Overview

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

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

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

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

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

Since inception, Nabriva Therapeutics has incurred significant operating losses. As of June 30, 2018, the company had an accumulated deficit of $310.2 million. To date, Nabriva Therapeutics has financed its operations primarily through its 2018 “at-the-market” equity offering, its 2017 equity offering, its 2016 rights offering, its 2015 initial public offering, private placements of its equity securities, convertible loans and research and development support from governmental grants and loans and, most recently, its underwritten public offering completed in July 2018. Nabriva Therapeutics has devoted substantially all of its efforts to research and development, including clinical trials. The company's ability to generate profits from operations and remain profitable depends on its ability to successfully develop and commercialize drugs that generate significant revenue.

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

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

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

Corporate Updates

Acquisition of Zavante

On July 23, 2018, the company entered into an Agreement and Plan of Merger, or the Merger Agreement,with Zavante, a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection) to improve the outcomes of hospitalized patients.

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

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

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

Subject to approval of its shareholders of the issuance of its ordinary shares in satisfaction of its milestone payment obligations in accordance with Nasdaq listing rules and Irish law, or the Milestone Share Approval, in excess of 19.9% of the issued and outstanding ordinary shares of Nabriva outstanding as of immediately prior to the Closing, the Approval Milestone Payment will be settled in its ordinary shares and the company will have the right to settle the Net Sales Milestone Payments in its ordinary shares, except as otherwise provided in the Merger Agreement. In the absence of obtaining the Milestone Share Approval, all milestone payments will be settled in cash. Nabriva Therapeutics has agreed to use commercially reasonable efforts after the Closing to obtain the Milestone Share Approval and to call a meeting of its shareholders no later than December 31, 2018 to seek the Milestone Share Approval.

In connection with the Acquisition, former Zavante stockholders agreed to cause any Upfront Shares received by them to abstain from voting on the Milestone Share Approval and to vote any other of its ordinary shares held by them in favor of the Milestone Share Approval.

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

In addition, the company now possess certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by it upon closing of the Acquisition.  Prior to the Acquisition, former Zavante stockholders entered into a stock purchase agreement, dated as of May 5, 2015, or the Stock Purchase Agreement, pursuant to which Zavante is obligated to make milestone payments to the selling stockholders of $3.0 million upon marketing approval by the FDA with respect to any oral, intravenous or other form of fosfomycin, or the Zavante Products, and milestone payments of up to $26.0 million in the aggregate upon the occurrence of various specified levels of net sales with respect to the Zavante Products.  In addition, Zavante is obligated to make annual royalty payments of a mid-single-digit percentage of net sales of Zavante Products, subject to adjustment based on net sales thresholds and with such percentage reduced to low single-digits if generic fosfomycin products account for half of the applicable market on a product-by-product and country-by-country basis.  The Stock Purchase Agreement also provides that Zavante will pay a mid-single-digit percentage of transaction revenue in connection with the consummation of the grant, sale, license or transfer of market exclusivity rights for a qualified infectious disease product (within the meaning of the 21st Century Cures Act, or the Cures Act) related to a Zavante Product.

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

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

License Agreement with Sinovant Sciences, Ltd.

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

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

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

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

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

Liquidity and Capital Resources

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

As of June 30, 2018, the company had cash and cash equivalents and short-term investments of $75.5 million.

In March 2018, the company entered into a Controlled Equity OfferingSM Sales Agreement, or the ATM Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which, from time to time, the company may offer and sell its ordinary shares having aggregate gross proceeds of up to $50.0 million through Cantor. As of June 30, 2018, the company issued and sold an aggregate of 4,243,096 ordinary shares under the ATM Agreement, for gross proceeds of $22.8 million, and net proceeds of $22.2 million, after deducting commissions. From June 30, 2018 to the date of this filing, Nabriva Therapeutics has not issued and sold any ordinary shares under the ATM Agreement.

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

Capital Expenditures

Capital expenditures were $236,000 and $168,000 for the six months ended June 30, 2017 and 2018, respectively. The company made no significant investments in intangible assets during the six months ended June 30, 2017 and 2018. Currently, there are no material capital projects planned in 2018.