10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended September 30, 2018

OR

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

Commission File Number 001-38135

DOVA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	81-3858961
(State or other jurisdiction of incorporation or organization)	(I.R.S.  Employer Identification No.)

240 Leigh Farm Road, Suite 245

Durham, North Carolina 27707

(Address of principal executive offices and zip code)

(919) 748-5975

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES   ý   NO   o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES   ý   NO   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o	Accelerated Filer	ý
Non-accelerated Filer	o	Smaller Reporting Company	ý
Emerging growth company	ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ý

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding Shares as of November 5, 2018
Common Stock, $0.001 par value	28,204,098

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Recent Sales of Unregistered Securities	31
Item 6.	Exhibits	32
Signatures		33

Part I. Financial Information

Item 1. Financial Statements (unaudited)

Dova Pharmaceuticals, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	September 30,			December 31,
	2018			2017
	(unaudited)
ASSETS
Current assets
Cash and equivalents	$	122,027		$	94,846
Accounts receivable, net	2,962			—
Inventory, net	1,781			—
Prepaid expenses and other current assets	3,041			1,471
Total current assets	129,811			96,317
Furniture and equipment, net	278			62
Total assets	$	130,089		$	96,379
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	68		$	1,263
Accrued expenses	12,997			2,520
Accrued interest	75			1,005
Due to related party	—			97
Early exercise liability, related party	—			100
Note payable, short-term	—			30,212
Current portion of long-term debt	4,166			—
Total current liabilities	17,306			35,197
Deferred revenue	2,373			—
Long-term debt	16,212			—
Total liabilities	35,891			35,197
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 28,204,098 and 25,652,457 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	28			26
Additional paid-in capital	204,264			118,301
Accumulated deficit	(110,094		)	(57,145		)
Total stockholders’ equity	94,198			61,182
Total liabilities and stockholders’ equity	$	130,089		$	96,379

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

1

Dova Pharmaceuticals, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Revenue
Product sales, net	$	2,929		$	—		$	4,886		$	—
Other revenue	—			—			2,627			—
Total revenue, net	2,929			—			7,513			—
Operating expenses:
Cost of product sales	370			—			889			—
Research and development	4,847			5,426			12,771			12,995
Selling, general and administrative	17,031			4,185			45,856			7,045
Total operating expenses	22,248			9,611			59,516			20,040
Loss from operations	(19,319		)	(9,611		)	(52,003		)	(20,040		)
Interest income and other income (expense), net	342			224			369			243
Interest expense	(546		)	(336		)	(1,315		)	(857		)
Total other expenses, net	(204		)	(112		)	(946		)	(614		)
Net loss	$	(19,523	)	$	(9,723	)	$	(52,949	)	$	(20,654	)
Net loss per share, basic and diluted	$	(0.69	)	$	(0.38	)	$	(1.91	)	$	(1.03	)
Weighted average common shares outstanding, basic and diluted	28,203,222			25,290,709			27,668,066			20,014,226

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

2

Dova Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(in thousands)

	Nine months ended September 30,
	2018			2017
Cash flows from operating activities
Net loss	$	(52,949	)	$	(20,654	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash research and development expenses	—			9,663
Research and development - licenses acquired, expensed	—			1,000
Depreciation	19			—
Loss on disposal of furniture and equipment	35			—
Amortization of debt discount and debt issuance costs	416			—
Stock-based compensation	11,043			2,761
Changes in operating assets and liabilities:
Accounts receivable, net	(2,962		)	—
Inventory	(1,781		)	—
Prepaid expenses	(1,570		)	(961		)
Accounts payable	(1,195		)	428
Accrued expenses	11,341			1,060
Accrued interest	(930		)	480
Due to related party	(97		)	(35		)
Deferred revenue	2,373			—
Net cash used in operating activities	(36,257		)	(6,258		)
Cash flows from investing activities
Purchases of furniture and equipment	(269		)	(35		)
Net cash used in investing activities	(269		)	(35		)
Cash flows from financing activities
Payment of note payable	(31,077		)	—
Debt issuance costs	(38		)	—
Proceeds from the issuance of debt	20,000			—
Payment of offering costs in connection with issuance of Series A preferred stock	—			(711		)
Proceeds from exercise of stock options	92			—
Proceeds from the issuance of common stock	80,000			86,313
Payment of offering cost in connection with issuance of common stock	(5,270		)	(7,604		)
Net cash provided by financing activities	63,707			77,998
Net increase in cash and equivalents	27,181			71,705
Cash and equivalents at the beginning of the period	94,846			28,709
Cash and equivalents at the end of the period	$	122,027		$	100,414
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,830		$	377
Supplemental disclosure of noncash investing and financing activities:
Change in note payable	$	—		$	13,479
Shares issued from the early exercise of options	$	100		$	—

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

3

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1—Organization and description of business operations

Dova Pharmaceuticals, Inc. (“Dova”) was originally formed as PBM AKX Holdings, LLC, a limited liability company formed under the laws of the State of Delaware on March 24, 2016 (“Inception”). PBM AKX Holdings, LLC changed its name to Dova Pharmaceuticals, LLC by filing a Certificate of Amendment to its Certificate of Formation with the State of Delaware on June 15, 2016. Dova converted from a limited liability company to a corporation on September 15, 2016.

Dova is a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia, a disorder characterized by a low blood platelet count. On May 21, 2018, the U.S. Food and Drug Administration (“FDA”) approved DOPTELET (avatrombopag), which is an orally administered thrombopoietin receptor agonist for the treatment of thrombocytopenia in adult patients with chronic liver disease (“CLD”) scheduled to undergo a procedure.

The unaudited condensed consolidated financial statements of Dova and its wholly owned subsidiaries AkaRx, Inc. (“AkaRx”) and Dova Pharmaceuticals Ireland Limited (together, the “Company”) include the results of operations for the three and nine months ended September 30, 2018 and September 30, 2017.

Note 2—Significant accounting policies

Basis of presentation and principles of consolidation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods and should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2017 in the Company’s Annual Report on Form 10-K.

Liquidity and capital resources

The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2018, the Company had an accumulated deficit of $110.1 million.

Since inception, the Company has financed its operations through the issuance of equity and debt with net aggregate proceeds of $238.0 million.  Although the Company began generating revenue from product sales of DOPTELET in June 2018, the Company does not expect product revenue to be sufficient to satisfy its operating needs for several years, if ever.  As of September 30, 2018, the Company had $122.0 million in cash and equivalents. Based on the Company’s forecast of future cash flows, the Company believes that it has adequate cash and equivalents to continue to fund operations in the normal course of business for at least the next 12 months.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to the determination of variable consideration for product sales, share-based compensation and some of its research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates, which could affect the Company’s future results of operations.

4

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Segments

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

Cash and equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and equivalents include cash held in banks and money market mutual funds.  The carrying amount of the Company’s cash equivalents approximates its fair value.

Inventory

Inventory acquired prior to receipt of the FDA approval for DOPTELET was expensed as research and development expense as incurred. The Company began capitalizing inventory upon receipt of FDA approval on May 21, 2018. The Company reduces its inventory to net realizable value for potentially excess, dated or obsolete inventory based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At September 30, 2018, the Company determined that no write downs to inventory for potentially excess, dated or obsolete inventory were required.  The Company’s inventory consists of finished goods only.

Research and development prepaid and accrued expenses

As part of the process of preparing financial statements, the Company is required to estimate its expenses resulting from its obligation under contracts with vendors and consultants and clinical site agreements in connection with its research and development efforts. The financial terms of these contracts are subject to negotiations which vary contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts.  The Company’s objective is to reflect the appropriate clinical trial expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines prepaid and accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of communication of clinical trials, or other services completed. During the course of a clinical trial, the Company adjusts its rate of clinical trial expense recognition if actual results differ from its estimates. The Company makes estimates of its prepaid and accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known at that time. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of status and timing of services performed relative to the actual status and timing of services performed may vary and may result in the Company reporting amounts that are too high or too low for any particular period. The Company’s clinical trial prepaid and accrual expense is dependent upon the timely and accurate reporting of fee billings and pass-through expenses from contract research organizations and other third-party vendors as well as the timely processing of any change orders from the contract research organizations.

Concentrations of credit risk and off-balance sheet risk

Cash and equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The majority of the Company’s cash equivalents is in money market mutual funds invested solely in U.S. Government securities. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss.

Research and development costs

Research and development (“R&D”) expenses for the three and nine months ended September 30, 2018 include direct and indirect R&D costs. Direct R&D costs consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and clinical research organizations, including costs incurred in connection with clinical trials, and related clinical trial fees and all employee-related expenses for those employees working in R&D functions, including stock-based compensation for R&D personnel. Indirect R&D costs include insurance or other indirect costs related to the Company’s R&D

5

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

function to specific product candidates.  The Company expenses pre-approval inventory as R&D until regulatory approval is received.

Revenue recognition

Effective January 1, 2018, the Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The guidance provides a unified model to determine how revenue is recognized.

Product sales

The Company is currently approved to sell DOPTELET in the United States market.  The product is distributed through an exclusive distribution model with Integrated Commercialization Solutions (“ICS”).  ICS sells DOPTELET to a limited number of specialty pharmacies (“customers”), who have agreements in place with the Company.  Patients and healthcare providers purchase the product from the specialty pharmacy providers.  (See Note 7 “Significant agreements and contracts” for more information on the Company’s agreement with ICS).

The Company recognizes revenue on product sales when the control of the Company’s product passes to its customers, which occurs at a point in time, upon delivery to the customers, or over time depending on the nature of the contract. The Company has determined that the delivery of its product to its customers constitutes a single performance obligation as there are no other promises to deliver goods or services. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. The Company has assessed the existence of a significant financing component in the agreements with its customers. The trade payment terms with its customers do not exceed one year and therefore the Company has elected to apply the practical expedient and no amount of consideration has been allocated as a financing component.

Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, government chargebacks, discounts and rebates, and other incentives, such as voluntary patient assistance, and other fee for service amounts that are detailed within contracts between the Company and its customers relating to the Company’s sale of its products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable or a current liability. These reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

Revenue from product sales is recorded after considering the impact of the following variable consideration amounts at the time of revenue recognition:

Trade discounts and distribution fees: Trade discounts relate to prompt settlement discounts provided to ICS and the customers.  Distribution fees include fees paid to ICS for the distribution of the product (which is based on a percentage of sales).  In addition, the Company compensates its customers for data and other activities. The Company has determined that such services received to date are not distinct from its sale of products and may not reasonably represent fair value for these services.  Therefore, estimates of these payments are recorded as a reduction of revenue based on contractual terms.

Product returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company based on the product’s expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as within accrued expenses on the condensed consolidated balance sheets. The Company currently estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company has not received any returns to date.

Government rebates and chargebacks: The Company contracts with Medicaid, Medicare, U.S Department of Veterans Affairs, 340b entities and other government agencies (“Government Payors”) so that DOPTELET will be eligible for purchase by, or partial or full reimbursement from, such Government Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Government Payors and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. The Company estimates these reserves based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses and other current liabilities

6

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

on the condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company estimates the rebates, chargebacks and discounts that it will provide to Government Payors based upon (i) the government-mandated discounts applicable to government-funded programs, (ii) information obtained from its customers and (iii) information obtained from other third parties regarding the payor mix for DOPTELET. The Company’s liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for product shipments that have been recognized as revenue but remain in the distribution channel inventories at the end of each reporting period.

Other incentives: Other incentives which the Company offers include voluntary patient assistance and assurance programs, such as a co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Strategic agreements

The Company’s other revenue consists of revenue from the Company’s strategic agreements for the development and commercialization of DOPTELET. The terms of the agreements typically include non-refundable upfront fees, payments based upon achievement of milestones and eventually revenue from the commercialized product. These agreements usually have both fixed and variable consideration. Non-refundable upfront fees are considered fixed, while milestone payments and revenue from the commercialized product are identified as variable consideration.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under these agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. The Company’s performance obligations include intellectual property rights, development services, and services associated with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

As part of the accounting for these arrangements, the Company develops assumptions that require judgment to determine the estimated selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the selling price on a standalone basis, which may include forecasted revenue, development timelines, and probabilities of regulatory success.

The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation.

If the right to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the right when the right is transferred to the customer, and the customer can use and benefit from the right. For rights that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the

7

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

At the inception of the arrangement, the Company evaluates whether the development milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until those approvals are received.

Stock-based compensation

The Company expenses stock-based compensation to employees, consultants and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in cost of goods sold, general and administrative or research and development expenses in the consolidated statements of operations based upon the underlying individual’s role at the Company.

Income taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Net loss per share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period assuming the retrospective conversion of member units described above. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The computations of diluted net loss per common share for the three and nine months ended September 30, 2018 excluded options to purchase 2,689,828 and 2,514,503 shares of common stock, respectively, as the inclusion of these securities would have been antidilutive.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-2, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the estimated term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The Company expects to adopt ASU 2016-2 in the first quarter of 2019. Although the Company is in the process of evaluating the impact of adoption of the ASU on

8

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

its consolidated financial statements, the Company currently believes the most significant change will be related to the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for real estate operating leases.

In May 2017, the FASB issued ASU 2017-9, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions.  The Company adopted ASU 2017-9 as of January 1, 2018.  The adoption of this standard did not impact the Company’s consolidated financial statements and disclosures.

In June 2018, the FASB issued ASU 2018-7, “Improvements to Nonemployee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company expects that the adoption of this ASU would not have a material impact on the Company’s consolidated financial statements.

Note 3—The purchase agreement with Eisai and related transactions

Purchase agreement with Eisai

Dova entered into a purchase agreement dated March 29, 2016 (the “Purchase Agreement”) with Eisai, Inc. (“Eisai”) for all of the issued and outstanding shares of the capital stock of AkaRx. The terms of the Purchase Agreement included (i) an upfront payment of $5.0 million that was paid at closing, (ii) milestone payments up to $135.0 million in the aggregate based on annual net sales of DOPTELET, and (iii) a commitment to negotiate in good faith to secure a long-term supply agreement with Eisai to govern manufacturing support and the purchase of DOPTELET from Eisai until the later of March 30, 2021 or the third anniversary of the commercialization of DOPTELET.

The transaction was accounted for as an asset acquisition pursuant to ASU 2017-1, Business Combinations (Topic 805), Clarifying the Definition of a Business, as the majority of the fair value of the assets acquired was concentrated in a group of similar assets, and the acquired assets did not have outputs or employees. The assets acquired under the Purchase Agreement included a license to DOPTELET, other associated intellectual property, inventory, documentation and records, and related materials. Because DOPTELET had not yet received regulatory approval, the $5.0 million purchase price paid to date for these assets was expensed in the Company’s statement of operations for the period from Inception to December 31, 2016. In addition, the potential milestone payments based on annual net sales are not yet considered probable, and no milestone payments have been accrued at September 30, 2018.

Long-term supply agreement with Eisai

In June 2017, the Company entered into a supply agreement with Eisai, pursuant to which the Company agreed to purchase finished drug product of DOPTELET from Eisai and Eisai agreed to supply finished drug product of DOPTELET. The initial term of the agreement will terminate on the later of March 30, 2021 and the third anniversary of the Company’s first commercial sale of DOPTELET. After the initial term, the supply agreement may be renewed by mutual agreement of the parties. During the initial term, Eisai is the Company’s exclusive supplier of finished drug product of DOPTELET, except that the Company has the right to terminate the exclusivity early by payment to Eisai of a fee calculated based on the Company’s forecasted purchases of DOPTELET during the remainder of the initial term. In addition, in the event that Eisai fails to deliver substantially all of the finished drug product due to the Company under the agreement, the Company may elect to seek alternative supply arrangements so long as such failure remains uncured, subject to certain exceptions. The aggregate payments to Eisai under the supply agreement for finished drug product will be the greater of a fixed payment per tablet or a payment calculated in the mid-single digit percentages of net sales of DOPTELET.

9

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Amended and Restated Transition Services Agreement with Eisai and an Additional Work Order

On October 1, 2018, the Company and Eisai entered into an Amended and Restated Transition Services Agreement (the “Amended TSA”) and an Additional Work Order (“Work Order”) pursuant to which Eisai has agreed to provide services to the Company after the expiration of the original Transition Services Agreement by and between Eisai and the Company, dated March 30, 2016 (the "TSA"), on March 31, 2018.

Under the Work Order, Eisai has agreed to provide certain regulatory, CMC, nonclinical, clinical pharmacology, and statistical services to the Company in order to support the Company's new drug application and marketing authorization application to the European Medicines Agency for the period from April 1, 2018 through June 30, 2019. Pursuant to the Amended TSA, the Company is obligated to pay Eisai for services provided by Eisai personnel based on a fixed payment schedule. To the extent that service fees and out-of-pocket costs payable by the Company to Eisai under the Amended TSA exceed $51.0 million, the Company's obligation to pay milestone payments under the Eisai Purchase Agreement will be reduced. To date, the Company has incurred $31.1 million under the TSA and the Amended TSA. Pursuant to the Amended TSA, payments due were financed under the Eisai note described below. The Company may terminate the services provided under the Amended TSA on a service-by-service basis or the agreement in its entirety upon 60-days’ written notice. The Amended TSA may also be terminated (i) by mutual consent, (ii) by either party upon 60-days’ written notice if the other party materially breaches the agreement, (iii) by either party in the event of the other party’s bankruptcy, insolvency or certain similar occurrences and (iv) by either party in the event that such party is unable to perform its obligations under the agreement as a result of events outside of its reasonable control.

Eisai note and security agreement

On March 30, 2016, the Company issued a Note to Eisai, which had an interest rate of 5% per annum, and enabled the Company to finance payments due to Eisai under the TSA for all costs incurred through December 31, 2017. The principal amount of the Note was increased on a quarterly basis by the amount of unpaid service fees and out-of-pocket expenses due and owed to Eisai under the TSA. The total aggregate spend through this Note was $31.1 million and on March 16, 2018, this principal balance along with accumulated interest of $1.3 million was repaid in full.

License agreement with Astellas Pharma Inc.

The primary intellectual property related to DOPTELET is licensed from Astellas Pharma Inc. (“Astellas”) on an exclusive, worldwide basis under the terms of a license agreement that the Company acquired from Eisai under the Purchase Agreement. Under the terms of the license agreement, the Company is required to make payments upon the achievement of certain milestones. On September 21, 2017, upon the filing of the NDA, the Company became obligated to make a milestone payment of $1.0 million, which was expensed and included in Research and development — licenses acquired.  The Company will be required to make additional aggregate milestone payments of up to $4.0 million to Astellas if certain other regulatory milestones are achieved.  No amounts have been accrued for any potential milestone payments as the payments were not deemed probable.  In addition, the Company is required to pay Astellas tiered royalties ranging from the mid to high single digits on net sales of DOPTELET, which are recorded in cost of product sales. Unless earlier terminated, this license agreement with Astellas will expire on a country-by-country and product-by-product basis upon the latest of (i) the expiration of the last-to-expire claim of the licensed patents, (ii) the expiration of any government-granted marketing exclusivity period for DOPTELET, and (iii) 10 years after the last date of launch of DOPTELET to have occurred in any country. Thereafter, the term of the license agreement may be extended for successive one-year terms if the Company notifies Astellas in writing of its desire to extend such term at least three months before it is otherwise set to expire.

Note 4—Related party agreements

Dova and AkaRx management services agreements

On April 1, 2016, Dova and AkaRx each entered into a services agreement (each, a “SA”) with PBM Capital Group, LLC. Pursuant to the terms of each of the SAs, which have terms of twelve months each (and are automatically renewable for successive one-year periods), PBM Capital Group, LLC will render advisory and consulting services to Dova and AkaRx. Services provided under the SAs may include certain scientific and technical, accounting, operations and back office support services. In consideration for these services, Dova and AkaRx are each obligated to pay PBM Capital Group, LLC a monthly management fee of $25,000.  On March 30, 2018, the SA agreement between AkaRx and PBM Capital Group, LLC was

10

terminated.  Effective April 1, 2018, the monthly management fee for the SA between Dova and PBM Capital Group, LLC was reduced to $17,400.

For the three months and nine months ended September 30, 2018, the Company incurred expenses under the SAs of $52,200 and $254,400, respectively, which were included in selling, general and administrative expenses.

For the three months and nine months ended September 30, 2017, the Company incurred expenses under the SAs of $150,000 and $450,000, respectively, which were included in selling, general and administrative expenses. 

Note 5—Stockholders’ equity

Series A preferred stock

Between September 19, 2016 and November 18, 2016, the Company closed on the sale of an aggregate of 982,714 shares of Series A preferred stock for gross proceeds of $29.0 million. The Series A preferred stock was entitled to non-cumulative, non-compounding dividends at 8.0% per annum (based on the original issue price), when, and if any dividends are declared by the Board.

Each share of Series A preferred stock was convertible, at the option of the holder and at any time, into a number of fully paid and non-assessable shares of common stock determined by dividing the Series A Original Issue Price by the Series A Conversion Price in effect at the time of conversion. The Series A preferred stock was mandatorily convertible under certain conditions (i) when the Company issued shares of common stock in a public offering generating gross proceeds of at least $60.0 million to the Company, at a price per share of at least $17.88, or (ii) by majority vote of the then outstanding shares of Series A preferred stock. The Series A Conversion Price was $8.94 and was subject to adjustment based on events including the issuance of additional equity securities, certain dividends and distributions, mergers and reorganizations, and stock splits and combinations.

The Series A preferred stock was not mandatorily redeemable and did not embody an unconditional obligation to settle in a variable number of equity shares. As such, the Series A preferred stock is classified as permanent equity on the condensed consolidated balance sheet. The holders’ contingent redemption right in the event of certain deemed liquidation events did not preclude permanent equity classification.

Further, the Series A preferred stock is considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation. The embedded conversion feature is considered to be clearly and closely related to the associated preferred stock host instrument and therefore was not bifurcated from the equity host. The contingent put right upon certain deemed liquidation events was not clearly and closely related to the associated preferred stock host instrument but did not meet the definition of a derivative and therefore was not bifurcated from the equity host.

Upon the closing of the Company’s initial public offering (“IPO”) on July 5, 2017, all outstanding shares of the Company’s Series A convertible preferred stock were automatically converted into 3,242,950 shares of the Company’s common stock.

Common stock

On July 5, 2017, the Company closed its IPO, which resulted in the issuance and sale of 5,077,250 shares of its common stock at a public offering price of $17.00 per share, generating net proceeds of approximately $78.7 million after deducting underwriting discounts and commissions and other offering costs.

On February 27, 2018, the Company completed an underwritten public offering of 2,500,000 shares of its common stock at an offering price of $32.00 per share. Net proceeds raised by the Company from the offering were approximately $74.7 million, after deducting underwriting discounts and commissions and other offering expenses.

11

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 6—Stock-based compensation

Options

The Company maintains the Amended and Restated 2017 Equity Incentive Plan (“2017 Equity Incentive Plan”).  The 2017 Equity Incentive Plan provides for the grant of incentive stock options to employees, and for the grant of nonstatutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards and other forms of stock awards to employees, including officers, consultants and directors. The 2017 Equity Incentive Plan also provides for the grant of performance-based cash awards to employees, including officers, consultants and directors.  The Company’s stock options generally vest as follows: 25% after 12 months of continuous services and the remaining 75% on a ratable basis over a 36-month period from 12 months after the grant date. Stock options granted during the three and nine months ended September 30, 2018 have a maximum contractual term of 10 years.

The Company initially reserved 4,285,250 shares of common stock for issuance under the 2017 Equity Incentive Plan.  The number of shares of common stock reserved for issuance under the 2017 Equity Incentive Plan automatically increases on January 1 each year, for a period of ten years, from January 1, 2018 through January 1, 2027, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board.   As of September 30, 2018, 2,615,129 shares were reserved for grant under the 2017 Equity Incentive Plan.

Stock option valuation

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on its historical volatility as well as the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. Due to the lack of historical exercise history, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Prior to the IPO, the fair values of the shares of common stock underlying the Company options were estimated on each grant date by the Company. In order to determine the fair value, the Company considered, among other things, contemporaneous valuations of the Company’s common stock and preferred stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Since the IPO, the fair value of the common stock underlying the Company’s options has been based upon the closing price of the Company’s common stock on the grant date.

Option awards

The fair value of the Company’s option awards was estimated using the assumptions below:

	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
Exercise price	$22.29	$23.90-$24.28	$22.29-$33.47	$3.73-$24.28
Risk-free rate of interest	2.84%-2.92%	1.86%-2.16%	2.41%-3.02%	1.71%-2.16%
Expected term (years)	5.4-6.9	5.5-7.0	5.0-7.0	5.2-7.1
Expected stock price volatility	64%-65%	87%-89%	64%-88%	87%-89%

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2018:

12

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

	Number of Options		Weighted- Average Exercise Price	Weighted- Average Contractual Term	Aggregate Intrinsic Value
Outstanding - December 31, 2017	2,128,641		7.90	9.4	$	44,481,000
Granted	843,150		29.17	9.2
Exercised	(51,641	)	4.62
Forfeited	(274,500	)	8.57
Outstanding - September 30, 2018	2,645,650		14.68	8.8	$	24,784,000
Options vested and exercisable - September 30, 2018	636,392		6.68	8.4	$	9,455,000

The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s closing common stock price on September 28, 2018, or $20.97 per share, and the exercise price of the stock options that had strike prices below $20.97 per share. The weighted average grant date fair value per share of options granted during the nine months ended September 30, 2018 was $20.12.

As of September 30, 2018, there was approximately $15.7 million of total unrecognized compensation expense, related to the unvested stock options shown in the table above, which is expected to be recognized over a weighted average period of 1.0 year.

Stock-based compensation expense has been reported in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2018 as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Cost of product sales	$	—	$	—	$	292	$	—
Selling, general and administrative	3,446		1,690		9,149		2,179
Research and development	590		452		1,602		582
Total stock-based compensation	$	4,036	$	2,142	$	11,043	$	2,761

Note 7 — Significant agreements and contracts

Distribution Agreement with Fosun

On March 16, 2018, the Company, through its wholly-owned subsidiary, AkaRx entered into an agreement by which it granted Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., a wholly owned subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., (collectively, “Fosun”) the exclusive development and distribution rights of DOPTELET in mainland China and Hong Kong (“territory”). Under the terms of the agreement, Fosun will have the right to exclusively commercialize and to assist the Company with the registration of DOPTELET in the territory.  Fosun is solely responsible for commercialization activities in the territory and associated expenses. The Company is responsible for supplying product at a fixed price to Fosun for the distribution of product upon approval.

The agreement between Fosun and the Company is governed by a joint steering committee comprised of equal representation by the Company and Fosun and operated on a consensus basis. In the event that the parties do not agree, the Company will have deciding authority, except with respect to matters that solely affect the territory.

Under the agreement, the Company received a non-refundable upfront payment of $4.5 million during the second quarter of 2018, which consisted of an upfront payment of $5.0 million, less $0.5 million that was withheld in accordance with tax withholding requirements in China and recorded as an expense during the nine months ended September 30, 2018.  The Company is also eligible to receive additional future payments upon the achievement of certain regulatory milestones. The Company assessed this arrangement in accordance with ASC Topic 606 and concluded that the contract counterparty, Fosun, is a customer.  The Company determined the distinct, material performance obligations within this agreement consist of (1) the exclusive right to develop and commercialize DOPTELET for multiple indications in the territory, (2) the delivery of certain indication specific information, and (3) manufacture and supply of commercial product.

13

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The transaction price includes the $5.0 million up-front consideration. None of the regulatory milestones have been included in the transaction price, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and Fosun’s efforts.

During the nine months ended September 30, 2018, the Company recognized $2.6 million related to the up-front payment as other revenue in connection with the Fosun agreement. The amount of revenue recognized in connection with this agreement is commensurate with the deliverables provided by the Company to Fosun in achieving the performance obligation. The remaining transaction price of $2.4 million is recorded in deferred revenue as of September 30, 2018, on the condensed consolidated balance sheet and will be recognized upon the delivery of certain information packages for indications which are currently in development. The relative fair value of deliverables was calculated using a combination of discounted cash flow and cost avoidance models (Level 3 inputs), under which estimated cash flows were discounted using a risk-adjusted rate that aligns with publicly available information of Fosun's cost structure. Estimated cash flows were determined based on management's best estimate of the performance of DOPTELET for each indication in the territory.

Commercial Outsourcing Agreement with Integrated Commercial Solutions, LLC (“ICS”)

On March 1, 2018, the Company entered into a Commercial Outsourcing Master Services Agreement with ICS, a division of AmerisourceBergen Specialty Group, a subsidiary of AmerisourceBergen, pursuant to which ICS is the exclusive provider of various third-party logistics services to support the Company’s distribution of DOPTELET in the United States. The key services provided by ICS include logistics, warehousing, returns and inventory management, contract administration and chargebacks processing and accounts receivable management.

Effective March 1, 2018, the Company also entered into a first amendment to the Commercial Outsourcing Master Services Agreement in order for ICS to purchase and sell DOPTELET to the Company’s customers in the United States.  Pursuant to the amendment, ICS will only make shipments to customers who have an executed contract with the Company.  Under this arrangement, ICS places orders with the Company to maintain an appropriate level of inventory.  ICS assumes all inventory risk and has sole responsibility for determining the prices at which it sells these products, subject to specified limitations in the amendment. The agreement will terminate on a date that is mutually agreed upon, in good faith, between ICS and the Company.  If the Company does not attain all regulatory approvals and licenses to sell and distribute DOPTELET within one calendar year from the effective date, ICS may terminate the agreement upon 30 days written notice.  Upon termination of this arrangement, ICS will be allowed to return one hundred percent of all inventory and revert to be the Company’s third-party logistics provider.

Co-Promotion Agreement with Valeant Pharmaceuticals North America LLC

On September 26, 2018, the Company entered into a Co-Promotion Agreement (the "Co-Promotion Agreement") with the Salix division of Valeant Pharmaceuticals North America LLC (“Salix”), a subsidiary of Bausch Health Companies Inc., pursuant to which the Company granted Salix the exclusive right to co-promote DOPTELET to specified medical professionals in the Gastroenterology, Colorectal Surgery and Proctology field (the “Specialty”) in the United States.

Pursuant to the Co-Promotion Agreement, the Company will pay Salix a fee based on the quarterly Net Sales (as defined in the Co-Promotion Agreement) of DOPTELET to specified medical professionals in the Specialty in the United States at specified tiered percentages, ranging from Salix receiving a mid-twenties to mid-thirties percent of Net Sales in a calendar year, subject to specified adjustments. In addition, the Company has agreed to pay Salix a milestone payment of $2.5 million upon the achievement of an aggregate Net Sales amount to the Specialty. The Co-Promotion Agreement specifies that the Company will grant Salix a royalty-free right to use trademarks and copyrights relating to DOPTELET in connection with the promotion of DOPTELET in the United States. The Co-Promotion Agreement also contains provisions regarding payment terms, confidentiality and indemnification, as well as other customary provisions.

The co-promotion of DOPTELET in the United States pursuant to the terms of the Co-Promotion Agreement will be supervised by a joint steering committee composed of an equal number of representatives from the Company and Salix. Under the terms of the Agreement, the Company remains responsible for the costs of maintaining regulatory approval of, manufacturing, supplying and distributing DOPTELET. Salix has also agreed to maintain at least one hundred Salix sales representatives (subject to certain adjustments) that will have the responsibility to promote DOPTELET in the Specialty in the United States.

14

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company did not make any milestone or royalty payments under the Co-Promotion Agreement for the three and nine months ended September 30, 2018.

Note 8 — Debt

On April 17, 2018, the Company and its wholly owned subsidiary, AkaRx (collectively “Co-Borrowers”), entered into a Loan and Security Agreement with Silicon Valley Bank (“Term Loan”) pursuant to which the Co-Borrowers borrowed $20.0 million.  The loan matures on April 17, 2021 unless the Company achieves a specified revenue milestone in which case the maturity date will be extended to April 17, 2022. The Co-Borrowers are only required to make monthly interest payments until April 30, 2019 unless the Company achieves the specified revenue milestone in which case the interest-only period will be extended until October 31, 2019.  Following the interest-only period, the Co-Borrowers will be required to also make equal monthly payments of principal and interest for the remainder of the term. The Co-Borrowers will also be required to pay an additional final payment at maturity equal to $2.0 million if the term loan is repaid after the interest-only period or a final payment of $0.6 million if the term loan is repaid during the interest-only period.  The final payment amount of $2.0 million has been recorded as a debt discount and is being accreted to the carrying value of the debt using the effective interest method.  In addition, at its option, the Co-Borrowers may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest), subject to a prepayment charge if the loan has been outstanding for less than one year, which prepayment charge of 4% of the outstanding principal amount on the date the loan is prepaid. All obligations under this agreement are guaranteed by all the assets of the Co-Borrowers, except for intellectual property and certain other assets. The agreement bears interest at the WSJ prime rate plus 1.25% per annum.  In connection with the Loan and Security Agreement, the Company incurred debt issuance costs totaling approximately $38,000. These costs are being amortized over the estimated term of the debt using the effective interest method. The Company deducted the debt issuance costs from the carrying amount of the debt as of September 30, 2018. As of September 30, 2018, the carrying value of the term loan was approximately $20.4 million, of which $4.2 million was due within 12 months and $16.2 million was due in greater than 12 months. The debt balance has been categorized within Level 2 of the fair value hierarchy. The carrying amount of the debt approximates its fair value based on prevailing interest rates as of the balance sheet date.

The Term Loan also provides for standard indemnification of Silicon Valley Bank and contains representations, warranties and certain covenants of the Co-Borrowers. While any amounts are outstanding under the Loan and Security Agreement, the Co-Borrowers are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The Co-Borrowers are also restricted from paying dividends or making other distributions or payments on their capital stock, subject to limited exceptions.

As of September 30, 2018, annual principal payments due under the Term Loan are as follows:

	Aggregate Minimum Payments
Year	(in thousands)
2019	$	6,667
2020	10,000
2021	5,333
Total	22,000
Less unamortized debt issuance costs and final payment	(1,622		)
Total	$	20,378

15

Dova Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 9—Commitments and contingencies

Office lease

On May 22, 2018, the Company entered into an Office Lease Agreement (the “Lease”) with Pine Forest 240 TT, LLC, a Delaware limited liability company (the “Landlord”), under which the Company will lease 21,745 square feet of space for its corporate headquarters located at 240 Leigh Farm Road, Durham, North Carolina. Pursuant to the Lease, the Company will effectively renew the Company’s lease of its existing 14,378 square feet of office space (the “Existing Office Space”) that the Company currently subleases from Paidian Research, Inc. pursuant to a sublease agreement, which is scheduled to expire on April 30, 2020, effective May 1, 2020. The Company also leases an additional 1,961 square feet of office space (“Suite 200”), which the Landlord delivered on October 12, 2018, and will lease an additional 5,406 square feet of office space (“Suite 215”), which the Landlord has agreed to use commercially reasonable efforts to deliver on or before August 1, 2019.

Under the Lease, subject to specified exceptions, the Company will pay an initial annual base rent of (i) $51,476, or $4,290 per month, for Suite 200, subject to an increase of approximately 2.7% per year, (ii) $145,800, or $12,150 per month, for Suite 215, subject to an increase of approximately 2.7% per year and (iii) $387,774, or $32,315 per month, for the Existing Office Space, subject to an increase of approximately 2.7% per year. In addition, the Company will pay its proportionate share of the Landlord’s annual operating expenses associated with the premises.

The term of the Lease will continue until September 30, 2023. The Company has an option to renew the Lease for one additional term of five years. If exercised, rent during the renewal term will be at the fair market rental rate as defined in the Lease.

The lease provides for a tenant improvement allowance of approximately $264,090. As of September 30, 2018, none of the allowance was utilized.

The Company incurred rent expense of $71,565 and $248,567 for the three and nine months ended September 30, 2018.  There was $54,698 and $75,184 rent expense for the three and nine months ended September 30, 2017.

Current future minimum lease payments under the Company’s current lease obligations are $101,316, $309,892 and $78,216 for the remainder of 2018, 2019 and 2020, respectively.

Purchase commitments

As noted in Note 3, the Company has an agreement with Eisai for the commercial supply of DOPTELET. Under the terms of the agreement, the Company will supply Eisai with non-cancelable firm commitment purchase orders. Future minimum purchase obligations are $1.7 million for the remainder of 2018.

The Company has also entered into other agreements with certain vendors for the provision of services, including services related to data access and packaging, under which the Company is contractually obligated to make certain payments to the vendors. The Company enters into contracts in the normal course of business that include, among others, arrangements with clinical research organizations for clinical trials, vendors for preclinical research, and vendors for manufacturing. These contracts generally provide for termination upon notice, and therefore the Company believes that its obligations under these agreements are not material.

Litigation

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

16

Note 10—Income taxes

The Company estimates an annual effective tax rate of 0% for the year ending December 31, 2018 as the Company incurred losses for the three and nine months ended September 30, 2018 and is forecasting additional losses through the fourth quarter of 2018, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2018. Therefore, no federal or state income taxes are expected, and none have been recorded at this time. Income taxes have been accounted for using the liability method in accordance with ASC 740.

Due to the Company’s history of losses since inception, the Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax asset.

At September 30, 2018, the Company had no unrecognized tax benefits that would reduce the Company’s effective tax rate if recognized.

Note 11—Employee benefit plan

The Company maintains a defined contribution 401(k) plan, under which employee contributions are voluntary and are determined on an individual basis, limited by the maximum amounts allowable under federal tax regulations. The Company provides an automatic matching contribution of $0.50 per $1.00 of employee contribution into the plan up to a maximum deferral per employee of 4% of the employee’s salary. The Company’s matching contributions totaled approximately $70,163 and $179,003 during the three and nine months ended September 30, 2018, respectively.  There were $5,113 and $6,447 of such contributions for the three and nine month ended September 30, 2017, respectively.

17

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

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the unaudited interim condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto for the year ended December 31, 2017 and the related management’s discussion and analysis of financial condition and results of operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

Forward-looking statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “expect,” “anticipate,” “estimate,” “may,” “will,” “should,” “intend,” “believe,” and similar expressions, although not all forward-looking statements contain these identifying words. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to significant risks and uncertainties and we can give no assurances that our expectations will prove to be correct. Actual results could differ materially from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, those described in our Annual Report on Form 10-K for the year ended December 31, 2017 under Part I - Item 1A “Risk Factors” filed with the Securities and Exchange Commission on February 16, 2018, in this Quarterly Report under Part II - Item 1A “Risk Factors,” and in our other filings with the SEC. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.

Overview

We are a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia, a disorder characterized by a low blood platelet count. On May 21, 2018, the U.S. Food and Drug Administration (“FDA”) approved DOPTELET (avatrombopag), which is an orally administered thrombopoietin receptor agonist for the treatment of thrombocytopenia in adult patients with chronic liver disease (“CLD”) who are scheduled to undergo a procedure.  On April 27, 2018, we also submitted a marketing authorization application ("MAA") with the European Medicines Agency ("EMA") for this same indication. Furthermore, on August 30, 2018, we submitted a supplemental New Drug Application ("sNDA") to the FDA for DOPTELET, seeking approval for the treatment of thrombocytopenia in adult patients with chronic immune thrombocytopenia ("ITP") who have had an insufficient response to a previous treatment. On November 5, 2018 the FDA accepted the sNDA for review with a Prescription Drug User Fee Act goal date of June 30, 2019.

We are also evaluating the use of DOPTELET in patients with thrombocytopenia regardless of disease etiology undergoing surgery, or pre-surgery trial (“PST”) and initiated an open-label Phase 3 clinical trial during the first quarter of 2018.  In addition, we also initiated a Phase 3 clinical trial in the second quarter of 2018 to evaluate DOPTELET for the treatment of patients who have developed chemotherapy-induced thrombocytopenia (“CIT”).

We have a limited operating history as we were formed on March 24, 2016. Since our inception, our operations have focused on acquiring rights to DOPTELET, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, conducting clinical trials, preparing for and submitting a new drug application ("NDA") and sNDA for DOPTELET and building a sales organization. We have funded our operations primarily through the sale of preferred and common stock and the incurrence of debt. On July 5, 2017, we closed our IPO of common stock, which resulted in the issuance and sale of 5,077,250 shares of common stock at a public offering price of $17.00 per share, resulting in net proceeds of approximately $78.7 million after deducting underwriting discounts and commissions and other offering costs. Upon the closing of the IPO, all outstanding shares of our Series A convertible preferred stock were automatically converted into 3,242,950 shares of common stock.   In addition, on February 27, 2018, we completed an underwritten public offering of 2,500,000 shares of our common stock. The shares were sold to the public at an offering price of $32.00 per share. Net proceeds raised from the offering were approximately $74.7 million, after deducting underwriting discounts and commissions and other offering expenses.  On April 17, 2018, we, along with our wholly owned subsidiary, AkaRx, (collectively the “Co-Borrowers”), entered in to a Loan and Security Agreement with Silicon Valley Bank, pursuant to which we borrowed $20.0 million (“term loan”) maturing up to 48 months from the closing.   We believe that our existing cash and equivalents, will enable us to fund our operating expenses, debt service obligations and capital expenditure requirements for at least the next 12 months.

18

Since inception, we have incurred significant operating losses. For the nine months ended September 30, 2018 and for the year ended December 31, 2017, our net loss was $52.9 million and $30.0 million, respectively. As of September 30, 2018, we had an accumulated deficit of $110.1 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

• continue to invest in the preclinical and clinical development of DOPTELET for the treatment of other thrombocytopenia indications;

• continue the commercialization of DOPTELET;

• manufacture DOPTELET under our supply agreement with Eisai;

• maintain, expand and protect our intellectual property portfolio;

• evaluate opportunities for development of additional drug candidates; and

• incur additional costs associated with operating as a public company.

DOPTLET Key Short-Term Launch Metrics

• From launch through September 30, 2018, a total of 335 health care professionals have prescribed DOPTELET to their patients with an increasing number using DOPTELET for multiple patients within their practice. Gastroenterologists represented 41.6% of these health care professionals.

• During the third quarter for prescriptions that completed the adjudication process with payers, we have seen 81% of those prescriptions approved by the payer with an average approval time of 7.9 days.

• We have made significant progress in our outreach efforts having reached 67% of our target prescribers an average of 2.8 times since launch through September 30, 2018.

• Inventory held by specialty pharmacies increased by approximately 65% from July 1, 2018 to September 30, 2018 as certain specialty pharmacies increased their inventory levels and stocking locations based on increased patient shipments.

Stock purchase agreement with Eisai

In March 2016, we entered into the stock purchase agreement with Eisai, (the “Eisai stock purchase agreement”), pursuant to which we acquired the worldwide rights to DOPTELET. The terms of the Eisai stock purchase agreement included (i) an upfront payment of $5.0 million, (ii) milestone payments up to $135.0 million in the aggregate based on annual net sales of DOPTELET and (iii) a commitment to negotiate in good faith to secure a long-term supply agreement with Eisai to purchase supplies of DOPTELET from Eisai. See Note 3 “The purchase agreement and related transactions” in the accompanying notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Amended and restated transition services agreement and an additional work order

On October 1, 2018, we entered into an Amended and Restated Transition Services Agreement (the “Amended TSA”) and an Additional Work Order (“Work Order”) with Eisai, pursuant to which Eisai has agreed to provide services to us after the expiration of the original Transition Services Agreement, dated March 30, 2016 (the "TSA"), on March 31, 2018.

Under the Work Order, Eisai has agreed to provide certain regulatory, CMC, nonclinical, clinical pharmacology, and statistical services to us in order to support our NDA to the FDA and MAA to the EMA for the period from April 1, 2018 through June 30, 2019. Pursuant to the Amended TSA, we are obligated to pay Eisai for services provided by Eisai personnel based on a fixed payment schedule. To the extent that service fees and out-of-pocket costs payable by us to Eisai under the Amended TSA exceed $51.0 million, our obligation to pay milestone payments under the Eisai stock purchase agreement will be reduced. We may terminate the services provided under the Amended TSA on a service-by-service basis or the agreement in its entirety upon 60-days’ written notice. The Amended TSA may also be terminated (i) by mutual consent, (ii) by either party upon 60-days’ written notice if the other party materially breaches the agreement, (iii) by either party in the event of the other party’s bankruptcy, insolvency or certain similar occurrences and (iv) by either party in the event that such party is unable to perform its obligations under the agreement as a result of events outside of its reasonable control.

Supply agreement with Eisai

In June 2017, we entered into a supply agreement with Eisai, pursuant to which we agreed to purchase finished drug product of DOPTELET from Eisai and Eisai agreed to supply finished drug product of DOPTELET to us. The initial term of the

19

agreement will terminate on the later of March 30, 2021 or the third anniversary of our first commercial sale of DOPTELET. After the initial term, the supply agreement may be renewed by mutual agreement of the parties. During the initial term, Eisai is our exclusive supplier of finished drug product of DOPTELET except that we have the right to terminate the exclusivity early by payment to Eisai of a fee calculated based on our forecasted purchases of DOPTELET during the remainder of the initial term. In addition, in the event that Eisai fails to deliver substantially all of the finished drug product due to us under the agreement, we may elect to seek alternative supply arrangements so long as such failure remains uncured, subject to certain exceptions. The aggregate payments to Eisai under the supply agreement for finished drug product will be the greater of a fixed payment per tablet or a payment calculated in the mid-single digit percentages of net sales of DOPTELET.

Eisai note and security agreement

On March 30, 2016, we issued a secured promissory note to Eisai (“Note”), which had an interest rate of 5% per annum, and enabled us to finance payments due to Eisai under the TSA for all costs incurred through December 31, 2017. The principal amount of the Note was increased on a quarterly basis by the amount of unpaid service fees and out-of-pocket expenses due and owed to Eisai under the TSA. The total aggregate spend through this Note was $31.1 million and on March 16, 2018, we repaid in full this principal balance along with accumulated interest of $1.3 million.

License agreement with Astellas

The primary intellectual property related to DOPTELET is licensed to us from Astellas on an exclusive, worldwide basis under the terms of a license agreement we acquired from Eisai in connection with our acquisition of the rights to DOPTELET from Eisai. Under the terms of the license agreement, we are required to make payments upon the achievement of certain milestones. On September 21, 2017, upon the filing of the NDA, we became obligated to make a milestone payment of $1.0 million.  We will be required to make additional aggregate milestone payments of up to $4.0 million to Astellas if certain other regulatory milestones are achieved. In addition, we will be required to pay Astellas tiered royalties in the mid to high single-digit percentages on net sales of DOPTELET. No amounts have been accrued for any potential future milestone payments as such payments have not been deemed probable. See Note 3 “The purchase agreement and related transactions” in the accompanying notes to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Services agreements with PBM Capital Group, LLC

On April 1, 2016, Dova and AkaRx each entered into a services agreement (each, a “SA”) with PBM Capital Group, LLC. Pursuant to the terms of each of the SAs, which have terms of twelve months each (and are automatically renewable for successive one-year periods), PBM Capital Group, LLC has rendered advisory and consulting services to Dova and AkaRx. Services provided under the SAs include certain scientific and technical, accounting, operations and back office support services. In consideration for these services, Dova and AkaRx were each obligated to pay PBM Capital Group, LLC a monthly management fee of $25,000.  On March 30, 2018, the SA agreement between AkaRx and PBM Capital Group, LLC was terminated.  Effective April 1, 2018, the monthly management fee for the SA between Dova and PBM Capital Group, LLC was reduced to $17,400.

Commercial outsourcing agreement

On March 1, 2018, we entered into a Commercial Outsourcing Master Services Agreement with Integrated Commercial Solutions, LLC (“ICS”), a division of AmerisourceBergen Specialty Group, a subsidiary of AmerisourceBergen, pursuant to which ICS is the exclusive provider of various third-party logistics services to support our distribution of DOPTELET in the United States. The key services provided by ICS include logistics, warehousing, returns and inventory management, contract administration and chargebacks processing and accounts receivable management.

Effective March 1, 2018, we also entered into a first amendment to the Commercial Outsourcing Master Services Agreement to in order for ICS to purchase and sell DOPTELET to our customers in the United States.  ICS will only make shipments to customers who have an executed contract with us.  Under this amendment, ICS places orders with us to maintain an appropriate level of inventory.  ICS assumes all inventory risk and has sole responsibility for determining the prices at which it sells these products, subject to specified limitations in the amendment.  The agreement will terminate on a date that is mutually agreed upon, in good faith, between ICS and us.  If we do not attain all regulatory approvals and licenses to sell and distribute DOPTELET within one calendar year from the effective date, ICS may terminate the agreement within 30 days written notice.  Upon termination of this arrangement, ICS will be allowed to return one hundred percent of all inventory and revert to be our third-party logistics provider.

20

Co-Promotion agreement

On September 26, 2018, we entered into a Co-Promotion Agreement (the "Co-Promotion Agreement") with the Salix division of Valeant Pharmaceuticals North America LLC (“Salix”), a subsidiary of Bausch Health Companies Inc., pursuant to which we granted Salix the exclusive right to co-promote DOPTELET to specified medical professionals in the Gastroenterology, Colorectal Surgery and Proctology field (the “Specialty”) in the United States.

Pursuant to the Co-Promotion Agreement, we will pay Salix a fee based on the quarterly Net Sales (as defined in the Co- Promotion Agreement) of DOPTELET to specified medical professionals in the Specialty in the United States at specified tiered percentages, ranging from Salix receiving a mid-twenties to mid-thirties percent of Net Sales in a calendar year, subject to specified adjustments. In addition, we have agreed to pay Salix a milestone payment of $2.5 million upon the achievement of an aggregate Net Sales amount to the Specialty. The Co-Promotion Agreement specifies that we will grant Salix a royalty-free right to use trademarks and copyrights relating to DOPTELET in connection with the promotion of DOPTELET in the United States. The Co-Promotion Agreement also contains provisions regarding payment terms, confidentiality and indemnification, as well as other customary provisions.

The co-promotion of DOPTELET in the United States pursuant to the terms of the Co-Promotion Agreement will be supervised by a joint steering committee composed of an equal number of representatives from us and Salix. Under the terms of the agreement, the we remain responsible for the costs of maintaining regulatory approval of, manufacturing, supplying and distributing DOPTELET. Salix has also agreed to maintain at least one hundred Salix sales representatives (subject to certain adjustments) that will have the responsibility to promote DOPTELET in the Specialty in the United States.

We did not make any milestone or royalty payments under the Co-Promotion Agreement for the three and nine months ended September 30, 2018.

Critical accounting policies and significant judgments and estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis.

Significant estimates include assumptions used in the determination of net revenue generated from product sales, revenue recognized upon the satisfaction of performance obligations under our strategic agreements, of share-based compensation and some of our research and development expenses. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We discussed accounting policies and assumptions that involve a higher degree of judgment and complexity in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 16, 2018. There have been no material changes during the three months ended September 30, 2018 to our critical accounting policies, significant judgments and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017, except for the addition of a revenue recognition policy as discussed in Note 2 of our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Components of results of operations

Revenue

Product sales, net consist of sales of DOPTELET, which was approved by the FDA on May 21, 2018.

In addition, during the nine months ended September 30, 2018, we recognized $2.6 million of the upfront payment received from our development and distribution agreement with Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., a wholly owned subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., (collectively, “Fosun”).

21

Cost of product sales

Cost of product sales consist primarily of direct and indirect costs related to the manufacturing of DOPTELET sold, including third-party manufacturing costs, packaging services, freight, royalty payments to Astellas in addition to inventory adjustment charges. We began capitalizing commercial inventory manufactured upon FDA approval of DOPTELET.

Research and development expense

Research and development expense consists of costs incurred in connection with our research activities, most of which to-date have been incurred under the TSA and the Amended TSA and includes costs associated with clinical trials, consultants, clinical trial materials, regulatory filings, facilities, laboratory expenses and other supplies.

Research and development costs are expensed as incurred. Costs for certain activities, such as manufacturing and preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

We expect our research and development expense will increase for the foreseeable future as we pursue additional indications for DOPTELET. Drug candidates in later stages of clinical development, such as DOPTELET, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Additionally, we are hiring internal resources to lead and take over development work that has historically been handled by Eisai personnel under the TSA and the Amended TSA.

The duration, costs and timing of additional clinical trials for DOPTELET and any other drug candidates will depend on a variety of factors that include, but are not limited to, the following:

• number of trials required for approval;

• delays in reaching, or failing to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites or prospective contract research organizations, the terms of which can be subject to extensive negotiation and may vary significantly among different contract research organizations and trial sites;

• clinical trials of our drug candidates producing negative or inconclusive results, including failure to demonstrate statistical significance;

• per patient trial costs, including based on number of doses that patients receive;

• the number of patients that participate in the trials and then drop-out or discontinuation rates of patients;

• the number of sites included in the trials;

• the countries in which the trial is conducted;

• the length of time required to enroll eligible patients;

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

• undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials;

• the duration of patient follow-up;

• timing and receipt of regulatory approvals;

• the efficacy and safety profile of the drug candidate;

• third-party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• whether and how many post-approval trials are required;

• regulators or institutional review boards requiring that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; and

• the insufficiency or inadequacy of the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of DOPTELET. We are also unable to predict when, if ever, material net cash inflows will commence from sales of DOPTELET. This is due to the numerous risks and uncertainties associated with developing and commercializing DOPTELET, including the uncertainty of:

• achieving successful enrollment and completion of additional clinical trials and achieving regulatory approval of DOPTELET for the treatment of thrombocytopenia beyond its initial indication;

22

• establishing an appropriate safety profile;

• establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers that provide for commercial quantities of DOPTELET manufactured at acceptable cost levels and quality standards;

• whether any indication approved by regulatory authorities is narrower than we expect;

• compliance with ongoing regulatory review by the FDA, EMA, or any comparable foreign regulatory authorities;

• the efficacy and safety of DOPTELET and potential advantages compared to alternative treatments, notwithstanding success in meeting or exceeding clinical trial endpoints;

• the size of the markets for approved indications in territories in which we receive regulatory approval, if any;

• the ability to set an acceptable price for DOPTELET and obtain coverage and adequate reimbursement from third-party payors and develop and implement viable patient assistance programs;

• the acceptance by the prescribing community of DOPTELET;

• the degree of competition we face from competitive therapies;

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

• retention of key research and development personnel;

• the ability to continue to build out and retain an experienced management and advisory team;

• the ability to maintain, expand and protect our intellectual property portfolio, including any licensing arrangements with respect to our intellectual property; and

• the ability to avoid and defend against third-party infringement and other intellectual property related claims.

A change in the outcome of any of these variables with respect to the development of our drug candidate would significantly change the costs, timing and viability associated with the development of that drug candidate.

Selling, general and administrative expense

Selling, general and administrative expense consists primarily of salaries and other related costs, stock compensation expense, recruiting fees, professional fees for accounting and legal services, as well as increasingly the costs associated with supporting the commercialization of DOPTELET.

We expect our selling, general and administrative expense will increase for the foreseeable future to support the commercialization of DOPTELET for its initial indication and other indications, if these other indications gain marketing approval, and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees related to the Co-Promotion Agreement with Salix, outside consultants, lawyers and accountants, among other expenses. Additionally, we have begun to incur increased costs associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs. In addition, we expect to incur, at an increased rate compared to prior periods, significantly higher expenses associated with building and maintaining

a sales and marketing team in connection with the commercialization of DOPTELET. As a result, we expect to report significantly higher general and administrative expenses over the next several fiscal quarters compared to prior periods.

Results of operations for the three months ended September 30, 2018 and 2017

The following table sets forth our selected statements of operations data for the three months ended September 30, 2018 and 2017 (in thousands):

23

	Three months ended September 30,
	2018			2017
Revenue
Product sales, net	$	2,929		$	—
Total revenue, net	2,929			—
Operating expenses:
Cost of product sales	370			—
Research and development	4,847			5,426
Selling, general and administrative	17,031			4,185
Total operating expenses	22,248			9,611
Loss from operations	(19,319		)	(9,611		)
Interest income and other income (expense), net	342			224
Interest expense	(546		)	(336		)
Total other expenses, net	(204		)	(112		)
Net loss	$	(19,523	)	$	(9,723	)

Revenue

During the three months ended September 30, 2018, product sales, net consist of sales of DOPTELET, which we commercially launched on June 4, 2018.  We did not recognize any revenue during the three months ended September 30, 2017.

Cost of product sales

Cost of product sales of $0.4 million for the three months ended September 30, 2018 consists of the cost of inventory, royalty payments to Astellas and certain distribution and overhead costs. 

Research and development expense

Research and development expenses decreased by $0.6 million, from $5.4 million for the three months ended September 30, 2017 to $4.8 million for the three months ended September 30, 2018, primarily driven by the $1.0 million milestone payment that we became obligated to pay Astellas on September 21, 2017 upon the submission of the NDA for DOPTELET and the completion of the clinical trials in 2017 of DOPTELET for the treatment of thrombocytopenia in patients with CLD, scheduled to undergo a procedure, partially offset by the initiation of clinical trials to evaluate DOPTELET for the treatment of PST and CIT.

For the three months ended September 30, 2018, we recorded approximately $3.2 million of product development expenses, $1.0 million of payroll-related expenses, and $0.6 million of stock-based compensation expense.

For the three months ended September 30, 2017, research and development expenses included $3.2 million of expenses under the TSA, $0.3 million of consulting fees associated with the preparation and submission of the NDA and planning for additional clinical development of avatrombopag, $0.4 million of payroll-related expenses and $0.5 million of stock-based compensation expense, as well as a $1.0 million milestone payment that we became obligated to pay Astellas on September 21, 2017 upon the submission of the NDA.

Selling, general and administrative expense

For the three months ended September 30, 2018, selling, general and administrative expenses increased by $12.8 million, which was primarily driven by the increased level of headcount and sales and marketing activities to support the commercial launch of DOPTELET, increased corporate infrastructure and additional costs associated with operating as a public entity.

For the three months ended September 30, 2018, selling, general and administrative expenses consisted of $3.0 million of commercial related expenses $7.7 million of payroll-related expenses, $3.4 million of stock-based compensation expenses, $0.7 million of office operations-related expenses, $1.7 million in professional and consulting fees, and $0.5 million in educational sponsorship and grants.

24

For the three months ended September 30, 2017, general and administrative expenses were $4.2 million, and were primarily attributable to $1.7 million of stock-based compensation expenses, $0.6 million of payroll-related expenses, $1.0 million of consulting fees, $0.3 million of recruiting fees, $0.3 million of office operations-related expenses and $0.2 million of fees under the SAs with PBM Capital Group, LLC.

Other expenses, net

Other expenses, net for the three months ended September 30, 2018 consisted primarily of $0.5 million of interest expense and amortization of debt issuance costs and accretion expense for the final payment related to our loan with Silicon Valley Bank, and $0.2 million of charitable contributions, partially offset by $0.5 million of income on our money market accounts.

Other expense, net for the three months ended September 30, 2017 consisted primarily of $0.3 million of interest expense related to the Eisai Note, partially offset by $0.2 million of income on our money market mutual funds. 

Results of operations for the nine months ended September 30, 2018 and 2017

The following table sets forth our selected statements of operations data for the nine months ended September 30, 2018 and 2017 (in thousands):

	Nine months ended September 30,
	2018			2017
Revenue
Product sales, net	$	4,886		$	—
Other revenue	2,627			—
Total revenue, net	7,513			—
Operating expenses:
Cost of product sales	889			—
Research and development	12,771			12,995
Selling, general and administrative	45,856			7,045
Total operating expenses	59,516			20,040
Loss from operations	(52,003		)	(20,040		)
Interest income and other income (expense), net	369			243
Interest expense	(1,315		)	(857		)
Total other expenses, net	(946		)	(614		)
Net loss	$	(52,949	)	$	(20,654	)

Revenue

During the nine months ended September 30, 2018, product sales, net consist of sales of DOPTELET. In addition, we recognized the $2.6 million of the upfront payment received from our development and distribution agreement with Fosun. We did not recognize any revenue during the nine months ended September 30, 2017.

Cost of product sales

Cost of product sales of $0.9 million for the nine months ended September 30, 2018, consists of the cost of inventory that was purchased from Eisai that was sold after FDA approval, royalty payments to Astellas and certain distribution and overhead costs.  In addition, for the nine months ended September 30, 2018, cost of product sales included $0.3 million related to a one-time stock-based compensation charge.

Research and development expense

Research and development expenses decreased by $0.2 million, from $13.0 million for the nine months ended September 30, 2017 to $12.8 million for the nine months ended September 30, 2018, primarily driven by the $1.0 million milestone payment that we became obligated to pay Astellas on September 17, 2017 upon the submission of the NDA and the completion of the

25

clinical trials in 2017 of DOPTELET for the treatment of thrombocytopenia in patients with CLD, scheduled to undergo a procedure, partially offset by the initiation of clinical trials to evaluate DOPTELET for the treatment of PST and CIT.

For the nine months ended September 30, 2018, research and development expenses included $8.8 million of clinical development costs associated with the clinical trials initiated to evaluate DOPTELET for the treatment of PST and CIT, $2.4 million of payroll-related expenses and $1.6 million of stock-based compensation expense.

For the nine months ended September 30, 2017, research and development expenses included $9.8 million of expenses under the TSA, $0.9 million of consulting fees, $0.7 million of payroll-related expenses and $0.6 million of stock-based compensation expense, as well as a $1.0 million milestone payment that we became obligated to pay Astellas on September 21, 2017 upon the submission of the NDA.

Selling, general and administrative expense

For the nine months ended September 30, 2018, selling, general and administrative expenses increased by $38.8 million, which was primarily driven by the increased level of headcount and sales and marketing activities to support the commercial launch of DOPTELET, increased corporate infrastructure and additional costs associated with operating as a public entity.

For the nine months ended September 30, 2018, selling, general and administrative expenses of $45.9 million, consists primarily of $17.6 million of payroll-related expenses, $10.0 million of commercial related expenses, $9.1 million of stock-based compensation expenses, $5.8 million of professional and consulting fees, $2.3 million of office operations-related expenses and $1.1 million in educational sponsorship and grants.

For the nine months ended September 30, 2017, selling, general and administrative expenses were $7.0 million, and were primarily attributable to $2.2 million of stock-based compensation expense, $1.2 million of payroll-related expenses, $1.8 million of consulting fees, $0.6 million of employee recruiting expenses, $0.6 million of office operations-related expenses, $0.2 million of travel expenses and $0.5 million of fees under the SAs with PBM Capital Group, LLC.

Other expenses, net

Other expenses, net for the nine months ended September 30, 2018 consists primarily of $1.3 million of interest expense, amortization of debt issuance costs and accretion expense for the final payment related to our loan with Silicon Valley Bank, $0.5 million of withholding taxes related to the $5.0 upfront payment received from Fosun, $0.2 million of charitable contributions, and $0.4 million of various state franchise taxes partially offset by $1.4 million of income on our money market accounts. Other expenses, net for the nine months ended September 30, 2017 consisted primarily of $0.9 million of interest expense related to the Eisai Note, partially offset by $0.3 million of interest income on our money market mutual funds.

Liquidity and capital resources

We have funded our operations primarily through sales of preferred stock and common stock as well as through the incurrence of debt. On July 5, 2017, we closed our IPO, which resulted in the issuance and sale of 5,077,250 shares of our common stock at a public offering price of $17.00 per share, resulting in net proceeds of $78.7 million after deducting underwriting discounts and commissions and other offering costs. On February 27, 2018, we completed an underwritten public offering of 2,500,000 shares of our common stock at an offering price of $32.00 per share. Net proceeds raised from the offering were approximately $74.7 million, after deducting underwriting discounts and commissions and other offering expenses. In addition, on April 17, 2018, we borrowed $20.0 million from Silicon Valley Bank pursuant to the Loan and Security Agreement.

We commercially launched DOPTELET in June 2018. Prior to the generation of revenue from DOPTELET, we had not generated any commercial revenue from the sale of our products. We expect to incur substantial and increasing losses for the foreseeable future. Our principal sources of liquidity were our cash and equivalents, which totaled $122.0 million and $94.8 million at September 30, 2018 and December 31, 2017, respectively.

26

The following table shows a summary of our cash flows for each of the periods shown below (in thousands):

	Nine months ended September 30,
	2018			2017
Cash and equivalents at the beginning of the period	$	94,846		$	28,709
Net cash used in operating activities	(36,257		)	(6,258		)
Net cash used in investing activities	(269		)	(35		)
Net cash provided by financing activities	63,707			77,998
Cash and equivalents at the end of the period	$	122,027		$	100,414

Operating activities

Operating activities used$36.3 million of cash during the nine months ended September 30, 2018, primarily for employee related expenses, consulting fees primarily related to our commercial readiness activities and clinical development fees related to the initiation of the PST program, partially offset by the receipt of a $4.5 million upfront payment from our strategic alliance with Fosun and cash receipts from our product sales. Operating cash flows also included office operational expenses, recruiting and legal fees.

Operating activities used$6.3 million of cash during the nine months ended September 30, 2017, primarily for consulting fees, payroll related expenses, office operational expenses, recruiting, professional and legal fees, travel and expenses under the SAs with PBM Capital Group, LLC.

Investing activities

Net cash used in investing activities related primarily for the purchases of equipment during the nine months ended September 30, 2018.  Investing activities during the nine months ended September 30, 2017 were insignificant.

Financing activities

For the nine months ended September 30, 2018, financing activities provided$63.7 million of cash, consisting primarily of net proceeds of $74.7 million from the issuance of common stock from our underwritten offering completed on February 27, 2018 and $20.0 million that was borrowed from Silicon Valley Bank under the Loan and Security Agreement, partially offset by the payment in full of the Eisai Note of $31.1 million and $37,705 in debt issuance costs to secure the new loan.

Financing activities provided$78.0 million of cash during the nine months ended September 30, 2017, consisting of the net proceeds of $78.7 million received upon the closing of our IPO on July 5, 2017, partially offset by the payment of $0.7 million of offering costs for our preferred stock sold in 2016.

Funding requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to build out our commercial organization including the sales leadership, marketing and market access functions and expand our commercialization activities. As we seek to obtain marketing approval for DOPTELET in other indications, we will incur additional costs around clinical trials and research and development. In addition, if we obtain FDA approval for DOPTELET in other indication or any other drug candidates, we expect to incur significant commercialization expenses. Furthermore, we have begun and will continue to incur costs as a public company that we did not previously incur or have previously incurred at lower rates as a private company.  We expect that, based on our current operating plans, our existing cash and equivalents as of September 30, 2018 will be sufficient to fund our current planned operations for at least the next 12 months. We have based this estimate on assumptions that could prove to be wrong and we could use our capital resources sooner than planned.

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

• costs of continued commercial activities, including product sales, marketing, manufacturing and distribution, for DOPTELET in CLD and other indications, if approved;

• the scope, progress, results and costs of clinical trials;

• the scope, prioritization and number of our research and development programs;

• the costs, timing and outcome of regulatory review of our drug candidates;

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

27

• the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under collaboration agreements, if any;

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

• the costs of retaining key research and development, sales and marketing personnel;

• the costs of building out internal accounting, legal, compliance and other operational and administrative functions;

• the timing and size of any milestone payments required under our existing or future arrangements;

• the extent to which we acquire or in-license other drug candidates and technologies; and

• the costs of establishing sales and marketing capabilities if we obtain regulatory approvals to market our drug candidates.

Clinical trial development is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval of and achieve sales of DOPTELET in other indications or other drug candidates. In addition, DOPTELET or any other drug candidates, if approved, may not achieve commercial success or may be limited in approved indications. Our commercial revenue will initially only be derived from sales of DOPTELET for the treatment of thrombocytopenia in adult patients with CLD who are scheduled to undergo a procedure. Accordingly, we may need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

If we are unable to raise capital or otherwise obtain funding when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

We will seek to obtain additional capital through the sale of debt or equity financings or other arrangements such as, collaborations, strategic alliances and licensing arrangements to fund operations; however, there can be no assurance that we will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing stockholders and newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock. Debt securities issued or other debt financing incurred may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued.

Contractual Obligations and Commitments

The following table discloses aggregate information about our contractual obligations and the periods in which payments are due as of September 30, 2018 (in thousands):

	Payments due by Period
	Total		Less Than 1 Year		1-3 Years		4-5 Years		More than 5 Years
	(in thousands)
Long term debt obligations (including interest) (1)	$	22,000	$	6,667	$	15,333	$	—	$	—
Operating lease obligations (2)	489		333		156		—		—
Supply agreement with Eisai	1,728		1,728		—		—		—
Total	$	24,217	$	8,728	$	15,489	$	—	$	—

(1) Represents the contractually required principal payments on our Loan Security Agreement in accordance with the required payment schedule and the $2.0 million final payment to Silicon Valley Bank on April 17, 2022.

(2) Represents the contractually required payments under our operating lease obligations in existence as of September 30, 2018 in accordance with the required payment schedule. No assumptions were made with respect to renewing the lease terms at the expiration date of their initial terms.

Off-balance sheet arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

28

Recent accounting pronouncements

See Note 2 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.

JOBS Act transition period

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation, (i) not providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) not complying with any requirement that may be adopted by the Public Company Accounting Oversight Board. We will remain an emerging growth company until the earliest of the following to occur of (1) the last day of the fiscal year (a) ending December 31, 2022, which is the end of the fiscal year following the fifth anniversary of the completion our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a “large accelerated filer” under the rules of the U.S. Securities and Exchange Commission, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents, are in the form of a money market fund. In addition, as discussed in Note 3 in the accompanying notes to the condensed consolidated financial statements included in this Quarterly Report, our Eisai Note had an interest rate of 5% per annum. If market rates were to decline, our required payments would have exceeded those based on the current market rate.

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations for the three and nine ended September 30, 2018.

We contract with clinical research organizations globally. We may be subject to fluctuations in foreign currency rates in connection with certain of these agreements. Transactions denominated in currencies other than the U.S. dollar are recorded based on exchange rates at the time such transactions arise. As of September 30, 2018, substantially all of our total receivables and liabilities were denominated in the U.S. dollar.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

29

With respect to the quarter ended September 30, 2018, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Management does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2018 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II.  Other Information

Item 1. Legal Proceedings.

We are not involved in any litigation that we believe could have a material adverse effect on our financial position or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers, threatened against or affecting our company or our officers or directors in their capacities as such.

Item 1A. Risk Factors

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities.  Except for the risk factors set forth immediately below, our risk factors have not changed materially from those described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on February 16, 2018.

We may not be able to generate sufficient cash to service our indebtedness, which currently consists of our loan from Silicon Valley Bank.

We have entered into a loan and security agreement with Silicon Valley Bank, pursuant to which we have borrowed an aggregate of $20.0 million. Our obligations under the loan and security agreement are secured by substantially all of our assets except for our intellectual property and certain other assets, and we may not encumber our intellectual property without Silicon Valley Bank’s prior written consent. The loan and security agreement contains a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. We are also restricted from paying dividends or making other distributions or payments on our capital stock, subject to limited exceptions. Our obligations under the loan agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in our business, operations or financial or other condition. We were in compliance with these covenants as of September 30, 2018. We may also enter into other debt agreements in the future which may contain similar or more restrictive terms.

Our ability to make scheduled monthly payments or to refinance our debt obligations depends on numerous factors, including the amount of our cash reserves and our actual and projected financial and operating performance. These amounts and our performance are subject to certain financial and business factors, as well as prevailing economic and competitive conditions, some of which may be beyond our control. We cannot assure you that we will maintain a level of cash reserves or cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our existing or future indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure you that we would be able to take any of these actions, or that these actions would permit us to meet our scheduled debt service obligations. Failure to comply with the conditions of the loan and security agreement could result in an event of default, which could result in an acceleration of amounts due under the loan and security agreement. We

30

may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments, and Silicon Valley Bank could seek to enforce security interests in the collateral securing such indebtedness, which would harm our business.

Our distribution agreements with ICS to market DOPTELET may not be successful.

We have entered into a distribution agreement with ICS to distribute DOPTELET in the United States. Under this agreement, ICS will generally be responsible for the warehousing, distribution, order management, and data management for DOPTELET. Although ICS has the exclusive right to distribute DOPTELET in the United States, the agreement does not require ICS to sell our products exclusively, and therefore, ICS is free to sell potentially competitive products. Because we are still relatively early in our commercial launch, we are not yet able to fully assess ICS’s performance in distributing DOPTELET in the United States, and it may take an extended period of time for us to accurately assess its performance under the agreement. Additionally, because the agreement with ICS is exclusive, we may be entirely dependent on ICS for sales in the United States for the duration of the agreement. If ICS fails to perform satisfactorily under the agreement, our ability to successfully commercialize DOPTELET would be adversely affected.

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

(b) Use of IPO Proceeds

On June 28, 2017, our registration statement on Form S-1, as amended (File No 333-218479) was declared effective by the SEC in connection with our IPO, pursuant to which we sold 5,077,250 shares of common stock, $0.001 par value per share at a public offering price of $17.00 per share, including the full exercise by the underwriters of their option to purchase additional shares.

On July 5, 2017, we received net proceeds of $78.7 million, after deducting underwriting discounts and commissions and offering expenses borne by us. None of the expenses incurred by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10 percent or more of our common stock, or (iii) our affiliates. The joint book-running underwriters of the IPO were J.P. Morgan Securities LLC, Jefferies LLC and Leerink Partners LLC.

There has been no material change in the planned use of proceeds from our IPO from that described in the final prospectus related to the offering, dated June 28, 2017, as filed with the SEC on June 30, 2017.

31

Item 6. Exhibits

Exhibit No.	Description
3.1*	Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.3 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-218479), filed with the Commission on June 9, 2017, and incorporated by reference herein.)
3.2*	Amended and Restated Bylaws (previously filed as Exhibit 3.4 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-218479), filed with the Commission on June 9, 2017, and incorporated by reference herein)
10.1*	At-the-Market Equity Offering Sales Agreement, dated July 27, 2018, by and between the Registrant and Stifel, Nicolaus & Company, Incorporated (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38135), filed with the Commission on July 27, 2018, and incorporated by reference herein)
10.2#+	Co-Promotion Agreement, dated as of September 26, 2018, by and between the Registrant and Valeant Pharmaceuticals North America LLC
10.3#+	Amended and Restated Transition Services Agreement, dated as of April 1, 2018, by and between AkaRx, Inc. and Eisai Inc.
31.1#	Certification of Principal Executive Officer of Dova Pharmaceuticals, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2#	Certification of Principal Financial Officer of Dova Pharmaceuticals, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#++	Certifications of Principal Executive Officer and Principal Financial Officer of Dova Pharmaceuticals, Inc. pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101#	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements (filed herewith).

+ Confidential treatment has been requested with respect to portions of this exhibit, indicated by asterisks, which has been filed separately with the SEC.

# Filed herewith.

* Previously filed.

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

32

SIGNATURES

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

	Dova Pharmaceuticals, Inc.
Date: November 8, 2018	By:	/s/ Alex Sapir
	Alex Sapir
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: November 8, 2018	By:	/s/ Mark W. Hahn
	Mark W. Hahn
	Chief Financial Officer
	(Principal Financial Officer)

33

EX-10.2

Exhibit 10.2

______________________________________________________________________________

CO-PROMOTION AGREEMENT

by and between

DOVA PHARMACEUTICALS, INC.

and

VALEANT PHARMACEUTICALS NORTH AMERICA LLC

September 26, 2018

______________________________________________________________________________

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

TABLE OF CONTENTS

	Page
ARTICLE 1 DEFINITIONS	1
ARTICLE 2 RIGHTS AND OBLIGATIONS	8
2.1      Engagement; Grant of Rights.	8
2.2      Retention of Rights.	9
2.3      Non-Competition; Non-Solicitation.	9
2.4      Dova Trademarks and Copyrights.	10
ARTICLE 3 JOINT STEERING COMMITTEE	11
3.1      Formation of the JSC.	11
3.2      Meetings and Minutes.	11
3.3      Purpose of the JSC.	11
3.4      Decision Making.	13
3.5      Marketing Sub-Committee.	13
ARTICLE 4 VALEANT ACTIVITIES FOR THE PRODUCT	14
4.1      Valeant Activities.	14
4.2      Detailing.	15
4.3      Compliance with Applicable Law.	17
4.4      Field Force Personnel Training; Product Materials.	19
4.5      Provisions Related to Field Force Personnel.	21
4.6      Responsibility for Valeant Activity Costs and Expenses.	22
4.7      Data Sharing.	22
ARTICLE 5 REGULATORY, SAFETY AND SURVEILLANCE, COMMERCIAL MATTERS	23
5.1      Dova Responsibility.	23
5.2      Valeant Involvement.	23
5.3      Inspections.	23
5.4      Pharmacovigilance.	24
5.5      Unsolicited Requests for Medical Information.	24
5.6      Recalls and Market Withdrawals.	25
5.7      Certain Reporting Responsibilities.	25
5.8      Booking of Sales Revenues.	25
5.9      Returns.	25

i

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

TABLE OF CONTENTS

(continued)

5.10    Manufacturing; Distribution; Marketing.	25
ARTICLE 6 FINANCIAL PROVISIONS	26
6.1      Promotion Fee.	26
6.2      Milestone Payment.	27
6.3      Reports; Payments.	27
6.4      Taxes.	28
6.5      Determination of Specialty.	29
ARTICLE 7 AUDIT RIGHTS	30
7.1      Recordkeeping.	30
7.2      Valeant Rights.	30
7.3      Dova Rights.	31
ARTICLE 8 INTELLECTUAL PROPERTY	32
8.1      Ownership of Intellectual Property.	32
8.2      Title to Trademarks and Copyrights.	32
8.3      Protection of Trademarks and Copyrights.	32
8.4      Disclosure of Know-How.	33
ARTICLE 9 CONFIDENTIALITY	33
9.1      Confidential Information.	33
9.2      Public Announcements.	34
ARTICLE 10 REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS	35
10.1      Representations and Warranties of Dova.	35
10.2      Representations and Warranties of Valeant.	37
10.3      Disclaimer of Warranty.	38
10.4      Additional Covenants.	39
ARTICLE 11 INDEMNIFICATION; LIMITATIONS ON LIABILITY	39
11.1      Indemnification by Dova.	39
11.2      Indemnification by Valeant.	39
11.3      Indemnification Procedures.	40
11.4      Limitation of Liability.	40
11.5      Insurance.	40
ARTICLE 12 TERM AND TERMINATION	41
12.1      Term.	41
12.2      Early Termination for Cause.	41
12.3      Other Early Termination.	42
12.4      Effects of Termination.	42
12.5      Tail Period.	42

ii

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

TABLE OF CONTENTS

(continued)

12.6      Survival.	43
ARTICLE 13 MISCELLANEOUS	43
13.1      Force Majeure.	43
13.2      Assignment.	43
13.3      Severability.	44
13.4      Notices.	44
13.5      Governing Law.	45
13.6      Dispute Resolution.	45
13.7      Waiver of Jury Trial.	45
13.8      Entire Agreement; Amendments.	46
13.9      Headings.	46
13.10    Independent Contractors.	46
13.11    Third Party Beneficiaries.	46
13.12    Waiver.	46
13.13    Cumulative Remedies.	46
13.14    Waiver of Rule of Construction.	46
13.15    Use of Names.	46
13.16    Further Actions and Documents.	47
13.17    Certain Conventions.	47
13.18    Counterparts.	47

iii

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

CO-PROMOTION AGREEMENT

This Co-Promotion Agreement (this “Agreement”) is entered into and dated as of September 26, 2018 (the “Effective Date”) by and between Dova Pharmaceuticals, Inc., a Delaware corporation (“Dova”), and Valeant Pharmaceuticals North America LLC, a Delaware limited liability company (“Valeant”). Dova and Valeant are each referred to individually as a “Party” and together as the “Parties”.

RECITALS

WHEREAS, Dova has developed and has rights to market and sell the Product (as defined below) in the Territory;

WHEREAS, the Parties believe that it would be mutually beneficial to collaborate on promotional activities for the Product and, accordingly, Dova desires that Valeant conduct certain promotional activities, and Valeant desires to conduct such activities, for the Product in the Territory;

NOW, THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ARTICLE 1DEFINITIONS

1.1“Act” shall mean the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et seq., as it may be amended from time to time, and the regulations promulgated thereunder.

1.2“Adverse Event” shall mean any untoward medical occurrence in a patient or clinical investigation subject who is administered the Product, but which does not necessarily have a causal relationship with the treatment for which the Product is used. An “Adverse Event” can include any unfavorable and unintended sign (including an abnormal laboratory finding), symptom or disease temporally associated with the use of the Product, whether or not related to the Product. A pre-existing condition that worsened in severity after administration of the Product would be considered an “Adverse Event”.

1.3“Affiliate” shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses the power to direct or cause the direction of the management, business and policies of such Person, whether through the ownership of fifty percent (50%) or more (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting securities of such Person, by contract or otherwise.

1.4“Agreement” shall have the meaning set forth in the preamble to this Agreement.

1.5“Alliance Managers” shall have the meaning set forth in Section 4.1.4.

1.6“Alternate Product” shall mean a pharmaceutical product that is commercialized by Valeant or its Affiliates in the Territory and that is part of the Salix business segment of Valeant’s parent company, Bausch Health Companies, Inc. (or, in the event that such business segments are restructured, that is part of the Salix business unit), and which product is complementary to the Product with regard to Target Professionals in the Specialty.

1.7“Applicable Laws” shall mean all applicable statutes, ordinances, regulations, codes, rules, or orders of any kind whatsoever of any Governmental Authority in the Territory pertaining to any of the activities and obligations contemplated by this Agreement, including, as applicable, the Act, the Generic Drug Enforcement Act of 1992 (21 U.S.C. § 335a et seq.), the Anti-Kickback Statute (42 U.S.C. § 1320a-7b et seq.), the Health Insurance Portability and Accountability Act of 1996, the Federal False Claims Act (31 U.S.C. §§ 3729-3733) (and applicable state false claims acts), the Physician Payments Sunshine Act, the Code, the Department of Health and Human Services Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers, released April 2003, the Antifraud and Abuse Amendment to the Social Security Act, the American Medical Association guidelines on gifts to physicians, generally accepted standards of good clinical practices adopted by current FDA regulations, as well as any state laws and regulations (i) impacting the promotion of pharmaceutical products, (ii) governing the provision of meals and other gifts to medical professionals, including pharmacists, or (iii) governing consumer

2

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

protection and deceptive trade practices, including any state anti-kickback/fraud and abuse related laws, all as amended from time to time.

1.8“Business Day” means each day of the week, excluding Saturday, Sunday or a day on which banking institutions in New York, New York, USA are closed.

1.9“Calendar Quarter” shall mean each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of January 1, April 1, July 1 or October 1 after the Effective Date, and the last Calendar Quarter shall end on the last day of the Term.

1.10“Calendar Year” shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of the year in which the Effective Date occurs, and the last Calendar Year of the Term shall commence on January 1 of the year in which the Term ends and end on the last day of the Term.

1.11 “Claims” shall mean all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations or injunctions, in each case of a Third Party (including any Governmental Authority).

1.12“Code” shall mean the Code on Interactions with Healthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America (PhRMA)/BIO, as it may be amended.

1.13“Compensation Report” shall have the meaning set forth in Section 4.2.2(b).

1.14“Compliance Manager” shall have the meaning set forth in Section 4.3.9.

1.15“Compliance Report” shall have the meaning set forth in Section 4.2.2(c).

1.16“Confidential Information” shall mean all secret, confidential, non-public or proprietary Know-How, whether provided in written, oral, graphic, video, computer or other form, provided by or on behalf of one Party to the other Party pursuant to this Agreement, including information relating to the disclosing Party’s existing or proposed research, development efforts, promotional efforts, regulatory matters, patent applications or business and any other materials that have not been made available by the disclosing Party to the general public. All such information related to this Agreement disclosed by or on behalf of a Party (or its Affiliate) to the other Party (or its Affiliate) pursuant to the Confidentiality Agreement shall be deemed to be such Party’s Confidential Information disclosed hereunder. For purposes of clarity, (i) Dova’s Confidential Information shall include all Product Materials unless and until made available by Dova to the general public (including through Valeant) and (ii) the terms of this Agreement shall be considered Confidential Information of both Parties.

1.17“Confidentiality Agreement” shall have the meaning set forth in Section 9.1.1.

3

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

1.18“Designated Product” shall mean a specific pharmaceutical product marketed by Valeant which is agreed to in writing by the Parties on or prior to the Effective Date.

1.19 “Detail(s)” shall mean a Product presentation during a face-to-face sales call between a Target Professional and a Sales Representative, during which a presentation of the Product’s attributes, benefits, prescribing information and safety information are orally presented, for use in the Field in the Territory. Neither e-details, nor presentations made at conventions, exhibit booths, a sample drop, educational programs or speaker meetings, or similar gatherings, shall constitute a Detail.

1.20“Detail Report” shall have the meaning set forth in Section 4.2.2.

1.21“Dispute” shall have the meaning set forth in Section 13.6.1.

1.22“Dollar” or “$” shall mean United States dollar.

1.23“Dova Trademarks and Copyrights” shall mean the logos, trade dress, slogans, domain names and housemarks of Dova or any of its Affiliates as may appear on any Product Materials or Product Labeling, in each case, as may be updated from time to time by Dova.

1.24“Dova’s Third Party Data Source” shall mean [***] or such other data source as selected by Dova and with which Dova enters into an agreement, at its cost.

1.25“Effective Date” shall have the meaning set forth in the preamble to this Agreement.

1.26“FDA” shall mean the United States Food and Drug Administration or any successor agency performing comparable functions.

1.27“Field” shall mean the treatment of thrombocytopenia in adult patients with chronic liver disease who are scheduled to undergo a procedure and any and all additional indications for which the Product is approved in the Territory.

1.28“Field Force Personnel” shall mean collectively, the Sales Representatives, the members of the institutional account management team described in Section 4.1.5, if any, that are engaged in Detailing the Product and any other employees of Valeant engaged in the Valeant Activities.

1.29“GAAP” shall mean United States generally accepted accounting principles.

1.30“Governmental Authority” shall mean any court, agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member, which has competent and binding authority to decide, mandate, regulate, enforce, or otherwise control the activities of the Parties contemplated by this Agreement.

4

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

1.31“Gross to Net Fraction” shall mean, for each SKU of the Product, a fraction (i) the numerator of which is the net sales of the SKU of the Product in the Territory for an applicable period (based on the gross-to-net discounts for all sales of such SKU of the Product (i.e., sales attributable to the Specialty, as well as all other sales of such SKU of the Product), and (ii) the denominator of which is gross sales of such SKU of the Product in the Territory for an applicable period, in each case, as determined in accordance with Dova’s revenue recognition policies, which is in accordance with GAAP (on a consistent basis), for quarterly financial reporting purposes, as reported in Dova’s quarterly filings with the U.S. Securities Exchange Commission.

1.32 “Indemnified Party” shall have the meaning set forth in Section 11.3.

1.33“Indemnifying Party” shall have the meaning set forth in Section 11.3.

1.34“Intellectual Property” shall have the meaning set forth in Section 8.1.2.

1.35“Intermediary” shall mean any wholesaler or distributor who sells Product to Retail Pharmacies and Non-Retail Institutions, but not patients, and with which Dova (or its Affiliates) has entered into an agreement or otherwise has arrangements.

1.36“Inventions” shall have the meaning set forth in Section 8.1.2.

1.37“JSC” shall have the meaning set forth in Section 3.1.

1.38“Know-How” shall mean information, whether or not in written form, including biological, chemical, pharmacological, toxicological, medical or clinical, analytical, quality, manufacturing, research, or sales and marketing information, including processes, methods, procedures, techniques, plans, programs and data.

1.39“Losses” shall mean any and all amounts paid or payable to Third Parties with respect to a Claim (including any and all losses, damages, obligations, liabilities, fines, fees, penalties, awards, judgments, interest), together with all documented out-of-pocket costs and expenses, including attorney’s fees, reasonably incurred.

1.40 “Net Sales” shall mean, for an applicable period, the aggregate amount, without duplication, equal to the Specialty Pharmacy Net Sales for each SKU, the Retail Net Sales for each SKU, if any, and the Non-Retail Net Sales for each SKU.

1.41“Non-Retail Institution” shall mean any institution (other than the Specialty Pharmacies, Retail Pharmacies and Intermediaries) to which Dova (or its Affiliates or its Intermediaries) sells and/or ships units of Product during the Term, which shall include group purchasing organizations (GPOs), hospitals, clinics, long term care facilities and any outlets that are a member of an Integrated Delivery Network (IDN), and with which Dova or its Affiliates do not have data agreements which enables Dova to track shipments of Product from such institution to patients based on the Target Professional prescribing such Product.

1.42 “Non-Retail Net Sales” shall mean, for each SKU of the Product:

5

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(i) the number of units of such SKU of Products shipped by Dova (or its Affiliates or its Intermediaries) to the Non-Retail Institutions in the Territory during an applicable period (excluding any shipments in excess of one unit of either SKU shipped to such Non-Retail Institutions based on the initial orders from such Non-Retail Institutions):

MULTIPLIED BY

(ii) the applicable Specialty Fraction for such SKU of the Product for the applicable period,

MULTIPLIED BY

(iii) the applicable WAC for such SKU of the Product for the applicable period,

MULTIPLIED BY

(iv) the Gross to Net Fraction for such SKU of the Product for the applicable period.

1.43 “Party” shall have the meaning set forth in the preamble to this Agreement.

1.44“Person” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization or other entity, or government or political subdivision thereof.

1.45“Product” shall mean the product approved pursuant to New Drug Application (NDA) No. 210238, as such approval may be supplemented from time to time (including by way of supplemental new drug application (sNDA)), currently marketed as DOPTELET® (avatrombopag) in the Territory and shall include an authorized generic version of such Product.

1.46 “Product Labeling” shall mean the labels and other written, printed or graphic matter upon (a) any container or wrapper utilized with the Product or (b) any written material accompanying the Product, including Product package inserts, in each case as approved by the FDA.

1.47“Product Materials” shall have the meaning set forth in Section 4.4.1(a).

1.48“Product Training Materials” shall have the meaning set forth in Section 4.4.1(a).

1.49“Quarterly Average Sales Force Size” shall have the meaning set forth in Section 4.2.2.

1.50“Quarterly Minimum Details” for an applicable Calendar Quarter shall mean [***].

1.51 “Regulatory Approval” shall mean any and all necessary approvals, licenses, registrations or authorizations from any Governmental Authority, in each case, necessary to commercialize the Product in the Territory.

1.52“Retail Pharmacy” shall mean an outlet which dispenses the Product directly to a patient in a retail setting or through mail order services.

6

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

1.53“Retail Net Sales” shall mean, for each SKU of the Product:

(i) the number of units of such SKU of the Product shipped from Retail Pharmacies to patients based on prescriptions written by the Specialty in the Territory (as determined by data reported by data aggregator) or such other data source with which Dova enters into an agreement at its cost),

MULTIPLIED BY

(ii) the applicable WAC for such SKU of the Product for the applicable period,

MULTIPLIED BY

(iii) the Gross to Net Fraction for such SKU of the Product for the applicable period.

1.54“Sales Representative” shall mean an individual employed and compensated by Valeant as a full-time employee as part of its sales forces and who engages in Detailing of the Designated Product (or the Alternate Product, as the case may be) in the Territory, and who is also trained with respect to the Product in accordance with this Agreement (including the Product Labeling and the use of the Promotional Materials) to deliver Details for the Product in the Field in the Territory.

1.55“Senior Officer” shall mean, with respect to Dova, its President and Chief Executive Officer (or such officer’s designee), and with respect to Valeant, its [***] (or such officer’s designee). From time to time, each Party may change its Senior Officer by giving written notice to the other Party.

1.56 “Specialty” shall mean (i) Target Professionals with a primary or secondary specialty designation of Gastroenterology, Colorectal Surgery or Proctology (excluding any such Target Professionals with a primary or secondary specialty designation of Hepatology (including Transplant Hepatology), in each case, as determined by data reported by Dova’s Third Party Data Source, subject to any adjustments determined pursuant to the process set out in Section 6.5, and (ii) all healthcare professionals with Nurse or Physician Assistant specialty designations affiliated with the Target Professionals described in subsection (i), as adjusted.

1.57“Specialty Fraction” shall mean, for each SKU of the Product, a fraction (i) the numerator of which is the number of units of such SKU of the Product shipped from the Specialty Pharmacies or the Retail Pharmacies to patients based on prescriptions written by the Specialty in the Territory (as determined by data reported pursuant to agreements between Dova (or its Affiliates) and the Specialty Pharmacies or the data aggregators, applicable), and (ii) the denominator of which is the number of units of such SKU of the Product shipped from the Specialty Pharmacies or the Retail Pharmacies to all patients in the Territory (namely based on prescriptions written by the Specialty and outside the Specialty) (as determined by data reported pursuant to agreements between Dova (or its Affiliates) and the Specialty Pharmacies or the data aggregators, as applicable).

1.58“Specialty Pharmacy Net Sales” shall mean, for each SKU of the Product:

7

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(i) the number of units of such SKU of the Product shipped from the Specialty Pharmacies to all patients based on prescriptions written by the Specialty in the Territory during an applicable period (as determined by data reported pursuant to agreements between Dova (or its Affiliates) and the Specialty Pharmacies or the data aggregators, as applicable); and

MULTIPLIED BY

(ii) the applicable WAC for such SKU of the Product for the applicable period,

MULTIPLIED BY

(iii) the Gross to Net Fraction for such SKU of the Product for the applicable period.

1.59“Specialty Pharmacy” shall mean those specialty pharmacies to which Dova (or its Affiliates) sells and/or ships units of Product during the Term and for which Dova or its Affiliates have agreements with that include data provisions or provide for separate data agreements which enables Dova to track shipments of Product from such Specialty Pharmacy to patients based on the Target Professional prescribing such Product.

1.60“Tail Period” shall mean the period commencing on the day after the last day of the Term and ending on the earlier of (i) [***] and (ii) [***], unless terminated early pursuant to Section 2.3.1(a) of the Agreement.

1.61 “Target Professionals” shall mean physicians, nurse practitioners, physician assistants and any other medical professionals in the Territory with prescribing authority (as authorized under Applicable Law) in the Territory for the Product.

1.62“Term” shall have the meaning set forth in Section 12.1.

1.63“Territory” shall mean the United States of America and its territories and possessions.

1.64“Third Party(ies)” shall mean any person or entity other than Dova and Valeant and their respective Affiliates.

1.65“Third Party Agreements” shall mean the agreements described on Schedule 1.65 hereto.

1.66“Valeant Activities” shall mean any and all promotional activities (including Detailing) conducted by Valeant to encourage the appropriate use of the Product in the Specialty in the Field in the Territory in accordance with the terms of this Agreement.

1.67“Valeant Property” shall have the meaning set forth in Section 8.1.1.

1.68“WAC” shall mean, for each SKU of the Product, Dova’s list price for a unit of the SKU of the Product to wholesalers or direct purchasers in the Territory, as reported in wholesale price guides or other nationally recognized publications of drug pricing data.

ARTICLE 2RIGHTS AND OBLIGATIONS

2.1Engagement; Grant of Rights. During the Term, subject to the terms and conditions of this Agreement, Dova hereby grants to Valeant the right, on a co-exclusive basis (solely with Dova and its Affiliates), to Detail and promote the Product in the Specialty in the Territory in the Field, and to conduct the Valeant Activities and the activities of the institutional account management team (pursuant to and subject to the terms of Section 4.1.5) for the Product in the Territory in the Field in accordance with the terms and conditions of this Agreement. Notwithstanding the foregoing, Dova retains and reserves the right for Dova and its Affiliates to promote the Product in the Territory including in the Specialty. Valeant shall have no other rights relating to the Product, except as specifically set forth in this Agreement and, without limiting the foregoing, except as set out in Section 4.1.5, if agreed upon, Valeant shall have no right to, and shall not, conduct the Valeant Activities for the Product outside the Specialty or outside the Territory or for use outside the Field. Except to Affiliates of Valeant, Valeant’s rights and obligations under this Section 2.1 are non-transferable, non-assignable, and non-delegable. Except to Affiliates of Valeant, Valeant shall not subcontract the Valeant Activities with any Third Party (including any contract sales force). Any obligation of Valeant under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at Valeant’s sole and exclusive option, either by Valeant or its Affiliates. Valeant guarantees the performance of all actions, agreements and obligations to be performed by its Affiliates under the terms and conditions of this Agreement. For clarity, Valeant shall not have any license rights hereunder nor any rights to sublicense any rights hereunder.

2.2Retention of Rights. Except with respect to the exclusive rights granted to Valeant to conduct the Valeant Activities for the Product in the Specialty in the Territory in the Field pursuant to Section 2.1 and, and if agreed upon, outside the Specialty in the Territory in the Field pursuant to Section 4.1.5, Dova retains all rights in and to the Product. Without limiting the generality of the foregoing (and without limiting Dova’s retained rights set forth in Section 2.1), Dova specifically retains the following rights (and Valeant and its Affiliates shall have no rights to the following, except as set forth below in this Section 2.2):

2.2.1responsibility for promoting the Product outside the Specialty;

2.2.2responsibility for the manufacture and distribution of the Product, and any future development of the Product;

2.2.3responsibility for all decisions regarding regulatory submissions and, except as expressly set forth herein, for interactions with any Governmental Authority, including but not limited to FDA, with respect to the Product;

2.2.4responsibility for final approval of all Product Materials content (including submission of Promotional Materials to FDA’s Office of Prescription Drug Promotion) with respect to the conduct of the Valeant Activities for Product, except as expressly set forth herein;

2.2.5selling and booking all sales of the Product; and

2.2.6responsibility for handling all safety related activities related to Product as set forth in ARTICLE 5 (including submitting all safety reports and interacting with Governmental Authorities with respect thereto) and initiating and managing any Product recalls.

For clarity, except as provided in Sections 2.1 or 2.4, Valeant shall not acquire any license or other intellectual property interest, by implication or otherwise, in any technology, Know-How or other intellectual property owned or controlled by Dova or any of its Affiliates, and Dova is not providing any such technology, Know-How or other intellectual property, or any assistance related thereto, to Valeant for any use other than for the mutual benefit of the Parties as expressly contemplated hereby.

2.3Non-Competition; Non-Solicitation.

2.3.1Non-Competition. (a) [***], neither Valeant nor its Affiliates shall, directly or indirectly, [***] in the Territory other than the Product; provided that if the Agreement is terminated by Dova pursuant to [***], then any Tail Period shall be immediately terminated if either Valeant or any of its Affiliates, directly or indirectly, [***] in the Territory other than the Product during such Tail Period. Notwithstanding the foregoing, this Section 2.3.1(a) shall not apply to any products marketed, promoted, detailed, offered for sale, or sold by any business (or any portion thereof), other Person, or group of Persons, [***].

(a)[***], neither Dova nor is Affiliates shall, directly or indirectly, [***]. Notwithstanding the foregoing, this Section 2.3.1(b) shall not apply to any products marketed, promoted, detailed, offered for sale, or sold by any business (or any portion thereof), other Person, or group of Persons[***].

2.3.2Non-Solicitation. [***], neither Valeant nor Dova (nor any of their respective Affiliates) shall directly or indirectly solicit for hire or employee as an employee, consultant or otherwise any of the other Party’s professional personnel who have had direct involvement with the JSC, with the Valeant Activities under this Agreement (which, in the case of Valeant, includes the Field Force Personnel) or with Dova’s commercialization activities for the Product, without the other Party’s prior written consent. Notwithstanding anything to the contrary, in no event shall the restrictions set forth in this Section 2.3.2 apply to [***].

2.4Dova Trademarks and Copyrights.

2.4.1Valeant shall have the non-exclusive right to use the Dova Trademarks and Copyrights solely on Product Materials in order to perform the Valeant Activities and solely in accordance with the terms and conditions of this Agreement. Dova shall promptly notify Valeant of any updates or changes to the Dova Trademarks and Copyrights on the Product Materials, and Valeant shall thereafter solely use such updated Product Materials in performing its obligations under this Agreement. Valeant shall promptly notify Dova upon becoming aware of any violation of this Section 2.4.1.

2.4.2Valeant shall follow all instructions and guidelines of Dova (of which Dova has provided Valeant copies) in connection with the use of any Dova Trademarks and Copyrights, and, if Dova reasonably objects to the manner in which any such Dova Trademarks and Copyrights are being used, Valeant shall cease the use of any such Dova Trademarks and Copyrights in such manner upon written notice from Dova thereof. Without limiting the foregoing, Valeant shall also adhere to at least the same quality control provisions as companies in the pharmaceutical industry adhere to for their own trademarks and copyrights. In all cases, Valeant shall use the Dova Trademarks and Copyrights with the necessary trademark (and copyright, as applicable) designations, and shall use the Dova Trademarks and Copyrights in a manner that does not derogate from Dova’s rights in the Dova Trademarks and Copyrights. Valeant shall not at any time during the Term knowingly do or allow to be done any act or thing which will in any way impair or diminish the rights of Dova in or to the Dova Trademarks and Copyrights. All goodwill and improved reputation generated by Valeant’s use of the Dova Trademarks and Copyrights shall inure to the benefit of Dova, and any use of the Dova Trademarks and Copyrights by Valeant shall cease at the end of the Term. Valeant shall have no rights under this Agreement in or to the Dova Trademarks and Copyrights except as specifically provided herein. During the Term, Valeant will not contest the ownership of the Dova Trademarks and Copyrights, their validity, or the validity of any registration therefor. During the Term, Valeant will not knowingly register and/or use any marks (including in connection with any domain names) that are confusingly similar to the Dova Trademarks and Copyrights.

ARTICLE 3JOINT STEERING COMMITTEE

3.1Formation of the JSC. As soon as practicable, but no later than twenty (20) days after the Effective Date, the Parties shall form a joint steering committee (“JSC”) whose responsibilities during the Term shall be to oversee the activities set forth in Section 3.3. The JSC shall consist of three (3) representatives from each Party, each with suitable seniority and relevant experience and expertise to enable such person to address matters falling within the purview of the JSC. From time to time, each Party may change any of its representatives on the JSC by giving written notice to the other Party. The meetings of the JSC will be chaired by a representative from Dova or Valeant, on an alternating basis. The JSC shall determine a meeting schedule; provided, that, in any event, meetings shall be conducted no less frequently than quarterly by teleconference or in person, or as otherwise agreed by the Parties. In person meetings shall occur at such places as mutually agreed by the Parties. Employees or consultants of either Party that are not representatives of the Parties on the JSC may attend meetings of the JSC; provided, that such attendees (i) shall not participate in the decision-making process of the JSC, and (ii) are bound by obligations of confidentiality and non-disclosure equivalent to those set forth in ARTICLE 9.

3.2Meetings and Minutes. Meetings of the JSC may be called by either Party on no less than thirty (30) days’ notice during the Term. Each Party shall make all proposals for agenda items and shall provide all appropriate information with respect to such proposed items at least ten (10) days in advance to the applicable meeting; provided that under exigent circumstances requiring input by the JSC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for that particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting, such consent not to be unreasonably withheld. The chairperson shall prepare and circulate for review and approval of the Parties minutes of each meeting within thirty (30) days after the meeting. Each Party shall bear its own costs for its members to attend such meetings.

3.3Purpose of the JSC. The purposes of the JSC shall be to, subject to Section 3.4:

3.3.1provide a forum to discuss and coordinate the Parties’ activities under this Agreement;

3.3.2provide a forum to discuss and coordinate the promotion of the Product in the Territory, including in and outside the Specialty;

3.3.3provide a forum to discuss Product Materials (it being understood that the JSC shall not have the right to approve such Product Materials);

3.3.4facilitate the flow of information and otherwise promote the communications and collaboration within and among the Parties relating to this Agreement and the promotion of the Product;

3.3.5discuss planning and implementation of all Valeant Activities, including but not limited to training of Sales Representatives and, if agreed upon, the activities of the institutional account management team referred to in Section 4.1.5;

3.3.6decide on the acceptable form of and review and discuss the Detail Reports and reports of Net Sales;

3.3.7decide on the acceptable form of and review and discuss the Compensation Reports and the incentive compensation matters described in Section 4.1.3, including any applicable adjustments to the Product-related sales goals and targets of the Sales Representatives;

3.3.8review and discuss any matters brought to its attention by either Party’s Alliance Manager;

3.3.9review, discuss and decide on the Alternate Product described in Section 4.2.1(c) or any additional product that may be Detailed by Valeant described in Section 4.2.1(d);

3.3.10discuss the Promotional Materials matters described in Section 4.4.1(b);

3.3.11discuss supply or distribution issues relating to the Product, such as any supply shortages;

3.3.12discuss the pricing of the Product (provided that Dova shall have sole authority to determine pricing of the Product);

3.3.13act as a first level escalation to address disagreements or disputes between the Parties;

3.3.14form and oversee any sub-committee or working group in furtherance of the activities contemplated by this Agreement;

3.3.15decide on the acceptable form of and review and discuss the Compliance Reports; and

3.3.16perform such other responsibilities as may be mutually agreed upon by the Parties in writing from time to time; provided, however, for clarity the JSC shall have no authority to amend or modify any provisions of this Agreement and no authority to waive or definitively interpret the provisions of this Agreement.

3.4Decision Making. Meetings of the JSC will occur only if at least one representative of each Party is present at the meeting. Each Party shall have one (1) vote. The JSC will use good faith efforts to reach consensus on all matters properly brought before it. If the JSC does not reach unanimous consensus on an issue at a meeting or within a period of [***] thereafter, then the JSC shall submit in writing the respective positions of the Parties to the Senior Officers of the Parties. Such Senior Officers shall use good faith efforts to resolve promptly such matter, which good faith efforts shall include at least one (1) teleconference between such Senior Officers within [***] after the JSC’s submission of such matter to them. Any final decision mutually agreed to in writing by the Senior Officers shall be conclusive and binding on the Parties. If the Senior Officers are not able to agree on the resolution of any such issue within [***] after such issue was first referred to them, then (i) Valeant shall have the right to conclusively determine all matters related to Valeant Activities and Detailing of the Product, including matters relating to the institutional account manager team, the incentive compensation of the Sales Representatives and targeting for Details, provided that such determination and any related activities comply with the terms and conditions of this Agreement, and (ii) Dova shall have the right to conclusively determine all other matters; provided, however, for clarity any such determination shall not amend, modify or waive any provisions of this Agreement or definitively interpret the provisions of this Agreement.

3.5Marketing Sub-Committee.

3.5.1Promptly after the Effective Date, the JSC shall facilitate the formation of a Marketing Sub-Committee comprised of an equal number of representatives from each Party. Such sub-committee shall meet from time to time and discuss, among other things:

(a)the number of speaker programs for the Product to be conducted by Dova in each Calendar Year;

(b)the Promotional Materials and quantities thereof;

(c)the annual brand plan; and

(d)the annual conference strategy.

3.5.2[***] shall constitute the “Speaker Program Threshold”. If Dova wishes to conduct speaker programs in any Calendar Year after 2018 in excess of the Speaker Program Threshold, then the Parties shall meet, through the Marketing Sub-Committee, to discuss such excess speaker programs and the costs thereof. If the Marketing Sub-Committee unanimously agrees that such excess speaker programs should be conducted, then the following costs and expenses will be shared equally by the Parties: (i) the costs and expenses associated with conducting the excess number of speaker programs and (ii) the additional incremental costs and expenses associated with training necessary to address the number of the speaker programs above and below the Speaker Program Threshold. In addition, if the Parties unanimously agree that such excess speaker programs should be conducted, then, as a condition of the payment by Valeant of its share of such costs, Valeant shall have the right to review and approve (acting reasonably and in good faith) any such excess speaker programs, including with respect to the number of speakers approved to speak on the Product as part of the speaker programs, the rates paid to speakers at such speaker programs and the rules regarding attendees who may attend such speaker programs (including frequency of attendance). For greater certainty, if Valeant does not agree to conduct speaker programs above the Speaker Program Threshold, then the costs described herein for any speaker programs conducted by Dova in excess of the Speaker Program Threshold shall not be shared by the Parties, but shall be borne solely by Dova. In the event that Dova incurs costs and expenses for which Valeant is responsible under this Section 3.5.2, Dova may deduct such amounts from the payments due under Section 6.3 and shall include a description thereof in the applicable report under Section 6.3.

ARTICLE 4VALEANT ACTIVITIES FOR THE PRODUCT

4.1Valeant Activities.

4.1.1General. Valeant shall conduct the Valeant Activities for the Product in the Specialty in the Field in the Territory in accordance with this Agreement.

4.1.2Number of Sales Representatives. Without limiting the generality of the foregoing, [***]) and continuing throughout the remainder of the Term, Valeant shall maintain at least one hundred (100) Sales Representatives with responsibility to Detail the Product in the Specialty in the Territory. Notwithstanding the above, the sole remedy of Dova for breach of this Section 4.1.2 shall be (i) the adjustment to the promotion fee as set forth in Section 6.1.2 and (ii) the termination right set out in Section 12.2.2.

4.1.3Target Incentive Compensation. In addition, [***] and continuing throughout the remainder of the Term, Valeant shall ensure the incentive compensation package for each Sales Representatives requires that at least fifty percent (50%) of the target incentive compensation is derived from achieving target sales of the Product. On at least a quarterly basis, the Parties will meet, through the JSC, to review the target incentive compensation and the actual incentive compensation paid out to the Sales Representatives to discuss, in good faith, any appropriate adjustments to the sales targets and goals related to the Product (but not to the above-mentioned fifty percent (50%) threshold of the target incentive compensation), with the intent of achieving, on average, an actual payout to the Sales Representatives of 50% of their incentive compensation relating to sales of the Product.

4.1.4Alliance Managers. Each Party shall appoint a person who shall oversee interactions between the Parties for all matters related to this Agreement, and any related agreements between the Parties (each an “Alliance Manager”). The Alliance Managers shall endeavor to ensure clear and responsive communication between the Parties and the effective exchange of information, and shall serve as a single point of contact for all matters arising under this Agreement. The Alliance Managers shall have the right to attend all JSC meetings and if applicable, subcommittee meetings as non-voting participants and may bring to the attention of the JSC or, if applicable, subcommittee any matters or issues either of them reasonably believes should be discussed, and shall have such other responsibilities as the Parties may mutually agree in writing. Each Party may designate different Alliance Mangers by notice in writing to the other Party.

4.1.5Institutional Account Management Team. Upon prior mutual agreement of the Parties in writing, Valeant may maintain a team of institutional account managers who, among other products, promote the Product in the Territory at liver transplant centers and large academic institutions only, and for purposes of this Section 4.1.5 only, both inside and outside the Specialty. Prior to any promotion of the Product by any institutional account managers, the Parties will discuss in good faith (acting reasonably) the number of institutional account managers that will promote the Product in the Territory, the appropriate portion of such institutional account managers’ target incentive compensation to be derived from sales of the Product and the liver transplant centers or large academic institutions such institutional account managers will be responsible for. Such institutional account managers shall not be counted for purposes of determining the Quarterly Average Sales Force Size or the Quarterly Minimum Details. The Parties agree that these institutional account managers shall not be required to achieve any minimum number of Details. The Parties agree that such team may be added or removed by the mutual written agreement of the Parties without the need to amend this Agreement in accordance with Section 13.8.

4.2Detailing.

4.2.1Detail Requirements.

(a)Commencing promptly upon completion of training of the Field Force Personnel that are engaged in Detailing the Product as described in Section 4.4.1 (but on the condition that Promotional Materials have been approved and delivered), Valeant shall deploy its Field Force Personnel that are engaged in Detailing to Detail the Product in accordance with the terms of this Agreement. Subject to compliance with the terms of this Agreement, Valeant shall be responsible, in its discretion, acting reasonably, for determining the manner in which it allocates and prioritizes the Details, provided that, in so allocating the Details, Valeant shall take into consideration geographic territory, frequency of calls, prescribing levels and other reasonable considerations. Except as set forth in this Agreement, without the prior written consent of Dova (not to be unreasonably withheld, delayed or conditioned), Valeant shall not conduct any Valeant Activities, other than Detailing, with respect to the Product.

(b)[***]

(c)Beginning after [***], Valeant may initiate discussions with Dova, upon at least [***] notice to Dova (which notice shall specify the proposed Alternate Product), regarding the potential replacement of the Designated Product with an Alternate Product. Following such notice period the Parties shall meet, through the JSC, and discuss in good faith (acting reasonably), for a period of up to [***], the potential replacement of the Designated Product with the Alternate Product. If the Parties agree on an Alternate Product, then the Parties shall make such agreement in writing and thereafter such Alternate Product shall be the Designated Product for purposes of this Agreement. If the Parties cannot agree on the Alternate Product during such period, then Valeant may give to Dova a written notice (the “Alternate Product Notice”) designating the proposed Alternate Product as the Alternate Product and, effective [***] after the Alternate Product Notice, such designated Alternate Product shall be the Designated Product for purposes of this Agreement; provided however that, notwithstanding the foregoing, Dova shall have the right to terminate this Agreement upon [***] written notice to Valeant after the Alternate Product Notice, provided further that if the Alternate Product is being proposed by Valeant as a result of an anticipated or the existence of a generic version of the Designated Product, a decision, judgment, ruling or other requirement of a Government Authority, including the FDA relating to or impacting the Designated Product in the Territory, a material safety concern regarding the Designated Product or a mandatory recall or withdrawal of the Designated Product, then Dova shall have no right to terminate this Agreement pursuant to this Section 4.2.1(c).

(d)[***]

(e)Notwithstanding the terms of this Section 4.2.1, Valeant shall have the right, from time to time, during the Term, to include in the incentive compensation package of all or some of the Sales Representatives a spiff, spiv or other similar incentive bonus that is based on [***], provided that the actual, maximum payout from such incentive bonuses does not exceed, in the aggregate, an amount equal to [***] for each Sales Representative for each Calendar Quarter. Any such spiff, spiv or other similar incentive bonus shall not be included in the calculation of the applicable Sales Representatives incentive compensation package in determining Valeant’s compliance with the terms of Section 4.1.3.

4.2.2Records and Reports.

(a)Valeant shall keep accurate and complete records, consistent with pharmaceutical industry standards, of each Detail and its obligations hereunder in connection therewith. Such records shall be kept for the longer of (i) [***] after the end of the Calendar Year to which they relate and (ii) such period of time as required by Applicable Laws. Within [***] following the end of each Calendar Quarter during the Term, Valeant shall provide Dova with a written report (each a “Detail Report”), setting out (i) the quarterly average number of Sales Representatives during such Calendar Quarter (calculated by taking the sum of the number of Sales Representatives employed by Valeant (or its affiliates) that have incentive compensation packages that comply with the terms of Section 4.1.3 on each Business Day of the Calendar Quarter divided by the number of Business Days in such Calendar Quarter) (the “Quarterly Average Sales Force Size”), and (ii) the aggregate actual number of Details for the Product made by its Sales Representatives during such Calendar Quarter, and the number of Details broken down by the name of the Target Professionals,. Through the JSC, the Parties shall agree on a mutually acceptable form of Detail Report.

(b)Within [***] following the end of each Calendar Quarter during the Term, Valeant shall provide Dova with a written report (each a “Compensation Report”), which describes (i) the details of the incentive compensation package of each Sales Representative as it relates to the Product and the Designated Product (or Alternate Product, as the case may be) (but, in the case of the Designated Product or Alternate Product, such details shall be limited to information regarding what portion of the Sales Representatives’ target incentive compensation package is derived from achieving sales targets or goals of the Designated Product (or Alternate Product) , but shall not include any sales targets or goals for the Designated Product (or Alternate Product)), and (ii) the actual incentive compensation payouts for each Sales Representatives as described in Section 4.1.3. Through the JSC, the Parties shall agree on a mutually acceptable form of Compensation Report.

(c)Within [***] following the end of each Calendar Quarter during the Term, Valeant shall provide Dova with a written report (each a “Compliance Report”), which sets out a summary of Valeant’s compliance monitoring and auditing of the Field Force Personnel that are engaged in Detailing (as such monitoring is further described in Section 4.5.1(b)), a summary of any compliance-related disciplinary actions relating to any Field Force Personnel that are engaged in Detailing and any associated remedial actions, a summary of all compliance investigations conducted by Valeant of any of the Field Force Personnel that are engaged in Detailing and any associated outcome, and, for the fourth Calendar Quarter only, a summary of the compliance-related training (including a reasonable description of each training topic) received by each Field Force Personnel that are engaged in Detailing during the Calendar Year. Through the JSC, the Parties shall agree on a mutually acceptable form of Compliance Report.

4.3Compliance with Applicable Law.

4.3.1In conducting the Valeant Activities hereunder, Valeant shall, and shall require all Field Force Personnel to, comply in all respects with Applicable Laws. In addition, Dova shall, and shall require all of its sales representatives to, comply in all respects with Applicable Laws in connection with its promotion of the Product in the Territory.

4.3.2Neither Valeant nor Field Force Personnel shall offer, pay, solicit or receive any remuneration to or from Target Professionals, in order to induce referrals of or purchase of the Product.

4.3.3In performing the activities contemplated by this Agreement, neither Valeant nor Field Force Personnel shall make any payment, either directly or indirectly, of money or other assets to government or political party officials, officials of international public organizations, candidates for public office, or representatives of other businesses or persons acting on behalf of any of the foregoing where such payment would constitute violation of any Applicable Law. In addition, Valeant shall not make any payment either directly or indirectly to officials if such payment is for the purpose of unlawfully influencing decisions or actions with respect to the subject matter of this Agreement.

4.3.4No employee of Valeant or its Affiliates shall have authority to give any direction, either written or oral, relating to the making of any commitment by Dova or its agents to any Third Party in violation of terms of this or any other provision of this Agreement

4.3.5Neither Valeant nor Dova shall undertake any activity under or in connection with this Agreement which violates any Applicable Law.

4.3.6Valeant’s or Dova’s material failure to abide by the provisions of this Section 4.3 shall be deemed a material breach of this Agreement by Valeant or Dova (as the case may be) and subject to the terms of Section 12.2 hereof.

4.3.7Dova shall ensure that any patient assistance program used in connection with the Product (and the services performed thereby in connection with the Product) shall be operated in accordance with Applicable Law. Notwithstanding the immediately preceding sentence, Dova shall have no liability with respect to any breach or non-compliance with Applicable Law relating to any patient assistance program used in connection with the Product to the extent caused by the act or omission of any Field Force Personnel, which act or omission is not in compliance with the terms of this Agreement, Applicable Law or instructions of Dova.

4.3.8Dova shall ensure that government-insured patients do not receive co-pay support from Dova with respect to the Product. 

4.3.9Dova shall ensure that its donations to, and interactions with, any 501(c)(3) charitable foundation that provides co-pay assistance to government-insured patients with respect to the Product are in full compliance with all Applicable Laws.

4.3.10If, during the Term, Valeant becomes aware of a material violation or failure to comply with Applicable Law or the terms of this Agreement by a member of the Field Force Personnel that are engaged in Detailing, it shall promptly, but no later than two (2) Business Days after it becomes aware, notify Dova of such violation and, as promptly as possible thereafter, shall notify the steps it has taken or intends to take to remediate such violation.

4.3.11Compliance Managers. As soon as practicable, but no later than thirty (30) days after the Effective Date, each Party shall appoint a representative to act as its compliance manager under this Agreement, each of which is routinely responsible for advising such Party on compliance matters and has suitable seniority and other relevant experience and expertise (each, a “Compliance Manager”). From time to time, each Party may change its Compliance Manager by giving written notice to the other Party. The Compliance Managers shall serve as a key point of contact between the Parties for compliance-related matters. Each Compliance Manager shall facilitate the resolution of any compliance issue with the Compliance Manager of the other Party. The Compliance Managers will use good faith efforts to reach consensus on all compliance matters. If the Compliance Managers do not reach consensus on an issue promptly, then such issue shall be submitted to dispute resolution process described in Section 13.6. Upon the reasonable request of Dova from to time, Valeant shall deliver to Dova copies of Valeant’s compliance program policies and compliance training materials which are applicable to the Field Force Personnel’s promotion of the Product. Other than as expressly stated herein, Valeant shall not be required to modify its compliance policies or practices in connection with the compliance-related provisions herein.

4.4Field Force Personnel Training; Product Materials.

4.4.1Training, Training Materials and Promotional Materials.

(a)Subject to the terms of this Section 4.4.1, Dova shall prepare and control the content of (i) all Product training materials for Field Force Personnel (the “Product Training Materials”) and (ii) all Product marketing and educational materials (the “Promotional Materials”) (the Product Training Materials and the Promotional Materials, collectively, the “Product Materials”). Dova shall be solely responsible for ensuring that the Product Materials prepared and approved by it are in compliance with the Regulatory Approval for the Product, the Product Labeling and Applicable Law. Once approved by Dova, the content of the Product Materials shall be provided by Dova to Valeant in advance of the Valeant Activates to allow for Valeant to review such content and provide verbal feedback to Dova in advance of use of the Product Materials. Within [***] of receipt of such Product Materials, Valeant shall verbally provide to Dova any comments and/or proposed revisions to such Product Materials, which comments and revisions Dova shall reasonably consider so long as Dova deems such suggestions are acceptable in the promotion of the Product; provided that in any event, to the extent that Dova reasonably believes that such changes are not in compliance with Applicable Law, the Regulatory Approval for the Product or the applicable Product Labeling, then Dova shall not be required to incorporate any such suggestions from Valeant in the Product Materials. In the event of any disagreement between the Parties regarding any feedback received from Valeant with respect to the Product Materials, Dova shall have the right to conclusively determine such matter. If Valeant has provided comments to Dova on the Product Materials and Dova accepts some or all of such comments, then, once revised, Dova shall provide to Valeant the revised versions of such Product Materials for further review by Valeant, in accordance with the terms and timelines of this Section 4.4.1(a) above. Valeant shall use only Product Materials approved by Dova in the performance of Valeant Activities under this Agreement; provided, however, that Valeant shall not be required to use any Product Materials that have not been approved by Valeant or which have not incorporated comments provided by Valeant and nothing herein shall require Valeant to use all Product Materials created or prepared by Dova and Valeant reserves the right not to use certain Product Materials. The content of Product Materials shall not be modified or changed by Valeant or Field Force Personnel at any time without the prior written approval of Dova in each instance. Dova shall be responsible for the costs and expenses of creation and development of the Product Materials and Valeant shall be responsible for the costs and expense of reproduction, printing and delivery of the Product Materials to and for Valeant. The Parties will coordinate the production and delivery of Product Materials to allow sufficient internal and field force review time to accommodate scheduled training meetings and distribution to Field Force Personnel that are engaged in Detailing. In the event that Dova incurs costs and expenses for which Valeant is responsible under this Section 4.4.1, Dova may deduct such amounts from the payments due under Section 6.3 and shall include a description thereof in the applicable report under Section 6.3. Promptly after the Effective Date, the Parties will collaborate to finalize the Product Materials in accordance with this Section 4.4.1(a), as soon as reasonably practical.

(b)Commencing with the Promotional Materials to be used for Calendar Year 2019 and for the remainder of the Term, Valeant and Dova shall meet to discuss the content of such Promotional Materials in order to ensure that such Promotional Materials appropriately address any messaging that may be desired for the Target Professionals in the Specialty. Such discussions may take place in the forum of the JSC. Dova shall in good faith reasonably consider all comments and suggestions of Valeant regarding the Promotional Materials.

(c)Promptly after the Effective Date, the Parties will collaborate to plan and schedule training for the Sales Representatives at a mutually acceptable time(s) and date(s), including a launch meeting for the Sales Representatives at a mutually acceptable location. Dova will lead such initial training and Valeant shall cooperate with any reasonable requests of Dova in order to support such training. The costs and expenses of such launch meeting will be shared equally by the Parties, other than travel and lodging for the Sales Representatives which shall be the responsibility of Valeant. All other training costs and expenses shall be the responsibility of Valeant. After the initial training, the Parties will collaborate to provide additional training at such frequency, times and places as the circumstances warrant and the Parties mutually agree. Valeant shall have the right, but not the obligation, to conduct such additional training itself, provided that the Valeant trainers have been trained by Dova, and provided further that Dova shall have the right to attend such training upon reasonable notice by Valeant to Dova. Valeant will certify in writing to Dova that all Field Force Personnel have completed the training described in this Section 4.4.1(b).

(d)Valeant and all Field Force Personnel that are engaged in Valeant Activities shall comply with the applicable provisions of the Code, and shall be trained on Valeant’s compliance policies, including those that are consistent with the applicable provisions of Sec. 1128B(b) of the Social Security Act and the American Medical Association Ethical Guidelines for Gifts to Physicians from Industry (which such training may have been accomplished prior to the Term), prior to commencing any Valeant Activities. Valeant agrees that it shall train any employee or agent of Valeant who is involved in performing the activities contemplated by this Agreement on anti-corruption and anti-bribery at its own expense.

(e)Field Force Personnel that are engaged in Detailing shall conduct the Valeant Activities only after having undergone the training described in this Section 4.4 and, without limiting the foregoing, no Field Force Personnel member shall Detail the Product without having undergone such training. Subject to the foregoing, Valeant shall have the responsibility for on-going training of its Field Force Personnel that are engaged in Detailing in accordance with customary practice in the pharmaceutical industry.

4.4.2Ownership of Product Materials. As between the Parties, Dova shall own all right, title and interest in and to any Product Materials (and all content contained therein) and any Product Labeling (and all content contained therein), including applicable copyrights and trademarks (other than any name, trademark, trade name or logo of Valeant or its Affiliates that may appear on such Product materials or Product Labeling), and to the extent Valeant (or any of its Affiliates) obtains or otherwise has a claim to any of the foregoing, Valeant hereby assigns (and shall cause any applicable Affiliate to assign) all of its right, title and interest in and to such Product Materials (and content) and Product Labeling (and content) (other than any name, trademark, trade name or logo of Valeant or its Affiliates that may appear on such Product materials or Product Labeling) to Dova and Valeant agrees to (and shall cause its applicable Affiliate to) execute all documents and take all actions as are reasonably requested by Dova to vest title to such Product Materials (and content) and Product Labeling (and content) in Dova (or its designated Affiliate).

4.5Provisions Related to Field Force Personnel.

4.5.1Activities of Field Force Personnel. Valeant hereby agrees and acknowledges that the following shall apply with respect to itself and the Field Force Personnel that are engaged in Detailing:

(a)Valeant shall instruct and cause the Field Force Personnel that are engaged in Detailing to use only the Product Labeling and, subject to the terms of Section 4.4, Product Materials approved by Dova for the conduct of the Valeant Activities for the Product and consistent with Applicable Laws. Valeant shall instruct the Field Force Personnel that are engaged in Detailing to, and will monitor the Field Force Personnel that are engaged in Detailing to ensure that such Field Force Personnel, limit their claims of efficacy and safety for the Product to those claims which are consistent with and do not exceed the Product Labeling and any Promotional Materials.

(b)Valeant shall instruct the Field Force Personnel that are engaged in Detailing to conduct the Valeant Activities for the Product, and will monitor and audit (in accordance with Valeant’s standard practice) the Field Force Personnel that are engaged in Detailing so that such personnel conduct the Valeant Activities for the Product in adherence in all respects with Applicable Laws.

(c)Valeant shall instruct the Field Force Personnel that are engaged in Detailing regarding provisions of this Agreement applicable to Details of the Product, including Section 4.2 and this Section 4.5.1.

(d)Valeant acknowledges and agrees that Dova will not maintain or procure any worker’s compensation, healthcare, or other insurance for or on behalf of the Field Force Personnel, all of which shall be Valeant’s sole responsibility.

(e)Valeant acknowledges and agrees that all Field Force Personnel are employees of Valeant and are not, and are not intended to be treated as, employees of Dova or any of its Affiliates, and that such individuals are not, and are not intended to be, eligible to participate in any benefits programs or in any “employee benefit plans” (as such term is defined in section 3(3) of ERISA) that are sponsored by Dova or any of its Affiliates or that are offered from time to time by Dova or its Affiliates to their own employees. All matters of compensation, benefits and other terms of employment for any such Field Force Personnel shall be solely a matter between Valeant and such individual. Dova shall not be responsible to Valeant, or to the Field Force Personnel, for any compensation, expense reimbursements or benefits (including vacation and holiday remuneration, healthcare coverage or insurance, life insurance, severance or termination of employment benefits, pension or profit-sharing benefits and disability benefits), payroll-related taxes or withholdings, or any governmental charges or benefits (including unemployment and disability insurance contributions or benefits and workmen’s compensation contributions or benefits) that may be imposed upon or be related to the performance by Valeant or such individuals of this Agreement, all of which shall be the sole responsibility of Valeant, even if it is subsequently determined by any Governmental Authority that any such individual may be an employee or a common law employee of Dova or any of its Affiliates or is otherwise entitled to such payments and benefits.

(f)Valeant shall be solely responsible for the acts or omissions of the Field Force Personnel that are not in compliance with Applicable Law and the terms of this Agreement while performing any of the activities under this Agreement. Valeant shall be solely responsible and liable for all probationary and termination actions taken by it, as well as for the formulation, content and dissemination (including content) of all employment policies and rules (including written probationary and termination policies) applicable to its employees.

4.5.2Termination of Employment; Cessation of Valeant Activities. If any Field Force Personnel leaves the employ of Valeant (or any of its Affiliates), or otherwise ceases to conduct the Valeant Activities for the Product, Valeant shall, to the extent consistent with, and in a manner similar to, its practices with respect to departures of the sales representatives or other field force personnel, as applicable, promoting, marketing or detailing other products for Valeant, account for, and shall cause such departing Field Force Personnel to return to Valeant and delete from his/her computer files (to the extent such materials or information have been provided in, or converted into, electronic form) all materials relating to the Product that have been provided to such individual, including the Product Materials and account level information, including all copies of the foregoing.

4.5.3Discipline. If Dova has a reasonable basis for believing any member of the Field Force Personnel that are engaged in Detailing has violated any Applicable Laws, or failed to comply with this Agreement, then Dova shall notify Valeant of the alleged violation and Valeant shall promptly investigate the matter and, if the allegation turns out to be true, shall take the appropriate remedial action. Subject to the foregoing, Valeant shall be solely responsible for taking any disciplinary actions in connection with its Field Force Personnel that are engaged in Detailing. If, at any time, Dova has any other compliance-related concerns regarding any Field Force Personnel Detailing, Dova’s Compliance Manager shall notify Valeant’s Compliance Manager of such concerns in writing and the Compliance Managers will discuss and resolve such matters pursuant to Section 4.3.9.

4.6Responsibility for Valeant Activity Costs and Expenses. Other than as expressly set out herein, Valeant shall be solely responsible for any and all costs and expenses incurred by Valeant or any of its Affiliates in connection with the conduct of the Valeant Activities for the Product hereunder, including all costs and expenses in connection with Sales Representatives, including salaries, travel expenses and other expenses, credentialing, licensing, providing benefits, deducting federal, state and local payroll taxes, and paying workers’ compensation premiums, unemployment insurance contributions and any other payments required by Applicable Laws to be made on behalf of employees.

4.7Data Sharing. Dova shall provide to Valeant certain information relating to the sale, commercialization, marketing and promotion of the Product, as may be mutually agreed by the Parties from time to time, for use by Valeant and the Field Force Personnel in connection with the Valeant Activities. Such information may include data from the applicable reimbursement HUB, specialty data aggregator, market research, and market access contracting and Third Party-provided brand performance data ([***]).  The timing of the delivery of such information shall be mutually agreed upon by the Parties, acting reasonably.

ARTICLE 5REGULATORY, SAFETY AND SURVEILLANCE, COMMERCIAL MATTERS

5.1Dova Responsibility. As between the Parties, except as expressly set out herein, all regulatory matters regarding the Product shall be the responsibility of Dova, including responsibility for all communications with Governmental Authorities, including but not limited to FDA, related to the Product, and Dova shall have sole responsibility to seek and/or obtain any necessary approvals of any Product Labeling and the Promotional Materials used in connection with the Product, and for determining whether the same requires approval. As between the Parties, Dova shall be responsible for any reporting of matters regarding the manufacture, sale or promotion of the Product (including Adverse Events) to or with the FDA and other relevant regulatory authorities, in accordance with Applicable Laws. Dova shall maintain, at its cost, the Regulatory Approvals for the Product and shall comply with all Applicable Law relevant to the conduct of Dova’s business with respect to the Product or pursuant to this Agreement, including, without limitation, all applicable requirements under the Act.

5.2Valeant Involvement. Except as expressly permitted herein, Valeant shall not, without Dova’s prior written consent, correspond or communicate with the FDA or with any other Governmental Authority concerning the Product, or otherwise take any action concerning any Regulatory Approval or other authorization under which the Product is marketed or sold. If not prohibited by any Government Authority or Applicable Law, Valeant shall provide to Dova, promptly upon receipt, copies of any communication from the FDA or other Governmental Authority related to the Product. If not prohibited by any Government Authority or Applicable Law, Dova has the right to review and comment on Valeant’s draft responses to any Governmental Authorities relevant to Detail of the Product prior to Valeant’s issuance of such response; and Valeant agrees to consider any comments or suggestions from Dova in good faith.

5.3Inspections.

5.3.1If not prohibited by any Government Authority or Applicable Law, Valeant shall notify Dova immediately upon receipt of any notice of inspection or investigation by any Governmental Authority related to or that Valeant reasonably believes may impact any aspect of the Valeant Activities. If not prohibited by any Government Authority or Applicable Law, Dova shall have the right to have a representative present at any such portion of the inspection involving any Valeant Activities. In such cases, Valeant shall (i) keep Dova fully informed of the progress and status of any such inspection or investigation, (ii) prior to undertaking any action pursuant to this Section 5.3.1, notify Dova of the inspection or investigation, and disclose to Dova in writing the Governmental Authorities’ assertions, findings and related results of such inspection or investigation pertaining to the Valeant Activities, and (iii) provide full disclosure to Dova with respect to any action undertaken or proposed to be undertaken pursuant to this Section 5.3.1 prior to acting as it pertains to the Valeant Activities. In addition, if such findings or the Governmental Authority requests or suggests that Valeant should change any aspect of the Valeant Activities, the Parties will work together to make any such modification; provided, however, that notwithstanding anything to the contrary herein, Valeant will not be required to engage in any Valeant Activities to the extent any finding or Government Authority has requested or suggested that Valeant may not engage in such activity.

5.3.2If not prohibited by any Government Authority or Applicable Law, Dova shall notify Valeant immediately upon receipt of any notice of inspection or investigation by any Governmental Authority related to or that Dova reasonably believes may impact the Valeant Activities. In such cases, Dova shall (i) keep Valeant fully informed of the progress and status of any such inspection or investigation, (ii) disclose to Valeant in writing the Governmental Authorities’ assertions, findings and related results of such inspection or investigation pertaining to the Product or its promotion, and (iii) provide full disclosure to Valeant with respect to any action undertaken or proposed to be undertaken pursuant to this Section 5.3.2 prior to acting as it pertains to the Valeant Activities. In addition, if such findings or the Governmental Authority requests or suggests that Valeant should change any aspect of the Valeant Activities, the Parties will work together to make any such modification; provided, however, that notwithstanding anything to the contrary herein, Valeant will not be required to engage in any Valeant Activities to the extent any finding or Government Authority has requested or suggested that Valeant may not engage in such activity.

5.4Pharmacovigilance. Subject to the terms of this Agreement, as soon as practicable following the Effective Date (but in no event later than [***]), Dova and Valeant (under the guidance of their respective pharmacovigilance departments, or equivalent thereof) shall identify and finalize the responsibilities the Parties shall employ to protect patients and promote their well-being in a separate safety data exchange agreement (“Pharmacovigilance Agreement”). These responsibilities shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication and exchange (as between the Parties) of safety information such as Adverse Events, lack of efficacy, misuse/abuse, and any other information concerning the safety of the Product. Such guidelines and procedures will be in accordance with, and enable the Parties and their Affiliates to fulfill, regulatory reporting obligations to Governmental Authorities. The Pharmacovigilance Agreement shall provide that: (i) Dova shall be responsible for all pharmacovigilance activities regarding the Product, including signal detection, medical surveillance, risk management, medical literature review and monitoring, Adverse Event reporting and responses to Governmental Authority requests or enquiries, and shall provide information related thereto to Valeant, and (ii) in the event Valeant receives safety information regarding the Product, or information regarding any safety-related regulatory request or inquiry, Valeant shall notify Dova as soon as practicable, but, in any event, within the timelines set forth in the Pharmacovigilance Agreement.

5.5Unsolicited Requests for Medical Information. Valeant shall direct to Dova any unsolicited requests for off-label medical information from health care professionals with respect to the Product promptly following receipt by Valeant (but in no event later than [***] after receipt). Dova shall, within [***] following receipt of any such request from Valeant, address any such requests directly.

5.6Recalls and Market Withdrawals. As between the Parties, Dova shall have the sole right to determine whether to implement, and to implement, a recall, field alert, withdrawal or other corrective action related to the Product. Dova shall bear the cost and expense of any such recall, field alert, withdrawal or other corrective action. Each Party shall promptly (but in any case, not later than [***]) notify the other Party in writing of any order, request or directive of a court or other Governmental Authority to recall or withdraw the Product.

5.7Certain Reporting Responsibilities. Notwithstanding the foregoing provisions of this ARTICLE 5, each Party shall be responsible for its own federal, state and local government pricing reporting and payment transparency reporting in the Territory arising from its Product promotional activities and related expenditures pursuant to Applicable Law. It is the intention of the Parties that any payments or transfer of value by a Party as it relates to the Product shall constitute transfers of value by that Party and such Party shall be responsible for the reporting described in the immediately preceding sentence. However, if a Party is deemed to have provided any payments or transfers of value to a Third Party on behalf of the other Party as it relates to the Product, then such Party shall provide to the other Party, in a format reasonably acceptable to such other Party, the data and other information on a timely basis (i.e., in the case of manual reporting of such data and other information, within [***] following the end of each Calendar Quarter, and, in the case of automated reporting of such data and other information, on a periodic basis during each Calendar Quarter as reasonably requested by such other Party) for such other Party’s reporting under the Physician Payments Sunshine Act and other Applicable Laws.

5.8Booking of Sales Revenues. Dova shall retain ownership of the rights to the Product and record on its books all revenues from sales of the Product. Dova shall be exclusively responsible for accepting and filling purchase orders, billing, and returns with respect to the Product. If Valeant receives an order for the Product, it shall promptly transmit such order to Dova (or its designee) for acceptance or rejection. Dova shall have sole responsibility for shipping, distribution and warehousing of Product, and for the invoicing and billing of purchasers of the Product and for the collection of receivables resulting from the sales of the Product in the Territory.

5.9Returns. Valeant is not authorized to accept any Product returns. Valeant shall advise any customer who attempts to return any Product to Valeant (or its Affiliates) that such Product must be shipped by the customer to the facility designated by Dova from time to time (and in accordance with other instructions provided by Dova). Dova shall provide to Valeant written instructions as to how Valeant should handle any Product that is actually physically returned to Valeant. Valeant shall take no other actions with respect to such return without the prior written consent of Dova.

5.10Manufacturing; Distribution;Marketing. Dova shall have the sole authority, at its cost, to manufacture, package, label, warehouse, sell and distribute the Product in the Territory. Dova shall use commercially reasonable efforts to cause sufficient quantities of the Product to be available in inventory to promptly fill orders throughout the Territory and otherwise meet the forecasted demand for the Product in the Territory. If, despite such efforts, there is insufficient supply of Product to meet demand, then Dova shall use commercially reasonable efforts to promptly address such insufficiency. Dova shall contractually require (and shall use commercially reasonable efforts to enforce such contractual provisions) that all Product is manufactured, shipped, sold and distributed in accordance with all Product specifications and all Applicable Law and that its contract manufacturers and/or suppliers of Product operate their facilities in accordance with Applicable Law. Dova shall ensure that all Product Labeling complies with the applicable Regulatory Approval for the Product and Applicable Law. Other than as set forth in this Agreement, Dova shall be responsible for all marketing of the Product in the Territory, provided that Dova shall continue to invest in marketing that is targeted towards the Specialty.

ARTICLE 6FINANCIAL PROVISIONS

6.1Promotion Fee.

6.1.1Calculation of Promotion Fee. Commencing with the Calendar Quarter commencing on October 1, 2018, as consideration for the Valeant Activities performed by Valeant, Dova shall pay Valeant a promotion fee based on annual Net Sales during the Term, calculated as follows:

(a)For any portion of Net Sales up to and equal [***] in a Calendar Year, an amount equal to [***] of such portion of Net Sales;

(b)For any portion of Net Sales in excess of [***] and up to and equal [***] in a Calendar Year, an amount equal to [***] of such portion of Net Sales; and

(c)For any portion of Net Sales in excess of [***] in a Calendar Year, [***] of such portion of Net Sales.

6.1.2Adjustment of Promotion Fee. The percentages set forth in Section 6.1.1 [***] shall each be referred to as an “Applicable Percentage”.

(a)If the aggregate actual number of Details for the Product made by the Sales Representatives for a Calendar Quarter is less than the Quarterly Minimum Details for such Calendar Quarter, then in calculating the promotion fee due under Section 6.1.1, the Applicable Percentage for such Calendar Quarter shall be reduced to a new percentage equal to [***].

(b)If the Quarterly Average Sales Force Size is less than [***] Sales Representatives for an applicable Calendar Quarter, then in calculating the promotion fee due under Section 6.1.1, the Applicable Percentage for such Calendar Quarter shall be reduced to a new percentage equal to [***].

(c)In the event that subsections (a) above and (b) above are both applicable in an applicable Calendar Quarter, then the Applicable Percentage shall be reduced to a new percentage equal to the lower of the percentages calculated under subsections (a) and (b).

6.2Milestone Payment. In addition to the promotion fee above and as additional consideration for the performance of such Valeant Activities, Dova shall pay to Valeant a milestone payment in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000) when aggregate Net Sales in a Calendar Year first reach [***], payable within [***] after the end of the Calendar Quarter in which such Net Sales are reached. For clarity, such payment shall be made only once during the Term.

6.3Reports; Payments.

6.3.1Quarterly Reports and Payments. Within [***] after the end of each Calendar Quarter during the Term, Dova shall provide to Valeant a written report setting forth in reasonable detail the calculation of the Net Sales for such Calendar Quarter and the promotion fee payable in respect of such Net Sales in accordance with Section 6.1, including (i) the number of units of the Product shipped from Specialty Pharmacies to patients in the Territory during such Calendar Quarter, together with an itemized list of such units by Target Professional writing the applicable prescription, (ii) the number of units of the Product shipped from Specialty Pharmacies to patients in the Territory based on prescriptions written by the Specialty only during such Calendar Quarter, together with an itemized list of such units by Target Professional in the Specialty writing the applicable prescription (iii) the number of units per shipment of Products (and the number of such shipments) sold by Dova (or its Affiliates or Intermediaries) to the Non-Retail Institutions during such Calendar Quarter, including details respecting which shipments are based on initial orders from such Non-Retail Institutions and which Non-Retail Institutions ordered the Product, (iv) the number of units of the Product shipped from Retail Pharmacies to patients in the Territory during such Calendar Quarter, together with an itemized list of such units by Target Professional writing the applicable prescription, (v) the number of units shipped from Retail Pharmacies to patients based on prescriptions written by the Specialty in the Territory during such Calendar Quarter, together with an itemized list of such units by Target Professional in the Specialty writing the applicable prescription, (vi) the applicable Specialty Fraction for such Calendar Quarter, (vii) the WAC applicable to each dispensable unit, (ix) the Gross to Net Fraction for the applicable period, together with the details respecting the calculation thereof (including details regarding each of the categories of the deductions to gross sales for such Calendar Quarter). Within sixty (60)days after the end of each Calendar Quarter during the Term, Dova shall pay to Valeant the undisputed portion of the promotion fee payable in respect of such Net Sales in accordance with Section 6.1. If this Agreement terminates or expires during a Calendar Quarter, the promotion fee payable to Valeant under Section 6.1 will be calculated only on the Net Sales that occurred during such Calendar Quarter prior to the effective date of such termination or expiration.

6.3.2Monthly Reports. Within fifteen (15) days of the end of each month within each Calendar Quarter, Dova shall provide to Valeant a written report setting forth Dova’s good faith estimate of the Net Sales and the estimated promotion fee payable in respect of such Net Sales for each of such calendar month and the Calendar Quarter-to-date period, together with its good faith estimates of each of the items described in Section 6.3.1 above (assuming there will be no adjustments made to the promotion fee pursuant to Section 6.1.2). The Parties acknowledge and agree that the monthly reports will only set forth Dova’s good faith estimates of the items contained therein and are being provided to Valeant for information purposes only and shall not be determinative of the any amounts due hereunder.

6.3.3Disputes. Promptly upon receipt of the quarterly or monthly reports described in this Section 6.3, Valeant shall review such reports and, in the event that Valeant disputes any of the items described in such report, Valeant shall promptly notify Dova of any such disputes. The Parties shall meet promptly thereafter to attempt to resolve such disputes.

6.3.4Data for Net Sales. During the Term, in the event Dova (or its Affiliates) enters into agreements with any specialty pharmacies (other than Non-Retail Institutions) in order to sell and/or ship units of the Product directly to such specialty pharmacies, Dova shall use commercially reasonable efforts to include in the agreements provisions relating to the supply of data by such specialty pharmacies to Dova that can be used to support the calculation of Net Sales or shall use commercially reasonable efforts to enter into separate data agreements with such specialty pharmacies that provide for the supply of data by such specialty pharmacies to Dova that can be used to support the calculation of Net Sales.

6.3.5Manner of Payment. All payments under this Agreement shall be made in US Dollars by wire transfer or ACH to a bank account designated in writing by Valeant or Dova, as applicable, which shall be designated at least five (5) Business Days before such payment is due.

6.3.6Late Payments. If Valeant does not receive payment of any sum due to it on or before the due date, simple interest shall thereafter accrue on the sum due to Valeant from the due date until the date of payment at the Prime Rate plus [***] or the maximum rate allowable by Applicable Law, whichever is less; provided, however, if it is discovered that any payment is past due as of the result of any audit conduct by Valeant pursuant to Section 7.2, such interest shall not accrue until [***] after the completion of such audit and not at the time the payment was originally due. Notwithstanding the foregoing, if the reason for any late payment is resulting from or arising out of any act or omission on the part of Valeant, including but not limited to any delay providing the requisite reports in Section 4.2.2, or the payment instructions pursuant to Section 6.3.4, such interest shall not accrue.

6.4Taxes. To the extent Dova is required to deduct and withhold taxes from any payment to Valeant, Dova shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to Valeant an official tax receipt or other evidence of timely payment sufficient to enable Valeant to claim the payment of such taxes as a deduction or tax credit. Valeant may provide to Dova any tax forms that may be reasonably necessary in order for Dova to not withhold tax and Dova shall dispense with withholding, as applicable. Dova shall provide Valeant with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of withholding taxes.

6.5Determination of Specialty.

6.5.1No later than [***] (or in the case of the first full Calendar Quarter following the Effective Date, promptly following the Effective Date), Dova shall provide Valeant with a list of Target Professionals in the Territory, together with their primary and secondary specialty designation, as generated by Dova’s Third Party Data Source. Promptly following receipt by Valeant of such list, but no later than [***] after receipt of the list of Target Professionals, Valeant may present to Dova a list of Target Professionals that, acting in good faith, it reasonably believes have a primary specialty designation of or otherwise currently practice in the specialty of Gastroenterology, Colorectal Surgery or Proctology. For greater certainty, this list may include, but not be limited to, Target Professionals with a primary specialty designation of Gastroenterology, Colorectal Surgery or Proctology and a secondary specialty designation of Hepatology, for which Valeant wishes to confirm the primary specialty.

6.5.2Promptly following receipt by Dova of such list from Valeant, the Parties shall meet and discuss, acting reasonably and in good faith, such list and their appropriate primary specialty. If the parties agree that the Target Professional included on such list has (or should have) a primary specialty designation of or otherwise currently practices in the specialty of Gastroenterology, Colorectal Surgery or Proctology, then Dova will submit an inquiry to Dova’s Third Party Data Source for each such Target Professional, requesting that Dova’s Third Party Data Source conduct an investigation to determine the primary specialty designation of each such Target Professional. In addition, if the Parties do not agree, but Valeant, acting reasonably and in good faith, still believes that the Target Professional has (or should have) a primary specialty designation of or otherwise currently practices in the specialty of Gastroenterology, Colorectal Surgery or Proctology, then Dova will submit an inquiry to Dova’s Third Party Data Source for each such Target Professional, requesting that Dova’s Third Party Data Source conduct an investigation to determine the primary specialty designation of each such Target Professional. The Parties shall equally share in the incremental costs to Dova of any such investigations by Dova’s Third Party Data Source. For greater certainty, if, under Dova’s agreement with Dova’s Third Party Data Source, Dova is entitled to a certain number of investigations at no additional cost, and such investigations requested by Valeant causes Dova to incur additional costs that it would not have, but for such investigations requested by Valeant, then Valeant shall still be required to share in any costs of investigations (pursuant to Dova’s Third Party Data Source’s standard rates) that would otherwise be a no-cost investigations. In the event that Dova incurs costs for which Valeant is responsible under this Section 6.5, Dova may deduct such amounts from the payments due under Section 6.3 and shall include a description thereof in the applicable report under Section 6.3.

6.5.3In the event that Dova’s Third Party Data Source agrees to conduct such investigation, and then based on the results of such investigation, Dova’s Third Party Data Source changes the primary designation of the Target Professional to Gastroenterology, Colorectal Surgery or Proctology or, in the case of those Target Professionals with a primary specialty designation of Gastroenterology, Colorectal Surgery or Proctology and a secondary specialty designation of Hepatology, confirms that the primary specialty designation should remain Gastroenterology, Colorectal Surgery or Proctology, then, commencing with the Calendar Quarter in which such investigations were conducted, such Target Professionals shall be deemed to be in the Specialty (regardless of whether their secondary specialty designation remains or becomes Hepatology). In the event that, following such investigation, Dova’s Third Party Data source does not change the primary specialty designation to Gastroenterology, Colorectal Surgery or Proctology or, in the case of those Target Professionals with a primary specialty designation of Gastroenterology, Colorectal Surgery or Proctology and a secondary specialty designation of Hepatology, changes the primary specialty designation to a specialty other than Gastroenterology, Colorectal Surgery or Proctology, then those Target Professionals shall be deemed not to be in the Specialty. For those Target Professionals that were not the subject of an inquiry to or an investigation by Dova’s Third Party Data Source, then the specialty designations set out in the original list generated by Dova’s Third Party Data Source shall apply for such Calendar Quarter, namely those Target Professionals that have either a primary or a secondary specialty designation of Gastroenterology, Colorectal Surgery or Proctology and that do not have either a primary or a secondary specialty designation of Hepatology shall be deemed to be in the Specialty.

6.5.4The process described in this Section 6.5 shall be repeated for each Calendar Quarter of the Term; provided, however, that, pursuant to the process described above, if Dova’s Third Party Data Source has confirmed that a Target Professional’s primary specialty designation should be or should remain Gastroenterology, Colorectal Surgery or Proctology, it is not necessary for Valeant to seek this confirmation in subsequent Calendar Quarters; provided, further, that, if Dova’s Third Party Data Source is subsequently updated (by Dova or any Third Party) to change the specialty designation (primary or secondary) of a Target Professional, pursuant to a request by Dova or a Third Party, then the process described in this Section 6.5 shall be repeated with respect to such Target Professional.

ARTICLE 7AUDIT RIGHTS

7.1Recordkeeping. Each Party shall maintain complete and accurate books and records in sufficient detail, in accordance with GAAP (to the extent applicable and in accordance with the Agreement) and all Applicable Law, to enable verification of the performance of such Party’s obligations under this Agreement and any payments due to a Party under this Agreement. Unless otherwise specified herein, the books and records for a given Calendar Year of the Term shall be maintained for a period of [***] after the end of such Calendar Year or longer if required by Applicable Law.

7.2Valeant Rights. Valeant shall have the right, at its own expense, during normal business hours and upon reasonable prior notice, through certified public accounting firm or other auditor selected by Valeant and reasonably acceptable to Dova and upon execution of a confidentiality agreement reasonably satisfactory to Dova in form and substance, to inspect and audit the applicable records and books maintained by Dova for purposes of verifying Dova’s payment obligations within this Agreement, including the applicable records and books of account maintained by Dova, or any Affiliate, as applicable, with respect to Net Sales in order to confirm the accuracy and completeness of such records and books of account and all payments hereunder; provided, however, that (i) such examination shall not take place more often than once per every twelve (12) months during the Term and once during the one (1) year period following the end of the Term, and (ii) such examination shall not cover a period of time that has previously been audited; provided that Valeant shall have the right to conduct additional “for cause” audits to the extent necessary to address significant problems relating to Dova’s payment obligations hereunder. Dova shall reasonably cooperate in any such inspection or audit conducted by Valeant. Any undisputed adjustments required as a result of overpayments or underpayments identified through the exercise of audit rights shall be made by payment to the Party owed such adjustment within [***] after identification of such adjustment. Valeant shall bear the out-of-pocket costs and expenses incurred by the Parties in connection with any such inspection or audit, unless the audit shows an undisputed under-reporting or underpayment for that audited period in excess of [***] of the amounts properly determined, in which case, Dova shall reimburse Valeant for its audit fees and reasonable out-of-pocket expenses in connection with said audit, which reimbursement shall be due and payable within [***] of receiving appropriate invoices and other support for such audit-related costs.

7.3Dova Rights. Dova shall have the right, at its own expense, during normal business hours and upon reasonable prior notice, through a certified public accounting firm or other auditor selected by Dova and reasonably acceptable to Valeant and upon execution of a confidentiality agreement reasonably satisfactory to Valeant in form and substance, to inspect and audit the applicable records and books maintained by Valeant relating to the Valeant Activities for purposes of verifying Valeant’s compliance with the terms of this Agreement, provided that (i) such examination shall not take place more often than once per every twelve (12) months during the Term and once during the one (1) year period following the end of the Term, and (ii) such examination shall not cover a period of time that has previously been audited; provided that Dova shall have the right to conduct additional “for cause” audits to the extent necessary to address significant compliance problems relating to Valeant’s obligations hereunder or in response to any inquiry, inspection, investigation or other requirements of a Government Authority in the Territory relating to the Valeant Activities. For purposes of clarity, any such inspection or audit described in this Section 7.3 shall be limited to only those books and records of Valeant that are applicable to Valeant’s performance of its obligations under this Agreement. Where necessary, on reasonable request, Dova’s audit rights shall include interviewing Sales Representatives and other employees of Valeant. Valeant shall reasonably cooperate in any such inspection or audit conducted by Dova. Any undisputed adjustments required as a result of overreporting the aggregate actual number of Details for the Product made by the Sales Representatives for a Calendar Quarter or the Quarterly Average Sales Force Size identified through the exercise of audit rights shall be made by payment by Valeant to Dova within [***] after identification of such adjustment. Dova shall bear the out-of-pocket costs and expenses incurred by the Parties in connection with any such inspection or audit, unless the audit shows an undisputed over-payment for that audited period in excess of [***] of the amounts properly determined, in which case, Valeant shall reimburse Dova for its audit fees and reasonable out-of-pocket expenses in connection with said audit, which reimbursement shall be due and payable within [***] of receiving appropriate invoices and other support for such audit-related costs.

ARTICLE 8INTELLECTUAL PROPERTY

8.1Ownership of Intellectual Property.

8.1.1Valeant Property. Dova acknowledges that Valeant owns or is licensed to use certain Know-How relating to the proprietary sales and marketing information, methods and plans that has been independently developed or licensed by Valeant (such Know-How, the “Valeant Property”). The Parties agree that any improvement, enhancement or modification made, discovered, conceived, or reduced to practice by Valeant to any Valeant Property in performing its activities pursuant to this Agreement which is not primarily related to the Product, or which is not otherwise derived from the Confidential Information of Dova, shall be deemed Valeant Property. [***], Valeant hereby grants to Dova a fully paid-up, royalty free, non-transferable, non-exclusive license (with a limited right to sub-license to its Affiliates) to any Valeant Property that appears on, embodied on or contained in the Product materials or Product Labeling solely for use in connection with Dova’s promotion or other commercialization of the Product in the Territory.

8.1.2Dova Property. Subject to the terms of Section 8.1.1, Dova shall have and retain sole and exclusive right, title and interest in and to all inventions, developments, discoveries, writings, trade secrets, Know-How, methods, practices, procedures, designs, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents, or copyrights based thereon (collectively, “Intellectual Property”) relating to the Product that are (i) owned or controlled by Dova as of the Effective Date, (ii) made, discovered, conceived, reduced to practice or generated by Dova (or its employees or representatives) during the Term, or (iii) made, discovered, conceived, reduced to practice or generated by Valeant (or its employees or representatives) in performing its activities pursuant to this Agreement to the extent primarily related to the Product or which is otherwise derived from the Confidential Information of Dova (“Inventions”). Valeant agrees to assign, and hereby does assign, to Dova (and shall cause its Affiliates and its and their respective employees and other representatives to assign to Dova) any and all right, title and interest that Valeant (or any such Affiliates, employees or other representatives) may have in or to any Invention. For clarity, any and all Inventions and any information contained therein or related thereto shall constitute Confidential Information of Dova.

8.2Title to Trademarks and Copyrights. The ownership, and all goodwill from the use, of any Dova Trademarks and Copyrights shall at all times vest in and inure to the benefit of Dova, and Valeant shall assign, and hereby does assign, any rights it may have in the foregoing to Dova.

8.3Protection of Trademarks and Copyrights. As between the Parties, Dova shall have the sole right (but not the obligation), as determined by Dova in its sole discretion, to (i) maintain the Dova Trademarks and Copyrights and/or (ii) protect, enforce and defend the Dova Trademarks and Copyrights. Valeant shall give notice to Dova of any infringement of, or challenge to, the validity or enforceability of the Dova Trademarks and Copyrights promptly after learning of such infringement or challenge. If Dova institutes an action against Third Party infringers or takes action to defend the Dova Trademarks and Copyrights, Valeant shall reasonably cooperate with Dova, at Dova’s cost and expense. Any recovery obtained by Dova as a result of such proceeding or other actions, whether obtained by settlement or otherwise, shall be retained by Dova. Valeant shall not have any right to institute any action to defend or enforce the Dova Trademarks and Copyrights.

8.4Disclosure of Know-How. For clarity, the Parties hereby agree and acknowledge that to the extent that either Party hereto has disclosed, or in the future discloses, to the other Party any Know-How or other intellectual property of such Party or its Affiliates pursuant to this Agreement, the other Party shall not acquire any ownership rights in such Know-How or other intellectual property by virtue of this Agreement or otherwise, and as between the Parties, all ownership rights therein shall remain with the disclosing Party (or its Affiliate).

ARTICLE 9CONFIDENTIALITY

9.1Confidential Information.

9.1.1Confidentiality and Non-Use. Each Party agrees that, during the Term and for a period of [***] thereafter, it shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as provided for in this Agreement (which includes the exercise of its rights or performance of any obligations hereunder) any Confidential Information furnished to it by or on behalf of the other Party pursuant to this Agreement, except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties. Without limiting the foregoing, each Party will use at least the same standard of care as it uses to protect its own Confidential Information to ensure that its employees, agents, consultants and contractors do not disclose or make any unauthorized use of such Confidential Information. Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the other’s Confidential Information. Any and all information and materials disclosed by a Party pursuant to the Confidentiality Agreement between the Parties dated [***] (the “Confidentiality Agreement”) shall be deemed Confidential Information disclosed pursuant to this Agreement. The foregoing confidentiality and non-use obligations shall not apply to any portion of the other Party’s Confidential Information that the receiving Party can demonstrate by competent tangible evidence:

(a)was already known to the receiving Party or its Affiliate, other than under an obligation of confidentiality, at the time of disclosure by the other Party;

(b)was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

(c)became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party or its Affiliates in breach of this Agreement;

(d)was disclosed to the receiving Party or its Affiliate by a Third Party who has a legal right to make such disclosure and who did not obtain such information directly or indirectly from the other Party (or its Affiliate); or

(e)was independently discovered or developed by the receiving Party or its Affiliate without access to or aid, application, use of the other Party’s Confidential Information, as evidenced by a contemporaneous writing.

9.1.2Authorized Disclosure. Notwithstanding the obligations set forth in Section 9.1.1, a Party may disclose the other Party’s Confidential Information and the terms of this Agreement to the extent:

(a)such disclosure is reasonably necessary (x) to comply with the requirements of Governmental Authorities; or (y) for the prosecuting or defending litigation as contemplated by this Agreement;

(b)such disclosure is reasonably necessary to its Affiliates, employees, agents, consultants and contractors on a need-to-know basis for the sole purpose of performing its obligations or exercising its rights under this Agreement; provided that in each case, the disclosees are bound by obligations of confidentiality and non-use consistent with those contained in this Agreement and the disclosing Party shall be liable for any failures of such disclosees to abide by such obligations of confidentiality and non-use; or

(c)such disclosure is reasonably necessary to comply with Applicable Laws, including regulations promulgated by applicable securities exchanges, court order, administrative subpoena or order.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Section 9.1.2(a) or 9.1.2(c), such Party shall, if permitted, promptly notify the other Party of such required disclosure and shall use reasonable efforts to assist the other Party (at the other Party’s cost) in obtaining, a protective order preventing or limiting the required disclosure.

9.2Public Announcements. The press release announcing the execution of this Agreement shall be issued in the form attached hereto as Exhibit A. No public announcement or statements (including presentations to investor meetings and customer updates) concerning the existence of or terms of this Agreement or incorporating the marks of the other Party or their respective Affiliates shall be made, either directly or indirectly, by either Party or a Party’s Affiliates, without first obtaining the written approval of the other Party and agreement upon the nature, text and timing of such announcement or disclosure. Either Party shall have the right to make any such public announcement or other disclosure required by Applicable Law after such Party has provided to the other Party a copy of such announcement or disclosure and an opportunity to comment thereon and the disclosing Party shall reasonably consider the other Party’s comments. Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the Securities Exchange Commission and any other Governmental Authorities, including requests for confidential treatment of proprietary information of either Party included in any such disclosure. Once any written statement is approved for disclosure by the Parties or information is otherwise made public in accordance with this Section 9.2, either Party may make a subsequent public disclosure of the same contents of such statement in the same context as such statement without further approval of the other Party. Notwithstanding anything to the contrary contained herein, in no event shall either Party disclose any financial information of the other without the prior written consent of such other Party, unless such financial information already has been publicly disclosed by the Party owning the financial information or otherwise has been made part of the public domain by no breach of a Party of its obligations under this ARTICLE 9.

8

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ARTICLE 10REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS

10.1Representations and Warranties of Dova. Dova represents and warrants to Valeant as of the Effective Date that:

10.1.1it is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation;

10.1.2the execution, delivery and performance of this Agreement by it has been duly authorized by all requisite corporate action;

10.1.3it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

10.1.4this Agreement constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

10.1.5the execution, delivery and performance of this Agreement by Dova does not require the consent of any Person (including under the Third Party Agreements) or the authorization of (by notice or otherwise) any Governmental Authority including the FDA;

10.1.6there is no action, suit or proceeding pending or, to the knowledge of Dova, threatened, against Dova or any of its Affiliates, or to the knowledge of Dova, any Third Party acting on their behalf, which would be reasonably expected to impair, restrict or prohibit the ability of Dova or Valeant to perform its obligations and enjoy the benefits of this Agreement;

10.1.7it is in compliance in all material respects with all Applicable Laws applicable to the subject matter of this Agreement, including its donations to, and interactions with, any 501(c)(3) charitable foundation that provides co-pay assistance to government-insured patients with respect to the Product have been in compliance with all Applicable Laws;

10.1.8 it has the right to market and sell the Product in the Territory as contemplated herein and has all licenses, authorizations, permissions, consents or approvals from any applicable Governmental Authority including the FDA necessary to make, use, sell and offer to sell the Product in the Territory and all such licenses, authorizations, permissions, consents or approvals are in good standing;

10.1.9 it has the exclusive right to promote the Product in the Territory to the Target Professionals in the Specialty and the rights granted by it to Valeant hereunder do not conflict with any rights granted by Dova to any Third Party;

10.1.10 to the knowledge of Dova, all manufacturing, stability testing, labeling, packaging, storing, shipping and distribution operations conducted by or on behalf of Dova relating to the commercial supply of the Product have been conducted in compliance with Applicable Law and it has no knowledge of any information indicating that Dova would be unable to manufacture and supply (or have manufactured and supplied) the Product in sufficient quantities to meet the reasonable demands in the Territory;

10.1.11 it has no knowledge of any information relating to the safety or efficacy of the Product or any communications with any Governmental Authority, which would reasonably be expected to materially impair, restrict, prohibit or affect Dova’s ability to perform its obligations and enjoy the benefits of this Agreement;

10.1.12 it is not a party to any agreement or arrangement with any Third Party or under any obligation or restriction agreement (including any outstanding order, judgment or decree of any court or administrative agency) which in any way limits or conflicts with its ability to execute and deliver this Agreement and to fulfill any of its obligations under this Agreement;

10.1.13each of the Third Party Agreements constitutes a valid and binding obligation of Dova or its Affiliate, as applicable, and is enforceable against Dova or its Affiliate, as applicable, and, to the knowledge of Dova, each of the Third Party Agreements constitutes a valid and binding obligation of the counterparty thereto and is enforceable against such counterparty, except in each case as may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization, preference or similar laws of general applicability relating to or affecting the rights of creditors generally and subject to general principles of equity (regardless of whether enforcement is sought in equity or at law). Dova or its Affiliate, as applicable, and to the knowledge of Dova, the applicable counterparty thereto, are not in material breach of or default under either of the Third Party Agreements. The counterparty to each of the Third Party Agreements has not exercised or, to the knowledge of Dova, threatened in writing to exercise any termination right with respect to the applicable Third Party Agreement.

10.1.14 neither Dova nor any of its personnel (i) have been debarred under the 21 U.S.C. § 335a, (ii) are excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or nonprocurement programs, (iii) are convicted of a criminal offense that falls within the ambit of the Federal statute providing for mandatory exclusion from participation in Federal health care programs but has not yet been excluded, debarred, suspended, or otherwise declared ineligible to participate in those programs, (iv) are listed on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) are listed on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov). If, during the Term, Dova or any of its personnel becomes or is the subject of a proceeding that could lead to, as applicable, (i) debarment under 21 U.S.C. § 335a, (ii) exclusion, debarment, suspension or ineligibility to participate in the Federal health care programs or in Federal procurement or nonprocurement programs, (iii) convicted (or conviction) of a criminal offense that falls within the ambit of the Federal statute providing for mandatory exclusion from participation in Federal healthcare programs, (iv) listed (or listing) on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) listed (or listing) on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov), Dova shall immediately notify Valeant, and Valeant shall have the option to prohibit such Person from performing work relating to this Agreement or the Product; and

10.1.15any patient assistance program used in connection with the Product used in connection with the Product have each been operated in accordance with Applicable Law.

10.2Representations and Warranties of Valeant. Valeant represents and warrants to Dova as of the Effective Date that:

10.2.1it is a limited liability company duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation;

10.2.2the execution, delivery and performance of this Agreement by it has been duly authorized by all requisite corporate action;

10.2.3it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

10.2.4this Agreement constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

10.2.5the execution, delivery and performance of this Agreement by Valeant does not require the consent of any Person or the authorization of (by notice or otherwise) any Governmental Authority or the FDA;

10.2.6there is no action, suit or proceeding pending or, to the knowledge of Valeant, threatened, against Valeant or any of its Affiliates, or to the knowledge of Valeant, any Third Party acting on their behalf, which would be reasonably expected to impair, restrict or prohibit the ability of Dova or Valeant to perform its obligations and enjoy the benefits of this Agreement;

10.2.7it is in compliance in all material respects with all Applicable Laws applicable to the subject matter of this Agreement;

10.2.8it has the right to market and sell the Designated Product in the Territory as contemplated herein and has all licenses, authorizations, permissions, consents or approvals from any applicable Governmental Authority including the FDA necessary to make, use, sell and offer to sell the Product in the Territory and all such licenses, authorizations, permissions, consents or approvals are in good standing;

10.2.9it is not a party to any agreement or arrangement with any Third Party or under any obligation or restriction agreement (including any outstanding order, judgment or decree of any court or administrative agency) which in any way limits or conflicts with its ability to execute and deliver this Agreement and to fulfill any of its obligations under this Agreement;

10.2.10it has no knowledge of any information relating to any communications with any Governmental Authority, which would reasonably be expected to materially impair, restrict, prohibit or affect Valeant’s ability to perform its obligations and enjoy the benefits of this Agreement;

10.2.11neither Valeant nor any of its personnel (i) have been debarred under the 21 U.S.C. § 335a, (ii) are excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or nonprocurement programs, (iii) are convicted of a criminal offense that falls within the ambit of the Federal statute providing for mandatory exclusion from participation in Federal health care programs but has not yet been excluded, debarred, suspended, or otherwise declared ineligible to participate in those programs, (iv) are listed on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) are listed on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov). If, during the Term, Valeant or any of its personnel become or are the subject of a proceeding that could lead to, as applicable, (i) debarment under 21 U.S.C. § 335a, (ii) exclusion, debarment, suspension or ineligibility to participate in the Federal health care programs or in Federal procurement or nonprocurement programs, (iii) convicted (or conviction) of a criminal offense that falls within the ambit of the Federal statute providing for mandatory exclusion from participation in Federal healthcare programs, (iv) listed (or listing) on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) listed (or listing) on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov), Valeant shall immediately notify Dova, and Dova shall have the option to prohibit such Person from performing work under this Agreement; and

10.2.12all Field Force Personnel that are engaged in Detailing are, and will be, licensed to the extent required and in accordance with all Applicable Laws.

10.3Disclaimer of Warranty. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, DOVA (AND ITS AFFILIATES) AND VALEANT (AND ITS AFFILIATES) MAKE NO REPRESENTATIONS AND NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND DOVA (AND ITS AFFILIATES) AND VALEANT (AND ITS AFFILIATES) EACH SPECIFICALLY DISCLAIM ANY OTHER REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS, STATUTORY OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY INTELLECTUAL PROPERTY OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

10.4Additional Covenants.

10.4.1Initial Orders to Non-Retail Institutions. For initial orders of Product from Dova (or its Affiliates or its Intermediaries) to the Non-Retail Institutions, Dova shall not engage in any “channel stuffing” or any similar program, activity or other action (including any rebate, discount, chargeback or refund policy or practice) that in each case is intended by Dova to result in purchases by the Non-Retail Institutions that are materially in excess of purchases in the ordinary course of business or that is intended to materially adversely impact Valeant’s promotion fee pursuant to this Agreement; provided, however, this Section10.4.1 shall not be applicable to any activity or action taken by Dova which applies to all or substantially all customers for the Product, or any activity or action taken by Dova in good faith and consistent with customary sales and marketing practices in the pharmaceutical industry.

10.4.2Third Party Agreements. Dova shall remain solely responsible for the payment of royalty, milestone and other payment obligations, if any, due to Third Parties on (or in connection with) the sale of Product in the Territory, including under the Third Party Agreements.

ARTICLE 11INDEMNIFICATION; LIMITATIONS ON LIABILITY

11.1Indemnification by Dova. Dova shall defend, indemnify and hold harmless Valeant and its Affiliates and its and their respective officers, directors, employees, agents, representatives, successors and assigns from and against all Claims, and all associated Losses, to the extent incurred or suffered by any of them to the extent resulting from or arising out of (a) any misrepresentation or breach of any representations, warranties, agreements or covenants of Dova under this Agreement, (b) the negligence, willful misconduct or violation of Applicable Laws by Dova (or any of its Affiliates or its or their respective officers, directors, employees, agents or representatives), (c) the infringement of the intellectual property rights of any Third Party in connection with the Product, including from the use of the Dova Trademarks and Copyrights on Product Labeling or Product Materials in accordance with this Agreement, (d) death or personal injury to any person related to use of the Product, or (e) the failure to comply with Applicable Laws by the Specialty Pharmacies, applicable reimbursement hub or any 501(c)(3) charitable foundation used in connection with the Product; except in each case to the extent any such Claims, and all associated Losses, are caused by an item for which Valeant is obligated to indemnify Dova pursuant to Section 11.2.

11.2Indemnification by Valeant. Valeant shall defend, indemnify and hold harmless Dova and its Affiliates and its and their respective officers, directors, employees, agents, representatives, successors and assigns from and against all Claims and all associated Losses, to the extent incurred or suffered by any of them to the extent resulting from or arising out of (a) any misrepresentation or breach of any representations, warranties, agreements or covenants of Valeant under this Agreement, or (b) the negligence, willful misconduct, or violation of Applicable Laws by Valeant (or any of its Affiliates or its and their respective officers, directors, employees, agents or representatives); except in each case to the extent any such Claims, and all associated Losses, are caused by an item for which Dova is obligated to indemnify Valeant pursuant to Section 11.1.

11.3Indemnification Procedures. The Party seeking indemnification under Section 11.1 or 11.2, as applicable (the “Indemnified Party”) shall give prompt notice to the Party against whom indemnity is sought (the “Indemnifying Party”) of the assertion or commencement of any Claim in respect of which indemnity may be sought under Section 11.1 or 11.2, as applicable, and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to give such notice will relieve the Indemnifying Party of any liability hereunder only to the extent that the Indemnifying Party has suffered actual prejudice thereby. The Indemnifying Party shall assume and control the defense and settlement of any such action, suit or proceeding at its own expense. The Indemnified Party shall, if requested by the Indemnifying Party, cooperate in all reasonable respects in such defense, at the Indemnifying Party’s expense. The Indemnified Party will be entitled at its own expense to participate in such defense and to employ separate counsel for such purpose. For so long as the Indemnifying Party is diligently defending any proceeding pursuant to this Section 11.3, the Indemnifying Party will not be liable under Section 11.1 or 11.2, as applicable, for any settlement effected without its consent. No Party shall enter into any compromise or settlement which commits the other Party to take, or to forbear to take, any action without the other Party’s prior written consent (and unless such compromise or settlement includes no payments by the Indemnified Party, an unconditional release of, and no admission of liability by, the Indemnified Party from all liability in respect of such Claim).

11.4Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN (OTHER THAN AS SET FORTH IN THE SECOND SENTENCE OF THIS SECTION 11.4), IN NO EVENT SHALL DOVA (OR ITS AFFILIATES) OR VALEANT (OR ITS AFFILIATES) BE LIABLE TO THE OTHER OR ANY OF THE OTHER PARTY’S AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING LOST PROFITS) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING SENTENCE SHALL NOT LIMIT (1) THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE OTHER PARTY FROM AND AGAINST THIRD PARTY CLAIMS UNDER SECTION 11.1 OR 11.2, AS APPLICABLE, OR (2) DAMAGES AVAILABLE FOR A PARTY’S BREACH OF THE CONFIDENTIALITY AND NON-USE OBLIGATIONS IN ARTICLE 9.

11.5Insurance. Each Party acknowledges and agrees that during the Term, it shall maintain, through purchase or self-insurance, adequate insurance, including products liability coverage and comprehensive general liability insurance, adequate to cover its obligations under this Agreement and which are consistent with normal business practices of prudent companies similarly situated. Each Party shall provide reasonable written proof of the existence of such insurance to the other Party upon request. Dova does not and will not maintain or procure any worker’s compensation, healthcare, or other insurance for or on behalf of any Field Force Personnel, all of which shall be Valeant’s sole responsibility. For clarity, the insurance requirements of this Section 11.5 shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under this ARTICLE 11.

ARTICLE 12TERM AND TERMINATION

12.1Term. This Agreement shall become effective as of the Effective Date and, unless earlier terminated as provided in this ARTICLE 12, shall extend until the four (4) year anniversary of the Effective Date (the “Term”).

12.2Early Termination for Cause. A Party shall have the right to terminate this Agreement before the end of the Term as follows:

12.2.1by a Party upon written notice to the other Party in the event of a material breach of this Agreement by such other Party where such breach is not cured (if able to be cured) within [***] following such other Party’s receipt of written notice of such breach (and any such termination shall become effective at the end of such [***] period unless the breaching Party has cured such breach prior to the expiration of such [***] period);

12.2.2by Dova if the Quarterly Average Sales Force Size is less than [***] Sales Representatives for [***] consecutive Calendar Quarters, upon [***] written notice to Valeant, such notice to be delivered no less than [***] following the end of the last consecutive Calendar Quarter in which the Quarterly Average Sales Force Size is less than [***] Sales Representatives;

12.2.3by Dova if the aggregate actual number of Details for the Product made by the Sales Representatives for a Calendar Quarter is less than the Quarterly Minimum Details for [***] consecutive Calendar Quarters, upon [***] written notice to Valeant, such notice to be delivered no less than [***] following the end of the last consecutive Calendar Quarter in which the actual Details are less than the Quarterly Minimum Details;

12.2.4by either Party upon [***] written notice to the other Party following the withdrawal of the Product from the market by Dova (or the decision by Dova to withdraw the Product from the market) due to (i) any decision, judgment, ruling or other requirement of the FDA, or (ii) material safety concern;

12.2.5by Dova upon [***] written notice to Valeant upon the cessation of marketing by Valeant of the Designated Product (or the Alternate Product in accordance with Section 4.2.1(c), as the case may be);

12.2.6by Dova pursuant to Section 4.2.1(c); and

12.2.7by a Party immediately upon written notice to the other Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings with respect to such other Party, or upon an assignment of a substantial portion of the assets for the benefit of creditors by such other Party, or in the event a receiver or custodian is appointed for such other Party’s business or a substantial portion of such other Party’s business is subject to attachment or similar process; provided, however, in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the party consents to the involuntary bankruptcy or such proceeding is not dismissed within [***] after the filing thereof.

12.3Other Early Termination.

12.3.1Either Party shall have the right to terminate this Agreement before the end of the Term for its convenience upon [***] written notice to the other Party (and any such termination shall become effective at the end of such [***]); [***].

12.3.2Either Party shall have the right to terminate this Agreement before the end of the Term upon [***] written notice to the other Party delivered within [***] after the conclusion of any Calendar Quarter, beginning with the Calendar Quarter commencing on [***], in which the Net Sales in such Calendar Quarter are less [***] (and any such termination shall become effective at the end of such [***] period); provided that Valeant shall not have the right to terminate this Agreement pursuant to this Section 12.3.2 with respect to any Calendar Quarter for which the Quarterly Average Sales Force Size is less than [***] Sales Representatives.

12.4Effects of Termination. Upon the expiration or effective date of termination of this Agreement, (i) all rights and obligations of both Parties hereunder shall immediately terminate, subject to any survival as set forth in Sections 12.5 and 12.6, (ii) Valeant, at Dova’s direction,shall immediately return to Dova or destroy in accordance with all Applicable Laws all Product Materials, reports and other tangible items provided by or on behalf of Dova to Valeant or otherwise developed or obtained by Valeant pursuant to the terms of this Agreement (other than Valeant Property) (and at the request of Dova, Valeant shall certify destruction of such materials if Valeant does not to return such materials to Dova), (iii) Valeant shall immediately cease all Valeant Activities with respect to the Product, and (iv) each of Dova and Valeant shall, at the other Party’s direction, either return to such other Party or destroy all Confidential Information of such other Party. Notwithstanding the foregoing, each Party may retain archival copies of any Confidential Information to the extent required by law, regulation or professional standards or copies of Confidential Information created pursuant to the automatic backing-up of electronic files where the delivery or destruction of such files would cause undue hardship to the receiving Party, so long as any such archival or electronic file back-up copies are accessible only to its legal or IT personnel, provided that such Confidential Information will continue to be subject to the terms of this Agreement.

12.5Tail Period. Solely in the event that Dova has terminated this Agreement pursuant to Section 12.3.1 and notwithstanding anything else herein, in consideration of the promotion services performed by Valeant during the Term, with respect to the Tail Period, Dova shall make payments to Valeant in an amount equal to [***] of the amounts that would have been payable by Dova to Valeant with respect to such Tail Period pursuant to Section 6.1 had the Agreement not been so terminated. Such payments shall be made within [***] following the end of each calendar quarter in the Tail Period. Sections 6.3, 6.4 and 6.5 shall apply, mutatis mutandis, to such Tail Period payments. For clarity, no tail payment shall be due following any expiration or termination of this Agreement except as set forth in this Section 12.5.

12.6Survival. Termination or expiration of this Agreement shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such termination or expiration. Notwithstanding any expiration or termination of this Agreement, such expiration or termination shall not relieve any Party from obligations which are expressly or by implication intended to survive expiration or termination, including Sections 2.3, , 4.4.2, 5.7, 5.9, 6.3.6, 6.3.5, 11.1, 11.2, 11.3, 11.4, 12.4, 12.5 and 12.6, Articles 7, 8, 9 and 13 (to the extent applicable to implementation of the survival of the preceding Sections and Articles) and, solely as it relates to the last Calendar Quarter, Sections 6.1, 6.2 and 6.3, which shall survive and be in full force and effect.

ARTICLE 13MISCELLANEOUS

13.1Force Majeure. Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement to the extent such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, potentially including, embargoes, war, acts of war (whether war be declared or not), acts of terrorism, insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, or other acts of God, or acts, omissions or delays in acting by any Governmental Authority. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practicable, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances and re-commence its performance hereunder as soon as practicable.

13.2Assignment. Except as provided in this Section 13.2, this Agreement may not be assigned or otherwise transferred, nor may any rights or obligations hereunder be assigned or transferred, by either Party, without the written consent of the other Party (such consent not to be unreasonably withheld); provided that a merger, sale of stock or comparable transaction shall not constitute an assignment. In the event either Party desires to make such an assignment or other transfer of this Agreement or any rights or obligations hereunder, such Party shall deliver a written notice to the other Party requesting the other Party’s written consent in accordance with this Section 13.2, and the other Party shall provide such Party written notice of its determination whether to provide such written consent within [***] following its receipt of such written notice from such Party. Notwithstanding the foregoing, (a) either Party may, without the other Party’s consent, assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate; and (b) Dova may assign this Agreement to a successor in interest in connection with the sale or other transfer of all or substantially all of Dova’s assets or rights relating to the Product; provided that such assignee shall remain subject to all of the terms and conditions hereof in all respects and shall assume all obligations of Dova hereunder whether accruing before or after such assignment. Any permitted assignee shall assume all assigned obligations of its assignor under this Agreement. Any attempted assignment not in accordance with this Section 13.2 shall be void. This Agreement shall be binding on, and inure to the benefit of, each Party, and its permitted successors and assigns.

13.3Severability. If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties. The Parties shall in such an instance use reasonable efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

13.4Notices. All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by e-mail (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier, or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to Dova, to:	Dova Pharmaceuticals, Inc. 240 Leigh Farm Road, Suite 245 Durham, NC 27707 Attention: Chief Executive Officer Email: asapir@dova.com With a copy to: Dova Pharmaceuticals, Inc. 240 Leigh Farm Road, Suite 245 Durham, NC 27707 Attention: General Counsel Email: mbanjak@dova.com
if to Valeant, to:	Valeant Pharmaceuticals North America LLC 400 Somerset Corporate Boulevard Bridgewater, NJ 08807 Attention: XXXXXXXXX Email: XXXXXXXX With a copy to: XXXXXXXX Attention: XXXXXXXX Fax: XXXXXXXX Email: XXXXXXXX

or to such other address(es) as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice shall be deemed to have been given: (a) when delivered if personally delivered; (b) on the Business Day after dispatch if sent by nationally-recognized overnight courier; or (c) on the fifth (5th) Business Day following the date of mailing, if sent by mail.

13.5Governing Law. This Agreement and any and all matters arising directly or indirectly herefrom shall be governed by and construed and enforced in accordance with the internal laws of the [***] applicable to agreements made and to be performed entirely in such state, including its statutes of limitation but without giving effect to the conflict of law principles thereof.

13.6Dispute Resolution.

13.6.1JSC; Escalation for Other Disputes. Except for disputes resolved by the procedures set forth in Section 3.4, if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (a “Dispute”), then either Party shall have the right to refer such dispute to the Senior Officers who shall confer within [***] after such Dispute was first referred to them to attempt to resolve the Dispute by good faith negotiations. Any final decision mutually agreed to by the Senior Officers in writing shall be conclusive and binding on the Parties. If such Senior Officers do not agree on the resolution of an issue within [***] after such issue was first referred to them, either Party may, by written notice to the other Party, initiate arbitration for resolution of such Dispute pursuant to Section 13.6.2.

13.6.2Arbitration of Other Disputes. If a Dispute is not resolved by the Senior Officers pursuant to Section 13.6.1, such Dispute shall be submitted to and finally settled by [***] The Parties hereby submit to the exclusive jurisdiction of the federal and state courts located in [***] for the purposes of an order to compel arbitration, for preliminary relief in aid of arbitration and for a preliminary injunction to maintain the status quo or prevent irreparable harm prior to the appointment of the arbitrators and to the non-exclusive jurisdiction of such courts for the enforcement of any ward issued hereunder.

13.7Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

13.8Entire Agreement; Amendments. This Agreement, together with the Schedules and Exhibits hereto, contains the entire understanding of the Parties with respect to the subject matter hereof. Any other express or implied agreements and understandings, negotiations, writings and commitments, either oral or written, in respect to the subject matter hereof (including the Confidentiality Agreement, but solely with respect to information which is deemed Confidential Information hereunder) are superseded by the terms of this Agreement. The Exhibits to this Agreement are incorporated herein by reference and shall be deemed a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representative(s) of both Parties hereto.

13.9Headings. The captions to the several Articles, Sections and subsections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Articles and Sections hereof.

13.10Independent Contractors. It is expressly agreed that Valeant and Dova shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither Valeant nor Dova shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

13.11Third Party Beneficiaries. Except as set forth in ARTICLE 11, no Person other than Dova or Valeant (and their respective Affiliates and permitted successors and assignees hereunder) shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

13.12Waiver. The waiver by either Party hereto of any right hereunder, or of any failure of the other Party to perform, or of any breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach by or failure of such other Party whether of a similar nature or otherwise.

13.13Cumulative Remedies. No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

13.14Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

13.15Use of Names. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name, trademark or logo of the other Party for any purpose in connection with the performance of this Agreement.

13.16Further Actions and Documents. Each Party agrees to execute, acknowledge and deliver all such further instruments, and to do all such further acts, as may be reasonably necessary or appropriate to carry out the intent and purposes of this Agreement.

13.17Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa, (d) whenever any provision of this Agreement uses the term “including” (or “includes”), such term shall be deemed to mean “including without limitation” (or “includes without limitations”), and (e) references to any Articles or Sections include Sections and subsections that are part of the references’ Article or Section (e.g., a section numbered “Section 2.2.1” would be part of “Section 2.2”, and references to “ARTICLE 2” or “Section 2.2” would refer to material contained in the subsection described as “Section 2.2.1”).

13.18Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile or electronic mail (including pdf) and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes and shall have the same force and effect as original signatures.

[signature page follows]

[Signature page to Co-Promotion Agreement]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

DOVA PHARMACEUTICALS, INC.

By: __/s/ Alex C. Sapir______________________

Name: Alex C. Sapir

Title: CEO

VALEANT PHARMACEUTICALS NORTH AMERICA LLC

By: ___/s/ Joseph C. Papa_______________

Name: Joseph C. Papa

Title: Chief Executive Officer and President

9

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EXHIBIT A

Joint Press Release

DURHAM, N.C. and BRIDGEWATER, N.J., Sept. 27, 2018 (GLOBE NEWSWIRE) -- Dova Pharmaceuticals, Inc. (“Dova”) (DOVA), a specialty pharmaceutical company focused on acquiring, developing, and commercializing drug candidates for diseases where there is a high unmet need, and Salix Pharmaceuticals (“Salix”), one of the largest specialty pharmaceutical companies in the world committed to the prevention and treatment of gastrointestinal diseases and its parent company, Bausch Health Companies Inc. (NYSE/TSX: BHC), today announced that they have entered into an exclusive agreement to co-promote Dova’s DOPTELET (avatrombopag) in the United States (U.S.). The U.S. Food and Drug Administration ("FDA") approved DOPTELET on May 21, 2018 for the treatment of thrombocytopenia in adult patients with chronic liver disease (CLD) who are scheduled to undergo a procedure. DOPTELET represents the first thrombopoietin (TPO) receptor agonist approved in the United States for this indication.

Thrombocytopenia, a condition in which patients have a low platelet count, is the most common hematological abnormality in patients with CLD that often worsens with the severity of liver disease. It is estimated that approximately 15 percent of the 7.5 million patients with CLD have some form of thrombocytopenia. In a study published in 2010, patients with severe thrombocytopenia (<75,000/µL) had a 31 percent incidence of procedure-related bleeding. As a result of the associated increased rate of bleeding, there is an increased risk for the CLD patient when undergoing common scheduled medical procedures such as liver biopsy, colonoscopy, endoscopy, and routine dental procedures.

As part of the co-promotion arrangement, Salix intends to deploy approximately 100 sales specialists who will promote DOPTELET to gastroenterology healthcare professionals. The Salix sales force will begin selling DOPTELET in mid-October 2018. Dova will continue its commercial efforts targeting primarily hepatologists and interventional radiologists and certain other specialties. Pursuant to the agreement, Dova will pay Salix a quarterly fee based on net sales (as defined in the agreement) of DOPTELET prescribed by gastroenterologists in the U.S.

“We are delighted to be working with Salix, a company considered by many to have the preeminent gastroenterology sales force in the United States,” said Alex C. Sapir, president and chief executive officer, Dova Pharmaceuticals. “Given Salix’s presence and strong reputation within large gastroenterology group practices coupled with the early interest we are seeing among the gastroenterology community, we are excited to see the impact this partnership will bring to DOPTELET and to patients.”

“Salix considers liver disease a strategic therapeutic area of focus, given our history and knowledge with XIFAXAN® (rifaximin), an innovative medicine indicated for the treatment of overt hepatic encephalopathy (HE), a condition that is often a consequence of chronic liver disease,” said Mark McKenna, president, Salix Pharmaceuticals. “Adding DOPTELET to our portfolio will enable our sales force to promote yet another innovative product that addresses a true unmet need in the marketplace.”

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

About DOPTELET
DOPTELET (avatrombopag) is a second generation, once daily, orally administered TPO receptor agonist approved for the treatment of thrombocytopenia in adult patients with CLD who are scheduled to undergo a procedure. DOPTELET is designed to mimic the effects of TPO, the primary regulator of normal platelet production.

Two global Phase 3, double-blind, placebo-controlled trials (ADAPT-1 [N=231] and ADAPT-2 [N=204]), conducted in adults with thrombocytopenia (platelet count of less than 50,000/µL) and CLD, supported the FDA approval. Patients were assigned to either 40 mg or 60 mg of avatrombopag daily for five days based on their Baseline platelet counts (40 to <50,000/µmL or <40,000/µmL, respectively). Avatrombopag was shown to be superior to placebo in increasing the proportion of patients not requiring platelet transfusions or rescue procedures for bleeding up to seven days following a scheduled procedure in both trials in both the 40 mg (ADAPT-1, 88% vs. 38%, p <0.0001; ADAPT-2, 88% vs. 33%; p<0.0001), and 60 mg (ADAPT-1, 66% vs. 23%, p <0.0001; ADAPT-2, 69% vs. 35%; p=0.0006) treatment groups. Avatrombopag was also superior to placebo at the two secondary efficacy endpoints in each trial.  In the avatrombopag treatment groups, there was an increased proportion of patients achieving the target platelet count of ≥50,000/µmL on procedure day, and a greater magnitude of the change in mean platelet count from baseline to procedure day; all treatment differences between the avatrombopag and placebo treatment groups for each secondary endpoint were highly statistically significant with p values <0.0001. The most common adverse reactions with avatrombopag included pyrexia, abdominal pain, nausea, headache, fatigue and edema peripheral. Portal vein thromboses have been reported in patients with CLD and in patients receiving TPO receptor agonists. One treatment-emergent event of portal vein thrombosis was reported in the ADAPT trials in an avatrombopag-treated patient.

INDICATION

DOPTELET (avatrombopag) is indicated for the treatment of thrombocytopenia in adult patients with chronic liver disease who are scheduled to undergo a procedure.

IMPORTANT SAFETY INFORMATION

WARNINGS AND PRECAUTIONS

DOPTELET is a thrombopoietin (TPO) receptor agonist and TPO receptor agonists have been associated with thrombotic and thromboembolic complications in patients with chronic liver disease. Portal vein thrombosis has been reported in patients with chronic liver disease treated with TPO receptor agonists. In the ADAPT-1 and ADAPT-2 clinical trials, there was one treatment-emergent event of portal vein thrombosis in a patient (n=1/430) with chronic liver disease and thrombocytopenia treated with DOPTELET.

Consider the potential increased thrombotic risk when administering DOPTELET to patients with known risk factors for thromboembolism, including genetic prothrombotic conditions (Factor V Leiden, Prothrombin 20210A, Antithrombin deficiency or Protein C or S deficiency). 

DOPTELET should not be administered to patients with chronic liver disease in an attempt to normalize platelet counts.

CONTRAINDICATIONS: None

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ADVERSE REACTIONS

Most common adverse reactions (≥ 3%) were: pyrexia, abdominal pain, nausea, headache, fatigue, and edema peripheral.

Please see full Prescribing Information for DOPTELET (avatrombopag) www.doptelet.com

About XIFAXAN
XIFAXAN is a nonsystemic* antibiotic that slows the growth of bacteria in the gut that are believed to be linked to symptoms of overt hepatic encephalopathy (HE). It has been proven to reduce the risk of overt HE recurrence and HE-related hospitalizations in adults.

*There is an increased systemic exposure in patients with severe (Child-Pugh Class C) hepatic impairment. Caution should be exercised when administering XIFAXAN to these patients.

INDICATION
XIFAXAN (rifaximin) 550 mg tablets are indicated for the reduction in risk of overt hepatic encephalopathy (HE) recurrence in adults and for the treatment of irritable bowel syndrome with diarrhea (IBS-D) in adults.

IMPORTANT SAFETY INFORMATION

• XIFAXAN is not for everyone. Do not take XIFAXAN if you have a known hypersensitivity to rifaximin, any of the rifamycin antimicrobial agents, or any of the components in XIFAXAN.

• If you take antibiotics, like XIFAXAN, there is a chance you could experience diarrhea caused by an overgrowth of bacteria (C. difficile). This can cause symptoms ranging in severity from mild diarrhea to life-threatening colitis. Contact your healthcare provider if your diarrhea does not improve or worsens.

• Talk to your healthcare provider before taking XIFAXAN if you have severe hepatic (liver) impairment, as this may cause increased effects of the medicine.

• Tell your healthcare provider if you are taking drugs called P-glycoprotein and/or OATPs inhibitors (such as cyclosporine) because using these drugs with XIFAXAN may lead to an increase in the amount of XIFAXAN absorbed by your body.

• In clinical studies, the most common side effects of XIFAXAN were:

HE: Peripheral edema (swelling, usually in the ankles or lower limbs), nausea (feeling sick to your stomach), dizziness, fatigue (feeling tired), and ascites (a buildup of fluid in the abdomen)
IBS-D: Nausea (feeling sick to your stomach) and an increase in liver enzymes

• XIFAXAN may affect warfarin activity when taken together. Tell your healthcare provider if you are taking warfarin because the dose of warfarin may need to be adjusted to maintain proper blood-thinning effect.

• If you are pregnant, planning to become pregnant, or nursing, talk to your healthcare provider before taking XIFAXAN because XIFAXAN may cause harm to an unborn baby or nursing infant.

You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch or call 1-800-FDA-1088.

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

For product information, adverse event reports, and product complaint reports, please contact:
Salix Product Information Call Center Phone: 1-800-321-4576
 Fax: 1-510-595-8183
Email: salixmc@dlss.com
Please click here for full Prescribing Information.

About Dova Pharmaceuticals, Inc.
Dova is a pharmaceutical company focused on acquiring, developing, and commercializing drug candidates for rare diseases where there is a high unmet need, with an initial focus on addressing thrombocytopenia. Dova’s proprietary pipeline includes one commercial product, DOPTELET, for the treatment of thrombocytopenia in adult patients with CLD scheduled to undergo a procedure.

 About Salix
Salix is one of the largest specialty pharmaceutical companies in the world committed to the prevention and treatment of gastrointestinal diseases. For almost 30 years, Salix has licensed, developed, and marketed innovative products to improve patients' lives and arm health care providers with life-changing solutions for many chronic and debilitating conditions. Salix currently markets its product line to U.S. health care providers through an expanded sales force that focuses on gastroenterology, hepatology, pain specialists, and primary care. Salix is headquartered in Bridgewater, New Jersey.

About Bausch Health
Bausch Health Companies Inc. (NYSE/TSX: BHC) is a global company whose mission is to improve people's lives with our health care products. We develop, manufacture and market a range of pharmaceutical, medical device and over-the-counter products, primarily in the therapeutic areas of eye health, gastroenterology and dermatology. We are delivering on our commitments as we build an innovative company dedicated to advancing global health. More information can be found at www.bauschhealth.com.

Dova Pharmaceuticals Cautionary Notes Regarding Forward-Looking Statements 
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “anticipated”, “believe”, “expect”, “may”, “plan”, “potential”, “will”, and similar expressions, and are based on Dova’s current beliefs and expectations. These forward-looking statements include the potential benefits of the collaboration, the timing of the Salix sales force beginning to sell DOPTELET and other information relating to the transaction between Dova and Salix. These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Risks and uncertainties that may cause actual results to differ materially include uncertainties inherent in the conduct of clinical trials, increased regulatory requirements, Dova’s reliance on third parties over which it may not always have full control, and other risks and uncertainties that are described in Dova’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (SEC) on February 16, 2018, and Dova’s other periodic reports filed with the SEC. Any forward-looking statements speak only as of the date of this press release and are based on information available to Dova as

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

of the date of this release, and Dova assumes no obligation to, and does not intend to, update any forward-looking statements, whether as a result of new information, future events or otherwise.

Bausch Health Forward-looking Statements 
 This news release may contain forward-looking statements, which may generally be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the Bausch Health’s most recent annual or quarterly report and detailed from time to time in Bausch Health’s other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which factors are incorporated herein by reference. In addition, certain material factors and assumptions have been applied in making these forward-looking statements, including that the risks and uncertainties outlined above will not cause actual results or events to differ materially from those described in these forward-looking statements. Bausch Health believes that the material factors and assumptions reflected in these forward-looking statements are reasonable, but readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Bausch Health and Salix undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law.

Dova Investor Contacts:   
Mark W. Hahn 
Chief Financial Officer mhahn@dova.com
(919) 338-7936 
  
Salix Investor Contact: 
Arthur Shannon Arthur.Shannon@bauschhealth.com 
514-856-3855 
877-281-6642 (toll free) 
 
Westwicke Partners 
John Woolford john.woolford@westwicke.com 
(443) 213-0506 

Salix Media Contacts: 
Lainie Keller Lainie.Keller@bauschhealth.com 
908-927-0617 
  
Karen Paff 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Karen.Paff@salix.com 
908-927-1190 

AkaRx, Inc., a wholly owned subsidiary of Dova Pharmaceuticals, Inc., is the exclusive licensee and distributor of DOPTELET® in the United States and its territories. ©2018
DOPTELET® is a registered trademark of AkaRx, Inc.

PM-US-DOP-0072

The Xifaxan 550 mg product and the Xifaxan trademark are licensed by Alfasigma S.p.A.to Salix Pharmaceuticals or its affiliates. 

SAL.0103.USA.18

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Schedule 1.65

Third Party Agreements

1. Stock Purchase Agreement dated March 29, 2016 (as amended) between PBM AKX Holdings, LLC and Eisai, Inc.

2. License Agreement dated August 15, 2005 (as amended) between Astellas Pharma Inc. and AkaRx, Inc.

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

TRANSITION SERVICES AGREEMENT

by and between

Eisai Inc.

and

AkaRx, Inc.

Dated as of April 1, 2018

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

TABLE OF CONTENTS

	Page
ARTICLE 1DEFINITIONS	1
1.1Certain Defined Terms	1
1.2Additional Defined Terms	3
1.3Interpretation	2
ARTICLE 2SERVICES	2
2.1Provision of Services	2
2.2Services Performed by Affiliates and Third Parties	3
2.3Pass-Through Agreements	4
2.4Services Standard; FTEs	4
2.5Ongoing Trials; Drug Approval Applications	7
2.6Assigned Contracts	8
2.7Regulatory Services	8
2.8Pharmacovigilance	10
2.9Location of Services Provided; Travel Expenses	11
2.10Transition Management	11
2.11Cooperation	11
2.12Documentation	12
2.13Exclusions	12
2.14Exclusion of Warranties	13
ARTICLE 3COMPENSATION	13
3.1Services Fees	13
3.2Out-of-Pocket Costs	13
3.3Invoicing	14
3.4Excess Costs	14
3.5Due Date	15
3.6Taxes	15
3.7Records; Audit	16
ARTICLE 4OWNERSHIP OF ASSETS: INTELLECTUAL PROPERTY AND RIGHTS OF REFERENCE; INVENTORY	16
4.1Ownership	16
4.2Limited License	18
4.3Inventory	18
ARTICLE 5CONFIDENTIALITY	18
5.1Confidentiality Obligations	18
5.2Permitted Uses and Disclosures	19
5.3Return or Destruction of Confidential Information	20
5.4Survival	20
ARTICLE 6LIMITATION OF LIABILITY; INDEMNIFICATION	21
6.1Other Agreements	21
6.2Indemnification	21
6.3Limitation of Liability	22

i

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ARTICLE 7TERM AND TERMINATION	22
7.1Term	22
7.2Termination of Services	23
7.3Asset Transfer	24
7.4Accrued Rights	24
7.5Surviving Obligations	24
ARTICLE 8MISCELLANEOUS	24
8.1Force Majeure	24
8.2Independent Contractor	25
8.3Assignment	25
8.4No Benefit to Third Parties	25
8.5Notices	25
8.6Severability	26
8.7Governing Law	27
8.8Jurisdiction	27
8.9Service of Process	27
8.10Waiver of Jury Trial	27
8.11Amendments and Waivers	27
8.12Joint Drafting	28
8.13Obligations	28
8.14Counterparts	28
8.15Entire Agreement	28
8.16Dispute Resolution	28

SCHEDULES

Schedule 2.1        Initial Work Order

Schedule 2.2        Additional Work Order

Schedule 2.4.2        Key Employees for Services

EXHIBITS

Exhibit A        Pass-Through Agreements

Exhibit B        Form of Seller IND Transfer Letter

Exhibit C        Form of Company IND Transfer Letter

AMENDED AND RESTATED TRANSITION SERVICES AGREEMENT

This Amended and Restated Transition Services Agreement (this “Agreement”), dated as of April 1, 2018 (the “Restated Effective Date”), by and between Eisai Inc. a Delaware corporation (“Seller”), and AkaRx, Inc., a Delaware corporation (the “Company”), which amends and restates the Transition Services Agreement, dated as of March 30, 2016 (the “Effective Date”), as amended on March 30, 2016, September 21, 2017, and March 16, 2018, by and between Seller and the Company (collectively, the “Original Agreement”). Seller and the Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

WHEREAS, Seller and PBM AKX Holdings, LLC, a Delaware limited liability company (“Purchaser”) are parties to that certain Stock Purchase Agreement, dated as of March 29, 2016 (the “Stock Purchase Agreement”), pursuant to which Purchaser purchased from Seller the Shares (as defined in the Stock Purchase Agreement);

WHEREAS, as the sponsor of the Ongoing Trials (as defined in the Stock Purchase Agreement), Seller has entered into the agreements listed in Exhibit A hereto relating to the conduct of the Ongoing Trials (collectively, the “Pass-Through Agreements”);

WHEREAS, following the consummation of the transactions contemplated by the Stock Purchase Agreement, Seller and the Company entered into the Original Agreement, pursuant to which Seller agreed to perform Initial Services (defined below) for the benefit of Purchaser and the Company with respect to the Company’s operation of the Company Business (as defined in the Stock Purchase Agreement), subject to the terms and conditions contained in the Original Agreement which the Parties acknowledge were negotiated on an arms’ length basis by Purchaser (on behalf of the Company) and Seller; and

WHEREAS, the Parties have agreed to amend and restate the Original Agreement to, among other things, add Additional Services (defined below) to the scope of the Services (defined below) performed by Seller for the benefit of Purchaser and the Company with respect to the Company’s operation of the Company Business, subject to the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth, and set forth in the Stock Purchase Agreement and the other Ancillary Agreements (as defined in the Stock Purchase Agreement), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

Article 1DEFINITIONS

1.1Certain Defined Terms    . Unless otherwise specifically provided herein, capitalized terms used, but not otherwise defined, in this Agreement shall have the meanings ascribed thereto in the Stock Purchase Agreement. As used herein, the following capitalized terms have the following meanings.

“Accountant” means a nationally recognized independent accounting firm to be mutually agreed upon by Seller and the Company.

“Affiliate” means, with respect to any Person, any Person controlling, controlled by or under common control with such Person. For purposes of this definition, “control” means, with respect to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities (or other ownership interest), by contract or otherwise.

“Applicable Laws” means the applicable provisions of any and all Laws, Judgments, directives, and approvals of or from any Governmental Entity, as they may be in effect from time to time, including the FDCA, Drug or Health Laws, and Privacy Laws.

“Clinical Trial Materials” means materials used in the conduct of the Ongoing Trials or otherwise in the performance of Clinical Trial Services, including the Compound and Products packaged for use in the Ongoing Trials.

“Compound INDs” means Investigational New Drug Application #062122, Investigational New Drug Application #075537 and Investigational New Drug Application #076680” (collectively, the “US INDs”) and any and all other Investigational New Drug Applications or their foreign equivalents (including any clinical trial authorizations) for the Compound held by Seller or any of its Affiliates as of the Effective Date.

“Excluded Services” means corporate management, legal, insurance, treasury, tax, travel planning services, meeting planning services, public affairs, internal audit and all other services not specifically covered by a Work Order or any Change Order.

“FTE” means, with respect to the Initial Services, the equivalent of the work of one employee of Seller full time for one Calendar Year (consisting of at least a total of [***] hours per Calendar Year of work in directly providing the Initial Services). If a Change Order contemplates that any Seller employee would devote fewer than [***] hours per year in providing the Initial Services, such employee shall be treated as an FTE on a pro-rata basis, calculated by dividing the actual number of hours worked by such employee in providing the Initial Services by [***]. Any employee who devotes more than [***] hours per year in providing the Initial Services shall be treated as one (1) FTE, unless otherwise indicated in a Change Order. With respect to the Additional Services, “FTE” means the equivalent of the work of one employee of Seller full time for one Calendar Year (consisting of at least a total of [***] hours per Calendar Year of work in directly providing the Additional Services). Any employee who devotes more than [***] hours per year in providing the Additional Services shall be treated as one (1) FTE, unless otherwise indicated in a Change Order.

“FTE Costs” means, with respect to any Calendar Quarter, the product of (i) the estimated total number of FTEs during such Calendar Quarter, multiplied by (ii) the FTE Rate applicable to such Calendar Quarter.

“FTE Rate” means (i) with respect to the Initial Services, [***] per Calendar Year, or [***] per Calendar Quarter and (ii) with respect to the Additional Services, [***] per Calendar Year, or [***] per Calendar Quarter. For clarity, with respect to Additional Services, the FTE Rate converted to an hourly format equals [***] per hour (i.e., the [***] fee per Calendar Year divided by [***] hours), regardless of the number of hours devoted by Seller.

“Ongoing Trials Information” means all materials, contracts, agreements, documents, data (including data contained in case report forms and all pharmacovigilance data and safety database information), information, records and reports that are either (i) generated or created (including by any clinical trial site or investigator or by any Pass-Through Contractor) in the conduct of the Ongoing Trials or (ii) disclosed or learned by Seller in the conduct of the Ongoing Trials and, in any case, relate solely to the Compound or the Ongoing Trials.

“Pass-Through Contractors” means the counterparties that have entered into the Pass-Through Agreements with Seller.

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.

“Privacy Laws” means all Laws with respect to the collection, use, transfer, storage, deletion, processing (both by computer and manually), combination or other use of subject or other personal data, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, including the regulations promulgated thereunder, Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 (while still in effect), the General Data Protection Regulation (GDPR) (EU 2016/679), and any other comparable foreign Laws relating to the security or privacy of medical information, and any applicable state privacy Laws.

“Regulatory Documentation” means all (i) regulatory applications, submissions, registrations, licenses, authorizations, filings (including Drug Approval Applications) and approvals, and (ii) correspondence, notifications and reports submitted to or received from Governmental Entities (including regulatory authority meeting requests, minutes and official contact reports relating to any communications with any regulatory authority) and all supporting documents with respect thereto, in each case, ((i) and (ii)), relating to the Compound or Product.

“Service Period” means (i) with respect to any particular Initial Service, the period between the Effective Date and the end date of such Initial Service performed (“Initial Service Period”), and (ii) with respect to any particular Additional Service, the period between the Restated Effective Date and the end date of such Additional Service performed (“Additional Service Period”), in each case, ((i) and (ii)), as set forth in the applicable Work Order or, if applicable, any Change Order.

1.2Additional Defined Terms    . For purposes of this Agreement, the following capitalized terms have the meanings set forth in the pages indicated:

ARTICLE 2

Accountant, 2

Additional Service, 2

Additional Service Period, 3

Additional Services, 2

Additional Services Fees, 13

Additional Services Key Employee, 5

Additional Work Order, 2

Affiliate, 2

Aggregate Expense Amount, 14

Agreement, 1

Applicable Company Employees, 6

Applicable Employees, 5

Applicable Laws, 2

Assigned Contract, 8

Breaching Party, 23

Budget, 2

Change Order, 3

Chosen Courts, 27

Clinical Trial Materials, 2

Clinical Trial Service Period, 7

Clinical Trial Services, 7

CMC, 18

Company, 1

Company Indemnitees, 21

Company Property, 17

Complaining Party, 23

Compound INDs, 2

Confidential Information, 18

Debarred/Excluded, 13

Development Safety Update Report, 9

Disclosing Party, 19

Dispute, 28

Documentation, 12

DSUR, 9

Effective Date, 1

Excluded Services, 2

Extent, 2

Force Majeure Event, 25

FTE, 2

FTE Costs, 2

FTE Rate, 2

ICSR, 10

include, 2

Including, 2

Individual Case Safety Report, 10

Initial Service, 2

Initial Service Fee, 2

Initial Service Period, 3

Initial Services, 2

Initial Services Fees, 2

Initial Services Key Employee, 5

Initial Work Order, 2

Invoice Dispute, 15

MAA, 23

NDA, 10

Notice, 25

Notice Period, 23

Ongoing Trials Information, 3

Original Agreement, 1

Other Seller Costs, 14

Out-of-Pocket Costs, 13

Parties, 1

Party, 1

Pass-Through Agreements, 1

Pass-Through Contractors, 3

Payments, 15

Permitted Use, 20

Person, 3

Privacy Laws, 3

Product DSUR, 9

Purchaser, 1

Receiving Party, 19

Regulatory Documentation, 3

Restated Effective Date, 1

Retention Period, 12

Safety Information, 9

Seller, 1

Seller Indemnitees, 21

Seller Intellectual Property, 17

Service, 2

Service Period, 3

Services, 2, 13

Stock Purchase Agreement, 1

Term, 22

Third Party Claims, 21

Third Party Materials, 18

Transfer Date, 7

Transition Managers, 11

US INDs, 2

Work Order, 2

2.1Interpretation    . All Schedules and Exhibits annexed hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized term used in the Schedules or the Exhibits, but not otherwise defined therein, shall have the meaning as defined in this Agreement or the Stock Purchase Agreement, as applicable. References to defined terms in the singular shall include the plural and references to defined terms in the plural shall include the singular. “Extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”. “Including” (and, with correlative meaning, “include”) means including, without limiting the generality of any description preceding or succeeding such term, and the rule of ejusdem generis will not be applicable to limit a general statement preceded, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. The descriptive headings of the several Articles and Sections of this Agreement and the Table of Contents to this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. All references herein to “Articles,” “Sections”, “Schedules” or “Exhibits” shall be deemed to be references to Articles or Sections of this Agreement or Schedules or Exhibits hereto unless otherwise indicated. The terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement. All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP. Unless otherwise specified or where the context otherwise requires, (A) wherever used, the word “or” is used in the inclusive sense (and/or), (B) references to a Person are also to its successors and permitted assigns, (B) references to a Law include any amendment or modification to such Law and any rules or regulations issued thereunder, in each case, as in effect at the relevant time of reference thereto, (C) references to monetary amounts are denominated in Dollars, and (D) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto. To the extent that any terms set forth in the Original Agreement conflict with the terms of this Agreement, from and after the Restated Effective Date the terms of this Agreement shall control.

ARTICLE 3SERVICES

3.1Provision of Services    . The Parties have agreed upon (a) the initial work order attached hereto and incorporated herein as Schedule 2.1 (the “Initial Work Order”), which, as of the Effective Date, includes an estimated number of FTEs required to provide the Initial Services, the agreed-upon FTE Costs payable for each Initial Service (each, an “Initial Services Fee” and collectively, the “Initial Services Fees”), and the budget for payment of each Initial Service Fee on a Calendar Quarter basis and the anticipated Out-of-Pocket Costs (the “Budget”) and, which describes certain deliverables to be provided and certain tasks and activities to be performed by Seller pursuant to this Agreement (each, an “Initial Service” and collectively, the “Initial Services”) and the Service Period for each Initial Service; and (b) the additional work order attached hereto and incorporated herein as Schedule 2.2 (the “Additional Work Order”, and together with the Initial Work Order, each a “Work Order”), which, as of the Restated Effective Date, includes certain additional tasks and activities to be performed by Seller pursuant to this Agreement (each, an “Additional Service” and collectively, the “Additional Services”) and the Service Period for each Additional Service. For purposes of this Agreement, a “Service” means an Initial Service or an Additional Service, and the “Services” means, collectively, the Initial Services and the Additional Services. Any changes to the Services or a Work Order, including any modification to the applicable Services Fees, the Budget or any Service Period, shall be made only with the written approval of both Parties and shall be detailed in a written amendment to such Work Order, which shall be deemed incorporated herein upon execution by both Parties’ Transition Managers (“Change Order”); provided, that Seller shall not unreasonably withhold consent to any Change Order for tasks that are required in order to perform the Additional Services, but has the discretion to take into account the time required to complete such additional tasks and resourcing for purposes of prioritization, and any Services so provided under any Change Order shall be on fee terms set forth in such Change Order, which shall be substantially consistent with the fee terms set forth in this Agreement. All Change Orders, including any increases in the applicable Services Fees and any changes in the Budget (including increases or decreases due to acceleration of activities) must be approved and signed by the Parties prior to Seller commencing or accelerating any work arising from such change or charging any costs that exceed the applicable Services Fees or Budget; provided, however, that (i) the Company shall not unreasonably withhold, condition or delay approval of any Change Order that results from circumstances not within the reasonable control of Seller or its Affiliates (including any delay or extension of the Ongoing Trials or any requirement by a Governmental Entity or Applicable Law) and (ii) if the Company so unreasonably withholds, conditions or delays, or otherwise refuses to grant, consent to such Change Order, Seller shall have no obligation to provide, or cause to be provided, any work or Service that is the subject of such Change Order. Only the Transition Managers shall be authorized to execute any Change Order. To the extent that any terms set forth in a Work Order or any Change Order conflict with the terms of this Agreement, the terms of this Agreement shall control unless such Work Order or Change Order specifically references a provision of this Agreement and indicates that the terms of such Work Order or Change Order shall control over such provision. Any deliverables to be provided hereunder shall be provided in accordance with the acceptance criteria included in the applicable Work Order or any Change Order or, if there are no acceptance criteria for a deliverable included in the applicable Work Order or any Change Order, such deliverable shall be subject to the Company’s reasonable approval.

3.2Services Performed by Affiliates and Third Parties    . With respect to the Initial Services or any Additional Service the performance of which has commenced prior to the date hereof, Seller shall have the right to perform the Services either itself or through any Affiliate or through any Third Party that performs Services for the benefit of Seller or its Affiliates as of the Effective Date (in the case of any Initial Service) or as of the date on which Seller commenced performing such Additional Service (in the case of any such Additional Service). With respect to the Additional Services, except to the extent provided in the immediately preceding sentence, Seller shall have the right to perform the Services either itself or through any Affiliate. Except as provided in the preceding sentences of Section 2.2 or as set forth in Section 2.3, Seller may not subcontract or delegate any of the Services to a Third Party without the Company’s prior written consent. In the event the Company withholds any consent requested by Seller to subcontract or delegate the performance of Additional Services to a Third Party due to prioritization of Seller’s internal resources or projects, the Parties agree to amend the Additional Work Order in good faith to modify the Additional Services that were to be performed by such Third Party to enable Seller to achieve such prioritization. In the event that the Company does so consent, then any agreement entered into by Seller with the permitted Third Party subcontractor shall, to the extent reasonably practicable, name the Company as intended third party beneficiary of such agreement and provide for ownership and allocation of Intellectual Property rights and for obligations of confidentiality, record-keeping, and access that are consistent with the terms of this Agreement. Notwithstanding any permitted subcontracting, subject to Section 6.3, Seller shall remain liable for the performance of any obligations hereunder that it delegates to a subcontractor, and Seller hereby expressly waives any requirement that the Company exhaust any right, power or remedy, or proceed directly against such subcontractor, for any obligation or performance hereunder, prior to proceeding directly against Seller.

3.3Pass-Through Agreements    . Subject to this Section 2.3, the Company hereby consents to Seller’s subcontracting and delegation to the Pass-Through Contractors of the Ongoing Trials-related services set forth in the Pass-Through Agreements. Within seven (7) Business Days after the Effective Date, Seller shall instruct each of the Pass-Through Contractors to copy the Company’s Transition Manager on all email communications with respect to all matters pertaining to the Ongoing Trials (but not with respect to Seller’s unrelated business or products) and to provide to the Company, at the same time as the Pass-Through Contractor provides to Seller, all updates, reports, documentation and other information relating to the Ongoing Trials to be provided under the Pass-Through Agreements; provided, however, that in the event the Pass-Through Contractor fails to follow such instructions with respect to any such communications, Seller shall promptly inform the Company of all such communications from such Pass-Through Contractor related to the status, cost and progress of, and other substantive matters with respect to the Ongoing Trials. For clarity, Seller shall not have any liability for any Pass-Through Contractor’s failure to follow such instructions. From and after the Effective Date, subject to Section 2.4.3, Seller shall continue to interact directly with the Pass-Through Contractors and shall have the authority to make ordinary course decisions with respect to all matters pertaining to the Ongoing Trials; provided, that, in the course of interacting with the Pass-Through Contractors or making decisions pertaining to the Ongoing Trials, Seller shall not take any action that (a) would cause Seller to breach any Pass-Through Agreement or to violate any Applicable Laws or (b) is inconsistent with the Company’s reasonable directions to Seller or final decision-making authority as provided in Section 2.4.3. Subject to the foregoing, Seller shall continue to perform its obligations and comply with all of the terms applicable to Seller under the Pass-Through Agreements (except to the extent any act or omission by the Company materially inhibits or prevents Seller’s performance of such obligations) and, at the request of the Company, Seller shall enforce the provisions and obligations of the Pass-Through Contractors under each of the Pass-Through Agreements for the benefit of the Company. Seller covenants and agrees that it shall not amend, waive any right under, voluntarily terminate, or, except as set forth in this Section 2.3, take any other material action under or with respect to any of the Pass-Through Agreements as they relate to the Ongoing Trials without the Company’s prior written consent. If the Company consents to the subcontracting or delegation to a Third Party of any Services in accordance with Section 2.2, any agreement between Seller and such Third Party governing the performance by such Third Party of such Service shall be deemed a Pass-Through Agreement and such agreement and the performance of such Service shall be subject to this Section 2.3.

3.4Services Standard; Applicable Employees    .

3.4.1The Company acknowledges that Seller is not in the business of providing services to Third Parties and is entering into this Agreement only in connection with the transactions contemplated by the Stock Purchase Agreement. Seller shall perform the Services in accordance with the terms and conditions of this Agreement, including the applicable Work Order, with substantially the same degree of skill, quality and care utilized by Seller (or its Affiliates) in performing such activities for the Company prior to the Effective Date (subject to any requirements of Section 2.3 and this Section 2.4) and in compliance with all Applicable Laws.

3.4.2Seller shall ensure that its (and its Affiliates’) employees who perform Services (the “Applicable Employees”) are properly trained and sufficiently qualified and experienced to perform the Services in accordance with this Section 2.4. Without limiting the foregoing, unless the Company agrees otherwise in writing (such agreement not to be unreasonably withheld, conditioned or delayed), Seller shall utilize in the performance of the Initial Services the same employees utilized by Seller in performing such activities for the Company prior to the Effective Date, or employees of Seller who have substantially equivalent training, qualifications and experience as such employees, provided, that in each case such employees (including those utilized to perform activities for the Company prior to the Effective Date) meet the standards set forth in this Section 2.4. Notwithstanding the foregoing, subject to resignations or terminations in accordance with Seller’s policies, Seller shall utilize each of the Applicable Employees listed in Schedule 2.4.2 (Part A) (each an “Initial Services Key Employee”) to perform the same Initial Services as such Initial Services Key Employee provided for the Company prior to the Effective Date, and Seller shall not diminish or alter (through transfer, reassignment or otherwise) the scope of any Initial Services or any obligations with respect to the Initial Services performed by any Initial Services Key Employee prior to completion of the applicable Initial Services and expiration of the Service Period applicable to the Initial Services assigned to such Initial Services Key Employee, without the prior written consent of the Company. Seller shall notify the Company (through the Transition Managers) if any Initial Services Key Employee provides notice of resignation to or is terminated by Seller in accordance with Seller’s policies. With respect to the performance of Additional Services during the Additional Service Period, Seller shall utilize each of the Applicable Employees listed in Schedule 2.4.2 (Part B) (each an “Additional Services Key Employee”) to perform the Additional Services; provided, that should any Additional Services Key Employee becomes unavailable to perform any Additional Service(s) due to resignation, termination, death, disability, illness or Seller’s prioritization of internal resources or projects, Seller shall have the right to assign such Additional Service(s) to another employee with the requisite training, qualifications, availability and experience as is required to perform such Additional Service(s) as set forth in the Additional Work Order. In the event any Additional Service(s) performed by any Additional Services Key Employee are reassigned to another employee due to Seller’s prioritization of internal resources or projects, Seller agrees that such Additional Services Key Employee will coordinate with such other employee to ensure there is appropriate knowledge transfer and oversight to perform such Additional Service(s). Except as otherwise permitted under this Agreement, Seller shall not diminish or otherwise alter the scope of any Additional Service prior to the completion of such Additional Service or the expiration or termination of the Service Period applicable to such Additional Service, without the prior written consent of the Company.

3.4.3Notwithstanding anything to the contrary herein, the Company shall have the authority to reasonably direct the Applicable Employees in the manner of performing the Services and shall have final decision-making authority with respect to matters that, in the Company’s sole judgment, would be expected to materially affect the Ongoing Trials, the time to completion thereof or materially affect the cost of completing the Ongoing Trials, or the Services themselves. All of the Company’s directions to Applicable Employees shall be made through Seller’s Transition Manager, or (a) with respect to Initial Services, the Initial Services Key Employees or (b) with respect to Additional Services, the Additional Services Key Employees. Seller’s Transition Manager and the Initial Services Key Employees or Additional Services Key Employees (as the case may be) shall have the responsibility within Seller’s organization for interacting directly with the other Applicable Employees and shall have the authority to cause such other Applicable Employees to carry out the Company’s reasonable directions. Seller shall instruct the Applicable Employees to, and shall take reasonable actions to ensure that the Applicable Employees shall, (a) comply with all reasonable directions relating to the Services given by the Company (and communicated through Seller’s Transition Manager and the Initial Services Key Employees or Additional Services Key Employees (as the case may be) and (b) respond promptly to the Company’s reasonable inquiries relating to the Services. The Company shall instruct its employees with responsibility for carrying out the Company’s rights and duties under this Agreement or otherwise with respect to the Ongoing Trials (the “Applicable Company Employees”) to, and shall take reasonable actions to ensure that such employees shall respond promptly to Seller’s reasonable inquiries relating to the Services. In the event that either Party (the “Notifying Party”) reasonably believes that the Applicable Employees or the Applicable Company Employees, as applicable, are failing to promptly respond to such inquiries or that the Applicable Employees are failing to comply with all reasonable directions relating to the performance of the Services given by the Company in accordance with this Section 2.4.3, the Notifying Party’s Transition Manager shall notify the other Party’s Transition Manager of such unresponsiveness and the Transition Managers shall discuss and work together in good faith to resolve any impact such failure may have to the provision of the Services. In the event such failures to promptly respond or to comply with reasonable directions are not resolved within ten (10) Business Days after the Notifying Party’s Transition Manager provides notice of such failure(s) to the other Party’s Transition Manager, or if any such failure that is successfully resolved by the Transition Managers recurs two (2) or more times in the three (3) month period following such resolution, such failure(s) shall be deemed to be a material breach of this Agreement.

3.4.4Each Party acknowledges and agrees that the Applicable Employees are not, and are not intended to be or be treated as, employees of the Company or any of its Affiliates, and that such individuals are not, and are not intended to be, eligible to participate in any benefits programs or in any “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, that may be sponsored by the Company or any of its Affiliates or that may be offered from time to time by the Company or its Affiliates to its or their own employees. Except as expressly set forth in this Agreement, from and after the Effective Date, Seller’s and the Company’s respective obligations and rights with respect to the Company Business shall be as set forth in the Stock Purchase Agreement and any applicable other Ancillary Agreements. For the avoidance of doubt, the Services do not include, and Seller shall have no obligation to provide, any of the Excluded Services; provided that, for clarity, Seller shall provide oversight and management incidental to the Services.

3.4.5With respect to the Initial Services, Seller shall perform its obligations and comply with all of the terms applicable to Seller under all of its agreements with Third Parties that perform Services for the benefit of Seller or its Affiliates as of the Effective Date and with any other permitted Third Party subcontractors (except to the extent any act or omission by the Company prevents Seller’s performance of such obligations).

3.5Ongoing Trials; Drug Approval Applications    .

3.5.1As set forth in the Initial Work Order, Seller oversaw and managed the Ongoing Trials, including the services and activities of the Pass-Through Contractors under the Pass-Through Agreements, subject to Section 2.3 and the control and direction of the Company as set forth in this Agreement. Seller held and maintained the Compound INDs as the sponsor of the Ongoing Trials during the Service Period for the Services set forth in the Initial Work Order relating to the Ongoing Trials (such Services, the “Clinical Trial Services” and such period, as the same may be modified in a Change Order or terminated by the Company pursuant to Section 7.2.1, the “Clinical Trial Service Period”). As sponsor of the Ongoing Trials, Seller represents and warrants it complied with all Applicable Laws, including regulations applicable to sponsors under 21 CFR 312. As of the Restated Effective Date, Seller and the Company filed all documents required to be filed with each applicable Governmental Entity and took all other actions as reasonably may have been required to effectuate the transfer of the Compound INDs from Seller to the Company in the Territory in accordance with Applicable Laws (the date on which the Compound INDs were transferred from Seller to the Company in the Territory in accordance with Applicable Laws, the “Transfer Date”). After the Transfer Date, all Drug Approval Applications (other than the Compound INDs) shall be filed under the Company’s name and the Company may designate Seller as its agent if the Company deems it necessary or useful for Seller, in the course of performing the Services, to respond to inquiries from Governmental Entities with respect to such filings. Seller shall not have any obligations with respect to post-approval obligations imposed by relevant Governmental Entities in connection with the grant of any Drug Approval Application.

3.5.2The Company commits to (a) complying with the reporting requirements for important safety information: reporting any unexpected fatal or life-threatening adverse events associated with the use of the Compound or any Product by telephone or fax no later than seven (7) days after initial receipt of the information; and reporting any adverse experiences associated with the use of the Compound or any Product that is both serious and unexpected no later than fifteen (15) days after initial receipt of the information; and submitting annual reports within sixty (60) days of each anniversary of the date on which each US IND went into effect, (b) continue the agreements, promises, and conditions made by Seller to FDA and contained in the application with respect to each US IND, and (c) notify FDA of any changes made to any US IND in accordance with the new principles and requirements identified under 21 CFR 312 as clinical trials continue.

3.5.3Subject to Section 2.7.1, Seller shall be responsible for preparing and submitting reports originating from the Ongoing Trials, including the End of Study Report with respect to the Ongoing Trials, to applicable regulatory authorities, ethics committees, institutional review boards and investigative sites as required by Applicable Law. Subject to Section 2.7.1, Seller shall provide to the Company the final version of the End of Study Report with respect to the Ongoing Trials upon submission to the applicable regulatory authority or, if not submitted, within twelve (12) months after the end of data collection.

3.5.4Seller shall be required to perform the obligations set forth in Section 2.5.1 only during the Initial Service Period and shall not be required to perform such obligations during the Additional Service Period.

3.5.5During the Additional Service Period, Seller shall be responsible for performing only those Additional Services expressly set forth in the Additional Work Order and shall be compensated for such work in accordance with Section 3.1. Any additional tasks and activities not contained within the Additional Work Order that the Company requests that Seller perform must be agreed upon by both Parties and, if so agreed upon, must be documented in accordance with Section 2.1. For clarity, Seller is not under any obligation to agree to provide any additional tasks or activities requested by the Company.

3.6Assigned Contracts    . Prior to or promptly following the Clinical Trial Service Period (with respect to Contracts pertaining to the Clinical Trial Services) and at any time during the Term (with respect to other Contracts), the Parties will agree on which Contracts, if any, need to be assigned by Seller to the Company (collectively, the “Assigned Contracts”). As promptly as practicable thereafter, subject to the receipt of all necessary Consents of Third Parties, Seller shall assign, transfer, convey and deliver to the Company each of the Assigned Contracts. In the event the Consent of a Third Party is required in order to so assign, transfer, convey or deliver an Assigned Contract, Seller shall use commercially reasonable efforts to obtain such Consent for a period of six (6) months following the date on which the Parties agree to assign the applicable Assigned Contract, provided, that Seller shall have no obligation to (a) make any payments to any Third Party or incur any obligations in respect of any such Consent which payments are not subject to reimbursement by the Company or which obligations are not assumed by the Company hereunder, or (b) enter into any alternative arrangements that are not commercially reasonable or that are not subject to reimbursement by the Company hereunder, in either case, in the event that any such Consent is not obtained. In the event Seller is unable to obtain the necessary Consent to assign any Assigned Contract, Seller shall continue to enforce such Assigned Contract for the benefit of the Company for the six (6) month period following the date on which the Parties agree to assign the applicable Assigned Contract or if longer, for so long as any ongoing obligations of the Third Party under such Assigned Contract (such as confidentiality obligations) remain in effect (provided that the Company pays or otherwise performs any corresponding obligation under any such Assigned Contract). The Company shall reasonably cooperate with Seller in its efforts to obtain any Third Party Consents contemplated by this Section 2.6.

3.7Regulatory Services    .

3.7.1In the event Seller, in the course of performing the Services, is required to submit any Regulatory Documentation to a Governmental Entity, Seller shall provide the Company a draft of such Regulatory Documentation as far in advance of the intended date of submission as reasonably possible and shall incorporate any comments thereto provided by the Company. Seller shall promptly notify the Company of any other Regulatory Documentation received from or to be submitted to any Governmental Entity, including correspondence, meeting minutes and summaries received by Seller from, or to be submitted by Seller to, any Governmental Entities, and shall provide the Company with copies thereof within five (5) Business Days after receipt thereof or, if such documents are prepared by Seller for submission to Governmental Entities, sufficiently in advance of such submission so as to allow the Company to review and finalize the content of such submission with Seller. Notwithstanding the foregoing, Seller shall not be required to delay a regulatory submission to any Governmental Entity or incorporate any comments of the Company to the extent doing so would cause Seller to violate the requirements of a Governmental Entity or Applicable Laws. For clarity, the terms of this Section 2.7.1 shall apply to correspondence with, inquiries or requests from, or reporting to Governmental Entities regarding adverse drug reactions/experiences, safety data and other information concerning the safety of Product or the Compound (“Safety Information”).

3.7.2Seller shall provide the Company with reasonable advance notice of all meetings, conferences and discussions scheduled with any Governmental Entity concerning the Compound or Product, and shall incorporate any input from the Company in preparing for such meetings, conferences or discussions; provided, that Seller shall not be required to incorporate any input from the Company to the extent doing so would cause Seller to violate the requirements of a Governmental Entity or Applicable Laws. One or more representatives of the Company shall have the right to attend and participate in all such meetings, conferences, and discussions to the extent not prohibited by Applicable Law or the applicable Governmental Entity, and Seller shall facilitate such participation. If the Company elects not to participate in such meetings, conferences or discussions, Seller shall provide the Company with written summaries of such meetings, conferences or discussions as soon as reasonably practicable after the conclusion thereof.

3.7.3During the Initial Service Period, Seller shall be responsible for submitting the DSUR involving the Product (the “Product DSUR”) or the Executive Summary of the Product DSUR to applicable regulatory authorities, ethics committees, institutional review boards and investigative sites. Before submitting the final version of the Product DSUR, Seller shall send a draft to the Company for review and comment as far in advance of the intended date of submission as reasonably possible and Seller shall incorporate any comments thereto provided by the Company. Notwithstanding the foregoing, Seller shall not be required to incorporate any of the Company’s comments to the extent doing so would cause Seller to violate the requirements of a Governmental Entity or Applicable Laws. Seller shall provide the final version of the Product DSUR to the Company at the same time that Seller submits the Product DSUR to any regulatory authorities. For purposes hereof, “Development Safety Update Report” or “DSUR” shall mean a periodic summary of safety information for regulatory authorities, including benefit-risk considerations, for a drug, biologic or vaccine under development or study, prepared by the sponsor of the clinical study(ies).

3.7.4During the Initial Service Period, Seller shall be responsible for submitting the Investigational New Drug (IND) Safety Reports for the Product to applicable regulatory authorities. Before submitting the final version of such IND Safety Report, to the extent practicable, Seller shall send a draft to the Company for review and comment as far in advance of the intended date of submission as reasonably possible and Seller shall incorporate any comments thereto provided by the Company. Notwithstanding the foregoing, Seller shall not be required to incorporate any Company comments to the extent doing so would cause Seller to violate the requirements of a Governmental Entity or Applicable Laws. Seller shall provide the final version of the IND Safety Report for the Product to the Company at the same time that Seller submits the IND Safety Report for the Product to any regulatory authorities.

3.7.5On a monthly basis during the Initial Service Period, Seller shall provide to the Company listings which provide ICSR submission data to the EMA occurring during the previous month. The listings shall include the number of ICSRs submitted, the submission due dates and the dates submitted. In addition, Seller shall forward to the Company the expedited ICSRs within five (5) Business Days after submission to the EMA. In the event any ICSRs were submitted late to the EMA or the FDA: (a) Seller shall provide the Company a written explanation of the delay and corrective action taken or proposed to be taken; (b) the Parties shall discuss the matter and align on corrective action; and (c) Seller shall implement such corrective action and any other necessary safeguards to ensure that no further late reports are submitted. For purposes of this Agreement, “Individual Case Safety Report” or “ICSR” means a document that presents the most complete, relevant information provided by a reporter to describe an individual subject’s adverse event(s)/adverse reaction(s) related to the administration of one or more (investigational) medicinal products at a particular point in time.

3.7.6Seller shall be required to perform the obligations set forth in Section 2.7.1 through Section 2.7.5 only during the Initial Service Period and shall not be required to perform such obligations during the Additional Service Period.

3.7.7Consistent withSection 2.5.5, during the Additional Service Period, Seller shall perform only those regulatory Services set forth in the Additional Work Order for the New Drug Application (within the meaning of the FDCA) submitted or to be submitted by the Company for a Product relating to the E5501-G000-310 and E5501-G000-311 studies (the “NDA”).

3.8Pharmacovigilance    . Until the later of: (i) the expiration of the Initial Service Period, and (ii) the Transfer Date, Seller shall bear responsibility for pharmacovigilance relating to the Compound and Products, including for the timely reporting of all adverse drug reactions/experiences and aggregate safety data relating to the Compound. As part of the Initial Services, Seller shall communicate with the Company regarding Product pharmacovigilance matters. Without limiting the foregoing, Seller shall instruct Quintiles, Inc. (or any successor entity with respect to any acquisition or merger of Quintiles, Inc.) to copy the Company’s Transition Manager on all communications transmitting Safety Information to Seller, and in the event Seller receives any Safety Information that meets the criteria for a Serious, Suspected Adverse Drug Reaction (as defined in ICH E2A) in a communication to which the Company is not copied, Seller shall send the source documents including such Safety Information that were transmitted by Quintiles, Inc. (or any successor entity with respect to any acquisition or merger of Quintiles, Inc.) to the Company, or other mutually agreed format, via email or fax as soon as possible, but, in any event, not later than one (1) Business Day after Seller receives such Safety Information, and, in the event Seller receives any information concerning any investigation, inquiry or other action by any Governmental Entity concerning the safety of the Compound or Product, Seller shall send such information to the Company via email or fax as soon as possible, but in any event, no later than two (2) days after Seller receives notice of such investigation, inquiry or other action. Seller agrees to reasonably cooperate with the Company to make available to the Company such Safety Information as may be reasonably requested by the Company. As soon as reasonably practicable after the Initial Service Period or such earlier time as may be requested in writing by the Company, Seller shall take all actions as reasonably may be required to effectuate the transfer to the Company of all Safety Information, including the portion of Seller’s global safety database that pertains to the Compound and the Products. In the event of any inconsistency between Section 2.7 and Section 2.8 regarding the time periods for transmittal to the Company of Regulatory Documentation that constitutes Safety Information, the time periods in Section 2.8 will govern.

3.9Location of Services Provided; Travel Expenses    . Seller shall provide the Services to the Company, as applicable, from locations of Seller’s choice in its sole discretion unless Services are required to be performed at a specific location identified in the applicable Work Order. Should the provision of Services require any personnel of Seller to travel (a) with respect to Initial Services, beyond 50 miles from his or her employment location or (b) with respect to Additional Services, beyond his or her employment location, in each case ((a) and (b)), the Company shall reimburse Seller for all reasonable travel-related costs, consistent with Seller’s travel policy, which costs shall be deemed Other Seller Costs and shall be reimbursed in accordance with Section 3.2; provided, however, that the Company shall have no obligation to reimburse Seller for such travel-related costs unless such travel is pre-approved by the Company and any expenses in excess of $1,000 associated with such travel are pre-approved by the Company.

3.10Transition Management    . Each Party designated an appropriate point of contact for all questions and issues relating to the Services (the “Transition Managers”). Each of Seller and the Company may, by written notice given to the other such Party, replace its Transition Manager. The Transition Managers shall meet at least twice per month, or on such other schedule as mutually agreed upon by Seller and the Company, during the Term in person or telephonically in order to discuss the status of the Services and to manage any open issues relating to the Services. In addition, if and as reasonably requested by the Company, the Transition Managers will establish transition teams composed of representatives from each Party who have the requisite experience and authority to enable such representatives to monitor, coordinate and make decisions on behalf of the Parties with respect to the Services (or any particular Service).

3.11Cooperation    . Each of the Company and Seller shall use commercially reasonable efforts to cooperate with one another in all matters relating to the provision and receipt of the Services. Without limiting the generality of the foregoing sentence, the Company shall permit Seller, its Affiliates and its and their employees and agents reasonable access, upon reasonable notice during regular business hours, to such personnel of the Company as are involved in receiving or overseeing the Services, and data and records of the Company as reasonably requested by Seller to facilitate Seller’s performance under this Agreement. Seller shall be excused from performing any obligation under this Agreement to the extent the Company’s failure to perform its obligations under this Agreement prevents Seller’s performance of such obligation, including to the extent any Service is dependent on the Company timely providing to Seller or any of its Affiliates information, materials, products and like items in a manner substantially similar in nature, quality and timeliness to the information, materials, products and like items provided by the Company to Seller and its Affiliates at the time of the Closing and the Company fails to so provide such information, materials, products and like items; provided, however, in the event that the Company fails to provide such information, materials, products and like items, the Transition Manager of Seller shall provide notice of such failure to the Transition Manager of the Company and the Transition Managers shall discuss and work together in good faith to resolve any impact such failure may have to the provision of the Services. Upon the Company’s request, Seller shall reasonably cooperate with the Company to renegotiate the terms of any existing agreement with a Third Party contractor that is required for Seller to provide any Services in order to reduce (to the extent reasonably possible) the amounts paid by Seller to such Third Party contractor in connection with the Services. The Company shall reimburse Seller for all actual, reasonably incurred, documented, out-of-pocket costs and expenses incurred by Seller or its Affiliates in connection with such cooperation, which costs and expenses shall be deemed Other Seller Costs and shall be reimbursed in accordance with Section 3.2.

3.12Documentation    . As part of the Services, Seller shall create and keep (and shall cause its Affiliates and permitted subcontractors to create and keep) accurate records, notes, reports, writings and other documentation reflecting all work done and results achieved in performance of the Services (collectively, “Documentation”), in tangible or electronic form, in a timely, accurate, complete and legible manner. Seller shall (and shall cause its Affiliates and permitted subcontractors to) maintain the Documentation during the Term and for the longest of (a) five (5) years after expiration or termination of this Agreement, (b) two (2) years after FDA approval of the New Drug Application for the Product, or (c) the retention period required by Applicable Laws, if any (“Retention Period”).During the Retention Period, upon reasonable advanced notice during regular business hours, Seller shall make the Documentation available for inspection and copying by the Company, at the Company’s sole cost and expense. After the Retention Period, Seller shall provide the Company at least sixty (60) days’ written notice before destroying any Documentation and, if requested by the Company, Seller shall transfer the Documentation to the Company or its designee at the Company’s expense.

3.13Exclusions    .Notwithstanding anything herein to the contrary, in no event shall Seller or any of its Affiliates be (a) obligated to provide any Services that would be unlawful for Seller to provide or that would require Seller to violate Applicable Law; (b) obligated to hire any additional employees to perform the Services or maintain the employment of any specific employee, except as set forth in Section 2.4.2 and, if applicable, the applicable Work Order; (c) subject to Section 2.4, obligated to hire replacements for employees that resign, retire or are terminated; (d) obligated to enter into retention agreements with employees or otherwise provide any incentive beyond payment of regular salary and benefits; (e) subject to Section 2.4, prevented from transferring after the Effective Date any employees (other than the Initial Key Employees) who were supporting the Company Business as of the Effective Date to support other businesses of Seller or its Affiliates or to assume other roles with Seller or its Affiliates to the extent such employees are not required to provide Services; or (f) subject to Section 2.4, prevented from determining, in its sole discretion, the individual employees (other than the Initial Key Employees) who will provide Services.

3.14Seller’s Representations, Warranties and Covenants. Seller hereby represents, warrants and covenants to the Company as follows:

(a)    except to the extent such performance is expressly excused by this Agreement, it shall perform the Services in compliance with the applicable Work Order, all Applicable Laws and the standards set forth in Section 2.4; and

(b)    neither it, nor any of its Affiliates, nor to Seller’s Knowledge, any of their respective officers, employees, agents, representatives, subcontractors or other persons used in the performance of its obligations under this Agreement has been debarred or suspended under 21 U.S.C. §335(a) or (b), excluded from a federal health care program, debarred from federal contracting, or convicted of or pled nolo contendere to any felony, or to any federal or state legal violation (including misdemeanors) relating to prescription drug products or fraud (“Debarred/Excluded”). Seller shall promptly notify the Company if Seller becomes aware that it, any of its Affiliates, or any officer, employee, agent, representative, subcontractor or other Person who is performing any activities under this Agreement is or becomes Debarred/Excluded or receives notice of action or threat of action to be Debarred/Excluded. In the event that Seller, any of Seller’s Affiliates or any officer or employee of Seller or any of its Affiliates who is performing any activities under this Agreement is or becomes Debarred/Excluded or receives notice of action or threat of action to be Debarred/Excluded, the Company shall have the right to terminate this Agreement. In the event that any other Person who is performing any activities under this Agreement on behalf of Seller is or becomes Debarred/Excluded or receives notice of action or threat of action to be Debarred/Excluded, upon notice from the Company, Seller shall promptly terminate the agreement under which such activities are provided.

3.15Exclusion of Warranties    . EXCEPT AS PROVIDED IN THIS AGREEMENT OR THE STOCK PURCHASE AGREEMENT, NEITHER SELLER NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES.

ARTICLE 4COMPENSATION

4.1Services Fees    . In consideration for the performance of the Initial Services by Seller, the Company shall pay the Initial Services Fees with respect to the applicable Initial Services in accordance with the Budget. The Company shall not be obligated to pay to Seller (a) for any Initial Service, any amount in excess of the Initial Service Fee amount set forth in the Budget for performance of such Initial Service or (b) Initial Services Fees that exceed, in the aggregate, $8,540,000, unless, in each case ((a) and (b)), the Company consents to do so in writing. In consideration for the performance of the Additional Services by Seller, the Company shall pay Seller (i) a service fee on a Calendar Quarter basis equal to (A) [***] for each of the second, third and fourth Calendar Quarters of the 2018 Calendar Year and (B) [***] for the first and second Calendar Quarter of the 2019 Calendar Year and (ii) the FTE Costs payable for the Additional Services ((i) and (ii), collectively, the “Additional Services Fees”). For purposes of this Agreement, the “Services Fees” means, collectively, the Initial Services Fees and the Additional Services Fees.

4.2Out-of-Pocket Costs    . In addition to the Services Fees, the Company shall reimburse Seller for (a) all amounts paid by Seller to the Pass-Through Contractors for performance of Ongoing Trials-related services under the Pass-Through Agreements, (b) those out-of-pocket costs and expenses described in the Budget, the Additional Work Order or any Change Order; (c) except as provided in clauses (d) through (g) immediately below, any other actual, reasonably incurred, documented, out-of-pocket costs and expenses paid by Seller or its Affiliates to Third Party contractors in order to perform the Services; ((a) through (c), collectively, “Out-of-Pocket Costs”); (d) fees associated with securing any Consents required from Third Party contractors pursuant to Section 2.6; (e) actual, reasonably incurred, documented, out-of-pocket costs or expenses incurred by Seller, its Affiliates or subcontractors for the extraction, conversion and transfer of data required to be provided to the Company under this Agreement (to the extent not included in the Services); (f) actual, reasonably incurred, documented, out-of-pocket costs or expenses incurred by Seller or its Affiliates in connection with the delivery or destruction of Clinical Trial Materials pursuant to Section 4.3; (g) Seller’s and its Affiliates’ actual, reasonably incurred, documented, out-of-pocket costs and expenses for the transfer and delivery to the Company of the tangible TSA Assets and Company Property contemplated by Section 7.3;(h) Seller’s and its Affiliates’ actual, reasonably incurred, documented, out-of-pocket costs and expenses contemplated by Section 2.11; and (i) all reasonable travel-related costs contemplated by and subject to Section 2.9 ((d) through (i), collectively, “Other Seller Costs”); provided, that Seller provides the Company with reasonably detailed documentation identifying such Out-of-Pocket Costs and Other Seller Costs and, upon the Company’s request, provides the Company with receipts and other reasonable supporting documentation. Except to the extent a lower threshold is provided for in this Agreement, to the extent any Out-of-Pocket Costs (other than as described in clause (a) immediately above) or Other Seller Costs are not included in the Budget, the Additional Work Order or any Change Order, Seller shall not incur any such costs in excess of [***] and the Company shall have no obligation to reimburse any such costs in excess of [***], unless approved in advance in writing by the Company. In addition, Seller shall allow the Company to participate in discussions with Seller and any Third Party regarding any agreement or other arrangement to pay Out-of-Pocket Costs (other than as described in clause (a) immediately above) or Other Seller Costs (that, in either case, are not included in the Budget, the Additional Work Order or any Change Order) in excess of [***]. Out-of-Pocket Costs and Other Seller Costs shall be reimbursed at actual cost without markup and, notwithstanding anything herein to the contrary, shall not include any late fees or other penalties incurred by Seller in connection therewith except to the extent caused by the Company. The Company reserves the right to decline to pay unsupported or unexplained costs or expenses and, except as provided in this Section, any costs or expenses, not included in the Budget, the Additional Work Order or any Change Order.

4.3Invoicing    .Seller shall, on a Calendar Quarter basis, invoice the Company for applicable Services Fees, Out-of-Pocket Costs and Other Seller Costs. Seller will not invoice Company for FTE Costs for Additional Services that are not performed. To the extent applicable, Services Fees (other than those described in clause (i) of Section 3.1) will be prorated for any partial Calendar Quarter based on the actual number of days in such Calendar Quarter for which Seller was providing the applicable Services relative to the total number of days in such Calendar Quarter. All Services Fees, Out-of-Pocket Costs and Other Seller Costs shall be billed in arrears.

4.4Excess Costs. If the aggregate amount of Initial Services Fees and Out-of-Pocket Costs incurred in connection with the performance of the Initial Services actually paid or reimbursed by the Company to Seller in cash hereunder (including through payment of the principal amount of the Note) exceeds $51,040,000 (the “Aggregate Expense Amount”), Purchaser shall be entitled to deduct such excess amounts from the Milestone Payments payable by the Company under Section 1.02(a) of the Stock Purchase Agreement in accordance with the terms and conditions of such section.

4.5Due Date    .

4.5.1The Company shall pay the undisputed portion of each invoice for Services Fees, Out-of-Pocket Costs and Other Seller Costs in cash promptly, but in no event later than forty-five (45) days, after the date of receipt of such invoice and acceptance of any deliverables to be provided. If there is any dispute concerning any portion of an invoice for Services Fees, Out-of-Pocket Costs or Other Seller Costs (an “Invoice Dispute”) that is not resolved by the Parties within thirty (30) days after the date of such invoice, such Invoice Dispute shall be referred for decision to the Accountant. The decision of the Accountant shall be in writing and, except for manifest error on the face of the decision, shall be binding on both Seller and the Company. The Company shall bear and pay 100% of the cost of the Accountant unless the Accountant determines all matters in such Invoice Dispute in favor of the Company, in which case Seller shall bear and pay 100% of the cost of the Accountant. Any amount payable by the Company or Seller based on the Accountant’s decision shall be paid within fourteen (14) days after the date of such decision in accordance with this Section 3.5.1. Each Party shall reasonably cooperate with the Accountant in connection with the resolution of any Invoice Dispute.

4.5.2Any payments under this Agreement that are not made on or before the applicable due date shall bear interest at the rate of the Prime Rate, as reported in the print edition of The Wall Street Journal, Eastern Edition, plus two percent (2%), on the payment due date or, if unavailable, on the latest date prior to the payment due date on which such rate is available, or the maximum rate allowed by Law, whichever is less, calculated on a daily basis, based on the actual number of days elapsed from the payment due date to the date of actual payment.

4.6Taxes    . The Company shall be responsible for all Taxes, if any, imposed in connection with this Agreement or the performance of Services, including any value added taxes, sales taxes, consumption taxes and other similar Taxes on the provision or receipt of the Services hereunder, exclusive of Taxes on Seller’s income. If Seller or any of its Affiliates are required to pay such Taxes applicable to the Services, the Company shall promptly reimburse Seller therefor. For the avoidance of doubt, the requirements of this Section 3.6 shall not apply to any employment-related taxes, income taxes or withholding and shall only apply to Taxes applicable to the Services. The amounts payable by the Company to Seller pursuant to this Agreement (“Payments”) shall not be reduced on account of any Taxes unless required by Applicable Law. Seller alone shall be responsible for paying any and all Taxes (other than withholding Taxes required to be paid by Purchaser) levied on account of, or measured in whole or in part by reference to, any Payments it receives. The Company shall deduct or withhold from the Payments any Taxes that it is required by Applicable Law to deduct or withhold; provided, however, if Seller is entitled under any applicable Tax treaty to a reduction of rate of, or the elimination of, or recovery of, applicable withholding Tax, it shall deliver to the Company or the appropriate Governmental Entity (with the assistance of the Company to the extent that this is reasonably required and is expressly requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve the Company of its obligation to withhold Tax, and the Company shall apply the reduced rate of withholding, or dispense with the withholding, as the case may be, to the extent it complies with the applicable Tax treaty. If, in accordance with the foregoing, the Company withholds any amount, it shall make timely payment to the proper Taxing Authority of the withheld amount, and send to Seller proof of such payment within sixty (60) days following that payment. The Company shall not change its domicile to a jurisdiction outside of the United States or assign this Agreement to any Person that is domiciled outside of the United States.

4.7Records; Audit    .

4.7.1Each Party shall keep and maintain, and shall cause its Affiliates to keep and maintain, complete and accurate records and books of account documenting all expenses and all other data necessary for the calculation of the amounts payable to any other Party under this Agreement consistent with its standard procedures and policies in the ordinary course of business for a period of five (5) years after such expenses are incurred or, if longer, any retention period required by Applicable Law. In the event of any inconsistency between Section 2.12 and Section 3.7.1 regarding the document retention obligations of Seller, Section 2.12 will govern.

4.7.2Upon either Seller’s or the Company’s request, the other such Party shall, and shall cause each of its Affiliates engaged in the performance of activities under this Agreement to, permit the requesting Party and its Representatives to audit the records and books of account maintained by it pursuant to Section 3.7.1 in order to confirm the accuracy and completeness of such records and books of account and all payments hereunder; provided, that no Party shall be entitled to exercise its audit rights under this Section 3.7.2 more than once per Calendar Year, unless, in any case, any prior audit resulted in an adjustment to amounts due or the Payments hereunder. The Party requesting the audit shall bear all out-of-pocket costs and expenses incurred in connection with any audit performed pursuant to this Section 3.7.2;provided, however, that the audited Party shall reimburse the Party requesting the audit for all reasonable costs and expenses incurred by such Party in connection with such audit if any such audit identifies an underpayment to the auditing Party or an overpayment to the audited Party hereunder in excess of 10% of the amounts actually payable. In any case, the full amount of the underpayment or overpayment as applicable shall be payable to the applicable Party plus accrued interest at the rate set forth in Section 3.5.2. All information disclosed pursuant to this Section 3.7.2 shall be subject to the non-disclosure and non-use provisions set forth in Article 5.

4.7.3Residual Pay-Off Amount. In connection with the Parties’ Pay-Off Letter, dated March 16, 2018, relating to the Note (as defined in such Pay-Off Letter), the Parties acknowledge and agree that the Pay-Off Amount (as defined in such Pay-Off Letter) did not include any amounts payable for the performance of the Initial Services under the Original Agreement from and after January 1, 2018. Accordingly, Seller shall invoice, and the Company shall pay such amounts in accordance with this Agreement.

ARTICLE 5OWNERSHIP OF ASSETS: INTELLECTUAL PROPERTY AND RIGHTS OF REFERENCE; INVENTORY

5.1Ownership    .

5.1.1This Agreement and the performance of the Services hereunder shall not affect the ownership of any Intellectual Property rights or other assets as set forth in the Stock Purchase Agreement. For the avoidance of doubt, upon the Closing, Seller shall not retain title to, or ownership rights in, the Company or any Owned Intellectual Property or other assets of the Company, other than the TSA Assets, the Prohibited Registered IP, the Seller Manufacturing Technology, the Trademarks and certain domain names included in the Registered IP (which, for the avoidance of doubt, shall be licensed and subsequently transferred to the Company in accordance with Section 5.10(b), Section 5.10(c), Section 5.10(f) and Section 5.10(g) of the Stock Purchase Agreement, as applicable).

5.1.2Except for any Seller Intellectual Property and any Third Party Materials, any and all results, products, deliverables (interim or final), reports, data (including raw data, processed data and data summaries), analyses (including analyses of data), inventions, ideas, improvements, documents (including CMC documents), discoveries, designs, drawings, protocols, processes, techniques, formulae, trade secrets, materials, methods, procedures, information, know-how, technology and other Intellectual Property that arise out of, or result from or are derived from, any of the Services or the Ongoing Trials, or that solely relate to the Compound or Products, including Ongoing Trials Information and Documentation but excluding Seller Manufacturing Technology (collectively, “Company Property”) shall be the sole and exclusive property of Company and shall be deemed the Confidential Information of the Company and subject to the confidentiality and non-use provisions of Article5. Seller shall fully disclose to the Company any and all Company Property, whether conceived, reduced to practice, created, developed, derived, generated or otherwise obtained by Seller or its Affiliates or its or their employees, agents, consultants, subcontractors (including the Pass-Through Contractors) or other representatives, alone or jointly with others, promptly upon obtaining or becoming aware of the development, creation, generation, conception or reduction to practice of such Company Property. To the extent any Company Property does not constitute Company Intellectual Property or TSA Assets (which are assigned or licensed to the Company pursuant to the Stock Purchase Agreement), Seller hereby assigns, and shall cause its Affiliates and its and their employees and subcontractors to assign, to Company all rights, title and interest in, to such Company Property. Seller will, at the Company’s request and expense, perform any and all acts necessary to assist the Company in preparing, filing any patent applications and enforcing any patents covering such Company Property, or in otherwise perfecting its rights thereto, without further compensation other than reimbursement of Seller’s reasonable, documented out-of-pocket costs directly and solely relating thereto.

5.1.3Notwithstanding the foregoing, the Company acknowledges and agrees that Seller and its Affiliates own and will retain all right, title and interest in and to inventions, ideas, improvements, documents (including CMC documents), discoveries, designs, drawings, protocols, processes, techniques, formulae, trade secrets, materials, methods, procedures, information, know-how, technology and other Intellectual Property (including Seller Manufacturing Technology) that have been or will be developed by Seller or its Affiliates outside the scope of this Agreement, but excluding Owned Intellectual Property and Product-Specific Manufacturing Technology (collectively, “Seller Intellectual Property”). Seller Intellectual Property shall also include all materials, documents, data (including data contained in case report forms and all pharmacovigilance data and safety database information), information, records and reports that are generated, created, disclosed or learned by Seller in the conduct of the Ongoing Trials to the extent such items are not included in the Ongoing Trials Information or are otherwise not included in the Company Property. Seller shall not, without the Company’s prior written consent, incorporate or integrate any Seller Intellectual Property into any deliverables or other Company Property except as required to perform the Services. Furthermore, Seller shall not, without the Company’s prior written consent, knowingly incorporate or integrate any materials, technology or Intellectual Property of any Third Party (“Third Party Materials”) into any deliverables or other Company Property unless, prior to incorporating such Third Party Materials, Seller shall have obtained from such Third Party any and all rights necessary to enable Seller to perform its obligations under this Agreement, including the granting of the rights as provided in the next sentence. To the extent that Seller incorporates or integrates Seller Intellectual Property or Third Party Materials into Company Property, in order to provide Company freedom-to-operate with respect to Company Property, Seller hereby grants to the Company a perpetual, assignable, sublicensable through multiple tiers, non-exclusive, worldwide, royalty-free, fully paid-up, irrevocable license under the Seller Intellectual Property and under Seller’s rights, title and interest in and to the Third Party Materials (to the extent permitted under any agreement between Seller or any of its Affiliates and the applicable Third Party) to use, make, have made, sell, offer for sale, import, reproduce, prepare derivative works of, display, distribute, disclose or publish Company Property and to Exploit the Compound, Products and otherwise conduct the Company Business.

5.2Limited License    . Solely for and with respect to performance of Services and other activities and obligations under this Agreement during the Term, the Company (on behalf of itself and its Affiliates) hereby grants to Seller and its Affiliates a non-exclusive, royalty-free, fully-paid up, worldwide, non-transferable, sublicensable (without the consent of the Company to any Third Party that performs Services for the benefit of Seller or its Affiliates as of the Effective Date for the purpose of continuing the performance of such Services and otherwise with the prior written consent of the Company), license and right of reference to all Company Intellectual Property, Company Property and all Drug Approval Applications owned by the Company (if any during the Term), necessary or useful to perform the Services hereunder.

5.3Inventory    . As of the Restated Effective Date, Seller, as directed by the Company, has already delivered to the Company or any of its Affiliates control of the existing inventory of packaged, unexpired Clinical Trial Materials for the 310 and 311 studies. To the extent Seller possesses existing bulk tablets of active and placebo Clinical Trial Materials that have not yet expired, the Company shall bear all costs and expenses associated with delivery of such inventory, which, to the extent incurred by Seller, shall be reimbursed in accordance with Section 3.2. Nothing in this Agreement shall limit or alter Seller’s obligations under the Supply Agreement, any future supply agreements between the Parties, Work Order or any Change Order relating to chemistry, manufacturing and controls (“CMC”) activities, including Seller’s obligations relating to manufacture of stability samples and related activities and process and manufacturing development.

ARTICLE 6CONFIDENTIALITY

6.1Confidentiality Obligations    . Each of Seller and the Company shall, and shall cause their respective Affiliates and Representatives to, keep completely confidential and not publish, disclose or use, directly or indirectly, for any purpose, any Confidential Information of the Disclosing Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement (including pursuant toSection 5.2). “Confidential Information” means the terms of this Agreement, the Original Agreement and any information provided by or on behalf of Seller, on the one hand, or the Company, on the other hand (in such capacity, a “Disclosing Party”) to the other (or to any of the other’s Affiliates or Representatives) (collectively, in such capacity, a “Receiving Party”) on or after the Effective Date in connection with the Services, and shall include all memoranda, notes, analyses, compilations, studies and other materials prepared by or for the Receiving Party to the extent containing or reflecting such information; provided, however, that all Company Property, including all Documentation and Ongoing Trials Information, shall be the Confidential Information of the Company, and the Company shall be deemed the Disclosing Party and Seller shall be deemed the Receiving Party of all Company Property regardless of which Party generated, furnished or otherwise disclosed the Company Property. Confidential Information shall not include any information that the Receiving Party can establish by written documentation to:

(a)have been publicly known prior to disclosure by the Disclosing Party or its Affiliates or Representatives to the Receiving Party;

(b)have become publicly known, without fault on the part of the Receiving Party or the Receiving Party’s Representatives, subsequent to disclosure by the Disclosing Party or its Affiliates or Representatives to the Receiving Party;

(c)have been received by the Receiving Party at any time after the Effective Date, other than in connection with the Services, from a source, other than the Disclosing Party or the Disclosing Party’s Affiliates or Representatives, lawfully having possession of and the right to disclose such Confidential Information; or

(d)have been otherwise known by the Receiving Party (based upon written records of the Receiving Party) prior to disclosure by the Disclosing Party or the Disclosing Party’s Affiliates or Representatives to the Receiving Party (excluding Ongoing Trial Information, any information included in the TSA Assets and the Manufacturing Technology).

6.2Permitted Uses and Disclosures    . Each Receiving Party may use or disclose Confidential Information of the Disclosing Party only as follows:

(a)in responding to a valid order of a Governmental Entity having jurisdiction or, if in the reasonable opinion of the Receiving Party’s legal counsel, such disclosure is otherwise required by Law; provided, however, that the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such order or to obtain a protective order requiring that the Confidential Information and documents that are the subject of such order be held in confidence by such Governmental Entity or, if disclosed, be used only for the purposes for which the order was issued (and, if requested by the Disclosing Party, the Receiving Party shall have reasonably cooperated with the Disclosing Party in connection with the foregoing); provided, further, that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such order shall be limited to that information that is legally required to be disclosed in response to such order;

(b)such Confidential Information may be (i) disclosed to any of the Receiving Party’s Representatives, the Receiving Party’s Affiliates and such Affiliates’ directors, officers and employees, in each case, who (A) has a need to know such Confidential Information in connection with the Receiving Party’s performance of its obligations or exercise of its rights or remedies under this Agreement (the “Permitted Use”) and (B) is subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 5 and (ii) used solely for the Permitted Use; provided, however, each Party shall be responsible for any failure by any Person to whom it disclosed Confidential Information of the Disclosing Party to comply with the confidentiality and use restrictions set forth in this Article 5;

(c)(i) the terms of this Agreement and the Original Agreement may be disclosed and (ii) with the Disclosing Party’s prior written consent, such Confidential Information may be disclosed, in either case ((i) or (ii)) to any of the Receiving Party’s potential or actual Third Party providers of finance, investors or acquirers as may be necessary or useful in connection with their evaluation of such potential or actual financing transaction, investment or acquisition, on the condition that any such Third Party is subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the Receiving Party pursuant to this Article 5;

(d)the Company shall have the right to disclose this Agreement and the Original Agreement if required by the rules of a stock exchange on which the Company’s securities are listed (or to which an application for listing has been submitted), provided that the Company shall submit the proposed disclosure in writing to Seller as far in advance as reasonably practicable so as to provide a reasonable opportunity for Seller to comment thereon and the Company shall accept any timely, reasonable comments provided by Seller thereon and use commercially reasonable efforts to ensure the confidential treatment of any portions of such proposed disclosure specified by Seller for redaction and confidentiality; or

(e)for the avoidance of doubt, the Company shall have the right to use and disclose to any Third Party the Services to the extent reasonably necessary or useful to exploit the Services for their intended use, and the Company shall have the right to reproduce, prepare derivative works of, display, distribute, disclose, publish, transfer, use and otherwise exploit any and all Company Property.

6.3Return or Destruction of Confidential Information    . Promptly following the expiration or earlier termination of this Agreement or, upon the earlier written request of a Disclosing Party, the applicable Receiving Party shall destroy or return all documentary, electronic or other tangible embodiments of the Disclosing Party’s Confidential Information to which the Receiving Party does not retain rights hereunder and any and all copies thereof, including those portions of any documents that incorporate or are derived from such Confidential Information, and, in the case of destruction, provide a written certification of such destruction, except that the Receiving Party may retain copies of any Confidential Information to the extent required to (a) exercise any of its rights or remedies or perform any of its obligations under this Agreement or (b) comply with its established document retention and archiving policies.

6.4Survival    . The provisions of this Article 5 shall survive for a period of ten (10) years following the termination of this Agreement.

ARTICLE 7LIMITATION OF LIABILITY; INDEMNIFICATION

7.1Other Agreements. Nothing in this Article 6 shall limit, alter or amend the indemnification provisions in the Stock Purchase Agreement the Supply Agreement, or any future supply agreements between the Parties.

7.2Indemnification    .

7.2.1Subject to this Article 6, the Company shall indemnify, defend and hold harmless Seller and its Affiliates and their respective directors, officers, shareholders, employees and agents (collectively, the “Seller Indemnitees”) from and against, and reimburse and compensate them for, any and all Losses incurred by any such Seller Indemnitees in connection with any suits, investigations, claims or demands of Third Parties (collectively, “Third Party Claims”) arising from or relating to (a) the breach of this Agreement by the Company or any of its Affiliates or its or their subcontractors; or (b) the negligent act or omission or willful misconduct of the Company or any of its Affiliates or its or their subcontractors in connection with this Agreement; or (c) the performance by Seller or any of its Affiliates or its or their subcontractors of Seller’s obligations under and in accordance with the terms of this Agreement, except, in each case, (i) for those Losses arising from Third Party Claims for which Seller has an obligation to indemnify any Company Indemnitee pursuant to Section 6.2.2, as to which Losses each of the Company and Seller shall indemnify the other Party and the Seller Indemnitees or the Company Indemnitees, as applicable, to the extent of its liability for such Losses, and (ii) that the Company shall have no obligation to indemnify any Seller Indemnitee under this Section 6.2.1 for any Losses in connection with Third Party Claims arising from or relating to any negligent act or omission of Seller or its Affiliates or subcontractors. In addition, subject to this Article 6, the Company shall indemnify, defend and hold harmless the Seller Indemnitees from and against, and reimburse and compensate them for, any and all Losses incurred by any such Seller Indemnitees inconnection with any Third Party Claims arising from or relating to (x) any action taken by Seller in connection with the Services at the specific request of the Company or (y) any Regulatory Documentation, the form and content of which have been approved by the Company, that is submitted to any regulatory or governmental authority by the Seller in connection with the performance of the Services (including any Third Party Claims that arise from or relate to the labeling of a Product).

7.2.2Subject to this Article 6, Seller shall indemnify, defend and hold harmless the Company, Purchaser and their Affiliates and each of their respective directors, officers, shareholders, employees and agents (collectively, the “Company Indemnitees”) from and against any and all Losses incurred by any such Company Indemnitees in connection with any Third Party Claims arising from or relating to (a) the breach of this Agreement by Seller, or any of its Affiliates or its or their subcontractors; or (b) the gross negligence or willful misconduct of Seller or any of its Affiliates or its or their subcontractors in connection with this Agreement, except, in each case, for those Losses arising from Third Party Claims for which the Company has an obligation to indemnify any Seller Indemnitee pursuant to Section 6.2.1(a) or (b), as to which Losses each of the Company and Seller shall indemnify the other Party and the Seller Indemnitees or the Company Indemnitees, as applicable, to the extent of its liability for such Losses.

7.2.3All indemnification claims made pursuant to this Section 6.2 shall be governed by Section 8.03(a) of the Stock Purchase Agreement, mutatis mutandis.

7.3Limitation of Liability    . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT IN CONNECTION WITH ACTUAL FRAUD AND THE PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER SECTION 6.2, NEITHER THE COMPANY NOR SELLER SHALL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, FOR LOST OR ANTICIPATED PROFITS, REVENUES OR OPPORTUNITIES OR FOR ANY DAMAGES CALCULATED BY REFERENCE TO A MULTIPLIER OF REVENUE, PROFITS, EBITDA OR SIMILAR METHODOLOGY, WHETHER OR NOT CAUSED BY OR RESULTING FROM THE ACTIONS OF SUCH PARTY OR THE BREACH OF ITS COVENANTS, AGREEMENTS, REPRESENTATIONS OR WARRANTIES HEREUNDER AND WHETHER OR NOT BASED ON OR IN WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE. For clarity, Seller shall not be liable for the acts or omissions of the Pass-Through Contractors (except to the extent arising from or in connection with Seller’s or its Affiliates’ gross negligence, willful misconduct or breach of this Agreement) and the liability of the Pass-Through Contractors shall be as set forth in the Pass-Through Agreements; provided, that, if the Company suffers any Losses with respect to which any Pass-Through Contractor is obligated to indemnify, reimburse or compensate under any of the Pass-Through Agreements, Seller shall, at the Company’s request, pursue a claim for such indemnity, reimbursement or compensation and shall pay to the Company any amounts that Seller receives from such Pass-Through Contractor on account of such claim. The maximum aggregate liability of Seller and its Affiliates to the Company or its Affiliates with respect to this Agreement and the Original Agreement shall not, in the aggregate, exceed the aggregate amount of Services Fees paid by the Company to Seller under the Agreement and the Original Agreement; provided, however, that, the fact that the liability of Seller and its Affiliates to the Company or its Affiliates with respect to this Agreement or the Original Agreement exceeds the Services Fees paid by the Company to Seller as of a particular time shall not preclude the Company or its Affiliates from recovering against Seller and its Affiliates to the extent of additional Services Fees paid after such time by the Company to Seller hereunder or thereunder.

ARTICLE 8TERM AND TERMINATION

8.1Term    . This Agreement shall commence on the Effective Date and shall continue in full force and effect until the earliest of (a) the date on which this Agreement is terminated in accordance with this Article 7; (b) the expiration of the last Service Period, such that Seller is no longer obligated to provide any Services pursuant to this Agreement; and (c) the termination by the Company of the only remaining outstanding Service pursuant to Section 7.2.1, such that Seller is no longer obligated to provide any Services pursuant to this Agreement (the “Term”). For clarity, all obligations of Seller to provide to the Company any Services under this Agreement shall cease at the end of the Term. For the sake of clarity, with respect to Additional Services performed for the NDA, the last Service Period shall end on June 30, 2018, unless extended upon mutual written agreement of the Parties. With respect to Additional Services performed for the Marketing Authorization Application to be submitted by the Company to EMA for the Product (the “MAA”), the last Service Period shall end on June 30, 2019.

8.2Termination of Services    .

8.2.1The Company may at any time prior to the end of the Term and upon sixty (60) days’ prior written notice to Seller, terminate this Agreement in its entirety or with respect to any Service, on a Service-by-Service basis, whereupon, from and after the date of termination specified in such written notice, Seller’s obligation to provide such Service(s) to the Company shall cease and the Company shall have no obligation to pay Seller for such Service(s) (other than with respect to those Services requested by the Company, and performed by Seller or its Affiliates or subcontractors, and Out-of-Pocket Costs incurred, or non-cancellable commitments made, prior to termination); provided, that (a) if termination of any Service prevents Seller from providing any other Service or Services (as reasonably determined by Seller), such other Service(s) shall be deemed terminated and (b) if Seller reasonably determines that termination of such Service would materially inhibit Seller from providing any other Service or Services, Seller shall notify the Company in writing of such determination within fifteen (15) days after Seller’s receipt of the Company’s termination notice and, unless the Company withdraws its termination of such Service within fifteen (15) days after the Company’s receipt of such notice by Seller, such other Service(s) shall be deemed terminated.

8.2.2In the event that either Seller or the Company materially breaches any of its obligations, covenants, agreements, representations or warranties under this Agreement (with the Party committing such material breach being referred to herein as the “Breaching Party”), Seller (if the Company is the Breaching Party) or the Company (if Seller is the Breaching Party) (the “Complaining Party”) may terminate this Agreement upon sixty (60) days’ prior written notice (such sixty (60)-day period, the “Notice Period”) to the Breaching Party, specifying the breach and its claim of right to terminate; provided, that the termination of this Agreement shall not become effective at the end of the Notice Period if (a) the Breaching Party cures such breach during the Notice Period or (b) such breach cannot be cured during the Notice Period and the Breaching Party commences and diligently pursues actions to cure such breach within the Notice Period, in which case the Breaching Party shall have an additional thirty (30)-day period to cure such breach before such termination shall become effective, provided, further, that any breach of a payment obligation hereunder shall not be subject to extension in accordance with the preceding clause (b).

8.2.3Each of the Company and Seller may terminate this Agreement immediately upon written notice to the other Party if Seller or the Company, respectively, (a) files in any court or with any other Governmental Entity, pursuant to any Law of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets; (b) proposes a written agreement of composition or extension of its debts; (c) is served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within sixty (60) days after the filing thereof; (d) consents to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Party or for any substantial part of its property or makes any assignment for the benefit of creditors; (e) admits in writing its inability to pay its debts generally as they become due; or (f) has issued or levied against its property any judgment, writ, warrant of attachment or execution or similar process that represents a substantial portion of its property.

8.2.4Each of the Company and Seller may terminate this Agreement to the extent provided in Section 8.1.

8.2.5This Agreement may be terminated upon the mutual written agreement of the Company and Seller at any time.

8.3Asset Transfer    . Upon termination or expiration of this Agreement, or upon termination of any Service by the Company pursuant to Section 7.2.1, Seller shall and shall cause its Affiliates to transfer and deliver to the Company, within such time periods as Seller and the Company may reasonably agree, all tangible TSA Assets and Company Property (or any portion thereof that pertains to the applicable terminated Service), including all records, data, files and other information and any work-in-process, received, generated or computed in Seller’s performance of the Services during the Term, in electronic or hard copy form; provided, however, that Seller shall not have any obligation to provide or cause its Affiliates to provide data in any format other than the format in which such data was originally generated or stored. Upon termination or expiration of this Agreement, Seller shall not have any further obligation with respect to any Services, or, except as expressly provided in this Agreement, including this Section 7.3, any TSA Assets or Company Property, including any obligation to facilitate the Company’s or any of its Affiliates’ performance, use or maintenance of any Service or asset. Upon termination of any specific Service by the Company pursuant to Section 7.2.1, Seller shall not have any further obligation with respect to those specific Services that are terminated pursuant to Section 7.2.1.

8.4Accrued Rights    . Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.

8.5Surviving Obligations    . Without limiting the foregoing, Article 1, Section 2.6, the last sentence of Section 2.8, Section 2.12, Section 2.15, Article 3 (solely as it relates to Services performed, or Out-of-Pocket Costs or Other Seller Costs incurred by Seller, in accordance with this Agreement prior to termination or expiration of this Agreement), Article 4 (excluding Section 4.2), Article 5, Article 6, Section 7.3, Section 7.4, this Section 7.5 and Article 8 shall survive the termination or expiration of this Agreement for any reason.

ARTICLE 9MISCELLANEOUS

9.1Force Majeure    . Except for the obligation to pay monies due and owing, neither Party shall be liable for any failure to perform or any delays in performance, and no such Party shall be deemed to be in breach or default of its obligations set forth in this Agreement, if, to the extent and for so long as, such failure or delay is due to any causes that are beyond such Party’s reasonable control and without its fault or negligence, including, without limitation, such causes as acts of God, natural disasters, fire, flood, severe storm, earthquake, civil disturbance, lockout, riot, order of any court or administrative body, embargo, acts of government, war (whether or not declared), acts of terrorism, or other similar causes (“Force Majeure Event”). In the event of a Force Majeure Event, Seller or the Company, if prevented from or delayed in performing, shall promptly give notice to the other such Party and shall use commercially reasonable efforts to avoid or minimize the delay. In the event that the delay continues for a period of at least thirty (30) days, the other such Party may elect to (a) suspend performance and extend the time for performance for the duration of the Force Majeure Event, or (b) terminate this Agreement without any liability to any Party.

9.2Independent Contractor    .The Parties and each of their respective Affiliates shall each be an independent contractor in the performance of its obligations hereunder. No Third Party, including any employee of any Party or any of such Party’s Affiliates, shall have or acquire any rights by reason of this Agreement.

9.3Assignment    . Neither this Agreement nor any of the rights or obligations of the Parties hereunder may be assigned by the Company, on the one hand, or Seller, on the other hand, without the prior written consent of Seller (in the case of the Company) or the Company (in the case of Seller), as applicable; provided, however, that subject to Section 3.6 (a) the Company, on the one hand, and Seller, on the other hand, may assign or delegate any or all of its rights or obligations hereunder to an Affiliate without the prior written consent of the other Party, and (b) the Company may assign this Agreementto a successor to all or substantially all of the assets or business of the Company to which this Agreement relates, whether in a merger, sale of stock, sale of assets or otherwise. Subject to the first sentence of this Section 8.3, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Any attempted assignment or transfer in violation of this Section 8.3 shall be null and void.

9.4No Benefit to Third Parties    . Except for the rights of any indemnified Person under Article 6, and as it relates to the Company, with the exception of Dova Pharmaceuticals, Inc. and Dova Pharmaceuticals Ireland Limited, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the Parties and such successors and assigns, any legal or equitable rights hereunder; provided, that, notwithstanding anything herein to the contrary, as among the Company, Dova Pharmaceuticals, Inc. and Dova Pharmaceuticals Ireland Limited, only Dova Pharmaceuticals Inc. shall have the right to give any Notice or provide any correspondence in connection with this Agreement to Seller or any of its Affiliates.

9.5Notices    .

9.5.1 Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement (each, a “Notice”) shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by email as a PDF attachment (with transmission confirmed by non-automated reply email from the recipient, provided, that any Notice received by e-mail transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m., Washington, D.C. time shall be deemed to have been received at 9:00 a.m., Washington, D.C. time on the next Business Day) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in this Section 8.5 or to such other address as the Party to whom notice is to be given may have provided to the Party giving the Notice at least ten (10) days’ prior to such address taking effect in accordance with this Section 8.5. Such Notice shall be deemed to have been given as of the date delivered by hand or internationally recognized overnight delivery service or confirmed that it was received by email. Any Notice delivered by email shall be confirmed by a hard copy delivered as soon as practicable thereafter.

(i) If to Seller, to:

Eisai Inc.

100 Tice Blvd.

Woodcliff Lake, New Jersey 07677

Facsimile: (201) 746-3204

Attention: General Counsel

with a copy (which shall not constitute notice) to:

Covington & Burling LLP

One CityCenter

850 Tenth Street, NW

Washington, D.C. 20001

Attention: Michael J. Riella

Facsimile: (202) 662-6291

E-mail: mriella@cov.com

(ii) If to the Company, to:

Dova Pharmaceuticals, Inc.

On behalf of AkaRx, Inc.

240 Leigh Farm Road, Suite 245

Durham, North Carolina 27707

Attention: Chief Executive Officer

with a copy (which shall not constitute notice) to:

Dova Pharmaceuticals, Inc.

240 Leigh Farm Road, Suite 245

Durham, North Carolina 10036

Attention: General Counsel

9.6Severability    . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Company and Seller.

9.7Governing Law    . This Agreement, the negotiation, execution or performance of this Agreement and any disputes arising under or related hereto (whether for breach of contract, tortious conduct or otherwise) shall be governed and construed in accordance with the Laws of the State of Delaware, without reference to its conflicts of law principles that would result in the application of the substantive Law of any other jurisdiction.

9.8Jurisdiction    . Each Party irrevocably agrees that any action, suit or proceeding against it arising out of or in connection with this Agreement or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) shall be brought exclusively in the Court of Chancery of the State of Delaware or, solely if such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in the State of Delaware, and the appellate courts having jurisdiction thereover (collectively, the “Chosen Courts”), and hereby irrevocably accepts and submits to the exclusive jurisdiction and venue of the Chosen Courts inpersonam with respect to any such proceeding and waives to the fullest extent permitted by Law any objection that it may now or hereafter have that any such proceeding has been brought in an inconvenient forum.

9.9Service of Process    . Each of the Parties consents to service of any process, summons, notice or document which may be served in any proceeding in the Chosen Courts, which service may be made by certified or registered mail, postage prepaid, or as otherwise provided in Section 8.5, to such Party’s address set forth inSection 8.5.

9.10Waiver of Jury Trial    . EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING HERETO. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10.

9.11Amendments and Waivers    . This Agreement may be amended, modified, superseded or canceled and any of the terms or conditions hereof may be waived only by an instrument in writing signed by each of the Company and Seller or, in the case of a waiver, by or on behalf of the Party waiving compliance. No course of dealing between the Parties shall be effective to amend or waive any provision of this Agreement. The waiver by a Party of any right hereunder or of the failure to perform or of a breach by any other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by applicable Law or otherwise available except as expressly set forth herein.

9.12Joint Drafting    . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

9.13Obligations    . To the extent any Affiliate of Seller will perform any Services or other obligations of Seller hereunder, Seller shall take any and all action necessary to cause such Affiliate to perform and fulfill Seller’s covenants, obligations and agreements under this Agreement, and shall be primarily responsible for any breach of this Agreement by such Affiliate.

9.14Counterparts    . This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed original counterpart of this Agreement.

9.15Entire Agreement    . This Agreement, together with Stock Purchase Agreement, the Schedules and Exhibits expressly contemplated hereby and attached hereto, the Confidentiality Agreement, the other Ancillary Agreements and the other agreements, certificates and documents delivered in connection with the Stock Purchase Agreement or therewith or otherwise in connection with the transactions contemplated hereby and thereby, contain the entire agreement among the Parties with respect to the transactions contemplated hereby or thereby and supersede all prior agreements, understandings, promises and representations, whether written or oral, between the Parties with respect to the subject matter hereof and thereof.

9.16Dispute Resolution. Except for Invoice Disputes (which shall be resolved pursuant to Section 3.5.1), if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (a “Dispute”), it shall be resolved pursuant to this Section 8.16.

9.16.1Either Party shall have the right to refer any Dispute to the President and Chief Executive Officer of Seller (or his or her designee with authority to resolve such Dispute) and the President and Chief Executive Officer of the Company who shall confer on the resolution of the issue. Any final decision mutually agreed to by such officers shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of any such issue within fifteen (15) Business Days after such Dispute is first referred to them, either Party may, by written notice to the other Party, elect to initiate litigation in accordance with Section 8.7, Section 8.8 and Section 8.9 for purposes of having the matter settled.

9.16.2Notwithstanding anything herein to the contrary, (a) any relevant time period related to a matter that is the subject of a Dispute shall be tolled during any dispute resolution proceeding under this Section 8.16 and (b) nothing in this Section 8.16 shall preclude either Party from seeking interim or provisional relief, including a temporary restraining order, preliminary injunction or other interim equitable relief concerning a Dispute, if necessary to protect the interests of such Party. This Section 8.16 shall be specifically enforceable.

[Signature page follows]

IN WITNESS WHEREOF, Seller and the Company have duly executed this Agreement as of the date first written above.

Eisai Inc.

By: /s/ Shaji Procida    

Name: Shaji Procida

Title: President and COO

AkaRx, Inc.

By: /s/ Mark Hahn    

Name: Mark Hahn

Title: CFO

Schedule 2.1Initial Work Order

[***]

•

Schedule 2.2Additional Work Order

[***]

•

Schedule 2.4.2

PART AKey Employees for Initial Services

[***]

PART B

Key Employees for Additional Services

[***]

EXHIBIT APass-Through Agreements

1. See Items 3-37 in Section 3.10(a) of the Seller Disclosure Schedule.

2. Master Services Agreement, dated December 23, 2010, between Eisai Limited and Phlexglobal Limited.

3. Development and Manufacturing Services Agreement, dated October 29, 2012, between Eisai Pharmatechnology and Manufacturing Pvt. Ltd. and Civentichem India Pvt. Ltd.

EXHIBIT B

Form of Seller IND Transfer Letter

[                              ]

Food and Drug Administration

5901-B Ammendale Road

Beltsville, MD  20705-1266

Re:	Investigational New Drug Application #062122/#075537/#076680
	Change in Ownership and Official Correspondent
Product:	Avatrombopag Maleate

Dear [                 ]:

Reference is made to Investigational New Drug Application #062122/#075537/#076680 for Avatrombopag (the “IND”).  The purpose of this submission is to inform the Food and Drug Administration (the “Agency”) that the ownership of the IND is being transferred from Eisai Inc., 155 Tice Blvd., Woodcliff Lake, NJ to [the Company],[            ].

In accordance with 21 CFR 314.72, Eisai Inc. hereby notifies the Agency that effective [            ], all rights to the IND have been transferred to [the Company].  [The Company’s] letter confirming acceptance of the IND transfer will be submitted as sequence no. [            ].  [The Company] has been provided with a complete copy of the IND, including amendments and records required to be kept under 21 CFR § 314.72.  As of the date hereof, [the Company] assumes all regulatory responsibility for the IND and all agreements, regulatory obligations, promises and conditions contained therein.

All correspondence for this application should be sent to:

[            ] (primary contact)

Email: [            ]

Telephone: [            ]

Facsimile: [            ]

[            ] (alternate contact)

Email: [            ]

Telephone: [            ]

Facsimile: [            ]

All electronic files included in this submission are <10 MB.  All files were checked and verified to be free of viruses before submitting via the Gateway using Symantec Endpoint Protection, program versions available upon request.  For technical questions regarding the electronic submission, please contact [Sung-Jun Ahn at 201-949-4531].

If you have any questions regarding this submission, please contact me at the number below.

Sincerely,

Eisai Inc.

[Stacie P. O’Sullivan

Associate Director, Global Regulatory Affairs

Office:  410-631-8138

Email:  Stacie_osullivan@eisai.com]

•

ii

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Schedule 2.1 - iii

EXHIBIT C
Form of Company IND Transfer Letter

[                                  ]

Food and Drug Administration

5901-B Ammendale Road

Beltsville, MD  20705-1266

Re:	Investigational New Drug Application #062122/#075537#076680
	Change in Ownership — Acceptance
Product:	Avatrombopag Maleate

Dear [                       ]:

Reference is made to Investigational New Drug Application #062122/#075537/#076680 for Avatrombopag (the “IND”).  The purpose of this submission is to inform the Food and Drug Administration (the “Agency”) that the ownership of the IND is being transferred from Eisai Inc., 155 Tice Blvd., Woodcliff Lake, NJ to [the Company],[            ].  Reference is also made to the enclosed letter from Eisai Inc., dated [           sequence no._] transferring ownership and official correspondent of the IND to [the Company].

In accordance with 21 CFR 314.72, [the Company] hereby accepts the change in ownership which is effective as of [            ].  [The Company] has a complete copy of the IND including amendments and records that are required under 21 CFR 314.81 and commits to the agreements, promises and conditions made by the former owner and contained in the application.

Also enclosed is a revised 1571 form.  Please direct all the IND-related correspondence to the following primary and alternate contacts at [the Company]:

[            ] (primary contact)

Email: [            ]

Telephone: [            ]

Facsimile: [            ]

[            ] (alternate contact)

Email: [            ]

Telephone: [            ]

Facsimile: [            ]

[            ]

[            ]

[            ]

If you have any questions, please contact me at [            ] or by phone at [            ].  Alternatively, you may contact [            ] at [            ] or at [            ].

Sincerely,

[            ]

[            ]

Cc: [            ]

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Schedule 2.1 - iv

[            ]

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alex Sapir, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2018 of Dova Pharmaceuticals, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018

/s/ Alex Sapir

Alex Sapir

President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark W. Hahn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2018 of Dova Pharmaceuticals, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018

/s/ Mark W. Hahn

Mark W. Hahn

Chief Financial Officer

(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF

PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Alex Sapir, President and Chief Executive Officer of Dova Pharmaceuticals, Inc. (the “Company”), and Mark W. Hahn, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 8th day of November 2018.

/s/ Alex Sapir	/s/ Mark W. Hahn
Alex Sapir	Mark W. Hahn
President and Chief Executive Officer (principal executive officer)	Chief Financial Officer (principal financial officer)

* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 05, 2018
Document and Entity Information
Entity Registrant Name	Dova Pharmaceuticals Inc.
Entity Central Index Key	0001685071
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		28,204,098
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets
Cash and equivalents	$ 122,027	$ 94,846
Accounts receivable, net	2,962	0
Inventory, net	1,781	0
Prepaid expenses and other current assets	3,041	1,471
Total current assets	129,811	96,317
Furniture and equipment, net	278	62
Total assets	130,089	96,379
Current liabilities
Accounts payable	68	1,263
Accrued expenses	12,997	2,520
Accrued interest	75	1,005
Due to related party	0	97
Early exercise liability, related party	0	100
Note payable, short-term	0	30,212
Current portion of long-term debt	4,166	0
Total current liabilities	17,306	35,197
Deferred revenue	2,373	0
Long-term debt	16,212	0
Total liabilities	35,891	35,197
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	0	0
Common stock, $0.001 par value; 100,000,000 shares authorized; 28,204,098 and 25,652,457 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	28	26
Additional paid-in capital	204,264	118,301
Accumulated deficit	(110,094)	(57,145)
Total stockholders’ equity	94,198	61,182
Total liabilities and stockholders’ equity	$ 130,089	$ 96,379

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	28,204,098	25,652,457
Common stock, shares outstanding	28,204,098	25,652,457

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue
Revenue	$ 2,929	$ 0	$ 7,513	$ 0
Operating expenses:
Cost of product sales	370	0	889	0
Research and development	4,847	5,426	12,771	12,995
Selling, general and administrative	17,031	4,185	45,856	7,045
Total operating expenses	22,248	9,611	59,516	20,040
Loss from operations	(19,319)	(9,611)	(52,003)	(20,040)
Interest income and other income (expense), net	342	224	369	243
Interest expense	(546)	(336)	(1,315)	(857)
Total other expenses, net	(204)	(112)	(946)	(614)
Net loss	$ (19,523)	$ (9,723)	$ (52,949)	$ (20,654)
Net loss per share, basic and diluted (in dollars per share)	$ (0.69)	$ (0.38)	$ (1.91)	$ (1.03)
Weighted average common shares outstanding, basic and diluted (in shares)	28,203,221.826087	25,290,709	27,668,065.5750916	20,014,226
Product sales, net
Revenue
Revenue	$ 2,929	$ 0	$ 4,886	$ 0
Other revenue
Revenue
Revenue	$ 0	$ 0	$ 2,627	$ 0

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities
Net loss	$ (52,949)	$ (20,654)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash research and development expenses	0	9,663
Research and Development in Process	0	1,000
Depreciation	19	0
Loss on disposal of furniture and equipment	35	0
Amortization of debt discount and debt issuance costs	416	0
Stock-based compensation	11,043	2,761
Changes in operating assets and liabilities:
Accounts receivable, net	(2,962)	0
Inventory	(1,781)	0
Prepaid expenses	(1,570)	(961)
Accounts payable	(1,195)	428
Accrued expenses	11,341	1,060
Accrued interest	(930)	480
Due to related party	(97)	(35)
Deferred revenue	2,373	0
Net cash used in operating activities	(36,257)	(6,258)
Cash flows from investing activities
Purchases of furniture and equipment	(269)	(35)
Net cash used in investing activities	(269)	(35)
Cash flows from financing activities
Payment of note payable	(31,077)	0
Debt issuance costs	(38)	0
Proceeds from the issuance of debt	20,000	0
Payments Of Stock Issuance Costs, Preferred Stock	0	(711)
Proceeds from exercise of stock options	92	0
Proceeds from the issuance of common stock	80,000	86,313
Payment of offering cost in connection with issuance of common stock	(5,270)	(7,604)
Net cash provided by financing activities	63,707	77,998
Net increase in cash and equivalents	27,181	71,705
Cash and equivalents at the beginning of the period	94,846	28,709
Cash and equivalents at the end of the period	122,027	100,414
Cash and equivalents at the end of the period
Cash paid for interest	1,830	377
Supplemental disclosure of noncash investing and financing activities:
Change in note payable	0	13,479
Shares issued from the early exercise of options	$ 100	$ 0

XML

Organization and description of business operations

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and description of business operations

Organization and description of business operations

Dova Pharmaceuticals, Inc. (“Dova”) was originally formed as PBM AKX Holdings, LLC, a limited liability company formed under the laws of the State of Delaware on March 24, 2016 (“Inception”). PBM AKX Holdings, LLC changed its name to Dova Pharmaceuticals, LLC by filing a Certificate of Amendment to its Certificate of Formation with the State of Delaware on June 15, 2016. Dova converted from a limited liability company to a corporation on September 15, 2016.

Dova is a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia, a disorder characterized by a low blood platelet count. On May 21, 2018, the U.S. Food and Drug Administration (“FDA”) approved DOPTELET (avatrombopag), which is an orally administered thrombopoietin receptor agonist for the treatment of thrombocytopenia in adult patients with chronic liver disease (“CLD”) scheduled to undergo a procedure.

The unaudited condensed consolidated financial statements of Dova and its wholly owned subsidiaries AkaRx, Inc. (“AkaRx”) and Dova Pharmaceuticals Ireland Limited (together, the “Company”) include the results of operations for the three and nine months ended September 30, 2018 and September 30, 2017.

XML

Significant accounting policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Significant accounting policies

Significant accounting policies

Basis of presentation and principles of consolidation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods and should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2017 in the Company’s Annual Report on Form 10-K.

Liquidity and capital resources

The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2018, the Company had an accumulated deficit of $110.1 million.

Since inception, the Company has financed its operations through the issuance of equity and debt with net aggregate proceeds of $238.0 million.  Although the Company began generating revenue from product sales of DOPTELET in June 2018, the Company does not expect product revenue to be sufficient to satisfy its operating needs for several years, if ever.  As of September 30, 2018, the Company had $122.0 million in cash and equivalents. Based on the Company’s forecast of future cash flows, the Company believes that it has adequate cash and equivalents to continue to fund operations in the normal course of business for at least the next 12 months.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to the determination of variable consideration for product sales, share-based compensation and some of its research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates, which could affect the Company’s future results of operations.

Segments

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

Cash and equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and equivalents include cash held in banks and money market mutual funds.  The carrying amount of the Company’s cash equivalents approximates its fair value.

Inventory

Inventory acquired prior to receipt of the FDA approval for DOPTELET was expensed as research and development expense as incurred. The Company began capitalizing inventory upon receipt of FDA approval on May 21, 2018. The Company reduces its inventory to net realizable value for potentially excess, dated or obsolete inventory based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At September 30, 2018, the Company determined that no write downs to inventory for potentially excess, dated or obsolete inventory were required.  The Company’s inventory consists of finished goods only.

Research and development prepaid and accrued expenses

As part of the process of preparing financial statements, the Company is required to estimate its expenses resulting from its obligation under contracts with vendors and consultants and clinical site agreements in connection with its research and development efforts. The financial terms of these contracts are subject to negotiations which vary contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts.  The Company’s objective is to reflect the appropriate clinical trial expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines prepaid and accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of communication of clinical trials, or other services completed. During the course of a clinical trial, the Company adjusts its rate of clinical trial expense recognition if actual results differ from its estimates. The Company makes estimates of its prepaid and accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known at that time. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of status and timing of services performed relative to the actual status and timing of services performed may vary and may result in the Company reporting amounts that are too high or too low for any particular period. The Company’s clinical trial prepaid and accrual expense is dependent upon the timely and accurate reporting of fee billings and pass-through expenses from contract research organizations and other third-party vendors as well as the timely processing of any change orders from the contract research organizations.

Concentrations of credit risk and off-balance sheet risk

Cash and equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The majority of the Company’s cash equivalents is in money market mutual funds invested solely in U.S. Government securities. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss.

Research and development costs

Research and development (“R&D”) expenses for the three and nine months ended September 30, 2018 include direct and indirect R&D costs. Direct R&D costs consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and clinical research organizations, including costs incurred in connection with clinical trials, and related clinical trial fees and all employee-related expenses for those employees working in R&D functions, including stock-based compensation for R&D personnel. Indirect R&D costs include insurance or other indirect costs related to the Company’s R&D function to specific product candidates.  The Company expenses pre-approval inventory as R&D until regulatory approval is received.

Revenue recognition

Effective January 1, 2018, the Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The guidance provides a unified model to determine how revenue is recognized.

Product sales

The Company is currently approved to sell DOPTELET in the United States market.  The product is distributed through an exclusive distribution model with Integrated Commercialization Solutions (“ICS”).  ICS sells DOPTELET to a limited number of specialty pharmacies (“customers”), who have agreements in place with the Company.  Patients and healthcare providers purchase the product from the specialty pharmacy providers.  (See Note 7 “Significant agreements and contracts” for more information on the Company’s agreement with ICS).

The Company recognizes revenue on product sales when the control of the Company’s product passes to its customers, which occurs at a point in time, upon delivery to the customers, or over time depending on the nature of the contract. The Company has determined that the delivery of its product to its customers constitutes a single performance obligation as there are no other promises to deliver goods or services. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. The Company has assessed the existence of a significant financing component in the agreements with its customers. The trade payment terms with its customers do not exceed one year and therefore the Company has elected to apply the practical expedient and no amount of consideration has been allocated as a financing component.

Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, government chargebacks, discounts and rebates, and other incentives, such as voluntary patient assistance, and other fee for service amounts that are detailed within contracts between the Company and its customers relating to the Company’s sale of its products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable or a current liability. These reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

Revenue from product sales is recorded after considering the impact of the following variable consideration amounts at the time of revenue recognition:

Trade discounts and distribution fees: Trade discounts relate to prompt settlement discounts provided to ICS and the customers.  Distribution fees include fees paid to ICS for the distribution of the product (which is based on a percentage of sales).  In addition, the Company compensates its customers for data and other activities. The Company has determined that such services received to date are not distinct from its sale of products and may not reasonably represent fair value for these services.  Therefore, estimates of these payments are recorded as a reduction of revenue based on contractual terms.

Product returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company based on the product’s expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as within accrued expenses on the condensed consolidated balance sheets. The Company currently estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company has not received any returns to date.

Government rebates and chargebacks: The Company contracts with Medicaid, Medicare, U.S Department of Veterans Affairs, 340b entities and other government agencies (“Government Payors”) so that DOPTELET will be eligible for purchase by, or partial or full reimbursement from, such Government Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Government Payors and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. The Company estimates these reserves based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company estimates the rebates, chargebacks and discounts that it will provide to Government Payors based upon (i) the government-mandated discounts applicable to government-funded programs, (ii) information obtained from its customers and (iii) information obtained from other third parties regarding the payor mix for DOPTELET. The Company’s liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for product shipments that have been recognized as revenue but remain in the distribution channel inventories at the end of each reporting period.

Other incentives: Other incentives which the Company offers include voluntary patient assistance and assurance programs, such as a co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Strategic agreements

The Company’s other revenue consists of revenue from the Company’s strategic agreements for the development and commercialization of DOPTELET. The terms of the agreements typically include non-refundable upfront fees, payments based upon achievement of milestones and eventually revenue from the commercialized product. These agreements usually have both fixed and variable consideration. Non-refundable upfront fees are considered fixed, while milestone payments and revenue from the commercialized product are identified as variable consideration.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under these agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. The Company’s performance obligations include intellectual property rights, development services, and services associated with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

As part of the accounting for these arrangements, the Company develops assumptions that require judgment to determine the estimated selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the selling price on a standalone basis, which may include forecasted revenue, development timelines, and probabilities of regulatory success.

The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation.

If the right to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the right when the right is transferred to the customer, and the customer can use and benefit from the right. For rights that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

At the inception of the arrangement, the Company evaluates whether the development milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until those approvals are received.

Stock-based compensation

The Company expenses stock-based compensation to employees, consultants and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in cost of goods sold, general and administrative or research and development expenses in the consolidated statements of operations based upon the underlying individual’s role at the Company.

Income taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Net loss per share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period assuming the retrospective conversion of member units described above. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The computations of diluted net loss per common share for the three and nine months ended September 30, 2018 excluded options to purchase 2,689,828 and 2,514,503 shares of common stock, respectively, as the inclusion of these securities would have been antidilutive.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-2, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the estimated term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The Company expects to adopt ASU 2016-2 in the first quarter of 2019. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant change will be related to the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for real estate operating leases.

In May 2017, the FASB issued ASU 2017-9, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions.  The Company adopted ASU 2017-9 as of January 1, 2018.  The adoption of this standard did not impact the Company’s consolidated financial statements and disclosures.

In June 2018, the FASB issued ASU 2018-7, “Improvements to Nonemployee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company expects that the adoption of this ASU would not have a material impact on the Company’s consolidated financial statements.

XML

The purchase agreement with Eisai and related transactions

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

The purchase agreement with Eisai and related transactions

The purchase agreement with Eisai and related transactions

Purchase agreement with Eisai

Dova entered into a purchase agreement dated March 29, 2016 (the “Purchase Agreement”) with Eisai, Inc. (“Eisai”) for all of the issued and outstanding shares of the capital stock of AkaRx. The terms of the Purchase Agreement included (i) an upfront payment of $5.0 million that was paid at closing, (ii) milestone payments up to $135.0 million in the aggregate based on annual net sales of DOPTELET, and (iii) a commitment to negotiate in good faith to secure a long-term supply agreement with Eisai to govern manufacturing support and the purchase of DOPTELET from Eisai until the later of March 30, 2021 or the third anniversary of the commercialization of DOPTELET.

The transaction was accounted for as an asset acquisition pursuant to ASU 2017-1, Business Combinations (Topic 805), Clarifying the Definition of a Business, as the majority of the fair value of the assets acquired was concentrated in a group of similar assets, and the acquired assets did not have outputs or employees. The assets acquired under the Purchase Agreement included a license to DOPTELET, other associated intellectual property, inventory, documentation and records, and related materials. Because DOPTELET had not yet received regulatory approval, the $5.0 million purchase price paid to date for these assets was expensed in the Company’s statement of operations for the period from Inception to December 31, 2016. In addition, the potential milestone payments based on annual net sales are not yet considered probable, and no milestone payments have been accrued at September 30, 2018.

Long-term supply agreement with Eisai

In June 2017, the Company entered into a supply agreement with Eisai, pursuant to which the Company agreed to purchase finished drug product of DOPTELET from Eisai and Eisai agreed to supply finished drug product of DOPTELET. The initial term of the agreement will terminate on the later of March 30, 2021 and the third anniversary of the Company’s first commercial sale of DOPTELET. After the initial term, the supply agreement may be renewed by mutual agreement of the parties. During the initial term, Eisai is the Company’s exclusive supplier of finished drug product of DOPTELET, except that the Company has the right to terminate the exclusivity early by payment to Eisai of a fee calculated based on the Company’s forecasted purchases of DOPTELET during the remainder of the initial term. In addition, in the event that Eisai fails to deliver substantially all of the finished drug product due to the Company under the agreement, the Company may elect to seek alternative supply arrangements so long as such failure remains uncured, subject to certain exceptions. The aggregate payments to Eisai under the supply agreement for finished drug product will be the greater of a fixed payment per tablet or a payment calculated in the mid-single digit percentages of net sales of DOPTELET.

Amended and Restated Transition Services Agreement with Eisai and an Additional Work Order

On October 1, 2018, the Company and Eisai entered into an Amended and Restated Transition Services Agreement (the “Amended TSA”) and an Additional Work Order (“Work Order”) pursuant to which Eisai has agreed to provide services to the Company after the expiration of the original Transition Services Agreement by and between Eisai and the Company, dated March 30, 2016 (the "TSA"), on March 31, 2018.

Under the Work Order, Eisai has agreed to provide certain regulatory, CMC, nonclinical, clinical pharmacology, and statistical services to the Company in order to support the Company's new drug application and marketing authorization application to the European Medicines Agency for the period from April 1, 2018 through June 30, 2019. Pursuant to the Amended TSA, the Company is obligated to pay Eisai for services provided by Eisai personnel based on a fixed payment schedule. To the extent that service fees and out-of-pocket costs payable by the Company to Eisai under the Amended TSA exceed $51.0 million, the Company's obligation to pay milestone payments under the Eisai Purchase Agreement will be reduced. To date, the Company has incurred $31.1 million under the TSA and the Amended TSA. Pursuant to the Amended TSA, payments due were financed under the Eisai note described below. The Company may terminate the services provided under the Amended TSA on a service-by-service basis or the agreement in its entirety upon 60-days’ written notice. The Amended TSA may also be terminated (i) by mutual consent, (ii) by either party upon 60-days’ written notice if the other party materially breaches the agreement, (iii) by either party in the event of the other party’s bankruptcy, insolvency or certain similar occurrences and (iv) by either party in the event that such party is unable to perform its obligations under the agreement as a result of events outside of its reasonable control.

Eisai note and security agreement

On March 30, 2016, the Company issued a Note to Eisai, which had an interest rate of 5% per annum, and enabled the Company to finance payments due to Eisai under the TSA for all costs incurred through December 31, 2017. The principal amount of the Note was increased on a quarterly basis by the amount of unpaid service fees and out-of-pocket expenses due and owed to Eisai under the TSA. The total aggregate spend through this Note was $31.1 million and on March 16, 2018, this principal balance along with accumulated interest of $1.3 million was repaid in full.

License agreement with Astellas Pharma Inc.

The primary intellectual property related to DOPTELET is licensed from Astellas Pharma Inc. (“Astellas”) on an exclusive, worldwide basis under the terms of a license agreement that the Company acquired from Eisai under the Purchase Agreement. Under the terms of the license agreement, the Company is required to make payments upon the achievement of certain milestones. On September 21, 2017, upon the filing of the NDA, the Company became obligated to make a milestone payment of $1.0 million, which was expensed and included in Research and development — licenses acquired.  The Company will be required to make additional aggregate milestone payments of up to $4.0 million to Astellas if certain other regulatory milestones are achieved.  No amounts have been accrued for any potential milestone payments as the payments were not deemed probable.  In addition, the Company is required to pay Astellas tiered royalties ranging from the mid to high single digits on net sales of DOPTELET, which are recorded in cost of product sales. Unless earlier terminated, this license agreement with Astellas will expire on a country-by-country and product-by-product basis upon the latest of (i) the expiration of the last-to-expire claim of the licensed patents, (ii) the expiration of any government-granted marketing exclusivity period for DOPTELET, and (iii) 10 years after the last date of launch of DOPTELET to have occurred in any country. Thereafter, the term of the license agreement may be extended for successive one-year terms if the Company notifies Astellas in writing of its desire to extend such term at least three months before it is otherwise set to expire.

XML

Related party agreements

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related party agreements

Related party agreements

Dova and AkaRx management services agreements

On April 1, 2016, Dova and AkaRx each entered into a services agreement (each, a “SA”) with PBM Capital Group, LLC. Pursuant to the terms of each of the SAs, which have terms of twelve months each (and are automatically renewable for successive one-year periods), PBM Capital Group, LLC will render advisory and consulting services to Dova and AkaRx. Services provided under the SAs may include certain scientific and technical, accounting, operations and back office support services. In consideration for these services, Dova and AkaRx are each obligated to pay PBM Capital Group, LLC a monthly management fee of $25,000.  On March 30, 2018, the SA agreement between AkaRx and PBM Capital Group, LLC was terminated.  Effective April 1, 2018, the monthly management fee for the SA between Dova and PBM Capital Group, LLC was reduced to $17,400.

For the three months and nine months ended September 30, 2018, the Company incurred expenses under the SAs of $52,200 and $254,400, respectively, which were included in selling, general and administrative expenses.

For the three months and nine months ended September 30, 2017, the Company incurred expenses under the SAs of $150,000 and $450,000, respectively, which were included in selling, general and administrative expenses.

XML

Stockholders' equity

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Stockholders' equity

Stockholders’ equity

Series A preferred stock

Between September 19, 2016 and November 18, 2016, the Company closed on the sale of an aggregate of 982,714 shares of Series A preferred stock for gross proceeds of $29.0 million. The Series A preferred stock was entitled to non-cumulative, non-compounding dividends at 8.0% per annum (based on the original issue price), when, and if any dividends are declared by the Board.

Each share of Series A preferred stock was convertible, at the option of the holder and at any time, into a number of fully paid and non-assessable shares of common stock determined by dividing the Series A Original Issue Price by the Series A Conversion Price in effect at the time of conversion. The Series A preferred stock was mandatorily convertible under certain conditions (i) when the Company issued shares of common stock in a public offering generating gross proceeds of at least $60.0 million to the Company, at a price per share of at least $17.88, or (ii) by majority vote of the then outstanding shares of Series A preferred stock. The Series A Conversion Price was $8.94 and was subject to adjustment based on events including the issuance of additional equity securities, certain dividends and distributions, mergers and reorganizations, and stock splits and combinations.

The Series A preferred stock was not mandatorily redeemable and did not embody an unconditional obligation to settle in a variable number of equity shares. As such, the Series A preferred stock is classified as permanent equity on the condensed consolidated balance sheet. The holders’ contingent redemption right in the event of certain deemed liquidation events did not preclude permanent equity classification.

Further, the Series A preferred stock is considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation. The embedded conversion feature is considered to be clearly and closely related to the associated preferred stock host instrument and therefore was not bifurcated from the equity host. The contingent put right upon certain deemed liquidation events was not clearly and closely related to the associated preferred stock host instrument but did not meet the definition of a derivative and therefore was not bifurcated from the equity host.

Upon the closing of the Company’s initial public offering (“IPO”) on July 5, 2017, all outstanding shares of the Company’s Series A convertible preferred stock were automatically converted into 3,242,950 shares of the Company’s common stock.

Common stock

On July 5, 2017, the Company closed its IPO, which resulted in the issuance and sale of 5,077,250 shares of its common stock at a public offering price of $17.00 per share, generating net proceeds of approximately $78.7 million after deducting underwriting discounts and commissions and other offering costs.

On February 27, 2018, the Company completed an underwritten public offering of 2,500,000 shares of its common stock at an offering price of $32.00 per share. Net proceeds raised by the Company from the offering were approximately $74.7 million, after deducting underwriting discounts and commissions and other offering expenses.

XML

Stock-based compensation

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation

Stock-based compensation

Options

The Company maintains the Amended and Restated 2017 Equity Incentive Plan (“2017 Equity Incentive Plan”).  The 2017 Equity Incentive Plan provides for the grant of incentive stock options to employees, and for the grant of nonstatutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards and other forms of stock awards to employees, including officers, consultants and directors. The 2017 Equity Incentive Plan also provides for the grant of performance-based cash awards to employees, including officers, consultants and directors.  The Company’s stock options generally vest as follows: 25% after 12 months of continuous services and the remaining 75% on a ratable basis over a 36-month period from 12 months after the grant date. Stock options granted during the three and nine months ended September 30, 2018 have a maximum contractual term of 10 years.

The Company initially reserved 4,285,250 shares of common stock for issuance under the 2017 Equity Incentive Plan.  The number of shares of common stock reserved for issuance under the 2017 Equity Incentive Plan automatically increases on January 1 each year, for a period of ten years, from January 1, 2018 through January 1, 2027, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board.   As of September 30, 2018, 2,615,129 shares were reserved for grant under the 2017 Equity Incentive Plan.

Stock option valuation

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on its historical volatility as well as the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. Due to the lack of historical exercise history, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Prior to the IPO, the fair values of the shares of common stock underlying the Company options were estimated on each grant date by the Company. In order to determine the fair value, the Company considered, among other things, contemporaneous valuations of the Company’s common stock and preferred stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Since the IPO, the fair value of the common stock underlying the Company’s options has been based upon the closing price of the Company’s common stock on the grant date.

Option awards

The fair value of the Company’s option awards was estimated using the assumptions below:

	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
Exercise price	$22.29	$23.90-$24.28	$22.29-$33.47	$3.73-$24.28
Risk-free rate of interest	2.84%-2.92%	1.86%-2.16%	2.41%-3.02%	1.71%-2.16%
Expected term (years)	5.4-6.9	5.5-7.0	5.0-7.0	5.2-7.1
Expected stock price volatility	64%-65%	87%-89%	64%-88%	87%-89%

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2018:

	Number of Options		Weighted- Average Exercise Price	Weighted- Average Contractual Term	Aggregate Intrinsic Value
Outstanding - December 31, 2017	2,128,641		7.90	9.4	$	44,481,000
Granted	843,150		29.17	9.2
Exercised	(51,641	)	4.62
Forfeited	(274,500	)	8.57
Outstanding - September 30, 2018	2,645,650		14.68	8.8	$	24,784,000
Options vested and exercisable - September 30, 2018	636,392		6.68	8.4	$	9,455,000

The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s closing common stock price on September 28, 2018, or $20.97 per share, and the exercise price of the stock options that had strike prices below $20.97 per share. The weighted average grant date fair value per share of options granted during the nine months ended September 30, 2018 was $20.12.

As of September 30, 2018, there was approximately $15.7 million of total unrecognized compensation expense, related to the unvested stock options shown in the table above, which is expected to be recognized over a weighted average period of 1.0 year.

Stock-based compensation expense has been reported in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2018 as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Cost of product sales	$	—	$	—	$	292	$	—
Selling, general and administrative	3,446		1,690		9,149		2,179
Research and development	590		452		1,602		582
Total stock-based compensation	$	4,036	$	2,142	$	11,043	$	2,761

XML

Significant agreements and contracts

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Significant agreements and contracts

Significant agreements and contracts

Distribution Agreement with Fosun

On March 16, 2018, the Company, through its wholly-owned subsidiary, AkaRx entered into an agreement by which it granted Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., a wholly owned subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., (collectively, “Fosun”) the exclusive development and distribution rights of DOPTELET in mainland China and Hong Kong (“territory”). Under the terms of the agreement, Fosun will have the right to exclusively commercialize and to assist the Company with the registration of DOPTELET in the territory.  Fosun is solely responsible for commercialization activities in the territory and associated expenses. The Company is responsible for supplying product at a fixed price to Fosun for the distribution of product upon approval.

The agreement between Fosun and the Company is governed by a joint steering committee comprised of equal representation by the Company and Fosun and operated on a consensus basis. In the event that the parties do not agree, the Company will have deciding authority, except with respect to matters that solely affect the territory.

Under the agreement, the Company received a non-refundable upfront payment of $4.5 million during the second quarter of 2018, which consisted of an upfront payment of $5.0 million, less $0.5 million that was withheld in accordance with tax withholding requirements in China and recorded as an expense during the nine months ended September 30, 2018.  The Company is also eligible to receive additional future payments upon the achievement of certain regulatory milestones. The Company assessed this arrangement in accordance with ASC Topic 606 and concluded that the contract counterparty, Fosun, is a customer.  The Company determined the distinct, material performance obligations within this agreement consist of (1) the exclusive right to develop and commercialize DOPTELET for multiple indications in the territory, (2) the delivery of certain indication specific information, and (3) manufacture and supply of commercial product.

The transaction price includes the $5.0 million up-front consideration. None of the regulatory milestones have been included in the transaction price, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and Fosun’s efforts.

During the nine months ended September 30, 2018, the Company recognized $2.6 million related to the up-front payment as other revenue in connection with the Fosun agreement. The amount of revenue recognized in connection with this agreement is commensurate with the deliverables provided by the Company to Fosun in achieving the performance obligation. The remaining transaction price of $2.4 million is recorded in deferred revenue as of September 30, 2018, on the condensed consolidated balance sheet and will be recognized upon the delivery of certain information packages for indications which are currently in development. The relative fair value of deliverables was calculated using a combination of discounted cash flow and cost avoidance models (Level 3 inputs), under which estimated cash flows were discounted using a risk-adjusted rate that aligns with publicly available information of Fosun's cost structure. Estimated cash flows were determined based on management's best estimate of the performance of DOPTELET for each indication in the territory.

Commercial Outsourcing Agreement with Integrated Commercial Solutions, LLC (“ICS”)

On March 1, 2018, the Company entered into a Commercial Outsourcing Master Services Agreement with ICS, a division of AmerisourceBergen Specialty Group, a subsidiary of AmerisourceBergen, pursuant to which ICS is the exclusive provider of various third-party logistics services to support the Company’s distribution of DOPTELET in the United States. The key services provided by ICS include logistics, warehousing, returns and inventory management, contract administration and chargebacks processing and accounts receivable management.

Effective March 1, 2018, the Company also entered into a first amendment to the Commercial Outsourcing Master Services Agreement in order for ICS to purchase and sell DOPTELET to the Company’s customers in the United States.  Pursuant to the amendment, ICS will only make shipments to customers who have an executed contract with the Company.  Under this arrangement, ICS places orders with the Company to maintain an appropriate level of inventory.  ICS assumes all inventory risk and has sole responsibility for determining the prices at which it sells these products, subject to specified limitations in the amendment. The agreement will terminate on a date that is mutually agreed upon, in good faith, between ICS and the Company.  If the Company does not attain all regulatory approvals and licenses to sell and distribute DOPTELET within one calendar year from the effective date, ICS may terminate the agreement upon 30 days written notice.  Upon termination of this arrangement, ICS will be allowed to return one hundred percent of all inventory and revert to be the Company’s third-party logistics provider.

Co-Promotion Agreement with Valeant Pharmaceuticals North America LLC

On September 26, 2018, the Company entered into a Co-Promotion Agreement (the "Co-Promotion Agreement") with the Salix division of Valeant Pharmaceuticals North America LLC (“Salix”), a subsidiary of Bausch Health Companies Inc., pursuant to which the Company granted Salix the exclusive right to co-promote DOPTELET to specified medical professionals in the Gastroenterology, Colorectal Surgery and Proctology field (the “Specialty”) in the United States.

Pursuant to the Co-Promotion Agreement, the Company will pay Salix a fee based on the quarterly Net Sales (as defined in the Co-Promotion Agreement) of DOPTELET to specified medical professionals in the Specialty in the United States at specified tiered percentages, ranging from Salix receiving a mid-twenties to mid-thirties percent of Net Sales in a calendar year, subject to specified adjustments. In addition, the Company has agreed to pay Salix a milestone payment of $2.5 million upon the achievement of an aggregate Net Sales amount to the Specialty. The Co-Promotion Agreement specifies that the Company will grant Salix a royalty-free right to use trademarks and copyrights relating to DOPTELET in connection with the promotion of DOPTELET in the United States. The Co-Promotion Agreement also contains provisions regarding payment terms, confidentiality and indemnification, as well as other customary provisions.

The co-promotion of DOPTELET in the United States pursuant to the terms of the Co-Promotion Agreement will be supervised by a joint steering committee composed of an equal number of representatives from the Company and Salix. Under the terms of the Agreement, the Company remains responsible for the costs of maintaining regulatory approval of, manufacturing, supplying and distributing DOPTELET. Salix has also agreed to maintain at least one hundred Salix sales representatives (subject to certain adjustments) that will have the responsibility to promote DOPTELET in the Specialty in the United States.

The Company did not make any milestone or royalty payments under the Co-Promotion Agreement for the three and nine months ended September 30, 2018.

XML

Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

On April 17, 2018, the Company and its wholly owned subsidiary, AkaRx (collectively “Co-Borrowers”), entered into a Loan and Security Agreement with Silicon Valley Bank (“Term Loan”) pursuant to which the Co-Borrowers borrowed $20.0 million.  The loan matures on April 17, 2021 unless the Company achieves a specified revenue milestone in which case the maturity date will be extended to April 17, 2022. The Co-Borrowers are only required to make monthly interest payments until April 30, 2019 unless the Company achieves the specified revenue milestone in which case the interest-only period will be extended until October 31, 2019.  Following the interest-only period, the Co-Borrowers will be required to also make equal monthly payments of principal and interest for the remainder of the term. The Co-Borrowers will also be required to pay an additional final payment at maturity equal to $2.0 million if the term loan is repaid after the interest-only period or a final payment of $0.6 million if the term loan is repaid during the interest-only period.  The final payment amount of $2.0 million has been recorded as a debt discount and is being accreted to the carrying value of the debt using the effective interest method.  In addition, at its option, the Co-Borrowers may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest), subject to a prepayment charge if the loan has been outstanding for less than one year, which prepayment charge of 4% of the outstanding principal amount on the date the loan is prepaid. All obligations under this agreement are guaranteed by all the assets of the Co-Borrowers, except for intellectual property and certain other assets. The agreement bears interest at the WSJ prime rate plus 1.25% per annum.  In connection with the Loan and Security Agreement, the Company incurred debt issuance costs totaling approximately $38,000. These costs are being amortized over the estimated term of the debt using the effective interest method. The Company deducted the debt issuance costs from the carrying amount of the debt as of September 30, 2018. As of September 30, 2018, the carrying value of the term loan was approximately $20.4 million, of which $4.2 million was due within 12 months and $16.2 million was due in greater than 12 months. The debt balance has been categorized within Level 2 of the fair value hierarchy. The carrying amount of the debt approximates its fair value based on prevailing interest rates as of the balance sheet date.

The Term Loan also provides for standard indemnification of Silicon Valley Bank and contains representations, warranties and certain covenants of the Co-Borrowers. While any amounts are outstanding under the Loan and Security Agreement, the Co-Borrowers are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The Co-Borrowers are also restricted from paying dividends or making other distributions or payments on their capital stock, subject to limited exceptions.

As of September 30, 2018, annual principal payments due under the Term Loan are as follows:

	Aggregate Minimum Payments
Year	(in thousands)
2019	$	6,667
2020	10,000
2021	5,333
Total	22,000
Less unamortized debt issuance costs and final payment	(1,622		)
Total	$	20,378

XML

Commitments and contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

Office lease

On May 22, 2018, the Company entered into an Office Lease Agreement (the “Lease”) with Pine Forest 240 TT, LLC, a Delaware limited liability company (the “Landlord”), under which the Company will lease 21,745 square feet of space for its corporate headquarters located at 240 Leigh Farm Road, Durham, North Carolina. Pursuant to the Lease, the Company will effectively renew the Company’s lease of its existing 14,378 square feet of office space (the “Existing Office Space”) that the Company currently subleases from Paidian Research, Inc. pursuant to a sublease agreement, which is scheduled to expire on April 30, 2020, effective May 1, 2020. The Company also leases an additional 1,961 square feet of office space (“Suite 200”), which the Landlord delivered on October 12, 2018, and will lease an additional 5,406 square feet of office space (“Suite 215”), which the Landlord has agreed to use commercially reasonable efforts to deliver on or before August 1, 2019.

Under the Lease, subject to specified exceptions, the Company will pay an initial annual base rent of (i) $51,476, or $4,290 per month, for Suite 200, subject to an increase of approximately 2.7% per year, (ii) $145,800, or $12,150 per month, for Suite 215, subject to an increase of approximately 2.7% per year and (iii) $387,774, or $32,315 per month, for the Existing Office Space, subject to an increase of approximately 2.7% per year. In addition, the Company will pay its proportionate share of the Landlord’s annual operating expenses associated with the premises.

The term of the Lease will continue until September 30, 2023. The Company has an option to renew the Lease for one additional term of five years. If exercised, rent during the renewal term will be at the fair market rental rate as defined in the Lease.

The lease provides for a tenant improvement allowance of approximately $264,090. As of September 30, 2018, none of the allowance was utilized.

The Company incurred rent expense of $71,565 and $248,567 for the three and nine months ended September 30, 2018.  There was $54,698 and $75,184 rent expense for the three and nine months ended September 30, 2017.

Current future minimum lease payments under the Company’s current lease obligations are $101,316, $309,892 and $78,216 for the remainder of 2018, 2019 and 2020, respectively.

Purchase commitments

As noted in Note 3, the Company has an agreement with Eisai for the commercial supply of DOPTELET. Under the terms of the agreement, the Company will supply Eisai with non-cancelable firm commitment purchase orders. Future minimum purchase obligations are $1.7 million for the remainder of 2018.

The Company has also entered into other agreements with certain vendors for the provision of services, including services related to data access and packaging, under which the Company is contractually obligated to make certain payments to the vendors. The Company enters into contracts in the normal course of business that include, among others, arrangements with clinical research organizations for clinical trials, vendors for preclinical research, and vendors for manufacturing. These contracts generally provide for termination upon notice, and therefore the Company believes that its obligations under these agreements are not material.

Litigation

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

XML

Income taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The Company estimates an annual effective tax rate of 0% for the year ending December 31, 2018 as the Company incurred losses for the three and nine months ended September 30, 2018 and is forecasting additional losses through the fourth quarter of 2018, resulting in an estimated net loss for both financial statement and tax purposes for the year ending December 31, 2018. Therefore, no federal or state income taxes are expected, and none have been recorded at this time. Income taxes have been accounted for using the liability method in accordance with ASC 740.

Due to the Company’s history of losses since inception, the Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax asset.

At September 30, 2018, the Company had no unrecognized tax benefits that would reduce the Company’s effective tax rate if recognized.

XML

Employee benefit plan

9 Months Ended

Sep. 30, 2018

Retirement Benefits [Abstract]

Employee benefit plan

Employee benefit plan

The Company maintains a defined contribution 401(k) plan, under which employee contributions are voluntary and are determined on an individual basis, limited by the maximum amounts allowable under federal tax regulations. The Company provides an automatic matching contribution of $0.50 per $1.00 of employee contribution into the plan up to a maximum deferral per employee of 4% of the employee’s salary. The Company’s matching contributions totaled approximately $70,163 and $179,003 during the three and nine months ended September 30, 2018, respectively.  There were $5,113 and $6,447 of such contributions for the three and nine month ended September 30, 2017, respectively.

XML

Significant accounting policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of presentation and principles of consolidation

Basis of presentation and principles of consolidation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods and should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2017 in the Company’s Annual Report on Form 10-K.

Liquidity and capital resources

Liquidity and capital resources

The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2018, the Company had an accumulated deficit of $110.1 million.

Since inception, the Company has financed its operations through the issuance of equity and debt with net aggregate proceeds of $238.0 million.  Although the Company began generating revenue from product sales of DOPTELET in June 2018, the Company does not expect product revenue to be sufficient to satisfy its operating needs for several years, if ever.  As of September 30, 2018, the Company had $122.0 million in cash and equivalents. Based on the Company’s forecast of future cash flows, the Company believes that it has adequate cash and equivalents to continue to fund operations in the normal course of business for at least the next 12 months.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to the determination of variable consideration for product sales, share-based compensation and some of its research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates, which could affect the Company’s future results of operations.

Segments

Segments

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

Cash and equivalents

Cash and equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and equivalents include cash held in banks and money market mutual funds.  The carrying amount of the Company’s cash equivalents approximates its fair value.

Inventory

Inventory

Inventory acquired prior to receipt of the FDA approval for DOPTELET was expensed as research and development expense as incurred. The Company began capitalizing inventory upon receipt of FDA approval on May 21, 2018. The Company reduces its inventory to net realizable value for potentially excess, dated or obsolete inventory based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. At September 30, 2018, the Company determined that no write downs to inventory for potentially excess, dated or obsolete inventory were required.  The Company’s inventory consists of finished goods only.

Research and development prepaid and accrued expenses

Research and development prepaid and accrued expenses

As part of the process of preparing financial statements, the Company is required to estimate its expenses resulting from its obligation under contracts with vendors and consultants and clinical site agreements in connection with its research and development efforts. The financial terms of these contracts are subject to negotiations which vary contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts.  The Company’s objective is to reflect the appropriate clinical trial expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines prepaid and accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of communication of clinical trials, or other services completed. During the course of a clinical trial, the Company adjusts its rate of clinical trial expense recognition if actual results differ from its estimates. The Company makes estimates of its prepaid and accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known at that time. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of status and timing of services performed relative to the actual status and timing of services performed may vary and may result in the Company reporting amounts that are too high or too low for any particular period. The Company’s clinical trial prepaid and accrual expense is dependent upon the timely and accurate reporting of fee billings and pass-through expenses from contract research organizations and other third-party vendors as well as the timely processing of any change orders from the contract research organizations.

Concentrations of credit risk and off-balance sheet risk

Concentrations of credit risk and off-balance sheet risk

Cash and equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The majority of the Company’s cash equivalents is in money market mutual funds invested solely in U.S. Government securities. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss.

Research and development costs

Research and development costs

Research and development (“R&D”) expenses for the three and nine months ended September 30, 2018 include direct and indirect R&D costs. Direct R&D costs consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and clinical research organizations, including costs incurred in connection with clinical trials, and related clinical trial fees and all employee-related expenses for those employees working in R&D functions, including stock-based compensation for R&D personnel. Indirect R&D costs include insurance or other indirect costs related to the Company’s R&D function to specific product candidates.  The Company expenses pre-approval inventory as R&D until regulatory approval is received.

Revenue recognition

Revenue recognition

Effective January 1, 2018, the Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The guidance provides a unified model to determine how revenue is recognized.

Product sales

The Company is currently approved to sell DOPTELET in the United States market.  The product is distributed through an exclusive distribution model with Integrated Commercialization Solutions (“ICS”).  ICS sells DOPTELET to a limited number of specialty pharmacies (“customers”), who have agreements in place with the Company.  Patients and healthcare providers purchase the product from the specialty pharmacy providers.  (See Note 7 “Significant agreements and contracts” for more information on the Company’s agreement with ICS).

The Company recognizes revenue on product sales when the control of the Company’s product passes to its customers, which occurs at a point in time, upon delivery to the customers, or over time depending on the nature of the contract. The Company has determined that the delivery of its product to its customers constitutes a single performance obligation as there are no other promises to deliver goods or services. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. The Company has assessed the existence of a significant financing component in the agreements with its customers. The trade payment terms with its customers do not exceed one year and therefore the Company has elected to apply the practical expedient and no amount of consideration has been allocated as a financing component.

Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, government chargebacks, discounts and rebates, and other incentives, such as voluntary patient assistance, and other fee for service amounts that are detailed within contracts between the Company and its customers relating to the Company’s sale of its products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable or a current liability. These reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

Revenue from product sales is recorded after considering the impact of the following variable consideration amounts at the time of revenue recognition:

Trade discounts and distribution fees: Trade discounts relate to prompt settlement discounts provided to ICS and the customers.  Distribution fees include fees paid to ICS for the distribution of the product (which is based on a percentage of sales).  In addition, the Company compensates its customers for data and other activities. The Company has determined that such services received to date are not distinct from its sale of products and may not reasonably represent fair value for these services.  Therefore, estimates of these payments are recorded as a reduction of revenue based on contractual terms.

Product returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company based on the product’s expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as within accrued expenses on the condensed consolidated balance sheets. The Company currently estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company has not received any returns to date.

Government rebates and chargebacks: The Company contracts with Medicaid, Medicare, U.S Department of Veterans Affairs, 340b entities and other government agencies (“Government Payors”) so that DOPTELET will be eligible for purchase by, or partial or full reimbursement from, such Government Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Government Payors and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. The Company estimates these reserves based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company estimates the rebates, chargebacks and discounts that it will provide to Government Payors based upon (i) the government-mandated discounts applicable to government-funded programs, (ii) information obtained from its customers and (iii) information obtained from other third parties regarding the payor mix for DOPTELET. The Company’s liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for product shipments that have been recognized as revenue but remain in the distribution channel inventories at the end of each reporting period.

Other incentives: Other incentives which the Company offers include voluntary patient assistance and assurance programs, such as a co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Strategic agreements

The Company’s other revenue consists of revenue from the Company’s strategic agreements for the development and commercialization of DOPTELET. The terms of the agreements typically include non-refundable upfront fees, payments based upon achievement of milestones and eventually revenue from the commercialized product. These agreements usually have both fixed and variable consideration. Non-refundable upfront fees are considered fixed, while milestone payments and revenue from the commercialized product are identified as variable consideration.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under these agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. The Company’s performance obligations include intellectual property rights, development services, and services associated with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

As part of the accounting for these arrangements, the Company develops assumptions that require judgment to determine the estimated selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the selling price on a standalone basis, which may include forecasted revenue, development timelines, and probabilities of regulatory success.

The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation.

If the right to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the right when the right is transferred to the customer, and the customer can use and benefit from the right. For rights that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

At the inception of the arrangement, the Company evaluates whether the development milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until those approvals are received.

Stock-based compensation

Stock-based compensation

The Company expenses stock-based compensation to employees, consultants and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in cost of goods sold, general and administrative or research and development expenses in the consolidated statements of operations based upon the underlying individual’s role at the Company.

Income taxes

Income taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Net loss per share

Net loss per share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period assuming the retrospective conversion of member units described above. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

Recent accounting pronouncements

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-2, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the estimated term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The Company expects to adopt ASU 2016-2 in the first quarter of 2019. Although the Company is in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements, the Company currently believes the most significant change will be related to the recognition of right-of-use assets and lease liabilities on the Company’s balance sheet for real estate operating leases.

In May 2017, the FASB issued ASU 2017-9, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions.  The Company adopted ASU 2017-9 as of January 1, 2018.  The adoption of this standard did not impact the Company’s consolidated financial statements and disclosures.

In June 2018, the FASB issued ASU 2018-7, “Improvements to Nonemployee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company expects that the adoption of this ASU would not have a material impact on the Company’s consolidated financial statements.

XML

Stock-based compensation (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of assumptions used to estimate fair value of option awards

The fair value of the Company’s option awards was estimated using the assumptions below:

	Three months ended September 30,		Nine months ended September 30,
	2018	2017	2018	2017
Exercise price	$22.29	$23.90-$24.28	$22.29-$33.47	$3.73-$24.28
Risk-free rate of interest	2.84%-2.92%	1.86%-2.16%	2.41%-3.02%	1.71%-2.16%
Expected term (years)	5.4-6.9	5.5-7.0	5.0-7.0	5.2-7.1
Expected stock price volatility	64%-65%	87%-89%	64%-88%	87%-89%

Summary of stock option activity

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2018:

	Number of Options		Weighted- Average Exercise Price	Weighted- Average Contractual Term	Aggregate Intrinsic Value
Outstanding - December 31, 2017	2,128,641		7.90	9.4	$	44,481,000
Granted	843,150		29.17	9.2
Exercised	(51,641	)	4.62
Forfeited	(274,500	)	8.57
Outstanding - September 30, 2018	2,645,650		14.68	8.8	$	24,784,000
Options vested and exercisable - September 30, 2018	636,392		6.68	8.4	$	9,455,000

Schedule of stock-based compensation expense

Stock-based compensation expense has been reported in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2018 as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Cost of product sales	$	—	$	—	$	292	$	—
Selling, general and administrative	3,446		1,690		9,149		2,179
Research and development	590		452		1,602		582
Total stock-based compensation	$	4,036	$	2,142	$	11,043	$	2,761

XML

Debt (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of annual principal payments due under term loan

As of September 30, 2018, annual principal payments due under the Term Loan are as follows:

	Aggregate Minimum Payments
Year	(in thousands)
2019	$	6,667
2020	10,000
2021	5,333
Total	22,000
Less unamortized debt issuance costs and final payment	(1,622		)
Total	$	20,378

XML

Significant accounting policies - Liquidity and Capital Resources (Additional Information) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Accumulated deficit	$ (110,094)	$ (57,145)
Proceeds from issuance or sale of equity and debt	238,000
Cash and equivalents	$ 122,027	$ 94,846

XML

Significant accounting policies - Segments (Additional Information) (Details)	9 Months Ended
	Sep. 30, 2018 segment
Accounting Policies [Abstract]
Number of operating segments	1

XML

Significant accounting policies - Inventory (Additional Information) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Accounting Policies [Abstract]
Inventory write down	$ 0.0

XML

Significant accounting policies - Concentrations of Credit Risk and Off-Balance Sheet Risk (Additional Information) (Details)	Sep. 30, 2018 item
Accounting Policies [Abstract]
Number of financial instruments with off-balance sheet risk of loss	0

XML

Significant accounting policies - Revenue Recognition (Additional Information) (Details)	9 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
Practical expedient	true

XML

Significant accounting policies - Net Loss Per Share (Additional Information) (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Stock Options
Net loss per share
Antidilutive shares	2,689,828	2,514,503

XML

The purchase agreement with Eisai and related transactions - Eisai (Details) - USD ($)			9 Months Ended
	Mar. 16, 2018	Mar. 29, 2016	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2017	Mar. 30, 2016
The purchase agreement with Eisai and related transactions
Research and development-licenses acquired, expensed			$ 0	$ 1,000,000
Outstanding borrowings			0			$ 30,212,000
Purchase agreement | AkaRx | Eisai
The purchase agreement with Eisai and related transactions
Payment made on closing date		$ 5,000,000
Maximum milestone payments due		$ 135,000,000
Research and development-licenses acquired, expensed					$ 5,000,000
Milestone payments accrued			0
Transition services agreement | AkaRx | Eisai
The purchase agreement with Eisai and related transactions
Threshold amount after which amounts in excess will be credited against milestone payments			51,000,000
Transition incurred for expenses incurred			31,100,000
Note and security agreement | Eisai | Notes payable
The purchase agreement with Eisai and related transactions
Interest rate (as a percent)							5.00%
Outstanding borrowings			$ 31,100,000
Repayment of principal balance along with accumulated interest	$ 1,300,000

XML

The purchase agreement with Eisai and related transactions - Astellas Pharma Inc (Details) - License agreement - Astellas Pharma Inc - USD ($) $ in Millions		9 Months Ended
	Sep. 21, 2017	Sep. 30, 2018
License agreement with Astellas Pharma Inc
Maximum milestone payments due		$ 4.0
Milestone payments accrued		$ 0.0
Agreement term		10 years
Agreement term, extensions		1 year
Termination notice period		3 months
Research and development - licenses acquired
License agreement with Astellas Pharma Inc
Milestone Expense	$ 1.0

XML

Related party agreements (Details) - PBM Capital Group, LLC - Services Agreement - USD ($)		3 Months Ended		9 Months Ended
	Apr. 01, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Apr. 01, 2018
Related party agreements
Monthly management fees payable						$ 17,400
Expenses incurred included in selling, general and administrative expenses		$ 52,200	$ 150,000	$ 254,400	$ 450,000
Dova
Related party agreements
Agreement term	12 months
Renewal term	1 year
Monthly management fees payable	$ 25,000
AkaRx
Related party agreements
Agreement term	12 months
Renewal term	1 year
Monthly management fees payable	$ 25,000

XML

Stockholders' equity - Series A Preferred Stock (Additional Information) (Details) - USD ($) $ / shares in Units, $ in Millions		2 Months Ended
	Jul. 05, 2017	Nov. 18, 2016
Series A preferred stock
Stockholders' equity
Shares issued		982,714
Gross proceeds from sale of shares		$ 29.0
Non-cumulative, non-compounding dividends		8.00%
Conversion price	$ 8.94
Common stock
Stockholders' equity
Shares issued upon conversion	3,242,950
IPO | Common stock
Stockholders' equity
Shares issued	5,077,250
Share price (in dollar per share)	$ 17.00
Minimum | IPO | Common stock
Stockholders' equity
Proceeds from issuance of common stock	$ 60.0
Share price (in dollar per share)	$ 17.88

XML

Stockholders' equity - Common Stock (Additional Information) (Details) - Common stock - USD ($) $ / shares in Units, $ in Millions	Feb. 27, 2018	Jul. 05, 2017
IPO
Stockholders' equity
Shares issued		5,077,250
Share price (in dollar per share)		$ 17.00
Net proceeds from issuance of stock		$ 78.7
Underwritten public offering
Stockholders' equity
Shares issued	2,500,000
Share price (in dollar per share)	$ 32.00
Net proceeds from issuance of stock	$ 74.7

XML

Stock-based compensation - Options (Details) - 2017 Equity Incentive Plan	3 Months Ended	9 Months Ended
	Sep. 30, 2018 shares	Sep. 30, 2018 shares
Stock-based compensation
Period in which reserved shares will increase annually		10 years
Annual increase in reserved shares (as a percent)		4.00%
Common stock
Stock-based compensation
Common stock initially reserved for future issuance	4,285,250	4,285,250
Remaining shares reserved for grant	2,615,129	2,615,129
Stock Options
Stock-based compensation
Maximum contractual term	10 years	10 years
Stock Options | Ratable basis over a 36-month period from 12 months after the grant date
Stock-based compensation
Vesting percentage		75.00%
Vesting period		36 months
Stock Options | Continuous service | 12 months after grant date
Stock-based compensation
Vesting percentage		25.00%
Vesting period		12 months

XML

Stock-based compensation - Assumptions used to calculate fair value of options (Details) - Stock Options - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Assumptions used to estimate fair value of options
Exercise price (in dollars per share)	$ 22.29
Minimum
Assumptions used to estimate fair value of options
Exercise price (in dollars per share)		$ 23.90	$ 22.29	$ 3.73
Risk-free rate of interest	2.84%	1.86%	2.41%	1.71%
Expected term (years)	5 years 4 months 24 days	5 years 6 months	5 years	5 years 2 months 12 days
Expected stock price volatility	64.00%	87.00%	64.00%	87.00%
Maximum
Assumptions used to estimate fair value of options
Exercise price (in dollars per share)		$ 24.28	$ 33.47	$ 24.28
Risk-free rate of interest	2.92%	2.16%	3.02%	2.16%
Expected term (years)	6 years 10 months 24 days	7 years	7 years	7 years 1 month 6 days
Expected stock price volatility	65.00%	89.00%	88.00%	89.00%

XML

Stock-based compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Stock Options
Weighted average exercise price
Granted (in dollars per share)	$ 22.29
Aggregate intrinsic value
Total unrecognized compensation expense	$ 15,700		$ 15,700
Unrecognized compensation expense, weighted average recognition period			1 year
Stock Options | Maximum
Weighted average exercise price
Granted (in dollars per share)		$ 24.28	$ 33.47	$ 24.28
2017 Equity Incentive Plan | Common stock
Aggregate intrinsic value
Share price (in dollars per share)	$ 20.97		$ 20.97
2017 Equity Incentive Plan | Stock Options
Total options outstanding
Outstanding, beginning balance (in shares)			2,128,641
Granted (in shares)			843,150
Exercised (in shares)			(51,641)
Forfeited (in shares)			(274,500)
Outstanding, ending balance (in shares)	2,645,650		2,645,650		2,128,641
Options vested and exercisable (in shares)	636,392		636,392
Weighted average exercise price
Outstanding, beginning balance (in dollars per share)			$ 7.90
Granted (in dollars per share)			29.17
Exercised (in dollars per share)			4.62
Forfeited (in dollars per share)			8.57
Outstanding, ending balance (in dollars per share)	$ 14.68		14.68		$ 7.90
Options vested and exercisable (in dollars per share)	$ 6.68		$ 6.68
Weighted average remaining contractual life (in years)
Granted			9 years 2 months 12 days
Outstanding			8 years 9 months 18 days		9 years 4 months 24 days
Options vested and exercisable			8 years 4 months 24 days
Aggregate intrinsic value
Outstanding at beginning of the period			$ 44,481
Outstanding at the end of the period	$ 24,784		24,784		$ 44,481
Options vested and exercisable	$ 9,455		$ 9,455
Weighted average grant date fair value (in dollars per share)			$ 20.12
2017 Equity Incentive Plan | Stock Options | Maximum
Aggregate intrinsic value
Exercise price (in dollars per share)	$ 20.97		$ 20.97

XML

Stock-based compensation - Allocation of expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-based compensation
Stock-based compensation	$ 4,036	$ 2,142	$ 11,043	$ 2,761
Cost of product sales
Stock-based compensation
Stock-based compensation	0		292
Selling, general and administrative
Stock-based compensation
Stock-based compensation	3,446	1,690	9,149	2,179
Research and development
Stock-based compensation
Stock-based compensation	$ 590	$ 452	$ 1,602	$ 582

XML

Significant agreements and contracts (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
	Mar. 01, 2018	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Significant agreements and contracts
Revenue		$ 2,929		$ 0	$ 7,513	$ 0
Commercial Outsourcing Master Services Agreement | Integrated Commercial Solutions, LLC
Significant agreements and contracts
Maximum time period to terminate the agreement	1 year
Grace period of time for terminate the agreement	30 days
Percentage of inventory returns upon the termination of the agreement	100.00%
Fosun Agreement
Significant agreements and contracts
Upfront payment received, Net of tax withholding			$ 4,500
Total non-refundable upfront consideration including taxes withholdings		5,000
Taxes withheld on upfront consideration		500
Revenue					2,600
Deferred revenue		$ 2,400			$ 2,400

XML

Significant agreements and contracts - Valeant Pharmaceuticals North America LLC (Details)	Sep. 26, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Milestone payment, upon net sales achievement	$ 2,500,000

XML

Debt (Details) - USD ($)		9 Months Ended
	Apr. 17, 2018	Sep. 30, 2018	Dec. 31, 2017
Annual principal payments
Total		$ 16,212,000	$ 0
Term Loan
Annual principal payments
2019		6,667,000
2020		10,000,000
2021		5,333,000
Total		22,000,000
Less unamortized debt issuance costs and final payment		(1,622,000)
Total		20,378,000
Term Loan | Co-Borrowers
Debt
Borrowing amount	$ 20,000,000.0
Final payment at maturity if term loan is repaid after after interest-only period	2,000,000
Final payment if term loan is repaid during the interest-only period	$ 600,000
Percentage of outstanding loan principal amount for calculation of prepayment charge	4.00%
Debt issuance costs		38,000,000
Carrying value of debt amount due within 12 months		4,200,000
Carrying value of debt amount due in greater then 12 months		16,200,000
Annual principal payments
Total		$ 20,400,000
Term Loan | Co-Borrowers | WSJ prime rate
Debt
Variable reference rate	prime rate
Basis points spread over variable reference rate	1.25%

XML

Commitments and contingencies (Details)		3 Months Ended		9 Months Ended
	May 22, 2018 USD ($) ft² item	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)
Office Lease
Number of options to renewal the lease | item	1
Renewal period of lease	5 years
Tenant improvement allowance		$ 264,090		$ 264,090
Tenant allowance utilized		0		0
Rent expense		71,565	$ 54,698.04	248,567	$ 75,183.64
Future rental payments
Remainder period of 2018		101,316		101,316
2019		309,892		309,892
2020		78,216		78,216
Purchase agreement | Eisai
Purchase commitments
Remainder of 2018		$ 1,700,000		$ 1,700,000
Property at 240 Leigh Farm Road, Office Space | Pine Forest 240 TT, LLC.
Office Lease
Leased office space | ft²	21,745
Existing Office Space | Paidian Research, Inc.
Office Lease
Leased office space | ft²	14,378
Annual lease rent expense	$ 387,774
Monthly lease rent expenses	$ 32,315
Percentage of annual increase in lease rental expenses	2.70%
Suite 200 office space | Pine Forest 240 TT, LLC.
Office Lease
Leased office space | ft²	1,961
Annual lease rent expense	$ 51,476
Monthly lease rent expenses	$ 4,290
Percentage of annual increase in lease rental expenses	2.70%
Suite 215 office space | Pine Forest 240 TT, LLC.
Office Lease
Leased office space | ft²	5,406
Annual lease rent expense	$ 145,800
Monthly lease rent expenses	$ 12,150
Percentage of annual increase in lease rental expenses	2.70%

XML

Income taxes (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2018
Reconciliation of the statutory U.S. federal rate to the Company's effective tax rate
Federal and state income taxes	$ 0
Unrecognized tax benefits	$ 0
Forecast
Reconciliation of the statutory U.S. federal rate to the Company's effective tax rate
Annual effective tax rate		0.00%

XML

Employee benefit plan (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee benefit plan
Employer matching contribution, as a percent of employee contribution			50.00%
Defined contribution plan, employer matching contribution, aggregate amount	$ 70,163	$ 5,113	$ 179,003	$ 6,447
Maximum
Employee benefit plan
Employer matching contribution, as a percent of employee gross pay			4.00%