts and commissions and offering expenses.

In March 2018, we entered into a Controlled Equity OfferingSM Sales Agreement,
or the Cantor ATM Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant
to which, from time to time, we could previously offer and sell our ordinary
shares having aggregate gross proceeds of up to $50.0 million through Cantor. We
terminated the Cantor ATM Agreement effective as of June 24, 2019. We did not
incur any penalties as a result of the termination of the Cantor ATM Agreement.
As of the effective date of the termination of the Cantor ATM Agreement, we had
issued and sold an aggregate of 1,031,619 of our ordinary shares pursuant to the
Cantor ATM Agreement for aggregate gross proceeds of $37.8 million and net
proceeds of $36.3 million, after deducting commissions and offering expenses.
The $12.2 million of ordinary shares that had been available for sale pursuant
to the Cantor ATM Agreement remained unsold at the time of its termination.

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Cash Flows

Comparison of Years Ended December 31, 2019 and 2020

The following table summarizes our cash flows for the years ended December 31,
2019 and 2020:




                                                                Year Ended December 31,
(in thousands)                                                    2019             2020
Net cash (used in) provided by:
Operating activities                                          $    (71,892)     $ (71,331)
Investing activities                                                    331          (274)
Financing activities                                                 56,075         26,924
Effects of foreign currency translation on cash                       (106)          (140)

Net decrease in cash, cash equivalents and restricted cash $ (15,592) $ (44,821)


Operating Activities

Cash flow used in operating activities decreased by $0.6 million from
$71.9 million for the year ended December 31, 2019 to $71.3 million for the year
ended December 31, 2020 primarily due to a $11.8 million decrease in net loss,
after adjustments for non-cash amounts included in net loss and higher working
capital of $11.2 million primarily due to a decrease in accrued expenses and
other current liabilities and an increase in inventory.

Investing Activities

Cash flow provided by investing activities decreased by $0.6 million from $0.3
million
cash provided for the year ended December 31, 2019 to $0.3 million cash
used for the year ended December 31, 2020 primarily due to changes in restricted
cash.

Financing Activities

Cash flow provided by financing activities decreased by $29.2 million from
$56.1 million for the year ended December 31, 2019 to $26.9 million for the year
ended December 31, 2020 primarily due to the repayment of $30.0 million of
long-term borrowings on our debt facility and lower net proceeds of
$20.4 million related to sales of our ordinary shares under our ATM Agreements ,
partly offset by higher net proceeds of $33.3 million from our May 2020 and
December 2020 equity offerings of ordinary shares, as well as the exercise of
warrants.

Comparison of Years Ended December 31, 2018 and 2019

The following table summarizes our cash flows for the years ended December 31,
2018 and 2019:




                                                            Year Ended December 31,
(in thousands)                                                2018             2019
Net cash (used in) provided by:
Operating activities                                      $    (72,723)     $ (71,892)
Investing activities                                            (4,604)            331
Financing activities                                             92,923         56,075
Effect of foreign currency translation on cash                    (362)          (106)
Net increase (decrease) in cash, cash equivalents and
restricted cash                                           $      15,234     $ (15,592)




Operating Activities

Cash flow used in operating activities decreased by $0.8 million from $72.7
million
for the year ended December 31, 2018 to $71.9 million for the year ended
December 31, 2019 primarily due to a $5.0 million decrease in

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net loss, after adjustments for non cash amounts included in net loss and higher
working capital of $4.2 million primarily due to changes in accrued expenses and
other current liabilities.

Investing Activities

Cash flow provided by investing activities decreased by $4.9 million from $4.6
million
of cash used for the year ended December 31, 2018 to $0.3 million cash
provided for the year ended December 31, 2019 primarily due to transaction costs
related to the acquisition of Zavante assets in 2018.

Financing Activities

Cash flow provided by financing activities decreased by $36.8 million from $92.9
million
for the year ended December 31, 2018 to $56.1 million for the year ended
December 31, 2019 primarily due to net proceeds of $26.9 million related to
sales of our ordinary shares under our ATM Agreements, net proceeds of $18.8
million
from our December 2019 registered direct offering of ordinary shares a
$10.0 million advance under our December 2019 Loan Agreement with Hercules and
$0.4 million proceeds from our employee stock purchase plan.

Operating and Capital Expenditure Requirements

We anticipate that our expenses will increase as we expect to incur significant
additional commercialization expenses related to product sales, marketing,
distribution and manufacturing. In addition, our expenses will increase if we
suffer any regulatory delays or are required to conduct additional clinical
trials to satisfy regulatory requirements.

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

? initiate or continue the research and development of XENLETA and CONTEPO for

additional indications and of our other product candidates;

? seek to develop additional product candidates;

? seek marketing approval for any product candidates that successfully complete

clinical development;

? are required by the FDA, EMA or other regulators to conduct additional clinical

trials prior to or after approval;

continue to build or re-build a medical affairs, sales, marketing and

? distribution infrastructure and scale up manufacturing capabilities to

commercialize XENLETA, SIVEXTRO and any other product candidates for which we

receive marketing approval;

? in-license or acquire other products, product candidates or technologies,

including additional community products;

? maintain, expand and protect our intellectual property portfolio;

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

? incur additional debt;

? establish and expand manufacturing arrangements with third parties; and

add operational, financial and management information systems and personnel,

? including personnel to support our product development and our operations as a

public company in addition to our commercialization efforts.

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As described above, on March 11, 2020, we entered into an Amendment to our Loan
Agreement with Hercules. Pursuant to the Amendment, we repaid to Hercules in
March 2020, $30.0 million of the $35.0 million in aggregate principal amount of
debt outstanding under the Loan Agreement, which we refer to as the Prepayment.
Under the Amendment, we and Hercules agreed to defer the end of term loan charge
payment in the amount of approximately $2.3 million that would have otherwise
become payable on the date of the Prepayment and to reduce the prepayment charge
with respect to the Prepayment from $600,000 to $300,000 and to defer its
payment, in each case, until June 1, 2023 or such earlier date on which all
loans under the Loan Agreement are repaid or become due and payable. The
Amendment also reset the revenue performance covenant to 70% of targeted revenue
based on a revised net product revenue forecast and lowered our minimum
liquidity requirement to $3.0 million in cash and cash equivalents, in each
case, following the Prepayment. The new minimum liquidity requirement will not
apply if CONTEPO receives regulatory approval from the U.S. Food and Drug
Administration
and we achieve at least 70% of our revised net product revenue
targets under the Loan Agreement. Based on our current operating plans, we
expect that our existing cash resources as of the date of this filing will be
sufficient to enable us to fund our operations, debt service obligations and
capital expenditure requirements into the fourth quarter of 2021. We have based
this estimate on assumptions that may prove to be wrong, and we could use our
capital resources sooner than we currently expect. This estimate assumes, among
other things, that we do not obtain any additional funding through grants and
clinical trial support, collaboration agreements, or equity or debt financings.
This estimate also assumes that we remain in compliance with the covenants and
no event of default occurs under the Loan Agreement.

We expect to continue to invest in critical commercial promotion and
distribution, medical affairs and other commercialization activities, as well as
investing in our supply chain for the commercialization of XENLETA, SIVEXTRO and
CONTEPO , if approved. We expect to seek additional funding in future periods to
support these activities.

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

? the costs and timing of process development and manufacturing scale-up

activities associated with XENLETA and CONTEPO;

? the costs to secure supply of SIVEXTRO and costs to sell and market the product

in the U.S.;

? the costs, timing and outcome of regulatory review of lefamulin in Europe and

for any other indications and CONTEPO;

the costs of commercialization activities for XENLETA, SIVEXTRO and potentially

CONTEPO if we receive marketing approval, including the costs and timing of

? establishing product sales, marketing, distribution and outsourced

manufacturing capabilities, including the costs of building finished product

inventory and its components in preparation of initial marketing of CONTEPO, if

approved;

? the commercial success of XENLETA and SIVEXTRO and the amount and frequency of

reorders or product returns by our wholesale customers;

? subject to the resubmission of the CONTEPO NDA and potential receipt of

marketing approval, revenue received from commercial sales of CONTEPO;

? the costs of developing XENLETA and CONTEPO for the treatment of additional

indications;

? the impact of the COVID-19 pandemic;

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

? the scope, progress, results and costs of product development of any other

product candidates that we may develop;

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? the extent to which we in-license or acquire rights to other products, product

candidates or technologies, including additional community products;

? the costs related to the promotion, sale and distribution of the products under

our distribution agreement with Merck & Co., Inc.;

the costs of preparing, filing and prosecuting patent applications, maintaining

? and protecting our intellectual property rights and defending against

intellectual property-related claims;

? the continued availability of Austrian governmental grants;

? the need to satisfy interest and principal obligations under our Loan Agreement

with Hercules as well as the covenants contained in our Loan Agreement;

? the rate of the expansion of our physical presence in the United States and

Ireland; and

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

Our commercial revenues, if any, will be derived from sales of XENLETA,
SIVEXTRO, and if approved, CONTEPO or any other products that we successfully
develop, in-license or acquire. In addition, XENLETA, SIVEXTRO and, if approved,
CONTEPO or any other product candidate that we develop, in-license or acquire
may not achieve commercial success. Accordingly, we will need to obtain
substantial additional financing to achieve our business objectives. Adequate
additional financing may not be available to us on acceptable terms, or at all.
In addition, we may seek additional capital due to favorable market conditions
or strategic considerations, even if we believe that we have sufficient funds
for our current or future operating plans.

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

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

Capital Expenditures

We made no significant capital investments during the year ended December 31,
2019
and capital expenditures were $0.1 million for the year ended December 31,
2020
. Currently, there are no material capital projects planned in 2021.

Off-Balance Sheet Arrangements

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

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