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Item 1. Business

2024-02-29 compared with 2023-02-28 · 241 added, 336 removed, 560 unchanged (51% of the section changed)

Innoviva, Inc.

(“Innoviva”, the “Company”, the “Registrant”

or “we”

and other similar pronouns) is a diversified holding company with a portfolio of royalties and other healthcare assets.

Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO ® ELLIPTA ® (umeclidinium bromide/vilanterol, “UMEC/VI”).

Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows:

(“Innoviva”, the “Company”, the “Registrant” or “we” and other similar pronouns) is a company with a portfolio of royalties and innovative healthcare assets.

We currently have three primary sets of assets:

a royalty portfolio, operating assets in critical care and infectious disease, and other strategic healthcare assets.

Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® as follows:

15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion;

and royalties from the sales of ANORO ® ELLIPTA ® , which tier upward at a range from 6.5% to 10%.

Innoviva was also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to Theravance Respiratory Company, LLC (“TRC”), including TRELEGY ® ELLIPTA ® and any other product or combination of products that may be discovered or developed in the future under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK Agreements”), which were assigned to TRC other than RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .

We sold our 15% ownership interest in TRC on July 20, 2022, and are no longer entitled to receive royalties on sales of TRELEGY ® ELLIPTA ® products.

We expanded our portfolio of royalties and innovative healthcare assets through the acquisition of Entasis Therapeutics Holdings Inc.

(“Entasis”) on July 11, 2022 and the acquisition of La Jolla Pharmaceutical Company (“La Jolla”) on August 22, 2022.

Our commercial and marketed products include GIAPREZA ® (angiotensin II), approved in the United States (“U.S.”) to increase blood pressure in adults with septic or other distributive shock, and XERAVA ® (eravacycline) approved in the U.S.

We expanded our portfolio through the acquisition of Entasis Therapeutics Holdings Inc.

(“Entasis”) on July 11, 2022 and the acquisition of La Jolla Pharmaceutical Company (“La Jolla”) on August 22, 2022.

for the treatment of complicated intra-abdominal infections in adults.

Our development pipeline includes medicines for the treatment of bacterial infections, such as our lead asset sulbactam-durlobactam (“SUL-DUR”).

On May 23, 2023, XACDURO ® (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the United States Food and Drug Administration (“FDA”) and we commenced commercial sales of XACDURO ® in the third quarter of 2023.

Our development pipeline includes zoliflodacin, an investigational treatment for uncomplicated gonorrhea that reported positive data in a pivotal Phase 3 clinical trial on November 1, 2023.

As such, we have a wholly owned robust critical care and infectious disease operating platform with a hospital focus anchored by three differentiated products with significant growth potential and a promising drug candidate.

In addition, we own other strategic healthcare assets, such as a large equity stake in Armata Pharmaceuticals, Inc., a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases.

We also have economic interests in other healthcare companies.

Our focus on capital allocation and shareholder value maximization has led our company to a meaningful transformation, and 2023 was a significant transition year.

In 2022 our financials contained royalty revenues from TRELEGY ® ELLIPTA ® which was divested mid-year in an economically accretive transaction.

Additionally, our acquisition and integration of operating companies further changed the structure of our financials compared to prior years.

Through these changes, we believe we are well-positioned to create significant long-term shareholder value.

Our headquarters are located at 1350 Old Bayshore Highway, Suite 400, Burlingame, CA 94010.

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In January 2016, we rebranded and changed our name to Innoviva, Inc.

Our corporate strategy is currently focused on increasing stockholder value by, among other things, maximizing the potential value of our respiratory assets partnered with GSK, optimizing our operations and augmenting capital allocation.

Our corporate strategy is currently focused on increasing stockholder value by, among other things, maximizing the potential value of our respiratory assets partnered with GSK, creating value through our critical care and infectious disease platform, optimizing our operations, and augmenting capital allocation.

We continue to diversify our royalty management business through actively pursuing opportunistic acquisitions of promising companies and assets in the healthcare industry and enhancing the returns on our capital.

In particular, our recent acquisitions of Entasis and La Jolla created a robust hospital and infectious disease platform.

Our Royalty Product Portfolio

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LABA Collaboration

In November 2002, we entered into our LABA Collaboration Agreement with GSK to develop and commercialize once‑daily products for the treatment of chronic obstructive pulmonary disease (“COPD”) and asthma.

The collaboration has developed three combination products, two of which we still retain rights in.

Those two are as follows:

RELVAR ® /BREO ® ELLIPTA ® (“FF/VI”) (BREO ® ELLIPTA ® is the proprietary name in the U.S.

• RELVAR ® /BREO ® ELLIPTA ® (“FF/VI”) (BREO ® ELLIPTA ® is the proprietary name in the U.S.

and Canada and RELVAR ® ELLIPTA ® is the proprietary name outside the U.S.

and Canada), a once-daily combination medicine consisting of a LABA, vilanterol (“VI”), and an inhaled corticosteroid (“ICS”), fluticasone furoate (“FF”), and,

ANORO ® ELLIPTA ® (“UMEC/VI”), a once-daily medicine combining a long-acting muscarinic antagonist (“LAMA”), umeclidinium bromide (“UMEC”), with a LABA, VI.

and Canada), a once-daily combination medicine consisting of a LABA, vilanterol (“VI”), and an inhaled corticosteroid (“ICS”), fluticasone furoate (“FF”), and,

• ANORO ® ELLIPTA ® (“UMEC/VI”), a once-daily medicine combining a long-acting muscarinic antagonist (“LAMA”), umeclidinium bromide (“UMEC”), with a LABA, VI.

As a result of the launch and approval of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the U.S., Japan and Europe, in accordance with the LABA Collaboration Agreement, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014.

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• Duaklir ® Genuair ® (aclidinium bromide in combination with formoterol fumarate) developed by AstraZeneca as a maintenance bronchodilator treatment for COPD and approved in November 2014 in the EU and March 2019 in the U.S.

QMF149 (indacaterol in combination with mometasone) developed by Novartis for markets outside the U.S.

and under regulatory review in the E.U.

In Phase 3 development for COPD

• Atectura ® Breezhaler ® (indacaterol in combination with mometasone) marketed by Novartis

• Trimbow ® (a fixed-dose, twice daily combination of formoterol, beclomethasone and glycopyrronium) manufactured by Chiesi and indicated for use in COPD in the E.U.

• Foster (beclomethasone dipropionate in combination with formoterol fumarate) manufactured by Chiesi and indicated for use in asthma and COPD outside the U.S.

Enerzair Breezehaler (QVM149) (a fixed-dose combination of indacaterol, mometasone and glycopyrronium) developed by Novartis as a triple therapy/single inhaler for the treatment of asthma and approved in the E.U., Canada, and Japan

• Enerzair ® Breezehaler ® (a fixed-dose combination of indacaterol, mometasone and glycopyrronium) developed by Novartis as a triple therapy/single inhaler for the treatment of asthma and approved in the E.U., Canada, and Japan

• Breztri ® Aerosphere ® (fixed dose combination of formoterol, glycopyrronium and budesonide) developed by AstraZeneca as a triple therapy single inhaler twice-daily medication for COPD and approved in the U.S.

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it is indicated for the add-on maintenance treatment of adult and pediatric patients aged 12 years and older with severe asthma.

In addition, several firms have been developing new formulations of Advair/Seretide (salmeterol /fluticasone propionate) and Symbicort (formoterol fumerate/budesonide) which may be marketed as generics or branded generics relative to the existing products from GSK and AstraZeneca, respectively.

In addition, several firms have developed and launched new formulations of Advair/Seretide (salmeterol /fluticasone propionate) and Symbicort (formoterol fumerate/budesonide) which may be marketed as generics or branded generics relative to the existing products from GSK and AstraZeneca, respectively.

All of these efforts represent potential competition for any of our partnered products.

Efforts have intensified following the publication of FDA draft guidance for the approval of fully substitutable versions of Advair and Symbicort in late 2013 and mid-2015, respectively.

Current examples of these products include the marketed products Duoresp/Biresp from Teva (generic Symbicort), AirFluSal Forspiro by Sandoz, Rolenium by Elpen and Sirdupla by Mylan (all generic versions of Seretide) which are all available in a wide number of countries in the E.U.

Numerous companies have brought to market generic forms of the ICS/LABA drug Advair ® since certain patents covering the Advair ® delivery device expired in 2016.

In March 2017, Mylan N.V.

received a complete response letter from the FDA relating to its Abbreviated New Drug Application (“ANDA”) for fluticasone propionate 100, 250, 500 mcg and salmeterol 50 mcg inhalation powder.

In May 2017, Hikma announced that it received a complete response letter from the FDA relating to its ANDA for fluticasone propionate and salmeterol inhalation powder, and in February 2018, Novartis announced that its generic division Sandoz had received a complete response letter from the FDA in response to its ANDA for a third fluticasone propionate and salmeterol product.

In January 2019, Mylan announced that the FDA approved Wixela Inhu (fluticasone propionate and salmeterol inhalation powder, USP), the first generic of Advair Diskus ® and Sandoz terminated development of generic Advair.

Teva announced that the FDA approved two of its products for adolescent and adult patients with asthma, one of which is AirDuo RespiClick ® (fluticasone propionate and salmeterol inhalation powder), a non-AB substitutable generic version of Advair ® .

In May 2020, Cipla filed for FDA approval of a generic version of Advair ® .

In April 2021, Hikma launched a generic version of Advair Diskus ® in the U.S.

In January 2020, Astra Zeneca launched an authorized generic version of Symbicort.

In August 2021, Lupin launched Luforbec ® , a branded generic alternative to Foster, in select European markets.

In general, these manufacturers are required to conduct a number of clinical efficacy, pharmacokinetic and device studies to demonstrate equivalence to Advair, per the FDA’s September 2013 Draft Guidance Document.

In general, these manufacturers are required to conduct a number of clinical efficacy, pharmacokinetic and device studies to demonstrate equivalence.

These studies are designed to demonstrate that the generic product has the same active ingredient(s), dosage form, strength, exposure and clinical efficacy as the branded product.

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In addition, in April 2016, the FDA issued a draft guidance document covering Fluticasone Furoate/Vilanterol Trifenatate (FF/VI), the active ingredients used in RELVAR ® /BREO ® ELLIPTA ® .

Our Integrated Hospital / Infectious Disease Business

Our Integrated Critical Care / Infectious Disease Assets

Commercial and Marketed Products

Our critical care and infectious disease portfolio was formed through the 2022 acquisitions of Entasis and La Jolla.

It comprises three differentiated commercial stage products and a pipeline.

The following table summarizes our commercial and marketed products:

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GIAPREZA is indicated for the treatment of refractory hypotension in adults with septic or other distributive shock who remain hypotensive despite adequate volume restitution and application of catecholamines and other available vasopressor therapies

XERAVA is a tetracycline class antibacterial indicated for the treatment of complicated intra-abdominal infections (“cIAI”) in patients 18 years of age and older

(5) European Union:

XERAVA is indicated for the treatment of cIAI in adults

XACDURO is a co-packaged product containing sulbactam, a beta-lactam antibacterial and beta lactamase inhibitor, and durlobactam, a beta lactamase inhibitor, indicated in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP), caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex.

GIAPREZA ® (angiotensin II)

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FDA as a vasoconstrictor indicated to increase blood pressure in adults with septic or other distributive shock.

GIAPREZA is approved by the European Commission (“EC”) and by the Great Britain Medicines and Health Care Products Regulatory Agency (“MHRA”) for the treatment of refractory hypotension in adults with septic or other distributive shock who remain hypotensive despite adequate volume restitution and application of catecholamines and other available vasopressor therapies.

GIAPREZA mimics the body’s endogenous angiotensin II peptide, which is central to the renin-angiotensin-aldosterone system (“RAAS”), which in turn regulates blood pressure.

GIAPREZA is marketed in the U.S.

by La Jolla and is marketed in Europe and Great Britain by PAION Deutschland GmbH (“PAION”) on behalf of La Jolla.

Angiotensin II for the Treatment of High-Output Shock (“ATHOS-3”)

by La Jolla and is marketed in Europe and Great Britain by PAION Deutschland GmbH on behalf of La Jolla.

PAION AG and PAION Deutschland GmbH (together and individually “PAION”) filed for insolvency in Germany on October 27, 2023 and the insolvency proceedings were opened on January 1, 2024.

PAION announced on December 22, 2023 that it concluded negotiations with Humanwell Healthcare Group and entered into an agreement on the sale of the essential business operations of PAION AG and PAION Deutschland GmbH with the approval of the insolvency administrator in both procedures.

La Jolla did not oppose the sale and is in discussions with the acquirer regarding the continued business relationship.

Angiotensin II for the Treatment of High-Output Shock (“ATHOS-3”)

GIAPREZA was approved by the U.S.

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ATHOS-3 was a multinational, randomized, double-blind, placebo-controlled study in which 321 adults with septic or other distributive shock who remained hypotensive despite fluid and vasopressor therapy received either GIAPREZA or placebo, both in addition to background vasopressor therapy.

The primary endpoint was mean arterial pressure

(“MAP”) response, defined as a MAP of 75 mm Hg or higher or an increase in MAP from baseline of at least 10 mm Hg without an increase in the dose of background vasopressors at Hour 3 (Khanna et al, New England Journal of Medicine 2017;

377:419–430).

The primary endpoint was mean arterial pressure (“MAP”) response, defined as a MAP of 75 mm Hg or higher or an increase in MAP from baseline of at least 10 mm Hg without an increase in the dose of background vasopressors at Hour 3 (Khanna et al, New England Journal of Medicine 2017;

377:419–430).

ATHOS-3 Study Design (1)

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(1) Khanna et al, New England Journal of Medicine 2017;

377:419–430

(2) Standard-of-care vasopressors included norepinephrine, epinephrine, dopamine and vasopressin

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Specifically, the primary endpoint was achieved by 70% of GIAPREZA-treated patients compared to 23% of placebo-treated patients (p <0.0001).

Primary Endpoint:

Mean Arterial Pressure Response (1),(2)

(1) GIAPREZA FDA prescribing information

ATHOS-3 Primary Endpoint Results

(1) Charts, graphs and tables derived from FDA prescribing information

(2) MAP response of 75 mm Hg or higher or an increase from baseline of at least 10 mm Hg at Hour 3 without an increase in the dose of background vasopressors

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Mortality through Day 28 was 46% on GIAPREZA and 54% on placebo (hazard ratio 0.78;

95% confidence interval 0.57–1.07).

Positive Survival Trend Observed (N=321) (1),(2)

(1) GIAPREZA FDA prescribing information

(2) MAP response of 75 mm Hg or higher or an increase from baseline of at least 10 mm Hg at Hour 3 without an increase in the dose of background vasopressors

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Khanna et al, New England Journal of Medicine 2017;

(3) Patients were treated with either GIAPREZA or placebo, both in addition to background vasopressor therapy

The most common adverse reactions that were reported in greater than 10% of GIAPREZA-treated patients were thromboembolic events.

Adverse Reactions Occurring in ≥4% of Patients Treated with GIAPREZA and ≥1.5% More Often than in Placebo-treated Patients (1)

(1) GIAPREZA FDA prescribing information

Adverse Reactions Occurring in ≥4% of Patients Treated with GIAPREZA and ≥1.5% More Often than in Placebo-treated Patients (1)

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Including arterial and venous thrombotic events

Percentage of Patients Experiencing ≥1 Adverse Event, ≥1 Serious Adverse Event and Discontinuing Treatment Due to an Adverse Event (1)

(1) Khanna et al, New England Journal of Medicine 2017;

377:419–43

XERAVA ® (eravacycline)

XERAVA ® (eravacycline) for injection is approved by the U.S.

FDA and Singapore Health Sciences Authority (“HSA”) as a tetracycline class antibacterial indicated for the treatment of cIAI due to susceptible microorganisms in patients 18 years of age and older.

XERAVA is approved by the EC, MHRA, and the Hong Kong Department of Health (“DoH”) for the treatment of cIAI in adults.

XERAVA is marketed in the U.S.

by our wholly owned subsidiary, Tetraphase Pharmaceuticals, Inc.

(“Tetraphase”), and is marketed in Europe and Great Britain by PAION on behalf of Tetraphase and is marketed in mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines by Everest Medicines Limited (“Everest”).

Everest submitted an NDA in China, which was accepted by the China National Medical Products Administration (“NMPA”) in March 2021.

cIAIs are the second most common source of severe sepsis in the ICU (Brun-Buisson et al, JAMA 1995;

274(12):968–974).

cIAIs are defined as consequences of perforations of the gastrointestinal tract that result in contamination of the peritoneal space (Solomkin et al, Clinical Infectious Diseases 2018;

69(6):921–929).

Investigating Gram-negative Infections Treated with Eravacycline (“IGNITE”)

cIAIs are the second most common source of severe sepsis in the ICU cIAIs are defined as consequences of perforations of the gastrointestinal tract that result in contamination of the peritoneal space.

Investigating Gram-negative Infections Treated with Eravacycline (“IGNITE”)

XERAVA was approved by the U.S.

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IGNITE1 was a multinational, randomized, double-blind, active-controlled study in 538 patients with clinical evidence of cIAIs requiring urgent surgical or percutaneous intervention who received either XERAVA or ertapenem.

The primary endpoint was clinical cure, defined as complete resolution or significant improvement of signs or symptoms of the index infection, at the test of cure (“TOC”) visit.

The TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered.

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XERAVA demonstrated statistical noninferiority in clinical cure rate in the micro-ITT population, which included all randomized subjects who had baseline bacterial pathogens that caused cIAIs and against at least one of which the investigational drug has in vitro (in a test tube) antibacterial activity (N=846).

Primary Endpoint:

Clinical Cure Rate (1)

(1) XERAVA FDA prescribing information

IGNITE1 and IGNITE4 Primary Endpoint Results (1)

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Noninferiority margins of 10% and 12.5% were used for IGNITE1 and IGNITE4, respectively

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n=Number of subjects with a clinical cure at the TOC visit

(1) XERAVA FDA prescribing information

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively

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(4) Includes Bacteroides caccae, Bacteroides fragilis, Bacteroides ovatus, Bacteroides thetaiotaomicron, Bacteroides uniformis, Bacteroides vulgatus, Clostridium perfringens, and Parabacteroides distasonis

XERAVA Demonstrated High Clinical Cure Rates Against Resistant Pathogens (1)

CEPH-R=cephalosporin-resistant;

ESBL=extended-spectrum β-lactamases;

MDR=multidrug resistance;

N=Number of subjects in the micro-ITT Population;

N1=Number of subjects with a specific pathogen;

n=Number of subjects with a clinical cure at the TOC visit

(1) Ditch et al, 2018 ASM Microbe Annual Meeting

(2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively

(3) Data on file from IGNITE1 and IGNITE4 micro-ITT population

The most common adverse reactions that were reported in XERAVA-treated patients in IGNITE1 and IGNITE4 were infusion site reactions.

Selected Adverse Reactions Reported in ≥1% of Patients Receiving XERAVA (1)

(1) XERAVA FDA prescribing information

Selected Adverse Reactions Reported in ≥1% of Patients Receiving XERAVA (1)

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively

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catheter/vessel puncture site pain, infusion site extravasation, infusion site hypoaesthesia, infusion/injection site phlebitis, infusion site thrombosis, injection site/vessel puncture site erythema, phlebitis, phlebitis superficial, thrombophlebitis, and vessel puncture site swelling

Sales and Marketing Organization

We employ an experienced sales and marketing team dedicated to the commercialization of GIAPREZA and XERAVA.

As of December 31, 2022, this team consisted of 35 professionals, including 27 critical care specialists.

During the year ended December 31, 2022, 503 hospitals in the U.S.

purchased GIAPREZA, and 874 hospitals and other healthcare organizations in the U.S.

purchased XERAVA.

Hospitals and other healthcare organizations generally purchase our products through a network of specialty and wholesale distributors.

These specialty and wholesale distributors are considered our

customers for accounting purposes.

We do not believe that the loss of one of these distributors would significantly impact the ability to distribute our products, as we expect that sales volume would be absorbed by the remaining distributors.

Due to the relatively short lead-time required to fill orders for GIAPREZA and XERAVA, backlog is not material to our business.

Catecholamines (primarily norepinephrine), which are available as generics and inexpensive, are typically used first line to treat distributive shock, while vasopressin, including Vasostrict ® (Endo International plc) and vasopressin generic drugs, is typically used second line.

XACDURO ® (sulbactam for injection;

durlobactam for injection), co-packaged for intravenous use (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the United States Food and Drug Administration (“FDA”) on May 23, 2023, and we commenced commercial sales of XACDURO ® in the third quarter of 2023.

XACDURO ® is a novel IV antibiotic.

The product is a combination of sulbactam, a β-lactam antibiotic, and durlobactam, a novel β-lactamase inhibitor (“BLI”) with broad spectrum β-lactamase coverage including Classes A, C and D, that was specifically developed for the treatment of a variety of serious infections caused by carbapenem-resistant Acinetobacter .

We believe that XACDURO ® is addressing a large unmet medical need in treating patients with serious Acinetobacter infections who prior to this launch have had few options for effective treatment.

Acinetobacter

Acinetobacter is a Gram-negative, opportunistic human pathogen that predominantly infects critically ill patients often resulting in severe pneumonia and bloodstream infections but also capable of infecting other body sites as well.

Once thought to be mostly benign, Acinetobacter is now considered a global threat in the healthcare setting due in part to its ability to acquire multidrug resistance at rates not previously seen in other bacteria.

In addition, Acinetobacter can remain viable for up to 100 days in dry conditions and easily spreads via air or water droplets, which explains why the pathogen can often be found in many locations in the intensive care unit, or ICU, including bedrails, bedside tables, monitors of mechanical ventilators, intravenous pumps, door handles, stethoscopes and many other locations.

Of significant concern, one study reported greater than 98% of Acinetobacter isolates in an ICU from non-clinical sources, such as bedrails and door handles, were determined to be multidrug resistant.

Pneumonia and bloodstream infections caused by drug-resistant Acinetobacter can have mortality rates up to 50%.

Antibiotic-resistance rates of Acinetobacter to current standard-of-care treatments are some of the highest reported, between 30% and 50% in the United States and greater than 90% in parts of Europe and Asia.

Acinetobacter resistance to β-lactams is primarily driven by the expression of Class D β-lactamases, often in combination with Class A and/or Class C β-lactamases.

There are currently no effective antibiotics specifically indicated for the treatment of multidrug-resistant Acinetobacter infections.

Durlobactam is the first clinical-stage BLI with sufficient broad-spectrum activity against class A, C, and D β-lactamases to potentially restore the efficacy of β-lactam antibiotics against multidrug-resistant Acinetobacter .

Sulbactam, the β-lactam antibiotic used in XACDURO has superior microbiological potency against Acinetobacter compared to other β-lactam antibiotics based on in vitro and in vivo analyses.

Historically, physicians used sulbactam to successfully treat Acinetobacter infections before development of broad β-lactamase mediated resistance rendered sulbactam on its own largely ineffective.

We believe our data demonstrates that combining durlobactam with sulbactam can effectively restore the activity of sulbactam against multidrug-resistant strains of Acinetobacter .

Acinetobacter Treatment Trial Against Colistin (“ATTACK”)

We completed ATTACK, a Phase 3 registration trial of XACDURO for the treatment of patients with carbapenem-resistant Acinetobacter infections, with positive top-line data announced in October 2021 and published in The Lancet Infectious Diseases in May 2023.

ATTACK enrolled 207 patients at 95 clinical sites in 16 countries.

This was a two-part trial with Part A being the randomized, comparative portion (XACDURO vs colistin) in patients with documented Acinetobacter hospital-acquired bacterial pneumonia (HABP), ventilator-associated bacterial pneumonia (VAPB), ventilated pneumonia (VP), or bacteremia, and Part B being an open-labeled portion including Acinetobacter infections resistant to, or having previously failed colistin or polymyxin B treatment.

Baseline Acinetobacter isolates tested were greater than 95% carbapenem resistant.

XACDURO met the primary efficacy endpoint of 28-day all-cause mortality compared to colistin in the CRABC m-MITT population of Part A.

XACDURO mortality was 19.0% (12/63) compared to 32.3% (20/62) in the colistin arm (treatment difference of -13.2%;

Similar trends were demonstrated in 28-day and 14-day all-cause mortality favoring XACDURO across all study populations evaluated to date.

A statistically significant difference in clinical cure at Test of Cure (TOC) was observed with 61.9% in the XACDURO arm compared to 40.3% in the colistin arm (95% CI 2.9-40.3).

In Part B, the 28-day all-cause mortality was 17.9% (5/28) and consistent with that observed in Part A.

Safety analyses from a total of 177 patients treated with XACDURO suggested that XACDURO was generally well-tolerated with a favorable safety profile compared to colistin.

XACDURO met the primary safety objective with a statistically significant lower incidence of nephrotoxicity as measured by the RIFLE classification for acute kidney injury.

XACDURO nephrotoxicity was 13.2% (12/91) versus 37.6% (32/85) in the colistin arm (p = 0.

Overall adverse events (AEs) in the safety population were comparable between treatment groups with 87.9% (80/91) in the XACDURO arm vs.

94.2% (81/86) in the colistin arm in Part A, 89.3% (25/28) in Part B.

Drug related AEs were 12.1% (10.7% in Part B) with XACDURO compared to 30.2% with colistin.

The most common non-infectious AEs (≥10%) in the XACDURO arm were diarrhea (16.5%), allergic and hypersensitivity reactions (16.5%), anemia (13.2%) and hypokalemia (12.1%) in Part A.

These AEs were also >10% in the colistin arm as was acute kidney injury.

ATTACK Study Design

IMI=Imipenem;

TOC=Test of cure;

HABP=hospital acquired bacterial pneumonia;

VABP=ventilator associated bacterial pneumonia;

VP=ventilated pneumonia;

BSI=blood stream infection;

ABC= Acinetobacter baumannii-calcoaceticus complex

(1) 2-part study, Part A being the randomized, controlled portion of the study in patients with ABC HABP / VABP or bacteremia.

Part B is the single-group portion of the study and includes ABC infections that are resistant to or have failed colistin or polymyxin B treatment, as detailed in the inclusion criteria.

Part B is deemed as not relevant to the HABP / VABP indication

ATTACK Primary Endpoint Results (1)

(1) Charts, graphs and tables derived from FDA prescribing information.

Lancet Infect Dis.

2023 May 11:S1473-3099(23)00184-6

Selected Adverse Reactions Occurring at a Frequency of >5% in Trial 1 (1)

(1) Charts, graphs and tables derived from FDA prescribing information

(2) Liver test abnormalities includes the following adverse reactions:

liver function test abnormal, hepatic function abnormal, increased transaminases, ALT increased, and AST increased;

Acute kidney injury includes the following adverse reactions:

renal impairment, blood Cr increased, toxic nephropathy, renal failure and acute kidney injury.

All-cause mortality:

Kaplan-Meier analysis of time to death by day 28 (1)

(1) Kaye et al.

Lancet Infect Dis.

2023 May 11:S1473-3099(23)00184-6

GIAPREZA ® competes with catecholamines (primarily norepinephrine), which are available as generics and inexpensive and typically used first line to treat distributive shock, and vasopressin, including Vasostrict ® (Endo International plc) and vasopressin generic drugs, which are typically used second line.

In the randomized, Phase 3 study ATHOS-3, GIAPREZA ® demonstrated clinical benefit in patients who were not adequately responding to available vasopressors, including catecholamines and vasopressin.

GIAPREZA’s principal competition as a treatment in patients not adequately responding to available vasopressors is the use of these same vasopressors at increased doses.

GIAPREZA ® ’s principal competition as a treatment in patients not adequately responding to available vasopressors is the use of these same vasopressors at increased doses.

If we are unable to successfully change treatment practices, the commercial prospects for GIAPREZA ® will be limited, and our business may suffer.

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If we are unable to successfully change treatment practices, the commercial prospects for XERAVA ® will be limited, and our business may suffer.

XACDURO ® competes with a number of antibiotics that are used to treat carbapenem-resistant Acinetobacter infections in the absence of other products indicated for these infections, including:

FETROJA ® (cefiderocol, marketed by Shionogi & Co., Ltd.), UNASYN ® (ampicillin and sulbactam, marketed by Pfizer Inc.), colistin (polymyxin E), and other current and future generic versions of marketed antibiotics.

There are at least two additional early-stage clinical programs developing investigational therapies for multidrug-resistant Acinetobacter infections.

If we are unable to successfully change treatment practices, the commercial prospects for XACDURO ® will be limited, and our business may suffer.

Regulatory Exclusivity

GIAPREZA and XERAVA are New Chemical Entities (“NCEs”) approved by the U.S.

GIAPREZA ® , XERAVA ® and XACDURO ® are New Chemical Entities (“NCEs”) approved by the U.S.

In the U.S., NCEs approved by the FDA are eligible for market exclusivity under the U.S.

Federal Food, Drug, and Cosmetic Act (“FDCA”), which can prevent the approval of generic versions of the NCE for 5 to 7.5 years from the date of the initial approval of the NCE.

Specifically, the FDCA provides a 5-year period of marketing exclusivity within the U.S.

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A drug is an NCE if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance.

During the exclusivity period, the FDA may not accept for review an Abbreviated New Drug Application (“ANDA”) or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all of the data required for approval.

However, an application may be submitted 4 years after the NDA approval of the NCE if it contains a certification of patent invalidity or non-infringement.

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In the absence of a court ruling, the 30-month stay will be extended by such amount of time (if any) that is required for 7.5 years to have elapsed from the date of NDA approval of the NCE.

On February 15, 2022, La Jolla received a paragraph IV notice of certification (the “Notice Letter”) from Gland Pharma Limited (“Gland”) advising that Gland had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of GIAPREZA in the U.S.

prior to the expiration of U.S.

and 11,219,662 (the “GIAPREZA Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

The Notice Letter alleges that the GIAPREZA Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Gland’s ANDA.

On March 29, 2022, La Jolla filed a complaint for patent infringement of the GIAPREZA Patents against Gland and certain related entities in the United States District Court for the District of New Jersey in response to Gland’s ANDA filing.

In accordance with the Hatch-Waxman Act, because GIAPREZA is a new chemical entity and La Jolla filed a complaint for patent infringement within 45 days of receipt of the Notice Letter, the FDA cannot approve Gland’s ANDA any earlier than 7.5 years from the approval of the GIAPREZA NDA unless the District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed.

and 11,219,662 (the “GIAPREZA ® Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

The Notice Letter alleges that the GIAPREZA ® Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Gland’s ANDA.

On March 29, 2022, La Jolla filed a complaint for patent infringement of the GIAPREZA ® Patents against Gland and certain related entities in the United States District Court for the District of New Jersey in response to Gland’s ANDA filing.

In accordance with the Hatch-Waxman Act, because GIAPREZA ® is a new chemical entity and La Jolla filed a complaint for patent infringement within 45 days of receipt of the Notice Letter, the FDA cannot approve Gland’s ANDA any earlier than 7.5 years from the approval of the GIAPREZA ® NDA unless the District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed.

On February 22, 2023, La Jolla received a paragraph IV notice of certification (the “Second Notice Letter”) from Gland advising that Gland had amended its ANDA filing to include a paragraph IV certification alleging that all claims of the newly-issued and Orange Book-listed U.S.

11,559,559 (“the ’559 Patent”), which covers GIAPREZA ® , are invalid, unenforceable and/or not infringed.

On March 22, 2023, La Jolla filed a First Amended Complaint in this litigation adding Gland’s marketing and distribution partners for its ANDA angiotensin II product, Fresenius Kabi USA LLC and Fresenius Kabi SwissBiosim GmbH (collectively, the “Fresenius Kabi Defendants”), as co-defendants.

On April 7, 2023, La Jolla filed a Second Amended Complaint in response to the Second Notice Letter, adding claims that the manufacture, use, sale, offer for sale, or import of Gland’s ANDA angiotensin II product will infringe the ’559 Patent.

On November 14, 2023, La Jolla filed a Third Amended Complaint adding additional infringement claims against the Fresenius Kabi Defendants.

We intend to vigorously enforce our intellectual property rights relating to GIAPREZA ® .

Under the Generating Antibiotic Incentives Now (“GAIN”) provisions of the FDA Safety and Innovation Act (“FDASIA”), the FDA may designate a product as a qualified infectious disease product (“QIDP”).

Fact discovery is set to conclude on February 29, 2024 and expert discovery will be complete by July 12, 2024.

A trial date has not yet been set in this matter.

In order to receive this designation, a drug must qualify as an antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections.

We obtained a QIDP designation for the IV formulation of XERAVA ® for cIAI in July 2013.

Upon approving an application for a QIDP, the FDA will extend by an additional 5 years any non-patent marketing exclusivity period awarded, such as a 5-year exclusivity period awarded for

Upon approving an application for a QIDP, the FDA will extend by an additional 5 years any non-patent marketing exclusivity period awarded, such as a 5-year exclusivity period awarded for an NCE.

This extension is in addition to any pediatric exclusivity extension awarded.

XERAVA ® has been awarded this 5-year exclusivity under FDASIA.

Our Product Candidates

The following table summarizes the status of our primary product candidates:

(1) Zai Lab (Shanghai) Co., Ltd.

(“Zai Lab”) has licensed exclusive rights to SUL-DUR in the Asia-Pacific region.

(2) Global Antibiotic Research and Development Partnership (“GARDP”) will fully fund the Phase 3 clinical trial and pharmaceutical development activities and has commercial rights in WHO defined low-income and specified middle-income countries.

We have retained commercial rights in all major markets in North America, Europe and Asia-Pacific

Our lead product candidate, SUL-DUR, is a novel IV antibiotic.

The product is a combination of sulbactam, a β-lactam antibiotic, and durlobactam, our novel β-lactamase inhibitor (“BLI”) with broad spectrum β-lactamase coverage including Classes A, C and D, that we are developing for the treatment of a variety of serious infections caused by carbapenem-resistant Acinetobacter .

We have completed three separate Phase 1 clinical trials, including one evaluating the penetration of SUL-DUR into the lung and one in renally impaired patients.

Subsequently, we completed a Phase 2 clinical trial in patients with cUTIs.

We initiated ATTACK, our single Phase 3 registration trial in 2019, that evaluated SUL-DUR in patients with confirmed carbapenem-resistant Acinetobacter pneumonia and/or bloodstream infections.

We believe SUL-DUR has the ability to improve outcomes of patients with multidrug-resistant Acinetobacter infections, reducing their overall mortality.

We announced positive top-line Phase 3 data in October 2021 and based on our positive top-line Phase 3 data and the totality of our preclinical and clinical data, we filed a new drug application (“NDA”) with the FDA in September 2022.

The NDA was accepted for filing by the U.S.

We believe SUL-DUR has the ability to improve outcomes of patients with multidrug-resistant Acinetobacter infections, reducing their overall mortality.

Acinetobacter

In addition, Acinetobacter has the ability to remain viable for up to 100 days in dry conditions and easily spreads via air or water droplets, which explains why the pathogen can often be found in many locations in the intensive care unit, or ICU, including bedrails, bedside tables, monitors of mechanical ventilators, intravenous pumps, door handles, stethoscopes and many other locations.

Of significant concern, one study reported greater than 98% of Acinetobacter isolates in an ICU from non-clinical sources such as bedrails and door handles, were determined to be multidrug resistant.

Pneumonia and bloodstream infections caused by drug-resistant Acinetobacter can have mortality rates approaching 50%.

Acinetobacter resistance to β-lactams is primarily driven by the expression of Class D β-lactamases, often in combination with Class A and/or Class C β-lactamases.

There are currently no effective antibiotics indicated for the treatment of multidrug-resistant Acinetobacter infections.

Sulbactam, the β-lactam antibiotic used in SUL-DUR has superior microbiological potency against Acinetobacter compared to other β-lactam antibiotics based on in vitro and in vivo analyses.

Historically, physicians used sulbactam to successfully treat Acinetobacter infections before development of broad β-lactamase mediated resistance rendered sulbactam on its own largely

We believe our data demonstrates that combining durlobactam with sulbactam can effectively restore the activity of sulbactam against multidrug-resistant strains of Acinetobacter .

Market Opportunity

We estimate that there are up to 200,000 hospital-treated Acinetobacter infections annually in the United States and Europe, of which up to 100,000 are carbapenem-resistant Acinetobacter infections, which we regard as our initial target markets for SUL-DUR.

We also believe there could be a significant market opportunity in Asia-Pacific, Central and South America, Russia and the Middle East given resistance rates exceeding 80% in some countries.

If approved, we believe SUL-DUR has the potential to address the issues of resistance facing existing regimens, which is currently limiting the utility of the carbapenems, and tolerability, which is a concern with regimens containing colistin.

There are currently no antibiotics indicated for the treatment of carbapenem-resistant Acinetobacter infections.

Clinical Development Plan

Completed Clinical Trials

Phase 3 registration trial:

We completed ATTACK, a Phase 3 registration trial of SUL-DUR for the treatment of patients with carbapenem-resistant Acinetobacter infections, with positive top-line data announced in October 2021.

ATTACK enrolled 207 patients at 95 clinical sites in 16 countries.

This was a two-part trial with Part A being the randomized, comparative portion (SUL-DUR vs colistin) in patients with documented Acinetobacter hospital-acquired bacterial pneumonia (HABP), ventilator-associated bacterial pneumonia (VAPB), ventilated pneumonia (VP), or bacteremia, and Part B being an open-labeled portion including Acinetobacter infections resistant to, or having previously failed colistin or polymyxin B treatment.

Baseline Acinetobacter isolates tested were greater than 95% carbapenem resistant.

SUL-DUR met the primary efficacy endpoint of 28-day all-cause mortality compared to colistin in the CRABC m-MITT population of Part A.

SUL-DUR mortality was 19.0% (12/63) compared to 32.3% (20/62) in the colistin arm (treatment difference of -13.2%;

Similar trends were demonstrated in 28-day and 14-day all-cause mortality favoring SUL-DUR across all study populations evaluated to date.

A statistically significant difference in clinical cure at Test of Cure (TOC) was observed with 61.9% in SUL-DUR arm compared to 40.3% in the colistin arm (95% CI 2.9-40.3).

In Part B, the 28-day all-cause mortality was 17.9% (5/28) and consistent with that observed in Part A.

Safety analyses from a total of 177 patients treated with SUL-DUR suggested that SUL-DUR was generally well-tolerated with a favorable safety profile compared to colistin.

SUL-DUR met the primary safety objective with a statistically significant lower incidence of nephrotoxicity as measured by the RIFLE classification for acute kidney injury.

SUL-DUR nephrotoxicity was 13.2% (12/91) versus 37.6% (32/85) in the colistin arm (p = 0.

Overall adverse events (AEs) in the safety population were comparable between treatment groups with 87.9% (80/91) in the SUL-DUR arm vs.

94.2% (81/86) in the colistin arm in Part A, 89.3% (25/28) in Part B.

Drug related AEs were 12.1% (10.7% in Part B) with SUL-DUR compared to 30.2% with colistin.

The most common non-infectious AEs (≥10%) in the SUL-DUR arm were diarrhea (16.5%), allergic and hypersensitivity reactions (16.5%), anemia (13.2%) and hypokalemia (12.1%) in Part A.

These AEs were also >10% in the colistin arm as was acute kidney injury.

On November 30, 2022, we announced that the U.S.

FDA accepted for Priority Review the new drug application (NDA) for SUL-DUR.

The FDA is currently planning to hold an advisory committee meeting to discuss this application.

The target PDUFA date (or action date) is May 29, 2023.

Phase 2 clinical trial in cUTI patients:

We completed a Phase 2 clinical trial in cUTI patients to provide additional safety and pharmacokinetic, or PK, data as well as efficacy data against carbapenem-resistant pathogens.

Eighty patients were randomized to receive either a dose of SUL-DUR or placebo every six hours for seven days.

Patients in both arms also received background therapy, which is current standard-of-care, with 500 mg of imipenem, or IMI, administered through IV every six hours.

There were no serious adverse events reported and the adverse event profile of SUL-DUR plus IMI was similar to that of the IMI comparator arm.

PK data observed in the Phase 2 trial was consistent with the PK data observed in the Phase 1 clinical trial in healthy volunteers.

We have completed three Phase 1 clinical trials, highlighted below, in addition to a Phase 2 clinical trial in patients with cUTIs.

In all of these clinical trials, SUL-DUR was observed to be generally well tolerated.

Four-part Phase 1 first-in-human trial:

Our four-part Phase 1 first-in-human clinical trial was conducted in Australia in 124 healthy volunteers.

SUL-DUR was generally well tolerated, with no dose-related systemic adverse events or drug-related serious adverse events reported.

SUL-DUR also exhibited linear dose-dependent increases in exposure and PK parameters across the dose range studied.

Phase 1 lung trial:

Our Phase 1 lung trial assessed the concentration of SUL-DUR in lung fluid, an important metric to understand, because ATTACK includes patients with pneumonia and lack of appropriate lung tissue penetration has been found to contribute to reduced efficacy.

We believe that the levels of SUL-DUR in the lung fluid achieved in this trial support its continued development as a potential treatment for pneumonia caused by Acinetobacter .

Phase 1 renal trial:

Our Phase 1 renal trial analyzed serum levels in renally impaired patients and provided data to enable the development of a dose adjustment protocol for the type of patient targeted in our ongoing Phase 3 registration trial.

We submitted an IND for SUL-DUR to the U.S.

FDA in June 2017, and the FDA notified us in July 2017 that we could proceed with this program.

The FDA granted Fast Track and QIDP designation for SUL-DUR in September 2017 for the treatment of hospital-acquired and ventilator-acquired bacterial pneumonia and bloodstream infections due to Acinetobacter .

Global Acinetobacter Surveillance Data

Durlobactam has broad activity against a wide range of β-lactamases, including Classes A, C and D, unlike currently marketed BLIs that primarily cover only Class A and Class C β-lactamases.

Durlobactam is the first BLI in clinical development with such a broad spectrum of in vitro activity.

SUL-DUR has also exhibited potent microbiological activity against Acinetobacter strains in vitro.

Over a series of studies summarized in the figure below, we have compared the effectiveness of SUL-DUR, sulbactam alone and comparators in inhibiting 7,221 strains of Acinetobacter that were collected from patients around the world between 2011 and 2020.

Amikacin and colistin were tested against 6,418 of the 7,221 strains.

The plot in the figure below presents the cumulative percentage of these strains inhibited by increasing concentrations of each of the tested compounds.

Sulbactam alone, as well as most of the other marketed antibiotics, had a very high MIC90 value of 64 mg/L, meaning that concentrations of 64 mg/L or greater were required to inhibit growth of 90% of the strains.

The corresponding breakpoints, which are established by the Clinical & Lab Standards Institute, or CLSI, as the specified concentrations for each antibiotic that define whether a strain is considered resistant, are significantly lower than their MIC90 values.

If the MIC90 of a drug is lower than its CLSI breakpoint, then that drug would be expected to be effective against more than 90% of the strains.

If a drug’s MIC90 is higher than its breakpoint, the drug would not be expected to have broad efficacy against those strains.

This cumulative analysis suggests that recent global strains of Acinetobacter are resistant to all the comparator antibiotics other than colistin, consistent with their significantly diminished clinical utility against Acinetobacter infections.

In contrast, SUL-DUR had very potent activity, with a much lower MIC90 of 2 mg/L.

This is lower than the CLSI breakpoint for sulbactam, which is 4 mg/L (in Unasyn ® , a combination of sulbactam and ampicillin), suggesting that our chosen target exposure levels of SUL-DUR may be effective against more than 90% of global, multidrug resistant Acinetobacter strains.

A subset of 926 isolates out of the 7,221 strains tested were from Chinese hospitals collected in 2016-2018.

831 of the 926 (84.6%) Chinese isolates were carbapenem-resistant.

In contrast, SUL-DUR showed potent activity against this subset, with an MIC90 of 2 mg/L and 97.9% of isolates susceptible to ≤

4 mg/L of SUL-DUR.

We are initially developing SUL-DUR for the treatment of multidrug-resistant Acinetobacter infections.

Due to rising resistance rates, standard-of-care treatment for multidrug-resistant Acinetobacter infections often includes a combination of several last-line treatment options, including carbapenems, tetracyclines, polymyxins, and other generically available agents.

Despite using best available therapy, mortality rates of patients with multidrug-resistant Acinetobacter infections are reported as high as 50%.

As of the date of this report, we are not aware of any marketed antibiotic that is indicated for the treatment of multidrug-resistant Acinetobacter infections;

however, we are aware of other potentially competitive products that have shown in vitro activity against some strains of Acinetobacter.

Melinta Therapeutics Inc.

currently markets minocycline.

Although recently approved for treating cUTIs, Fetroja ® , from Shionogi & Co., Ltd., includes in its label a specific warning of an observed increase in all-cause mortality in patients with carbapenem-resistant Gram-negative bacterial infections that were treated with the drug.

BioVersys AG reported in May 2022 that their lead program BV100, being developed specifically for multidrug-resistant Acinetobacter infections, completed three Phase 1 clinical trials.

Commercial Approach

In the United States, our commercial strategy is driven by our understanding of where Acinetobacter infections are known to exist.

Given that Acinetobacter infections more commonly occur in immunocompromised patients, treatment settings for these patients are frequently large intensive care units (ICUs), specialized centers like transplant, cancer, and burn, outpatient long-term acute centers (LTACs) and home infusion.

SUL-DUR has been developed specifically for multi-drug resistant Acinetobacter infections and we believe the unmet need and value proposition of SUL-DUR will support its use for treating infections caused by this serious Gram-negative pathogen.

This value proposition includes:

Acinetobacter infections currently cost lives.

There is an urgent, global unmet medical need due to the limitations of currently available treatment options.

Published mortality rates of Acinetobacter infections treated with best available therapy are reported to exceed 50%.

Acinetobacter infections currently cost time.

These serious infections directly lead to time in a hospital where hospital length of stay is often measured in months or weeks instead of days.

Acinetobacter infections currently cost money.

Given the limitations described above, carbapenem-resistant Acinetobacter infections are reported to be one of the costliest to treat, exceeding $75,000 per case based upon published literature.

We believe the data from ATTACK, combined with our overall preclinical and clinical data package, clearly demonstrate an efficacy and safety benefit of SUL-DUR over colistin in treating carbapenem resistant Acinetobacter infections.

Current Acinetobacter treatment protocols allow for clear positioning of SUL-DUR.

Patients with suspected Acinetobacter infections are frequently treated with a broad-spectrum antibiotic, commonly a carbapenem, as first-line therapy.

If susceptibility testing identifies that the causative bacterial pathogen is carbapenem-resistant Acinetobacter , the patient is then frequently switched to a colistin-based antibiotic regimen in an attempt to successfully treat the infection.

Published literature, however, reports greater than 50% mortality rates using colistin-based regimens.

We believe that the data from the ATTACK Phase 3 registration trial demonstrate improved efficacy and safety profiles, that could result in SUL-DUR, if approved, being preferred to a colistin-based regimen for the treatment of multidrug-resistant, including carbapenem-resistant, Acinetobacter infections.

Multidrug-resistant Acinetobacter infections also present a significant unmet medical need in China and across the broader Asia/Pacific territory.

Our collaboration and license agreement with Zai Lab, which included their participation in the ATTACK Phase 3 registration clinical trial, provides a potentially accelerated path for regulatory approval and commercialization in China and Asia-Pacific territories.

Zai Lab supported the enrollment of approximately 25% of the evaluable patients in ATTACK from China, which we believe will support a regulatory submission in China.

Under our agreement with Zai Lab, we receive upfront, milestone and royalty payments in addition to payment of certain Phase 3 registration clinical trial costs.

We maintain 100% of the rights and associated economics in North America and Europe.

Outside of the United States, we intend to work with multi-national pharmaceutical companies to leverage their commercialization capabilities in territories not covered by our agreement with Zai Lab.

In January 2023, Zai Lab announced that the Center for Drug Evaluation of China’s National Medical Products Administration has granted priority review status to the NDA for SUL-DUR for the treatment of infections caused by Acinetobacter baumannii, including multidrug-resistant and carbapenem-resistant (CRAB) strains.

Our second late-stage product candidate is zoliflodacin, a potential single oral dose cure for the treatment of uncomplicated gonorrhea caused by the bacterial pathogen N.

The following table summarizes the status of our primary product candidate:

(1) Global Antibiotic Research and Development Partnership (“GARDP”) fully funded the Phase 3 clinical trial and pharmaceutical development activities and has commercial rights in WHO defined low-income and specified middle-income countries.

We have retained commercial rights in major markets in North America, Europe and Asia-Pacific

Zoliflodacin is a late-stage product candidate, a potential single oral dose cure for the treatment of uncomplicated gonorrhea caused by the bacterial pathogen N.

gonorrhoeae .

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Zoliflodacin targets the validated mechanism of action of the fluoroquinolone class of antibiotics but does so in a novel manner to avoid existing fluoroquinolone resistance.

We have completed several Phase 1 clinical trials and a Phase 2 clinical trial of zoliflodacin in patients with uncomplicated gonorrhea.

In collaboration with GARDP, in 2019 we initiated a single Phase 3 registration trial of zoliflodacin in patients with uncomplicated gonorrhea.

GARDP will fund all the Phase 3 clinical trial and pharmaceutical development costs and in return will receive commercial rights for zoliflodacin in WHO-defined low-income and select middle-income countries.

We have retained commercial rights in all other countries, including the major markets in North America, Europe and Asia-Pacific.

Uncomplicated gonorrhea is an N. gonorrhoeae infection of the urethra, cervix, pharynx or rectum, and is more common than complicated gonorrhea, which includes spread of the infection to other tissues and potentially the bloodstream.

In November 2023, we reported positive top-line data results of a pivotal Phase 3 trial.

The study demonstrated statistical non-inferiority of microbiological cure at the urogenital site when compared to treatment with intramuscular infection of ceftriaxone and oral azithromycin, a current global standard of care regimen.

This trial was initiated in 2019 in collaboration with GARDP, who funded all the Phase 3 clinical trial and pharmaceutical development costs and in return received commercial rights for zoliflodacin in WHO-defined low-income and select middle-income countries.

We retained commercial rights in all other countries, including the major markets in North America, Europe and Asia-Pacific.

Uncomplicated gonorrhea is an N.

gonorrhoeae infection of the urethra, cervix, pharynx or rectum, and is more common than complicated gonorrhea, which includes spread of the infection to other tissues and potentially the bloodstream.

Gonorrhea can be associated with serious complications, including pelvic inflammatory disease, ectopic pregnancy and infertility, as well as an increased risk of human immunodeficiency virus, or HIV.

Despite the continued use of effective antibiotics, it remains one of the most common sexually transmitted bacterial infections in the world with an estimated 82.4 million people worldwide infected each year.

Despite the continued use of effective antibiotics, it remains one of the most common sexually transmitted bacterial infections in the world with an estimated 82 million people worldwide infected each year, including over 1 million people each year in the United States.

The occasional absence of symptoms, more frequent in women, is thought to be one reason for sustained levels of infection.

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Cases of gonorrhea in the United States have reached an estimated 1.6 million per year.

The WHO worldwide estimate of approximately 82.4 million new cases includes infected adolescents and adults aged 15–49 years.

The CDC estimates that the cases of gonorrhea in the United States have been increasing at least 10% per year since 2009.

In April 2021, the CDC announced that sexually transmitted diseases in the U.S.

reached all-time high for 6th consecutive year, with approximately 2.6 million cases of chlamydia, gonorrhea & syphilis reported in 2019.

The results of a 2017-2018 survey of countries reporting decreased susceptibility, DS, or resistance, R, of N.

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This follows a 2019 update in the United Kingdom where recommended empirical treatment of gonorrhea is now 1 g intramuscular ceftriaxone monotherapy.

Clinical Development Plan

Ongoing Registration Trial

Phase 3 registration trial:

In 2019, we announced the initiation of a global, multi-center Phase 3 registration trial in collaboration with GARDP who is conducting and funding all Phase 3 clinical trial and pharmaceutical development costs.

Up to 18 clinical trial sites are planned across the U.S., Thailand, South Africa, the Netherlands and Belgium.

Our Phase 3 registration trial is a multi-center, open-label, noninferiority trial in approximately 1,000 enrolled patients with uncomplicated gonorrhea who will be randomized on a 2:1 basis to receive either a single 3.0g oral dose of zoliflodacin or a regimen of 500mg intramuscular ceftriaxone plus 1g oral azithromycin.

The primary endpoint will be the proportion of patients with microbiological cure at urethral or cervical sites, approximately six days after treatment.

The Data Safety Monitoring Board, or DSMB, in May 2021 recommended to continue the study without modification.

Despite the ongoing challenges with the COVID-19 pandemic, we have observed an increase in the enrollment rate recently and based on current enrollment rates we anticipate completion of trial enrollment in 2023.

Based on our discussions with the U.S.

FDA, we believe that the efficacy data from this single Phase 3 registration trial, if positive, along with the data from our other clinical trials of zoliflodacin, will be sufficient to support the submission of an NDA to the U.S.

We believe that as resistance to ceftriaxone continues to grow both in the US and around the world, there is an increasing unmet medical need for drugs effective against resistant strains of N.

gonorrhoeae and also for an oral therapy for those patients who cannot get an in-office intramuscular injection or prefer a more convenient option.

Completed Clinical Trials

Phase 2 clinical proof-of-concept trial:

We have completed a multi-center, randomized, open-label Phase 2 clinical trial comparing a single oral dose of 2.0g or 3.0g of zoliflodacin to 500mg intramuscular ceftriaxone for the treatment of uncomplicated gonorrhea.

Phase 3 registrational trial:

We completed a global, multi-center Phase 3 registrational trial in collaboration with GARDP who conducted and funded all Phase 3 clinical trial and pharmaceutical development costs.

The Phase 3 trial enrolled a total of 930 patients with uncomplicated gonorrhea, including women, adolescents, and people living with HIV, making it the largest clinical trial ever conducted for a new treatment against gonorrhea infection, with 16 trial sites in regions with a high prevalence of gonorrhea across five countries, including Belgium, the Netherlands, South Africa, Thailand, and the U.S.

The trial compared a single, oral, 3g dose of zoliflodacin to a globally recognized standard of care regimen (500mg ceftriaxone IM plus 1g oral azithromycin) for the treatment of uncomplicated gonorrhea.

Zoliflodacin met the prespecified statistical test for non-inferiority when compared to ceftriaxone and oral azithromycin (5.31% (95%CI 1.38, 8.65%)).

Non inferiority of zoliflodacin was demonstrated within the pre-specified margin of 12% and, furthermore, within the margin of 10% as specified in U.S.

Food and Drug Administration guidance.

Phase 3 trial design

TOC=Test of Cure;

IM=intra-muscular;

CRO-AZI=ceftriaxone and azithromycin

Efficacy and safety results from Phase 3 trial (1)

TEAE=Treatment emergent adverse event;

CRO-AZI=ceftriaxone and azithromycin

(1) Company data, published on November 6, 2023

Phase 2 clinical proof-of-concept trial:

We have completed a multi-center, randomized, open-label Phase 2 clinical trial comparing a single oral dose of 2.0g or 3.0g of zoliflodacin to 500mg intramuscular ceftriaxone for the treatment of uncomplicated gonorrhea.

In this trial, 179 randomized patients received treatment and zoliflodacin was generally well tolerated, with efficacy outcomes comparable to ceftriaxone.

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Phase 1 clinical trial:

We evaluated zoliflodacin in two Phase 1 clinical trials studying 72 healthy volunteers in total.

We evaluated zoliflodacin in two Phase 1 clinical trials studying 72 healthy volunteers in total.

In one trial, we evaluated PKs and tolerability in 48 subjects and food effects in 18 subjects, and in the second trial, we evaluated absorption, distribution, metabolism and excretion in six subjects.

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The data suggest that zoliflodacin retains potent activity against contemporary clinical isolates in the U.S., Europe, China, Thailand and South Africa that are resistant to other antibiotic classes including fluroquinolones, which was expected given its novel mechanism of action.

In addition, the data show

significant resistance against two of the four standard antibiotics indicated for gonorrhea, ciprofloxacin, a fluoroquinolone, and azithromycin, a macrolide.

In addition, the data show significant resistance against two of the four standard antibiotics indicated for gonorrhea, ciprofloxacin, a fluoroquinolone, and azithromycin, a macrolide.

We are initially developing zoliflodacin as a single oral dose treatment for uncomplicated gonorrhea.

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Additional generic cephalosporins and fluoroquinolones are also prescribed, but not recommended as primary treatment options given current resistance rates.

Gepotidacin, currently under development for a variety of infections by GlaxoSmithKline plc, is the only potentially competitive product candidate in late-stage clinical development that we are aware of that is being developed for the treatment of uncomplicated urogenital gonorrhea.

Gepotidacin, currently under development for a variety of infections by GlaxoSmithKline plc, is the only potentially competitive product candidate in late-stage clinical development that we are aware of that is being developed for the treatment of uncomplicated urogenital gonorrhea.

A Phase 3 clinical trial (EAGLE-1) was initiated by GlaxoSmithKline in October 2019.

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a 4-tablet 3000 milligram (mg) oral dose at the study site followed by another 4-tablet 3000mg oral dose as an outpatient.

Commercial Approach

Antibiotics to treat uncomplicated gonorrhea will typically be available through primary care physicians, outpatient clinics and emergency rooms, and numerous community sites.

In addition, placement on CDC guidelines has historically driven awareness and uptake in the U.S.

We have partnered with GARDP who will lead the commercialization of zoliflodacin in certain WHO-defined low-income and specified middle-income countries.

Zoliflodacin is a potential single dose cure (sachet in water) that can facilitate “expedited partner therapy”

at home, which may lower the chance for a repeat infection from a partner.

Expedited partner therapy, or EPT, is the clinical practice of treating the sex partners of patients diagnosed with chlamydia or gonorrhea by providing prescriptions or medications to the patient to take to his/her partner without the health care provider first examining the partner.

Within the United States, EPT is permissible in 45 states, potentially allowable in 4 states and is only prohibited in one state.

Manufacturing

Manufacturing of RELVAR ® /BREO ® ELLIPTA ® (FF/VI) and ANORO ® ELLIPTA ® (UMEC/VI) is performed by GSK.

We rely on third-party manufacturers to produce GIAPREZA and XERAVA and expect to continue to do so in the foreseeable future to meet our development and commercial needs.

In all of our manufacturing agreements, we require that contract manufacturers produce active pharmaceutical ingredients (“APIs”) and drug products in accordance with the FDA’s current Good Manufacturing Practices (“cGMPs”) and all other applicable laws and regulations.

We maintain confidentiality agreements with potential and existing manufacturers in order to protect our proprietary rights related to GIAPREZA and XERAVA.

The long-term commercial success of GIAPREZA and XERAVA will depend in part on the ability of our contract manufacturers to supply cGMP-compliant API and drug product without interruption.

We rely on third-party manufacturers to produce GIAPREZA ® , XERAVA ® , and XACDURO ® and expect to continue to do so in the foreseeable future to meet our development and commercial needs.

We maintain confidentiality agreements with potential and existing manufacturers in order to protect our proprietary rights related to GIAPREZA ® , XERAVA ® and XACDURO ® .

The long-term commercial success of GIAPREZA ® , XERAVA ® and XACDURO ® will depend in part on the ability of our contract manufacturers to supply cGMP-compliant API and drug product without interruption.

With respect to our product candidates, we currently rely on third-party contract manufacturers for our required raw materials, drug substance, and finished drug product for our preclinical research and clinical trials.

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In the United States, the process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local statutes and regulations requires the expenditure of substantial time and financial resources.

The failure to comply with the

applicable requirements at any time during the product development process, approval process or after approval may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and untitled letters, product recalls, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal penalties.

The failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and untitled letters, product recalls, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal penalties.

Approval Processes

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• preparation and submission to the FDA of an NDA;

satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s safety, identity, strength, quality and purity;

• satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s safety, identity, strength, quality and purity;

• FDA review and approval of the NDA.

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In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin.

A clinical hold may occur at any time during the life of an IND and may affect one or more specific studies or all studies conducted u1nder the IND.

A clinical hold may occur at any time during the life of an IND and may affect one or more specific studies or all studies conducted under the IND.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with cGCP.

They must be conducted under protocols detailing, among other things, the objectives of the trial, dosing procedures, subject selection and

exclusion criteria and the safety and effectiveness criteria to be evaluated.

They must be conducted under protocols detailing, among other things, the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated.

Each protocol and any amendments must be submitted to the FDA as part of the IND, and progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently in other situations, including the occurrence of serious adverse events.

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The FDA or the sponsor may suspend or terminate a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points, including prior to submission of an IND, at the end of Phase 2 and before an NDA is submitted.

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A drug that, if approved, would represent a significant improvement in the safety or effectiveness of the treatment, prevention or diagnosis of a serious disease or condition may receive priority review.

Requests for priority review generally must be submitted at the

time of NDA submission.

Requests for priority review generally must be submitted at the time of NDA submission.

The FDA has agreed to specified performance goals in the review process of NDAs.

Under that agreement, 90% of applications seeking approval of new molecular entities, or NMEs, are meant to be reviewed within ten months from the date on which FDA accepts the NDA for filing, and 90% of applications for NMEs that have been designated for “priority review”

are meant to be reviewed within six months of the filing date.

For applications seeking approval of drugs that are not NMEs, the ten-month and six-month review periods run from the date that FDA receives the application.

The review process may be extended by the FDA for three additional months to consider a major amendment to the application following the original submission.

The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing complies with cGMP requirements to assure and preserve the product’s safety, identity, strength, quality and purity.

The FDA may refer the NDA to an advisory committee for review and recommendation as to whether the application should be approved and under what conditions.

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In addition, the FDA may require, as a condition of approval, risk evaluation and mitigation strategies, or REMS (which may include requirements for, restricted distribution and use), enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre-approval of promotional materials, restrictions on direct-to-consumer advertising or commitments to conduct additional research post-approval.

On the basis of the FDA’s evaluation of the NDA and accompanying information, the FDA may issue an approval letter or a complete response letter.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

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QIDPs are defined as antibacterial or antifungal drugs intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen or qualifying pathogens identified by the FDA.

XERAVA and SUL-DUR have been designated by the FDA as a QIDP.

XERAVA ® and XACDURO ® have been designated by the FDA as a QIDP.

Zoliflodacin has also been designated as a QIDP by the FDA for the treatment of uncomplicated gonorrhea.

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As noted above, the Hatch-Waxman Amendments permit a patent restoration term of up to five years for a single patent for an approved product as compensation for patent term lost during product development and the FDA regulatory review process.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14

years from the product’s approval date and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended.

Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent.

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The decentralized procedure allows marketing authorization applications to be submitted simultaneously in two or more EU member states, whereas the mutual recognition procedure must be used if the product has already been authorized in at least one other EU member state.

Both the decentralized and mutual recognition procedures provide for approval by one or more “concerned”

member states based on an assessment of an application performed by one-member state, known as the “reference”

member state.

Both the decentralized and mutual recognition procedures provide for approval by one or more “concerned” member states based on an assessment of an application performed by one-member state, known as the “reference” member state.

Under the decentralized approval procedure, an applicant submits an application, or dossier, and related materials to the reference member state and concerned member states.

The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application.

Within 90 days of receiving the reference member state’s assessment report, each

concerned member state must approve the assessment report and related materials, unless they identify a serious risk to public health.

Within 90 days of receiving the reference member state’s assessment report, each concerned member state must approve the assessment report and related materials, unless they identify a serious risk to public health.

Under the mutual recognition procedure, the concerned member states have the same 90-day period to recognize the marketing authorization in the reference member state.

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The TCA sets out the new arrangements for trade of goods, including medicines and medical devices, which aims to ensure goods continue to flow between the EU and the UK and also has implications for product regulation and mutual recognition.

As a result of the United Kingdom’s departure from the EU, if a company wishes to sell its products in the United Kingdom, it will need to seek and maintain appropriate national marketing authorizations.

The TCA does not provide for wholesale mutual recognition of the regulatory regimes and so products exported from the UK to the EU must comply with the EU’s regulatory requirements.

In the pharmaceutical context, this has had a number of implications.

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Since the TCA does not provide for mutual recognition of batch testing and release, products must be quality control tested and released in the EU.

However, the UK will unilaterally waive batch testing requirements for UK imports from the EU for products placed on the market before January 2023.

However, the UK has unilaterally waived batch testing requirements for UK imports from the EU for products placed on the market prior to January 2023.

It remains to be seen how these developments will impact regulatory requirements for product candidates and products in the United Kingdom.

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For example, in the U.S.

and most major foreign markets, drugs like GIAPREZA and XERAVA that are administered in the hospital must be purchased by the hospital and generally are not reimbursed by third-party payors.

Hospitals instead are reimbursed for patient cases based on patients’

diagnosed conditions under the U.S.

Medicare diagnosis-related group (“DRG”) system or other like systems for non-Medicare patients in the U.S.

and most major foreign markets, drugs like GIAPREZA ® , XERAVA ® and XACDURO ® that are administered in the hospital must be purchased by the hospital and generally are not reimbursed by third-party payors.

Hospitals instead are reimbursed for patient cases based on patients’ diagnosed conditions under the U.S.

Medicare diagnosis-related group (“DRG”) system or other like systems for non-Medicare patients in the U.S.

and in most major foreign markets.

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Nonetheless, product candidates may not be considered medically necessary or cost effective.

Additionally, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

Further, one payor’s determination to provide coverage for a drug product does not ensure that other payors will also provide coverage for the drug product.

Additionally, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

Further, one payor’s determination to provide coverage for a drug product does not ensure that other payors will also provide coverage for the drug product.

Third-party reimbursement may not be sufficient to maintain price levels high enough to realize an appropriate return on investment in product development.

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The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item, good, facility or service reimbursable under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

The term “remuneration” has been broadly interpreted to include anything of value.

This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers, among others, on the other.

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Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the federal Anti-Kickback Statute has been violated.

Additionally, the intent standard under the federal Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, or ACA, to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, impose certain requirements on covered entities (i.e., certain healthcare providers, health plans and healthcare clearinghouses) relating to the privacy, security and transmission of individually identifiable health information.

Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.

HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’

fees and costs associated with pursuing federal civil actions.

What is more, the federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, require certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the children’s health insurance program (with certain exceptions) to annually report information related to certain payments or other transfers of value provided to covered recipients, including physicians, as defined by such law, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals’

covered recipients and information related to certain ownership and investment interests held by physicians and their immediate family members.

The majority of states also have statutes or regulations similar to the aforementioned federal laws, some of which are broader in scope and apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government.

In addition, some state laws require drug manufacturers to report information related to payments to clinicians and other healthcare providers or marketing expenditures and drug pricing.

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State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Finally, in Europe, the European Union General Data Protection Regulation (2016/679) (“GDPR”) contains provisions specifically directed at the processing of health information.

The GDPR provides for potentially significant sanctions and contains extraterritoriality measures intended to bring non-EU companies under the regulation.

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For example, the Bipartisan Budget Act of 2018 contained various provisions that affect coverage and reimbursement of drugs, including an increase in the discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70% starting in 2019.

As another example, in 2018, President Trump and the Secretary of the HHS, released a “blueprint”

to lower prescription drug prices and out-of-pocket costs.

As another example, in 2018, President Trump and the Secretary of the HHS, released a “blueprint” to lower prescription drug prices and out-of-pocket costs.

Certain proposals in the blueprint, and related drug pricing measures proposed since the blueprint, could cause significant operational and reimbursement changes for the pharmaceutical industry.

HHS has solicited feedback on some of these measures and, at the same, has implemented others under its existing authority.

On November 20, 2020, CMS issued an interim final rule through the CMS Innovation Center whereby Medicare Part B reimbursement for “certain high-cost prescriptions drugs”

would be no more than most-favored-nation price (i.e., the lowest price) after adjustments, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Cooperation and Development that has a comparable per-capita gross domestic product.

On November 20, 2020, CMS issued an interim final rule through the CMS Innovation Center whereby Medicare Part B reimbursement for “certain high-cost prescriptions drugs” would be no more than most-favored-nation price (i.e., the lowest price) after adjustments, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Cooperation and Development that has a comparable per-capita gross domestic product.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

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Senate in September 2020 which aims to reinvigorate innovation for the development of new antibiotics through a subscription contract program managed by HHS.

The PASTEUR Act was introduced to provide a mechanism for funding designated ‘critical need antimicrobial’

drugs post FDA approval.

The PASTEUR Act was introduced to provide a mechanism for funding designated ‘critical need antimicrobial’ drugs post FDA approval.

In return, patients covered by federal insurance programs will receive these drugs at no cost.

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Other Laws and Regulations

We are subject to a variety of financial disclosure and securities trading regulations as a public company in the U.S., including laws relating to the oversight activities of the U.S.

Securities and Exchange Commission (“SEC”) and the regulations of the Nasdaq Capital Market, on which our shares of common stock are traded.

We are subject to a variety of financial disclosure and securities trading regulations as a public company in the U.S., including laws relating to the oversight activities of the SEC and the regulations of the Nasdaq Capital Market, on which our shares of common stock are traded.

We are also subject to various laws and regulations relating to safe working conditions, laboratory practices and the experimental use of animals.

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The foreign patents, and patents that may issue from the pending foreign patent applications, will expire in 2034, absent any disclaimers, extensions, or adjustments of patent term.

As of February 15, 2023, the intellectual property portfolio relating to GIAPREZA included 3 issued U.S.

As of February 15, 2023, the intellectual property portfolio relating to GIAPREZA ® also included 4 issued U.S.

patents, 6 pending U.S.

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patent, 1 pending U.S.

patent application and 11 pending foreign patent applications that relate to crystalline forms of eravacycline, any U.S.

patent application, 2 granted foreign patents and 9 pending foreign patent applications that relate to crystalline forms of eravacycline, any U.S.

patent that may issue from the pending patent application will expire in 2037 absent any disclaimers, extensions, or adjustments of patent term.

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patent application, 39 issued foreign patents and 12 pending foreign patent applications relating to other tetracycline-related intellectual property.

As of February 15, 2023, we owned 4 issued U.S.

patents, 115 issued foreign patents and 5 pending foreign patent applications (of which 1 is allowed) relating to XACDURO ® .

The issued U.S.

patents have an expiration date of April 2, 2033 and November 17, 2035, absent any disclaimers, extensions, or adjustments of patent term.

The foreign patents, and patents that may issue from the pending foreign applications, will likewise have an expiration date of April 2, 2033 and November 17, 2035, absent any disclaimers, extensions, or adjustments of patent term.

United States

Our intellectual property portfolio for our durlobactam program contains patent applications directed to compositions of matter for durlobactam and other chemical analogs, as well as methods of making, referred to as synthetic methods, and methods of use and modes of treatment using durlobactam in combination with one or more antibiotic compounds.

As of February 15, 2023, we owned four issued U.S.

patents, one pending provisional application, one pending PCT application, 107 issued foreign patents as well as six pending foreign patent applications, of which two are allowed.

The issued foreign patents are in several jurisdictions including Australia, the European Union, Canada, China, Hong Kong, Israel, India, Japan, Macau, Mexico, New Zealand, the Philippines, the Russian Federation, Singapore, South Africa, South Korea, Taiwan and the United Kingdom.

and foreign patents and patents issuing from pending U.S.

and foreign applications will have expiration dates of April 2033 and April 2043.

Our intellectual property portfolio for zoliflodacin contains patent applications directed to compositions of matter for zoliflodacin and other chemical analogs, as well as synthetic methods and methods of use and modes of treatment.

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Strategic Advisory Agreement

us in the development and execution of our acquisition strategy intended to diversify our assets and the potential sources of revenue.

On December 11, 2020, we entered into a Strategic Advisory Agreement (the “Services Agreement”) with Sarissa Capital Management LP (“Sarissa Capital”), pursuant to which Sarissa Capital provides a variety of strategic services to us in order to assist us in the development and execution of our acquisition strategy intended to diversify our assets and the potential sources of revenue.

Sarissa Capital is considered to be a related party due to its investment in Innoviva and its representation on our board of directors.

Partnership Agreement

On December 11, 2020, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), entered into a subscription agreement and an Amended and Restated Limited Partnership Agreement (the “Partnership Agreement”) pursuant to which Strategic Partners became a limited partner of ISP Fund LP (the “Partnership”).

The general partner of the Partnership is an affiliate of Sarissa Capital and, pursuant to an investment management agreement, Sarissa Capital acts as the investment adviser to the Partnership.

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We are also committed to the continued development of our people, providing opportunities for employees to further their career development through internal training and education programs and third party online training programs.

Environmental, Social and Governance

The management team and Board of Directors are keenly aware of the importance of environmental, social and governance issues, and the Company’s need to conduct business with high standards.

Our mission as an organization is to be patient-centric and develop innovative treatments to find solutions for patients suffering from rare and underserved diseases.

We collectively believe that pursuing an environmental, social and governance agenda serves the interests of all of our stakeholders, which includes our stockholders.

Our employees, partners, and investors expect us to honor our values and take action to promote a more equitable and sustainable world for future generations.

As we further build our organization behind our portfolio of royalties and innovative healthcare assets, we intend to strive to understand the perspectives of the diverse clients and communities we will serve, and as such, we are intensifying our efforts to drive diversity and inclusion and a culture of belonging throughout our organization.

We will strive to comply with all applicable environmental laws, regulations and policies concerning environmental protection in all our business activities and in the selection of partners we choose to work with.

We are committed to strengthening our local community by contributing through volunteerism and will continue, as we have been doing, to provide donations to parties we believe will support our goal of improving patient health and well-being.

We are also committed to good corporate governance.

All of our employees, officers and directors must conduct themselves according to the language and spirit of our Code of Conduct, and our Board of Directors is dedicated to providing effective corporate oversight including through oversight committees such as the Nominating and Governance Committee, the Audit Committee and the Compensation Committee.

As our Company grows, we will continue to integrate policies and programs that further foster this effort.

Information about our Executive Officers

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Chief Executive Officer

Stephen Basso

Chief Financial Officer

Marianne Zhen

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Raifeld earned an AB degree from Harvard University and an MBA degree from Columbia University.

Stephen Basso was appointed Chief Financial Officer of the Company in August 2023.

Prior to joining Innoviva, Mr.

Basso served as the Chief Financial Officer and Chief Operating Officer at Cybrexa Therapeutics and has held a variety of financial leadership positions at Inozyme Pharma, Alexion Pharmaceuticals and Pfizer.

He received a BS in business from Providence College and an MBA from Boston College.

Marianne Zhen , CPA, was appointed Chief Accounting Officer in July 2018.

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Code of Business Conduct that applies to all directors, officers and employees.

The Code of Business Conduct, as amended through March 9, 2021, is available on the corporate governance section of our website at www.inva.com .

The Code of Business Conduct, as amended through January 24, 2023, is available on the corporate governance section of our website at www.inva.com .

If the Company makes any substantive amendments to the Code of Business Conduct or grants a waiver from any provision of such code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver, as required by applicable law.

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Our investor relations website is located at http://investor.inva.com .

We make available free of charge on our investor relations website under “SEC Filings”

our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, our directors’

and officers’

Section 16 Reports and any amendments to those reports after filing or furnishing such materials to the SEC.

We make available free of charge on our investor relations website under “SEC Filings” our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, our directors’ and officers’ Section 16 Reports and any amendments to those reports after filing or furnishing such materials to the SEC.

The information found on our website is not part of this or any other report that we file with or furnish to the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business