(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

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 ☒ No ☐

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

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

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

As of ~~October 31, 2017~~April 30, 2021, there were ~~27,941,015~~46,928,028 shares of the registrant's common stock, par value $0.001 per share, outstanding.

							March 31,			December 31,
	September 30, 2017			December 31, 2016			2021			2020
Assets
Current assets
Cash and cash equivalents	$	32,995		$	52,962		$	103,450		$	105,157
Available-for-sale securities		130,445			75,076
Marketable securities								—			20,005
Restricted cash		162			817			424			891
Other receivable		—			323
Accounts receivable, net								15,858			11,878
Inventories, net								14,207			14,555
Other receivables								2,680			3,855
Prepaid and other current assets		2,604			2,922			5,212			7,776
Total current assets		166,206			132,100			141,831			164,117
Restricted cash		250			250
Fixed assets, net		1,922			1,188			970			964
Intangible assets, net		229			1,015
Goodwill		829			829			829			829
Right-of-use assets								1,774			2,010
Other long-term assets		298			350			13,873			8,933
Total assets	$	169,734		$	135,732		$	159,277		$	176,853
Liabilities and stockholders’ equity
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	2,858		$	4,418		$	4,045		$	1,813
Other accrued expenses		8,340			6,428
Accrued contract research		4,599			9,566
Accrued expenses								17,630			20,826
Other current liabilities								1,282			1,314
Total current liabilities		15,797			20,412			22,957			23,953
Long-term debt		49,079			38,974			250,809			250,474
Contingent obligations		84			655
Long-term lease liabilities								1,442			1,544
Other liabilities		4,902			4,099			3,077			3,142
Total liabilities		69,862			64,140			278,285			279,113
Commitments and contingencies (Note 15)
Stockholders’ equity
Commitments and contingencies (Note 17)
Stockholders’ deficit
Preferred stock:
Undesignated preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 27,892,040 and 23,358,637 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		28			23
Undesignated preferred stock: $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding								—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 46,907,228 and 46,516,567 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively								47			46
Additional paid-in capital		548,144			451,947			707,090			705,489
Accumulated other comprehensive loss		(80	)		(16	)
Accumulated other comprehensive income								—			4
Accumulated deficit		(448,220	)		(380,362	)		(826,145	)		(807,799	)
Total stockholders’ equity		99,872			71,592
Total liabilities and stockholders’ equity	$	169,734		$	135,732
Total stockholders’ deficit								(119,008	)		(102,260	)
Total liabilities and stockholders’ deficit							$	159,277		$	176,853

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

License and royalty revenue

$
12

$
—

$
7,544

$
—

Operating expenses:

Research and development

12,112

17,334

45,847

63,757

General and administrative

8,219

5,949

25,299

19,896

Impairment of intangible asset

—

—

682

—

Changes in fair value of contingent consideration

(22
)

(170
)

(571
)

(50
)
Total operating expenses

20,309

23,113

71,257

83,603

Loss from operations

(20,297
)

(23,113
)

(63,713
)

(83,603
)
Other income and expenses:

Interest expense

(1,408
)

(820
)

(3,666
)

(2,368
)
Interest income

389

309

979

788

Other loss, net

(8
)

(4
)

(23
)

1

Loss before income taxes

$
(21,324
)

$
(23,628
)

$
(66,423
)

$
(85,182
)
Provision for income taxes

—

—

753

—

Net loss

$
(21,324
)

$
(23,628
)

$
(67,176
)

$
(85,182
)
Other comprehensive income:

Unrealized (loss) gain on available-for-sale securities, net of tax

16

(20
)

(64
)

14

Comprehensive loss

$
(21,308
)

$
(23,648
)

$
(67,240
)

$
(85,168
)
Net loss per share - basic and diluted

$
(0.77
)

$
(1.04
)

$
(2.54
)

$
(4.39
)
Weighted average common shares outstanding

Basic and diluted

27,776,218

22,627,711

26,453,219

19,391,443

	Three Months Ended March 31,
	2021			2020
Product revenue, net	$	13,207		$	7,303
Government contract service revenue		973			337
Government contract grant revenue		1,613			—
Collaboration and royalty revenue		634			280
Net revenue	$	16,427		$	7,920
Expenses:
Cost of product revenue		2,751			1,471
Research and development		5,538			6,389
Selling, general and administrative		22,359			23,638
Total operating expenses		30,648			31,498
Loss from operations		(14,221	)		(23,578	)
Other income and expenses:
Interest income		25			705
Interest expense		(4,307	)		(4,826	)
Other gains (losses), net		157			82
Net loss	$	(18,346	)	$	(27,617	)
Other comprehensive loss
Unrealized gain (loss) on available-for-sale securities, net of tax		(4	)		397
Comprehensive loss	$	(18,350	)	$	(27,220	)
Basic and diluted net loss per common share	$	(0.39	)	$	(0.66	)
Weighted average common stock outstanding
Basic and diluted		46,664,374			41,641,203

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2021			2020
Net loss	$	(67,176	)	$	(85,182	)	$	(18,346	)	$	(27,617	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		979			941
Depreciation, amortization and accretion								110			70
Stock-based compensation expense		13,018			8,102			1,599			2,535
Noncash interest expense		354			772			335			4,542
Noncash interest income		—			(107	)
Impairment of intangible asset		682			—
Change in fair value of contingent consideration		(571	)		(50	)
Changes in operating assets and liabilities
Accounts receivable and other current assets		1,109			4,621
Purchase of prepaid interest - marketable securities		(288	)		—
Accounts receivable, other receivables, prepaid, and other current assets								(240	)		(2,058	)
Inventories								(2,734	)		(137	)
Operating lease right-of-use asset								236			192
Accounts payable and accrued expenses		(5,094	)		1,474			(421	)		(7,758	)
Operating lease liability								(102	)		(256	)
Other liabilities and other assets		798			(438	)		(1,955	)		161
Net cash used in operating activities		(56,189	)		(69,867	)		(21,518	)		(30,326	)
Investing activities
Purchase of fixed assets, net		(1,165	)		(314	)
Purchase of fixed assets								(262	)		(253	)
Purchase of marketable securities		(149,356	)		(93,250	)		—			(19,631	)
Proceeds from maturities of marketable securities		93,750			24,966			20,000			63,000
Increase (decrease) in restricted cash		655			(1,197	)
Net cash used in investing activities		(56,116	)		(69,795	)
Net cash provided by investing activities								19,738			43,116
Financing activities
Proceeds from issuance of long-term debt, net of costs		9,915			—
Payment of long-term royalty-backed loan agreement debt issuance costs								(397	)		—
Proceeds from sale of common stock, net of costs								—			9,092
Proceeds from exercise of stock options		321			11			3			—
Proceeds from sale of common stock		82,102			61,287
Net cash provided by financing activities		92,338			61,298
Net decrease in cash and cash equivalents		(19,967	)		(78,364	)
Cash and cash equivalents at beginning of period		52,962			131,302
Cash and cash equivalents at end of period	$	32,995		$	52,938
Net cash (used in) provided by financing activities								(394	)		9,092
Net (decrease) increase in cash, cash equivalents and restricted cash								(2,174	)		21,882
Cash, cash equivalents and restricted cash at beginning of period								106,048			105,633
Cash, cash equivalents and restricted cash at end of period							$	103,874		$	127,515
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	2,338		$	—		$	975		$	2,463
Purchases of equipment included in accrued expenses							$	—		$	87

See accompanying notes to unaudited condensed consolidated financial statements.

	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Income (Loss)			Deficit			Deficit
Balances at December 31, 2020		46,516,567	$	46	$	705,489		$	4		$	(807,799	)	$	(102,260	)
Vesting of restricted stock unit awards		389,700		1		(1	)		—			—			—
Exercise of stock options		961		—		3			—			—			3
Employee stock purchase plan expense		—		—		27			—			—			27
Unrealized loss on available-for-sale securities, net of tax		—		—		—			(4	)		—			(4	)
Stock-based compensation expense		—		—		1,572			—			—			1,572
Net loss		—		—		—			—			(18,346	)		(18,346	)
Balances at March 31, 2021		46,907,228	$	47	$	707,090		$	—		$	(826,145	)	$	(119,008	)
	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Income (Loss)			Deficit			Deficit
Balances at December 31, 2019		39,827,749	$	40	$	671,497		$	74		$	(711,258	)	$	(39,647	)
Issuance of common stock, net of expenses		2,334,107		2		9,092			—			—			9,094
Vesting of restricted stock unit awards		212,170		—		—			—			—			—
Employee stock purchase plan expense		—		—		35			—			—			35
Unrealized gain on available-for-sale securities, net of tax		—		—		—			397			—			397
Stock-based compensation expense		—		—		2,500			—			—			2,500
Net loss		—		—		—			—			(27,617	)		(27,617	)
Balances at March 31, 2020		42,374,026	$	42	$	683,124		$	471		$	(738,875	)	$	(55,238	)

Paratek Pharmaceuticals, Inc., or the Company or Paratek, is a Delaware corporation with its corporate office in Boston, Massachusetts and an office in King of Prussia, Pennsylvania.

The Company is a ~~clinical stage~~commercial-stage biopharmaceutical company focused on the development and commercialization of ~~innovative therapeutics based upon tetracycline chemistry. The Company has used its expertise in biology~~novel life-saving therapies for life-threatening diseases or other public health threats for civilian, government and tetracycline chemistry to create chemically diverse and biologically distinct small molecules derived from the minocycline core structure. The Company has generated innovative small molecule therapeutic candidates based upon medicinal chemistry-based modifications, according to structure-based activity, of all positions of the core tetracycline molecule. These efforts have yielded molecules with broad-spectrum antibiotic properties and narrow-spectrum antibiotic properties, and molecules with potent anti-inflammatory properties to fit specific therapeutic applications. This proprietary chemistry platform has produced many compounds that have shown interesting characteristics in various ~~in vitro~~ ~~and~~ ~~in vivo~~ ~~efficacy models.~~military use. The Company’s ~~two lead~~United States, or U.S., Food and Drug Administration, or FDA, approved commercial product, ~~candidates are the antibacterials omadacycline and sarecycline. Omadacycline and sarecycline are examples of molecules that were synthesized from this chemistry discovery platform.~~

~~If approved, omadacycline will be the first in a new class of aminomethylcycline antibiotics. Omadacycline~~NUZYRA^® (omadacycline), is a ~~broad-spectrum, well-tolerated,~~ once-daily oral and intravenous ~~or IV, antibiotic. The Company believes that omadacycline has the potential to become the primary antibiotic choice of physicians for use as a broad-spectrum monotherapy~~ antibiotic for the treatment of adult patients with community-acquired bacterial pneumonia, or CABP, and acute ~~bacterial~~ skin and skin structure infections, or ABSSSI, ~~community-acquired bacterial pneumonia, or CABP, urinary tract infection, or UTI, and other serious community-acquired bacterial infections where resistance~~caused by susceptible pathogens. SEYSARA^® (sarecycline) is ~~of concern. The~~an FDA-approved product with respect to which the Company ~~believes omadacycline, if approved, will be used~~has exclusively licensed in the ~~emergency room, hospital~~U.S. and ~~community care settings. The Company has designed omadacycline~~the People’s Republic of China, or the PRC, Hong Kong and Macau, or the greater China region, certain rights to provide potential advantages over existing antibiotics, including activity against resistant bacteria, broad-spectrum antibacterial activity, oral and IV formulations with once-daily dosing, no known drug interactions, and a favorable safety and tolerability profile.

~~The Company’s second antibacterial product candidate, sarecycline, also known as WC3035,~~Almirall, LLC, or Almirall. SEYSARA is ~~a new, once-daily, tetracycline-derived compound designed for use~~currently being marketed by Almirall in the treatment of acne and rosacea. The Company believes that, based upon the data generated to-date, sarecycline possesses favorable anti-inflammatory activity, plus narrow-spectrum antibacterial activity relative to other tetracycline-derived molecules,U.S. as a once-daily oral ~~bioavailability, does not cross the blood-brain barrier, and favorable pharmacokinetic, or PK, properties that the Company believes make it particularly well-suited~~therapy for the treatment of ~~inflammatory~~moderate to severe acne invulgaris. With respect to the ~~community setting. The Company has exclusively licensed U.S. development and commercialization rights~~Company’s technology as it relates to sarecycline, ~~for~~ the ~~treatment of acne to Allergan plc, or Allergan, while retaining~~Company retains development and commercialization rights in all countries other than the ~~rest~~U.S. and the greater China region, and in February 2020, the Company exclusively licensed from Almirall certain technology owned or in-licensed by Almirall or its affiliates that is necessary or useful to develop or commercialize sarecycline outside of the ~~world.~~

~~Prior~~U.S. Almirall plans to October 30, 2014, the name of the Company was Transcept Pharmaceuticals, Inc., or Transcept. On October 30, 2014, Transcept completed a business combination, or the Merger, with privately held Paratek Pharmaceuticals, Inc., or Old Paratek,develop sarecycline for acne in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of June 30, 2014, by and among Transcept, Tigris Merger Sub, Inc., Tigris Acquisition Sub, LLC and Old Paratek, or the Merger Agreement.China.

The Company has incurred significant losses since ~~its~~ inception in 1996. The Company has generated an accumulated deficit of ~~$448.2~~$826.1 million through ~~September 30, 2017~~March 31, 2021 and ~~will~~may require substantial additional funding in connection with the Company’s continuing operations to support ~~commercial~~clinical development and commercialization activities associated with ~~its lead product candidate, omadacycline. Based~~NUZYRA. Based upon the Company’s current operating plan, ~~the Company~~it anticipates that its ~~existing~~ cash and cash equivalents ~~and marketable securities~~of $103.5 million as of March 31, 2021 will enable the Company to fund ~~its~~ operating expenses and capital expenditure requirements through at least the next twelve months from the ~~filing date~~issuance of the financial statements included in this Quarterly Report on Form ~~10-Q.~~ 10-Q. The Company expects to finance future cash needs primarily through a combination of product sales, royalties, public ~~and~~or private equity offerings, debt or other structured financings, strategic collaborations, grant funding and ~~strategic collaborations.~~government funding. The Company is subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain additional financing to fund the future development of the Company’s product candidates, the need to obtain compliant product from ~~third party~~third-party manufacturers, the need to obtain marketing approval for the Company’s product candidates, the need to successfully commercialize and gain market acceptance of product candidates, the risks of manufacturing product with an external supply chain, dependence on key personnel, and compliance with government regulations as well as ~~those~~the risks discussed in the “~~Risk Factors~~”“Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, as filed with the U.S. Securities and Exchange Commission, or the SEC, on March ~~2, 2017,~~29, 2021, or the 2020 Form 10-K, in the Company’s other filings with the SEC and ~~elsewhere~~ in the “Risk Factors” section of this ~~report.~~ Quarterly Report on Form 10-Q.

The significant accounting policies and estimates used in preparation of the condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2016, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.

~~As of January 1, 2017, the Company adopted ASU No. 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09~~. Upon adoption, the Company adjusted retained earnings for amendments related to an entity-wide accounting policy election to recognize the impact of share-based award forfeitures only as they occur rather than by applying an estimated forfeiture rate as previously required. ASU 2016-09 requires that this change be applied using a modified-retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is adopted. The following table summarizes the impact to the Company’s consolidated balance sheet, including the amount charged to retained earnings as of January 1, 2017 (in thousands):

~~There have been no other material changes in the Company’s significant accounting policies during the nine months ended September 30, 2017.~~

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, ~~of the United States of America,~~ or U.S. GAAP, as found in the Accounting Standards Codification, or ASC, and Accounting Standards ~~Update,~~Updates, or ASU, of the Financial Accounting Standards Board, or FASB, and pursuant to the rules and regulations of the SEC.

The accompanying condensed consolidated financial statements are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, ~~2016,~~2020, and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2021 and December 31, 2020, results of operations for the three month periods ended March 31, 2021 andMarch 31, 2020, cash flows for the ~~interim~~three month periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~March 31, 2020 and changes in stockholders’ deficit for the three month periods ended March 31, 2021 and March 31, 2020. Purchase of prepaid interest - marketable securities, which was included as a line item in the March 31, 2020 condensed consolidated statement of cash flows, has been reclassified into the accounts receivable, other receivables, prepaid, and other current assets line item to conform to the fiscal 2021 presentation.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the year ending December 31, ~~2017.~~2021. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, ~~2016,~~2020, and notes thereto, which are included in the Company’s ~~Annual Report on~~2020 Form 10-K.

As of March 31, 2021, the Company’s significant accounting policies and estimates, which are detailed in the Company’s 2020 Form 10-K, ~~for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.~~have not changed.

The accompanying unaudited condensed consolidated financial statements include the results of operations of Paratek Pharmaceuticals, Inc. and its wholly-owned subsidiaries, Paratek Pharma, LLC, Paratek Securities Corporation, Transcept Pharma, Inc., Paratek UK ~~Ltd~~Limited, Paratek Ireland Limited, Paratek Royalty Corporation, Paratek Royalty Corporation II, PRTK SPV1 LLC and ~~Paratek Bermuda Ltd.~~PRTK SPV2 LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

The preparation of the accompanying unaudited condensed consolidated financial statements, in conformity with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses ~~and the disclosure of contingent liabilities~~ in the Company’s financial statements. On an ongoing basis, the Company evaluates its estimates and judgments, including those related to, among other items, ~~intangible assets,~~accounts receivable and related reserves, inventory and related reserves, goodwill, ~~contingent liabilities,~~net product revenue, government contract service revenue, government contract grant revenue, collaboration and royalty revenue, leases, stock-based compensation arrangements, amortization of the debt discount and issuance costs under the R-Bridge Loan Agreement (as defined below), manufacturing and clinical accruals, useful lives for depreciation ~~and amortization of long-lived assets~~ and valuation allowances on deferred tax assets. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known by the Company’s management.

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in ~~one~~1 operating segment.

Financial instruments that subject the Company to credit risk consist primarily of cash, restricted cash, and accounts receivable. The Company places its cash in an accredited financial institution and this balance is above federally insured amounts. The Company has 0 off-balance sheet concentrations of credit risk such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Accounts receivable as of March 31, 2021 includes $13.8 million due from customers for sales of NUZYRA, net of prompt payment discounts, chargebacks, rebates and certain fees. Accounts receivable as of March 31, 2021 also includes$0.7 million of government contract service revenue earned under the BARDA contract (as defined below), $0.7 million of government contract grant revenue earned under the BARDA contract, and estimated revenue earned of $0.6 million of royalties on SEYSARA sales under the Almirall Collaboration Agreement (as defined below) and XERAVA^TM (eravacycline) sales under the Tetraphase License Agreement (as defined below). Refer to Note 7, Government Contract Revenue for further information on the BARDA contract and to Note 8, License and Collaboration Agreements for further information on the Almirall Collaboration Agreement and the Tetraphase License Agreement.

The following is a summary of available-for-sale securities as of ~~September 30, 2017 and~~ December 31, ~~2016~~2020 (in thousands):

NoNaN available-for-sale securities held as of ~~September 30, 2017 and~~ December 31, ~~2016~~2020 had remaining maturities greater than ~~one year.~~twelve months.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated statement of cash flows that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):

AsOn May 1, 2019, the Company deposited $4.0 million into an interest reserve account in conjunction with the funding of ~~September 30, 2017, restricted cash of $0.2 million represents royalty income received but not yet paid to former Transcept stockholders as part of the royalty sharing~~a royalty-backed loan agreement, or the ~~Royalty Sharing~~Royalty-Backed Loan Agreement, executed bywith Healthcare Royalty Partners III, L.P., or HCRP. Payments of interest under the Royalty-Backed Loan Agreement are made quarterly using royalty payments received since the immediately preceding payment date under the Almirall Collaboration Agreement. On each interest payment date, if the royalty payments received do not equal the total interest due for the respective quarter, the Company ~~on October 28, 2016 with~~will cover the ~~Special Committee~~balance of the ~~Company’s Board~~interest payment due from the interest reserve account. Refer to Note 13, Long-Term Debt, for further details. An insignificant amount and $0.6 million of ~~Directors, or the Special Committee, a committee established in connection with the Merger. See Note 11,~~ ~~Fair Value Measurements, for more information on the Royalty Sharing Agreement. Included in the balance~~restricted cash as of March 31, 2021 and December 31, ~~2016, was~~2020, respectively, represented the ~~remainder~~estimated amount that is expected to be paid to HCRP out of the ~~Intermezzo~~interest reserve ~~of $0.1 million, established in accordance with~~account within the ~~Merger Agreement, which was comprised of unpaid legal fees.~~

During the year ended December 31, 2016, the Company obtained a letter of credit in the amount of $0.8 million, which was collateralized with a bank account at a financial institution, to secure value-added tax registration in certain foreign countries. The letter of credit was cancelled by the Company during the first quarter of 2017.

The Company leases its Boston, Massachusetts office space under a non-cancelable operating lease. ~~Refer to Note 15,~~ ~~Commitments and Contingencies, for further details.~~In accordance with the lease, the Company has a cash-collateralized irrevocable standby letter of credit in the amount of $0.3 million as of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, naming the landlord as beneficiary.The Company executed an amendment to the existing lease agreement on its Boston office space in April 2021. In accordance with the amendment, the cash-collateralized irrevocable standby letter of credit will be reduced to an insignificant amount. Refer to Note 14, Leases, for further details.

~~Fixed assets,~~The following table presents inventories, net ~~consists of the following~~ (in thousands):

~~Intermezzo product rights and the TO-2070 license rights were acquired through the Merger. Refer to Note 8,~~ ~~License and Collaboration Agreements,~~ for further detail concerning Intermezzo and TO-2070. Intangible assets are reviewed when events or circumstances indicate that the assets might be impaired. An impairment loss would be recognized when the estimated undiscounted cash flows to be generated by those assets are less than the carrying amounts of those assets. If it is determined that the intangible asset is not recoverable, an impairment loss would be calculated based on the excess ofWhen recorded, inventory reserves reduce the carrying value of inventories to their net realizable value. The Company reviews inventories on hand at least quarterly and records provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. NaN inventory reserves existed as of March 31, 2021 and December 31, 2020.

Long-term inventory, which consists of raw materials and work in process, is included in other long-term assets in the ~~intangible asset over its fair value.~~Company’s consolidated balance sheets.

In April 2016, the first generic equivalent of Intermezzo was launched. Although the generic was off the market for a short period, it re-entered in September 2016. Since the generic launch, a recoverability test has been performed each reporting period and the Company determined that the summation of the undiscounted cash flows through the year of patent expiration, or the estimated useful life of the asset, exceeded the carrying value of the asset in periods up to and including March 31, 2017. During the quarter ended June 30, 2017, Intermezzo product sales projections significantly declined. As such, the Company performed a recoverability test and it was determined that the summation of the undiscounted future cash flow of the Intermezzo product rights were less than its carrying value. As a result, the Company recorded an impairment charge during the three months ended June 30, 2017 of $0.7 million. No impairment was recorded during the three months ended September 30, 2017 or the year ended December 31, 2016.

Basic net loss per share ~~available to common stockholders~~ is calculated by dividing the net loss ~~available to common stockholders~~ by the weighted-average number of common ~~shares~~stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share ~~available to common stockholders~~ is computed by dividing the net loss ~~available to common stockholders~~ by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method or the if-converted method, as applicable. For purposes of this calculation, shares of common stock issuable upon conversion of convertible debt, stock options, restricted stock units, ~~and~~or RSUs, warrants to purchase common stock, and shares issuable under the employee stock purchase plan are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share ~~available to common stockholders~~ when their effect is dilutive.

The following outstanding shares subject to stock options and restricted stock units, ~~and~~ warrants to purchase shares of common stock, common stock issuable upon conversion of convertible debt and shares issuable under the employee stock purchase plan were antidilutive due to a net loss in the periods presented and, therefore, were excluded from the dilutive securities computation ~~as of~~for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 as indicated below:

On December 18, 2019, the Company entered into a five-year contract with the Biomedical Advanced Research and Development Authority, or BARDA, a division of the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response, herein referred to as the BARDA contract, with an option to extend up to ten years, to support the development of NUZYRA for the treatment of pulmonary anthrax, FDA post-marketing requirements, or PMRs, associated with the initial NUZYRA approval, and with an option for BARDA to procure up to 10,000 treatment courses of NUZYRA for the Strategic National Stockpile, or SNS.

The BARDA contract could result in payments to the Company of up to approximately $284.7 million and consists of a five-year base period-of-performance and a total contract period-of-performance (base period plus option exercises) of up to ten years. Under the base period-of-performance, the Company will conduct activities necessary to (i) allow the product to be used under an Emergency Use Authorization, (ii) obtain licensure of NUZYRA through a supplemental New Drug Application, or NDA, submission for anthrax, and (iii) provide up to 2,500 treatment courses of the drug product to be stored as vendor managed inventory and subsequently delivered to the SNS. BARDA has exercised two options that respectively cover manufacturing-required requirements and post-licensure commitments required by the FDA. The remaining contract options may be exercised to perform additional studies necessary for licensure for the prophylaxis of anthrax and procure additional treatment regimens.

Under the terms of the agreement, an award of up to approximately $59.4 million for the development of NUZYRA for the treatment of pulmonary anthrax and the purchase of an initial 2,500 treatment courses of NUZYRA to add to the current SNS has been funded by BARDA. Two additional contractual services have been funded by BARDA that awarded funding of approximately $76.8 million for existing FDA PMRs and approximately $20.4 million for manufacturing-related requirements. BARDA exercised the options to award the initial funding in December 2019 and the additional staged funding in April 2020. The additional staged funding will support all FDA PMRs associated with the approval of NUZYRA, including CABP and pediatric studies as well as a five-year post-marketing bacterial surveillance study, and support the U.S. onshoring and security requirements of the Company’s manufacturing activities for NUZYRA.

The remaining optional funding under the BARDA contract includes the potential for approximately $12.7 million to support the development of NUZYRA for the prophylaxis of anthrax and a maximum of approximately $115.3 million to provide for three additional purchases of NUZYRA treatment courses, each of which may be exercised at BARDA’s discretion upon development milestones related to the anthrax treatment development program.

The BARDA contract contains a number of terms and conditions that are customary for government contracts of this nature, including provisions giving the government the right to terminate the contract at any time for its convenience.

The Company evaluated the BARDA contract under ASC, Topic 606, Revenue from Contracts with Customers, or ASC 606, and concluded that a portion of the arrangement represents a transaction with a customer. The Company identified five material promises under the BARDA contract: (i) research and development services performed for the treatment of pulmonary anthrax, (ii) the procurement of 2,500 treatment courses of NUZYRA, (iii) an option for services performed for the supplemental late-stage development of NUZYRA for treatment and prophylaxis of pulmonary anthrax, (iv) an option for services related to U.S. manufacturing onshoring and security requirements, which includes shelf-life stability extension work and regulatory activities that will benefit the manufacturing processes that support NUZYRA for the treatment of pulmonary anthrax, and (v) options to procure up to three 2,500 treatment courses of NUZYRA.

In December 2019, the Company determined material promises (i) and (ii) above were performance obligations since they were distinct within the context of the contract as the services are separately identifiable from other promises within the arrangement. The Company also determined that for (i) and (ii) the transaction price included within the BARDA contract was equivalent to the standalone selling price of the services and the cost of the procurement.

The Company evaluated the material promises that contained option rights ((iii), (iv), and (v) above). The Company determined that (iii) and (iv) were not offered at a discount that is incremental to the range of discounts typically given for these goods and services, and therefore do not represent material rights. As such, options for additional services in (iii) and (iv) were not considered performance obligations at the outset of the arrangement. The Company also evaluated the future procurement option rights (v) and determined that those option rights represent a material right. As such, the optional additional NUZYRA procurements in (v) were considered performance obligations at the outset of the arrangement. The Company concluded that three performance obligations existed at the outset of the BARDA contract.

As the BARDA contract is partially within the scope of ASC 606 and partially within the scope of other guidance, the Company applied the guidance of ASC 606 to initially measure the parts of the contract to which ASC 606 is applicable. The total transaction price of the parts of the BARDA contract that existed at the outset of the contract that fall under ASC 606 was determined to be $63.6 million, inclusive of $4.2 million in variable consideration, and was allocated to each of the three performance obligations based on the performance obligation’s estimated relative stand-alone selling prices. As of March 31, 2021, the Company reevaluated the variable consideration of $4.2 million that is included in the transaction price and determined that the variable consideration should not be constrained as it is not probable that a significant reversal in the amount of the cumulative revenue recognized will occur in a future period. The transaction price was allocated as follows: $21.5 million to research and development services performed for the treatment of pulmonary anthrax in (i), which will be classified as government contract service revenue when recognized, $37.9 million to the procurement of 2,500 treatment courses of NUZYRA in (ii), which will be classified as product revenue when recognized, and a total of $4.2 million to the options to procure up to three 2,500 treatment courses of NUZYRA in (v), which would be included within product revenue when recognized upon exercise and transfer of control of related treatment courses. The Company estimated the stand-alone selling price of the research and development services performed for the treatment of pulmonary anthrax based on the Company’s projected cost of providing the services plus an applicable profit margin commensurate with observable market data for similar services. The Company estimated the stand-alone selling price of the procurement of 2,500 treatment courses of NUZYRA based on historical pricing of the Company’s commercial products to similar customers. The Company estimated the stand-alone selling price of the future procurement options based on the discount that the customer would obtain when exercising the option, adjusted for any discount that the customer could receive without entering into the contract, and the likelihood that the option will be exercised.

The Company’s performance obligations are either satisfied over time as work progresses or at a point in time.

The Company concluded that research and development services performed for the treatment of pulmonary anthrax in (i) would be recognized as government contract service revenue over time as the performance obligation is satisfied. Costs incurred represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Types of contract costs include labor, material, and third-party services.

The product procurement performance obligations ((ii) and, if any optional additional procurements are exercised from (v) above), generate revenue at a point in time, which will be upon transfer of control of the product. As such, the related revenue for

these performance obligations will be recognized at a point in time as product revenue within the Company’s consolidated statement of operations. As of March 31, 2021, no product procurement performance obligations have been completed and therefore 0 product revenue has been recognized.

In April 2020, BARDA exercised its option to obtain manufacturing-related services under material promise (iv) and the Company is treating these services as a separate $20.4 million contract for accounting purposes since manufacturing-related services were determined at the contract outset to be optional services that did not represent a material right. The Company’s manufacturing-related services are satisfied over time as work progresses.

The Company recognized $1.0 million of government contract service revenue during the three months ended March 31, 2021.

As of March 31, 2021, the aggregate amount of transaction price allocated to remaining performance obligations, excluding unexercised contract options, was $79.7 million. The Company expects to recognize this amount as revenue over the next three to six years.

The Company concluded that BARDA’s reimbursement for existing FDA PMRs associated with the initial NUZYRA approval was not within the scope of ASC 606 as BARDA is not receiving services as the Company’s customer. The Company estimated the consideration to be allocated to government contract grant revenue based on the consideration under the BARDA contract in excess of the estimated standalone selling prices for components of the BARDA contract accounted for under ASC 606. The Company recognizes the allocated consideration for BARDA’s reimbursement of existing FDA PMRs associated with the initial NUZYRA approval of $72.6 million as government contract grant revenue as the related reimbursable expenses are incurred.

The Company recognized $1.6 million of government contract grant revenue under the BARDA contract during the three months ended March 31, 2021.

Contract assets (i.e., unbilled accounts receivable) and/or contract liabilities (i.e., customer advances and deposits) may exist at the end of each reporting period under the BARDA contract. When amounts are received prior to performance obligations being satisfied, the amounts allocated to those performance obligations are reflected as contract liabilities on the consolidated balance sheets, as deferred revenue, until the performance obligations are satisfied.

As of March 31, 2021, an insignificant amount of unbilled accounts receivable was recorded and is a component of accounts receivable, net on the Company’s condensed consolidated balance sheet.

As of March 31, 2020, $0.3 million of deferred revenue was recorded and is a component of other current liabilities on the Company’s consolidated balance sheet.

On March 18, 2019, Paratek and Tetraphase Pharmaceuticals, Inc., or Tetraphase, which is now a subsidiary of La Jolla Pharmaceutical Company, entered into a License Agreement, or the Tetraphase License Agreement. Under the terms of the Tetraphase License Agreement, Paratek granted to Tetraphase a non-exclusive, worldwide, royalty-bearing license, with the right to grant sublicenses, under certain Paratek patents, to develop, make, have, use, import, offer for sale and sell the licensed product, or XERAVA, which is a drug for the treatment of complicated, intra-abdominal infections caused by bacteria, which was approved by the FDA in August 2018.

The terms of the Tetraphase License Agreement provide for Tetraphase to pay Paratek royalties at a low single digit percent on net product revenues of the licensed product sold in the U.S. Tetraphase’s obligation to pay royalties with respect to the licensed product shall be retroactive to the date of the first commercial sale of the licensed product in the U.S., which occurred in February 2019. Tetraphase is currently selling XERAVA in the U.S.

In accordance with the Company’s revenue recognition policy, the Company recognized an insignificant amount of royalty revenue during the three months ended March 31, 2021 under the Tetraphase License Agreement.

On April 21, 2017, Paratek Bermuda Ltd., a former wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., and Zai Lab (Shanghai) Co., Ltd., or Zai, entered into a License and Collaboration Agreement, or the Zai Collaboration Agreement. On December 18, 2019, Paratek Bermuda Ltd. assigned its rights under the Zai Collaboration Agreement to Paratek Pharmaceuticals, Inc. Under the terms of the Zai Collaboration Agreement, Paratek ~~Bermuda Ltd.~~ granted Zai an exclusive license to develop, manufacture and commercialize omadacycline, or the licensed product, in the ~~People’s Republic of China,~~PRC, Hong Kong, Macau and Taiwan, or the Zai territory, for all human therapeutic and preventative uses other than biodefense. Zai will be responsible for the development, manufacturing and commercialization of the licensed product in the Zai territory, at its sole cost with certain assistance from ~~Paratek Bermuda Ltd.~~Paratek.

Under the terms of the Zai Collaboration Agreement, Paratek ~~Bermuda Ltd. earned an upfront cash payment of $7.5 million, before taxes, and~~ is eligible to receive up to ~~$14.0~~$6.0 million in potential future regulatory milestone payments and $40.5 million in potential future commercial milestone payments, the next being ~~$5.0~~$6.0 million upon regulatory approval ~~by the U.S. Food & Drug Administration, or FDA, of~~for a ~~New Drug Application, or NDA, submission~~licensed product in the ~~CABP indication~~PRC. The terms of the Zai ~~will~~Collaboration Agreement also provide for Zai to pay Paratek ~~Bermuda Ltd.~~ tiered royalties at a low double digit to mid-teen percent on net sales of the licensed product in the ~~territory.~~

~~The~~ Zai ~~Collaboration Agreement will continue, on a region-by-region basis, until~~territory. In accordance with the ~~expiration of and payment by Zai of all Zai’s payment obligations, which~~Company’s revenue recognition policy, as regulatory approval in the PRC is ~~until~~not within the ~~later of: (i) the abandonment, expiry or final determination of invalidity~~control of the ~~last valid claim within~~Company, the Paratek patents that covers the licensed product in the region in the territory in the manner that Zai or its affiliates or sublicensees exploit the licensed product or intend for the licensed product to be exploited; or (ii) the eleventh anniversary of the first commercial sale of such licensed product in such region.

~~The Company evaluated the Zai Collaboration Agreement under ASC Subtopic 605-25, “Multiple Element Arrangements”.The Company determined that there were five deliverables under the Zai Collaboration Agreement: (i) an exclusive license to develop, manufacture and commercialize omadacycline in the territory; (ii)~~ ~~an initial transfer of technology; (iii)~~ ~~a transfer of certain materials and materials know-how (iv) an additional transfer of materials; and~~ ~~(v) participation on a joint steering committee, or JSC, and joint development committee, or JDC.~~

The consideration allocable to the delivered unit or units of accounting is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions. Therefore, the Company excluded from the allocable consideration the milestone payments and royalties, regardless of the probability that such milestone and royalty payments will be made, until the events that give rise to such payments occur. In addition, all regulatory milestones in the Zai Collaboration Agreement are considered substantive on the basis of the contingent nature of the milestone, including factors such as regulatory and other risks that must be overcome to achieve each milestone as well as the level of effort and investment required. Accordingly, such amounts will be recognized in the period in which the associated milestone is achieved, assuming all other revenue recognition criteria are met. All commercial milestones will be accounted for in the same manner as royalties and recorded as revenue upon achievement of the milestone ~~assuming all other~~was not deemed probable and the risk of significant reversal of revenue ~~recognition criteria are met.~~

~~The Company determined that all five deliverables listed above had value to the Company on a stand-alone basis and therefore five units~~was not resolved as of accounting were identified. The Company determined, however, that the best estimate for the selling price of the initial transfer of technology, transfer of certain materials and materials know-how, the additional transfer of materials and participation on the JSC and JDC were all inconsequential.March 31, 2021. As such, the ~~Company~~next milestone payment was 0t recognized ~~the total arrangement consideration~~ as revenue during the ~~quarter ended June 30, 2017.~~

Under the Zai Collaboration Agreement, Zai will pay taxes incurred in the territory by Paratek on Paratek’s behalf and deduct these taxes from the payments due to Paratek. Withholding and other value-added taxes of $0.8 million were incurred on the $7.5 million upfront payment. As such, the Company received $6.7 million, net of taxes, during the nine months ended September 30, 2017. These taxes were paid by Zai on behalf of the Company.

~~During the nine months ended September 30, 2017, the Company recognized revenue under the Zai Collaboration Agreement of $7.5 million, which represents the upfront payment. During the~~ three months ended ~~September 30, 2017, the Company did not recognize revenue under the Zai Collaboration Agreement.~~March 31, 2021.

In July 2007, the Company and Warner Chilcott Company, Inc. ~~(now~~(which became a part of Allergan plc, or Allergan), entered into a collaborative research and license agreement ~~or the Allergan Collaboration Agreement,~~ under which the Company granted Allergan an exclusive license to research, develop, manufacture and commercialize tetracycline products for use in the ~~United States~~U.S. for the treatment of acne and rosacea. In September 2018, Allergan assigned to Almirall its rights under the collaboration agreement, or the Almirall Collaboration Agreement. Since Allergan did not exercise its development option with respect to the treatment of rosacea prior to initiation of a Phase 3 trial for the product, the license grant to Allergan, which was assigned to Almirall, converted to a non-exclusive license for the treatment of rosacea as of December 2014. Under the terms of the Allergan Collaboration Agreement, the Company and Allergan are responsible for, and are obligated to use, commercially reasonable efforts to conduct specified development activities for the treatment of acne and, if requested by Allergan, the Company may conduct certain additional development activities to the extent the Company determines in good faith that the Company has the necessary resources available for such activities. Allergan has agreed to reimburse the Company for its costs and expenses, including third-party costs, incurred in conducting any such development activities.

Under the terms of the ~~Allergan~~Almirall Collaboration Agreement, ~~Allergan~~Almirall is responsible for and is obligated to use commercially reasonable efforts to develop and commercialize tetracycline compounds that are specified in the agreement for the treatment of acne. The Company has agreed during the term of the ~~Allergan~~Almirall Collaboration Agreement not to directly or indirectly develop or commercialize any tetracycline compounds in the ~~United States~~U.S. for the treatment of acne, and ~~rosacea, and Allergan~~Almirall has agreed during the term of the ~~Allergan~~Almirall Collaboration Agreement not to directly or indirectly develop or commercialize any tetracycline compound included as part of the agreement for any use other than as provided in the ~~agreement.~~Almirall Collaboration Agreement.

In February 2020, the Company finalized a license agreement with Almirall granting the Company exclusive rights to develop, manufacture and commercialize sarecycline outside of the U.S., including rights of reference to Almirall’s clinical data thus formalizing the Company’s rights to develop, manufacture and commercialize sarecycline in the rest of the world. In connection with that license, the Company then exclusively licensed Almirall pursuant to the Almirall China License Agreement, the rights to develop, manufacture and commercialize sarecycline in the greater China region. Almirall currently holds a nonexclusive license to develop and commercialize sarecycline for the treatment of rosacea in the U.S., and in the U.S., Paratek cannot grant rights on back-up compounds, lead candidate(s), or products licensed to Almirall for rosacea.

The ~~Company earned~~Almirall Collaboration Agreement contains 2 performance obligations: (i) an ~~upfront fee~~exclusive license to research, develop and commercialize tetracycline products for use in the ~~amount~~U.S. for the treatment of ~~$4.0 million~~acne and rosacea and (ii) research and development services. The performance obligation to deliver the license was satisfied upon ~~the~~ execution of the ~~Allergan~~Almirall Collaboration Agreement ~~$1.0 million upon filing~~in July 2007. All research and development services were completed by December 2010. As of ~~an Investigational New Drug Application in~~December 2010, ~~and $2.5 million upon initiation of Phase 2 trials in 2012. In December 2014,~~ the Company ~~also earned $4.0 million upon initiation of Phase 3 trials associated with~~had 0 remaining performance obligations under the ~~Allergan~~Almirall Collaboration Agreement. In addition, Allergan may be required to pay the Company an aggregate of approximately $17.0 million upon the achievement of specified future regulatory milestones, the next being $5.0 million upon acceptance by the FDA of a NDA submission. Allergan

Almirall is also obligated to pay the Company tiered royalties, ranging from the mid-single digits to the low double digits, based on net sales of tetracycline compounds developed under the ~~Allergan~~Almirall Collaboration Agreement, with a standard royalty reduction post patent expiration for such product for the remainder of the royalty term. ~~Allergan’s obligation~~

Royalty payments are recognized when the sales occur. The Company recognized $0.6 million of royalty revenue for sales of SEYSARA in the U.S. by Almirall for the three months ended March 31, 2021 under the Almirall Collaboration Agreement. During the first quarter of 2021, royalty revenue recognized for sales of SEYSARA in the U.S. was estimated using third-party data and an approximation of discounts and allowances to ~~pay~~calculate net product sales, to which the Company ~~royalties~~then applied the applicable royalty percentage specified in the Almirall Collaboration Agreement. Differences between actual and estimated royalty revenues will be adjusted for ~~each tetracycline compound it commercializes~~in the period in which they become known, which is expected to be the following quarter.

In February 2020, the Company entered into (i) an ex-U.S. license agreement with Almirall, or the Ex-U.S. License, under which Almirall granted the ~~Allergan Collaboration Agreement expires on~~Company an exclusive license in and to certain technology owned or in-licensed by Almirall or its

affiliates in order to research, develop, manufacture and commercialize sarecycline for the ~~later~~treatment of acne in all countries other than the U.S. and (ii) a license agreement with Almirall that is specific to China, or the China License, under which the Company granted to Almirall an exclusive license in and to certain technology owned or in-licensed by the Company or its affiliates in order to research, develop and commercialize sarecycline for the treatment of acne in the greater China region.

Under the terms of the ~~expiration~~China License, Almirall is responsible for and is obligated to use commercially reasonable efforts to develop and commercialize sarecycline for the treatment of acne, including requirements to (i) file an Investigational New Drug Application (or analogous foreign submission) for sarecycline for the treatment of acne in the greater China region in calendar year 2020, (ii) receive regulatory approval for sarecycline for the treatment of acne in the greater China region within seven years following such submission and (iii) commercialize sarecycline for the treatment of acne in the greater China region within eighteen months after obtaining regulatory approval. If Almirall does not satisfy the diligence requirements set forth in subclauses (ii) or (iii) above, the Company may terminate the China License.

In connection with the Ex-U.S. License, the Company pays Almirall, on a country-by-country and product-by-product basis, (i) for eight years following the first commercial sale of a sarecycline product in a country, a royalty in the middle-single digits on its or its affiliates’ nets sales of sarecycline products outside of the ~~last~~U.S., subject to ~~expire patent that covers~~certain standard reductions, and (ii) for fifteen years following the ~~tetracycline compound~~first commercial sale of a sarecycline product in a country, a percentage of the consideration (e.g., milestones, royalties) we receive from sublicensees in connection with developing and commercializing sarecycline outside of the U.S., which ranges from one-fifth to one-half of such consideration, subject to certain standard reductions. In connection with the China License, for fifteen years following the first commercial sale of a sarecycline product in China, Almirall pays the Company a royalty in the ~~United States and the date~~high-single digits on ~~which generic drugs that compete with the tetracycline compound reach a certain threshold market share~~their, their affiliates’ or their sublicensees’ net sales of sarecycline products in the ~~United States.~~

~~The Company has not received any amounts or recognized any revenue under this arrangement since 2014.~~greater China region, subject to certain standard reductions.

In February 1997, the Company and Tufts University, or Tufts, entered into a license agreement under which the Company acquired an exclusive license to certain patent applications and other intellectual property of Tufts related to the drug resistance field to develop and commercialize products for the treatment or prevention of bacterial or microbial diseases or medical conditions in humans or animals or for agriculture. The Company subsequently entered into ~~ten~~eleven amendments to that agreement, collectively the Tufts License Agreement, to include patent applications filed after the effective date of the original license agreement, to exclusively license additional technology from Tufts, to expand the field of the agreement to include disinfectant applications, and to change the royalty rate and percentage of sublicense income paid by the Company to Tufts under sublicense agreements with specified sublicensees. The Company is obligated under the Tufts License Agreement to provide Tufts with annual diligence reports and a business plan and to meet certain other diligence milestones. The Company has the right to grant sublicenses of the licensed rights to third parties, which will be subject to the prior approval of Tufts unless the proposed sublicensee meets a certain net worth or market

capitalization threshold. The Company is primarily responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents covering the intellectual property licensed under the Tufts License Agreement at its sole expense. The Company has the first right, but not the obligation, to enforce the licensed intellectual property against infringement by third parties.Past Collaborations

The Company issued Tufts 1,024 shares of the Company’s common stock on the date of execution of the original license agreement, and the Company may be required to make certain payments of up to $0.3 million to Tufts upon the achievement by products developed under the agreement of specified development and regulatory approval milestones. The Company has already made a payment of $50,000 to Tufts for achieving the first milestone following commencement of the Phase 3 clinical trial for omadacycline. The Company is also obligated to pay Tufts a minimum royalty payment in the amount of $25,000 per year. In addition, the Company is obligated to pay Tufts royalties based on gross sales of products, as defined in the agreement, ranging in the low single digits depending on the applicable field of use for such product sale. If the Company enters into a sublicense under the Tufts License Agreement, based on the applicable field of use for such product, the Company agreed to pay Tufts a percentage, ranging from 10% to 14% (ten percent to fourteen percent), of that portion of any sublicense issue fees or maintenance fees received by the Company that are reasonably attributable to the sublicense of the rights granted to the Company under the Tufts License Agreement and the lesser of a percentage, ranging from the low tens to the high twenties based on the applicable field of use for such product, of the royalty payments made to the Company by the sublicensee or the amount of royalty payments that would have been paid by the Company to Tufts if the Company had sold the product. The Company paid $0.1 million, or 1.5%, of a sublicense issue fee to Tufts during the nine months ended September 30, 2017 upon earning the $7.5 million upfront payment under the Zai Collaboration Agreement.

Unless terminated earlier, the Tufts License Agreement will expire at the same time as the last-to-expire patent in the patent rights licensed to the Company under the agreement and after any such expiration the Company will continue to have an exclusive, fully-paid-up license to such intellectual property licensed from Tufts. Tufts has the right to terminate the agreement upon 30 days’ notice should the Company fail to make a material payment under the Tufts License Agreement or commit a material breach of the agreement and not cure such failure or breach within such 30-day period, or if, after the Company has started to commercialize a product under the Tufts License Agreement, the Company ceases to carry on its business for a period of 90 consecutive days. The Company has the right to terminate the Tufts License Agreement at any time upon 180 days’ notice. Tufts has the right to convert the Company’s exclusive license to a non-exclusive license if the Company does not commercialize a product licensed under the agreement within a specified time period.

In ~~July~~September 2009, the Company and ~~Purdue Pharma L.P.~~Novartis International Pharmaceutical Ltd., or ~~Purdue Pharma,~~Novartis, entered into a ~~license~~Collaborative Development, Manufacture and ~~collaboration agreement,~~Commercialization License Agreement, or the ~~Purdue Collaboration~~Novartis Agreement, ~~that grants an~~which provided Novartis with a global, exclusive patent and technology license ~~to Purdue Pharma to commercialize Intermezzo~~for the development, manufacturing and marketing of omadacycline. The Novartis Agreement was terminated by Novartis without cause in June 2011 and the ~~United States~~termination was effective 60 days later. The Company and Novartis subsequently entered in a letter agreement in January 2012, or the Novartis Letter Agreement, as amended, pursuant to ~~which:~~

The Purdue Collaboration Agreement expires on the expiration of Purdue Pharma’s royalty obligations. Purdue Pharma has the right to terminate the Purdue Collaboration Agreement at any time upon advance notice of 180 days. The Purdue Collaboration Agreement is also subject to termination by Purdue Pharma in the event of FDA or governmental action that materially impairs Purdue Pharma’s ability to commercialize Intermezzo or the occurrence of a serious eventnegotiation with respect to commercialization rights of omadacycline following approval of omadacycline from the ~~safety of Intermezzo. The Purdue Collaboration Agreement may be terminated by the Company upon Purdue Pharma commencing an action that challenges the~~

~~validity of Intermezzo related patents~~FDA, European Medicines Agency, or if Purdue Pharma is excluded from participation in federal healthcare programs. The Purdue Collaboration Agreement may be terminated by either party in the event of a material breach by or insolvency of the other party.

~~The Company also granted Purdue Pharma and an associated company the right to negotiate for the commercialization of Intermezzo in Mexico in 2013~~any regulatory agency, but ~~retained the rights to commercialize Intermezzo in the rest of the world.~~

~~During the first quarter of 2014, Purdue Pharma discontinued use of the Purdue Pharma sales force to actively market Intermezzo to healthcare professionals.~~

In October 2014, the Company announced that its Board of Directors had approved a special dividend of, among other things, the right to receive, on a pro rata basis, 100% of any royalty income received by the Company pursuant to the Purdue Collaboration Agreement and 90% of any cash proceeds from a sale or disposition of Intermezzo, less fees and expenses incurred in connection with such activity,only to the extent ~~that either occurred prior~~the Company had not previously granted such commercialization rights related to omadacycline to another third party as of any such approval.

For additional information related to these agreements, as well as the Company’s other significant collaborative agreements, please read Note 6, License and Collaboration Agreements, to the ~~second anniversary of the closing date of the Merger. On October 28, 2016, in satisfaction of~~consolidated financial statements included within the Company’s payment obligation of the proceeds of sale or disposition of the Intermezzo assets to the former Transcept stockholders under the Merger Agreement, the Company executed the Royalty Sharing Agreement pursuant to which the Company agreed to pay to the former Transcept stockholders fifty percent of all royalty income received by the Company pursuant to the Purdue Collaboration Agreement, net of all costs, fees and expenses incurred by the Company in connection with the Purdue Collaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income to the former Transcept stockholders.

In September 2013, the Company and Shin Nippon Biomedical Laboratories Ltd., or SNBL, entered into a license agreement, or the SNBL License Agreement, pursuant to which SNBL granted the Company an exclusive worldwide license to commercialize SNBL’s proprietary nasal drug delivery technology to develop TO-2070. The Company was developing TO-2070 as a treatment for acute migraine using SNBL’s proprietary nasal powder drug delivery system. Under the SNBL License Agreement, the Company was required to fund all development and regulatory approval with respect to TO-2070. Pursuant to the SNBL License Agreement, the Company paid an upfront nonrefundable technology license fee of $1.0 million, and the Company was also obligated to pay up to an aggregate of $41.5 million upon the achievement of certain development, regulatory and sales milestones, and tiered, low double-digit royalties on annual net sales of TO-2070.

In September 2014, the Company and SNBL entered into a termination agreement and release, or the SNBL Termination Agreement, pursuant to which, among other things, the SNBL License Agreement was terminated and the Company assigned all of its rights, interest and title to the TO-2070 asset to SNBL in exchange for a portion of certain future net revenue received by SNBL as set forth in the SNBL Termination Agreement, up to an aggregate of $2.0 million.2020 Form 10-K.

~~In October 2015~~On May 11, 2020, the Company filed a registration statement on Form S-3 with the SEC, as amended on June 19, 2020, and ~~February 2017, Paratek Pharmaceuticals, Inc.~~declared effective on July 9, 2020, to sell certain of its securities in an aggregate amount of up to $250.0 million. As of March 31, 2021, $250.0 million remains available on this shelf registration statement.

On May 17, 2021, the Company entered into ~~Controlled Equity Offering~~^SMan At-the-Market Sales ~~Agreements,~~Agreement, or the ~~2015~~ Sales Agreement, ~~and 2017 Sales Agreement, respectively, and collectively, the Sales Agreements,~~ with ~~Cantor Fitzgerald & Co.,~~BTIG, LLC, or ~~Cantor,~~BTIG, under which ~~the Company could, at~~it may offer and sell its ~~discretion,~~common stock having aggregate sales proceeds of up to $50.0 million from time to time ~~sell shares of~~through BTIG as its ~~common stock, with a~~ sales value of up to $50 million under each Sales Agreement through Cantor. The Company provided Cantor with customary indemnification rights, and Cantor was entitled to a commission at a fixed rate of 3% of the gross proceeds per share sold.agent. Sales of the ~~shares under the Sales Agreements were to~~Company’s common stock through BTIG, if any, will be made ~~in transactions~~by any method permitted

by law deemed to be an “at the market ~~offerings”,~~offering” as defined in Rule ~~415~~415(a)(4) under the Securities Act of 1933, as ~~amended.~~amended, including without limitation sales made directly on the Nasdaq Global Market or any other existing trading market for its common stock. BTIG will use commercially reasonable efforts to sell the Company’s common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay BTIG a commission of 3% of the gross sales proceeds of any common stock sold through BTIG under the Sales Agreement. The Company has ~~sold all $50 million of shares of its common stock under the 2015 Sales Agreement.~~ also provided BTIG with customary indemnification rights.

The Company ~~received $36.9 million in proceeds, after deducting commissions of $1.1 million, from the sale of 2,326,119 shares~~is not obligated to make any sales of common stock under the ~~2015 Sales Agreement during the nine months ended September 30, 2017.~~ ~~The Company received $45.9 million in proceeds, after deducting commissions of $1.4 million, from the sale of~~ ~~2,006,007~~ ~~shares of common stock, as of November 1, 2017, under the 2017~~ Sales Agreement. AsThe offering of ~~November 1, 2017, $2.7 million remain available for sale under the 2017 Sales Agreement.~~

~~Warrants to purchase preferred stock with intrinsic value issued to HBM Healthcare Investments (Cayman) Ltd., Omega Fund III, L.P., and K/S Danish BioVenture, all beneficial owners of more than 5%~~shares of the Company’s common stock ~~were exchanged for 9,614 warrants~~pursuant to ~~purchase~~the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock ~~in connection with~~subject to the ~~Merger. These 9,614 warrants to purchase common stock have an exercise price of $0.15 per share and will, if not exercised, expire in 2021.~~

~~As described in Note 13,~~ ~~Long-term Debt, in connection with a Loan and Security~~Sales Agreement, or the Loan Agreement, into which the Company entered with Hercules Technology II, L.P. and Hercules Technology III, L.P., together, Hercules, and certain other lenders and Hercules Technology Growth Capital, Inc. (as agent), the Company issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P. a warrant to purchase 16,346 shares of its common stock (32,692 shares of common stock in total) at an exercise price of $24.47 per share, or the Hercules Warrants, on September 30, 2015, which expire five years from issuance or at the consummation of a Public Acquisition, as defined in each(ii) termination of the ~~Hercules Warrant agreements.~~

~~As described~~Sales Agreement in ~~Note 13,~~ ~~Long-term Debt, in connection~~accordance with ~~the Loan Agreement Amendment (as defined in Note 13,~~ ~~Long-term Debt), on December 12, 2016, the Company issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P. a warrant to purchase 18,574 shares of~~ its common stock (37,148 shares of common stock in total) at an exercise price of $13.46 per share, or the Loan Amendment Warrants. Additionally, in connection with the borrowing of the Third Tranche (as defined in Note 13, ~~Long-term Debt) on June 27, 2017, the Company issued an additional warrant to Hercules Capital, Inc. to purchase 5,374 shares of its common stock at an exercise price of $23.26 per share, or the Additional Warrant.~~ ~~The Additional Warrant’s total relative fair value of $0.1 million was determined using a Black-Scholes option-pricing model with the following assumptions:~~

~~Each Loan Amendment Warrant may be exercised on a cashless basis.~~ The Loan Amendment Warrants are exercisable for a term beginning on the date of issuance and ending on the earlier to occur of five years from the date of issuance or the consummation of certain acquisitions of the Company as set forth in the Loan Amendment Warrants.

Financial instruments, including cash, cash equivalents, restricted cash, money market funds, U.S. treasury ~~and government agency~~ securities, accounts receivable, accounts payable, and accrued expenses ~~contingent obligations and the Intermezzo reserve~~ are carried on the condensed consolidated financial statements at amounts that approximate fair value. The fair value of the Company’s long-term debt is determined using current applicable rates for similar instruments as of the balance sheet date. The ~~carrying~~fair value of the ~~long-term~~Company’s debt ~~approximates its fair value~~(including the Notes as ~~the interest rate~~defined in Note 13, Long-Term Debt), is ~~near current market rates.~~$230.7 million as of March 31, 2021. The fair value of the Company’s ~~long-term~~ debt was determined using Level 3 inputs. Fair values are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of ~~September 30, 2017 and~~ December 31, ~~2016,~~2020 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. The Company did not hold any U.S. treasury securities as of March 31, 2021. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities or other inputs that are observable market data. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability (in thousands):

Description

Quoted
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

September 30, 2017

Assets:

U.S. treasury securities

$
128,649

$
—

$
—

$
128,649

Government agencies

—

$
1,796

—

1,796

Total Assets

$
128,649

$
1,796

$
—

$
130,445

Liabilities:

Contingent obligations

$
—

$
—

$
84

$
84

Total Liabilities

$
—

$
—

$
84

$
84

December 31, 2016

Assets:

U.S. treasury securities

$
62,556

$
—

$
—

$
62,556

Government agencies

—

12,520

—

12,520

Total Assets

$
62,556

$
12,520

$
—

$
75,076

Liabilities:

Contingent obligations

$
—

$
—

$
655

$
655

Total Liabilities

$
—

$
—

$
655

$
655

Description	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
December 31, 2020
Assets:
U.S. treasury securities	$	20,005	$	—	$	—	$	20,005
Total Assets	$	20,005	$	—	$	—	$	20,005

U.S. treasury securities fair values can be obtained through quoted market prices in active exchange markets and are therefore classified as Level 1. The pricing on government agency securities was primarily sourced from independent third party pricing services, overseen by management, and is based on valuation models that consider standard input factor such as deal quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment spreads, credit information and the bond’s terms and conditions, among other things, and are therefore classified as Level 2.

On October 28, 2016, in satisfaction of the Company’s payment obligation of the proceeds of sale or disposition of the Intermezzo product rights to the former Transcept stockholders under the Merger Agreement, the Company executed the Royalty Sharing Agreement with the Special Committee. Under the Royalty Sharing Agreement, the Company agreed to pay to the former Transcept stockholders fifty percent of all royalty income received by the Company pursuant to the Purdue Collaboration Agreement, net of all costs, fees and expenses incurred by the Company in connection with the Purdue Collaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income to the former Transcept stockholders. The Company determined that the Royalty Sharing Agreement represents a modification to the original contingent obligations established under the Merger Agreement in accordance with ASC 805, ~~Business Combinations.~~

The significant unobservable inputs used in the fair value measurement of the contingent obligation to former Transcept stockholders with respect to the Intermezzo product rights as of September 30, 2017 and December 31, 2016 were estimated future Intermezzo product revenues and associated royalties due to the Company as well as the appropriate discount rate given consideration to the market and forecast risk involved. The results of this valuation yielded a decrease in the contingent obligation to former Transcept stockholders of $22,000 and $0.6 million during the three and nine months ended September 30, 2017, respectively. Significant increases or decreases in any of those inputs would result in a substantially lower or higher fair value measurement.

~~The following table provides a roll forward of the fair value of contingent obligations categorized as Level 3 instruments, for the nine months ended September 30, 2017 (in thousands):~~

~~As described in Note 2,~~ ~~Summary of Significant Accounting Policies and Basis of Presentation~~, the Company adopted ASU 2016-09. ASU 2016-09 requires the Company to recognize compensation expense of stock-based awards over the vesting periods of the awards, and realize forfeitures when they occur. The following table presents stock-based compensation expense included in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

Stock-based compensation expense is estimated as of the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period. The Company estimates the fair value of its stock options using the Black-Scholes option-pricing model. The weighted-average assumptions used to determine the fair value of the stock option grants is as follows:

The ~~number~~Company’s Board of ~~shares of the Company’s common stock available for issuance under~~Directors adopted the Paratek Pharmaceuticals, Inc. 2015 Equity Incentive Plan, or the 2015 Plan, which was ~~initially 1,200,000 shares. The initial number~~approved by Company stockholders at the annual meeting of ~~shares authorized under the 2015 Plan may be increased by the number~~shareholders held on June 9, 2015. As of March 31, 2021, there are 158,072 shares ~~that again become~~ available for grant as a result of forfeited or terminated awards or shares withheld in satisfaction of the exercise price or tax withholding obligations associated with awards under the Paratek Pharmaceuticals, Inc. 2006 Incentive Award Plan, as amended, and the Paratek Pharmaceuticals, Inc. 2014 Equity Incentive Plan, with the total amount of the initial shares plus the forfeited or terminated shares not to exceed 2,000,000 shares. In addition, the number of shares authorized forfuture issuance under the 2015 ~~Plan will be automatically increased each year pursuant~~Plan.

The Company recognizes the stock-based compensation expense of awards subject to ~~an “evergreen” provision contained~~performance-based vesting conditions over the requisite service period, to the extent achievement of the performance condition is deemed probable relative to targeted performance using the accelerated attribution method. A change in the ~~2015 Plan. The number of shares available for issuance will automatically increase on January 1 of each year, for~~requisite service period that does not change the ~~period commencing on (and including) January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to 5%~~estimate of the total ~~number~~stock-based compensation expense (i.e., it does not affect the grant-date fair value or quantity of ~~shares of common stock outstanding on December 31 of~~awards to be recognized) is recognized prospectively over the preceding calendar year. Notwithstanding the foregoing, the Board of Directors of the Company may act prior to January 1 of a given year to provide that there will be no January 1 increase in the number of shares available for issuance for such year or that the increase in the number of shares available for issuance for such year will be a lesser number of shares of common stock than would otherwise occur. On January 1, 2017, 1,167,931 shares of common stock were automatically added to the shares authorized for issuance under the 2015 Plan pursuant to the evergreen provision.remaining requisite service period.

~~In June 2017,~~ During the three months ended March 31, 2021, the Company’s Board of Directors adopted the Paratek Pharmaceuticals, Inc. 2017 Inducement Plan, or the 2017 Inducement Plan, in accordance with NASDAQ Rule 5635(c)(4), reserving 550,000 shares of common stock solely for the grant of inducement stock options to employees entering into employment or returning to employment after a bona fide period of non-employment with the Company. During the nine months ended September 30, 2017, ~~the Company’s Board of Directors~~ granted ~~176,000~~69,817 stock options and ~~35,000 restricted stock unit awards, or~~3,456,575 RSUs to employees of the Company under the 2017 Inducement Plan. The stock option awards are subject to time-based vesting over a period of one to four years. The RSU awards made to an employee of the Company is subject to time-based vesting, with 100% of the shares of common stock subject to the RSUs vesting three years from the grant date. ~~Although the Company does not currently anticipate the issuance of additional stock options under the 2015 Inducement Plan,~~ ~~73,167 shares remain available for grant under the 2015 Inducement Plan.~~

~~During the nine months ended September 30, 2017, the Company’s Board of Directors granted 735,400 stock options and 867,800 restricted stock units~~ to directors, executives, and employees of the Company under the 2015 Plan. The stock option awards are subject to time-based vesting over a period of one to four years. The RSU awards ~~made~~granted to ~~directors of~~executives during the ~~Company~~three months ended March 31, 2021 are subject to time-based vesting, with ~~100%~~1/3 of the shares vesting on December 10, 2021, and an additional 1/3of ~~common stock~~the shares vesting on the succeeding two anniversaries of such date. The RSU awards granted to non-executive employees of the Company during the three months ended March 31, 2021 are subject to time-based vesting, with 1/3 of the ~~RSUs~~shares vesting ~~one year from~~on February 18, 2022, and an additional 1/3 of the ~~grant~~shares vesting on the succeeding two anniversaries of such date.

The grants also included performance-based RSU, or PRSU, awards to certain executives and employees of the Company. The PRSU awards ~~issued during the quarter ended June 30, 2017 have vested or~~granted in March 2021 will vest as follows: ~~20% of the PRSUs vested upon~~(a) 25/55 on certain net product revenue achievements, (b) 10/55 on certain business achievements, (c) 10/55 on certain manufacturing achievements and (d)10/55 on achievement of data lock for Study 16301 (oral only ABSSSI), which occurred in July 2017, or the First Milestone; 30% of the PRSUs shall vest upon achievement of IV and oral NDA filing acceptances, or the Second Milestone; and 50% of the PRSUs shall vest upon FDA approval of omadacycline, or the Third Milestone, provided, that, each of the First Milestone, the Second Milestone and the Third Milestone must occur no later than the fifth anniversary of the date of grant for the applicable portion of the PRSUscertain clinical milestones related to vest. The PRSU awards issued during the quarter ended September 30, 2017 shall become earned upon FDA approval of omadacycline, or the Milestone, and shall, upon achievement of the Milestone, be eligible to vest as to 100% of the PRSUs subject to the award on the first anniversary of the Milestone achievement date.

~~The Company recognizes compensation cost for awards with performance conditions if and when~~NUZYRA. Since the Company ~~concludes that~~believes it is probable that milestone (d) above will be achieved, the Company recognized an insignificant amount of compensation cost for the performance condition during the three months ended March 31, 2021 using the accelerated attribution method.

During the year ended December 31, 2020, the Company’s Board of Directors granted PRSU awards to certain executives and employees of the Company in February 2020 under the 2015 Plan that will vest as follows: (a) 25/55 on certain net product revenue achievements, (b) 15/55 on achievement of certain clinical milestones related to NUZYRA and (c) 15/55 on achievement of certain regulatory milestones related to NUZYRA. Since the Company believes it is probable that milestone (b) above will be achieved, ~~over~~ the ~~requisite service period. Since~~Company recognized an insignificant amount of compensation cost for the ~~First~~performance condition during the three months ended March 31, 2021 using the accelerated attribution method.

During the year ended December 31, 2019, the Company’s Board of Directors granted PRSU awards to certain executives and employees of the Company in February 2019 and July 2019 under the 2015 Plan that will vest as follows: (a) 25/60 and (b) 25/60, each, on certain net product revenue achievements and (c) the remaining 10/60 on certain other business achievements. Milestone (a) was achieved in September 2020 and vested during ~~the quarter ended September 30, 2017,~~November 2020 and the Company believes it is ~~more likely than~~probable that milestones (b) and (c) above will be achieved. The Company recognized an insignificant amount of stock-based compensation expense for milestones (b) and (c) during the three months ended March 31, 2021 using the accelerated attribution method.

The Company’s Board of Directors adopted the Paratek Pharmaceuticals, Inc. 2015 Inducement Plan, or the 2015 Inducement Plan, in accordance with Nasdaq Rule 5635(c)(4), reserving 360,000 shares of common stock solely for the grant of inducement stock options to employees entering into employment or returning to employment after a bona fide period of non-employment with the Company. The Company has 0t made any grants under the 2015 Inducement Plan since December 31, 2015. Although the Company does not currently anticipate the issuance of additional grants under the 2015 Inducement Plan, as of March 31, 2021, 306,500 shares remain available for grant under that plan, as well as any shares underlying outstanding stock options that may become available for grant pursuant to the plan’s terms. It is therefore possible that the ~~Second Milestone will be achieved prior to~~Company may, based on the ~~fifth anniversary~~business and recruiting needs of the ~~date~~Company, issue additional stock options under the 2015 Inducement Plan.

In June 2017, the Company’s Board of Directors adopted the Paratek Pharmaceuticals, Inc. 2017 Inducement Plan, or the 2017 Inducement Plan, in accordance with Nasdaq Rule 5635(c)(4), reserving 550,000 shares of common stock solely for the grant of inducement stock options and RSU awards to employees entering into employment or returning to employment after a bona fide period of non-employment with the ~~Company recognized compensation cost,~~Company. In October 2018, the Company’s Board of Directors approved the reserve of an additional 500,000 shares for the 2017 Inducement Plan, for a total of ~~$0.6 million and $3.0 million, for both performance conditions during the three and nine months ended September 30, 2017, respectively, using the accelerated attribution method.~~

~~As of September 30, 2017, no additional~~1,050,000 shares ~~remained available~~reserved for issuance under ~~either~~it. During the ~~Paratek Pharmaceuticals, Inc. 2006 Equity Incentive~~three months ended March 31, 2021, the Company’s Board of Directors granted 128,400 stock options and 22,800 RSUs to employees of the Company under the 2017 Inducement Plan. The stock option awards are subject to time-based vesting over a period of one to four years. The RSU awards are generally subject to time-based vesting, with 100% of the shares of common stock subject to the RSU award vesting three years from the grant date. As of March 31, 2021, 298,339 shares remain available for grant under the 2017 Inducement Plan, as ~~amended, or the Paratek Pharmaceuticals, Inc. 2014 Equity Incentive Plan.~~

~~Total~~well as any shares underlying awards that may become available for ~~future issuance under~~grant pursuant to the ~~2015 Plan are 688 shares as of September 30, 2017.~~plan’s terms.

A summary of stock option activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 is as follows:

Number
of Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic
Value
(in thousands)

Outstanding at December 31, 2016

2,780,791

$
16.63

8.27

$
8,809

Granted

911,400

17.08

Exercised

(66,455
)

4.83

Expired or Forfeited

(50,103
)

17.04

Outstanding at September 30, 2017

3,575,633

$
16.96

8.01

$
30,210

Exercisable at September 30, 2017

1,957,219

$
16.11

7.45

$
18,236

Vested and expected to vest at September 30, 2017

3,575,633

$
16.96

8.01

$
30,210

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020		1,986,442		$	11.92		5.63	$	1,748
Granted		198,217
Exercised		(961	)
Cancelled or forfeited		(23,994	)
Expired		(4,505	)
Outstanding at March 31, 2021		2,155,199		$	11.39		5.79	$	2,490
Exercisable at March 31, 2021		1,745,971		$	12.45		5.03	$	1,961

The total intrinsic value of stock options exercised was insignificant for the three months ended March 31, 2021.

A summary of ~~restricted stock unit~~RSU activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 is as follows:

Total unrecognized stock-based compensation expense for all stock-based awards was ~~$22.3~~$21.6 million as of ~~September 30, 2017.~~March 31, 2021. This amount will be recognized over a ~~weighted average~~weighted-average period of ~~2.04~~2.35 years.

In June 2009, at the annual meeting of stockholders, the stockholders of the Company approved the 2009 Employee Stock Purchase Plan, or the 2009 ESPP. As of March 31, 2021, 36,539 shares were available for issuance under the 2009 ESPP. Since the merger involving privately-held Paratek Pharmaceuticals, Inc. and Transcept Pharmaceuticals, Inc., the Company has not made the 2009 ESPP available to employees.

The Company’s Board of Directors adopted, and in June 2018 Company’s stockholders approved, the Paratek Pharmaceuticals, Inc. 2018 Employee Stock Purchase Plan, or the 2018 ESPP. The 2018 ESPP was amended in October 2018 to change the commencement dates of the offering periods. The maximum aggregate number of shares of the Company’s common stock that may be purchased under the 2018 ESPP is 943,294 shares, or the ESPP Share Pool, subject to adjustment as provided for in the 2018 ESPP.The 2018 ESPP allows eligible employees to purchase shares during certain offering periods, which will be six-month periods commencing June 1 and ending November 30 and commencing December 1 and ending May 31 of each year. The first offering under the 2018 ESPP occurred on December 1, 2018. As of March 31, 2021, 570,277 shares remain available for issuance under the 2018 ESPP. During the three ended March 31, 2021, the Company recognized an insignificant amount in related stock-based compensation expense.

On October 4, 2018, the Company adopted the Revenue Performance Incentive Plan, or the Plan, to grant performance-based cash incentive awards to key employees and consultants of the Company. The Plan provides for an incentive pool of up to $50.0 million, plus accrued interest during the period between the awards’ vesting date and payment dates. Each participant will be allocated a percentage of the incentive pool.

The incentive pool will be divided into 2 equal tranches with the first tranche vesting upon the Company’s achievement of cumulative net product revenues over $300.0 million by December 31, 2025, or Tranche 1, and the second tranche vesting upon the Company’s achievement of cumulative product revenues over $600.0 million by December 31, 2026, or Tranche 2. Participants will vest annually in each tranche of their awards in 4 equal installments on December 31, 2019, December 31, 2020, December 31, 2021, and December 31, 2022, subject to their continued employment with the Company through the applicable vesting date. If a participant’s employment terminates prior to December 31, 2022 due to death or disability, the participant will automatically vest in an additional 25% of each tranche of his or her award. Upon the achievement of a Tranche 1 or Tranche 2 milestone (but not a deemed achievement in connection with a change of control), each participant who has remained in continuous employment with the Company through December 31, 2022 will be 100% vested in the applicable tranche. In the event of a change of control of the Company prior to December 31, 2026, participants whose employment has terminated prior to such date will be eligible for payouts under the Plan based on the then-vested portion of their awards, and participants who have remained employed through the change of control will be deemed to have time vested in full in each tranche of their awards.

Upon the achievement of a Tranche 1 or Tranche 2 milestone (but not a deemed achievement in connection with a change of control), each participant’s payout in respect of the applicable tranche of his or her award will equal (a) the participant’s then-vested percentage, multiplied by (b) $25 million, multiplied by (c) the participant’s individual percentage allocation of the incentive pool.

If a change of control occurs prior to December 31, 2026, and the Tranche 1 milestone was not achieved prior to the change of control, the Tranche 1 milestone will be deemed to be achieved at a percentage equal to the greater of (1) 50% and (2) the cumulative product revenues as of the change of control, divided by $300.0 million. If a change of control occurs prior to December 31, 2026, and the Tranche 2 milestone was not achieved prior to the change of control, the Tranche 2 milestone will be deemed to be achieved at a percentage equal to the greater of (1) 30% and (2) the cumulative product revenues as of the change of control, divided by $600.0 million. A participant’s payout in respect of each tranche of his or her award in a change of control will equal (1) the participant’s then-vested percentage of such tranche, multiplied by (2) the percentage of that tranche’s milestone that has been achieved or is deemed to have been achieved, multiplied by (3) $25.0 million, multiplied by (4) the participant’s individual percentage allocation of the incentive pool.

Amounts that become payable upon achievement of the Tranche 1 milestone will be paid in a lump-sum in the first quarter of 2026 and amounts that become payable upon achievement of the Tranche 2 milestone will be paid in a lump-sum in the first quarter of

2027. In the event of a change of control, any portion of the incentive pool that is earned, but unpaid, or deemed earned in connection with the change of control will be paid at the time of the change of control.

If a change of control occurs prior to the achievement of either or both of the Tranche 1 and Tranche 2 milestones, the awards will remain outstanding and the remaining unpaid portion of the incentive pool applicable to the Tranche 1 or Tranche 2 milestone, as applicable, will be paid following the achievement of either such milestone at the time or times the bonuses would otherwise be paid out. Any successor in interest to the Company upon or following a change of control will be required to assume all obligations under the Plan.

Awards may be paid out in cash or in a combination of cash and registered securities of equal value (based on the Company’s 20-day trailing average closing common stock price), with the portion paid in registered securities not to exceed 50% of the aggregate payment amount with respect to each tranche; provided, however, that any amounts payable with respect to an award in connection with a change in control will be paid in cash.

The Company will recognize the compensation cost over the requisite service period, to the extent achievement of the performance condition is deemed probable relative to targeted performance. The performance condition is not yet deemed probable; as such, 0 amounts were accrued under the Plan during the three months ended March 31, 2021.

On ~~September 30, 2015,~~December 31, 2020, or the Closing Date, the Company, through its wholly-owned subsidiary PRTK SPV2 LLC, a Delaware limited liability company, or the Subsidiary, entered into a royalty and revenue interest-backed loan agreement, or the R-Bridge Loan Agreement, with an affiliate of R-Bridge Healthcare Investment Advisory, Ltd., or the R-Bridge Lender. Pursuant to the terms of the R-Bridge Loan Agreement, the Subsidiary borrowed a $60.0 million term loan, secured by, and repaid with proceeds from, (i) royalties from the Zai Collaboration Agreement, or the Royalty Interest, and (ii) a revenue interest based on the Company’s U.S. sales of NUZYRA in an initial amount of two and a half percent (2.5%), which amount may adjust under certain circumstances up to five percent (5%), of the Company’s net U.S. sales, subject to an annual cap of $10.0 million, which may adjust under certain circumstances to $12.0 million, or the Revenue Interest.

Under the R-Bridge Loan Agreement, the outstanding principal balance will bear interest at an annual rate of 7.0%, increasing to an annual rate of 10% during the continuance of any event of default. Payments of the obligations outstanding under the R-Bridge Loan Agreement are made quarterly and began with the payment due in respect of the quarter ended March 31, 2021, out of the Royalty Interest payments and Revenue Interest payments received by the Subsidiary during such quarter, or the Collection Amount. On each payment date, after payment of certain expenses, the Collection Amount shall be applied first to accrued interest, with any excess up to $15.0 million per annum applied to repay principal until the balance is fully repaid, and any shortfalls being capitalized and added to the principal balance of the loan. Amounts in excess of the $15.0 million annual cap shall be shared between the Company and the R-Bridge Lender based on a formula set out in the R-Bridge Loan Agreement. Following repayment in full of the loan, the first $15.0 million per annum in Collection Amount shall be paid to the Company and any amounts in excess shall be shared between the Company and the R-Bridge Lender based on a formula set out in the R-Bridge Loan Agreement.

Prior to the eighth (8^th) anniversary of the Closing Date, the R-Bridge Loan Agreement will automatically terminate once the Subsidiary has paid to the R-Bridge Lender, in the form of regularly scheduled payments or as a voluntary prepayment, a capped amount of $114.0 million, less principal, interest and certain fee payments through the date of such prepayment, or the Capped Amount. From and after the eighth (8^th) anniversary of the Closing Date, the Revenue Interest can be terminated by payment of the Capped Amount, but the Royalty Interest payments shall continue until maturity of the R-Bridge Loan Agreement on December 31, 2032, at which time, the outstanding principal amount of the loan, if any, together with any accrued and unpaid interest, and all other obligations then outstanding, shall be due and payable in cash by the Subsidiary.

The Company’s subsidiary, PRTK SPV1 LLC, a Delaware limited liability company and owner of the Subsidiary’s capital stock, has entered into a Pledge and Security Agreement in favor of the R-Bridge Lender, pursuant to which the Subsidiary’s obligations under the R-Bridge Loan Agreement are secured by PRTK SPV1 LLC’s pledge of all of the Subsidiary’s capital stock.

The R-Bridge Loan Agreement contains certain customary affirmative covenants, including those relating to: use of proceeds; maintenance of books and records; financial reporting and notification; compliance with laws; and protection of Company intellectual property. The R-Bridge Loan Agreement also contains certain customary negative covenants, barring the Subsidiary from: certain fundamental transactions; issuing dividends and distributions; incurring additional indebtedness outside of the ordinary course of business; engaging in any business activity other than related to the Zai Collaboration Agreement; and permitting any additional liens

on the collateral provided to the R-Bridge Lender under the R-Bridge Loan Agreement. As of March 31, 2021, the Company was in compliance with all covenants under the R-Bridge Loan Agreement.

An ancillary agreement executed by the Company and the Subsidiary in respect of the Revenue Interest, contains negative covenants applicable to the Company, including restrictions on the sale or transfer of our assets related to NUZYRA and giving rise to the Revenue Interest, each subject to the exceptions set forth therein.

The R-Bridge Loan Agreement contains customary defined events of default, upon which any outstanding principal, unpaid interest, and other obligations of the Subsidiary, shall be immediately due and payable by the Subsidiary. These include: failure to pay any principal or interest when due; failure to the Capped Amount as and when due following a non-qualified change of control of the Company, any uncured breach of a representation, warranty or covenant; any uncured failure to perform or observe covenants; any uncured breach of our representations, warranties or covenants under an ancillary agreement executed by the Company and the Subsidiary in respect of the Royalty Interest; any termination of the Zai Collaboration Agreement; and certain bankruptcy or insolvency events. NaN events of default had occurred under the R-Bridge Loan Agreement through March 31, 2021.

The Company raised approximately $58.3 million in net proceeds in connection with the R-Bridge Loan Agreement, comprised of the $60.0 million term loan funded at execution, net of $1.1 million in lender fees accounted for as debt discount and $0.6 million in direct and incremental third-party expenses accounted for as debt issuance costs. The net proceeds of the term loan, together with cash on hand, was used to prepay in full all obligations outstanding under the Amended and Restated Loan and Security Agreement dated as of June 27, 2019, as amended, with Hercules ~~and~~Technology III, L.P., certain other lenders and Hercules ~~Technology Growth~~ Capital, Inc. (as agent). ~~Under~~

The Company evaluated the R-Bridge Loan Agreement ~~Hercules provided~~for embedded derivatives pursuant to ASC 815, Derivatives and Hedging (ASC 815). The Company determined that the R-Bridge Loan Agreement represents a debt host due to its legal form. The Company concluded that the contingent put options that could require mandatory repayment upon the occurrence of an event of default, change of control, and certain other events are required to be bifurcated from the debt host instrument and accounted for separately as derivative instruments. Such features are not clearly and closely related to the debt host contract and a separate instrument with the same terms would be considered a derivative instrument subject to the requirements of ASC 815. However, the Company has determined that the fair value of these embedded derivatives is nominal at March 31, 2021 and December 31, 2020 due to the estimated likelihood of the any of the associated events occurring. All other embedded features are not required to be accounted for separately because they are either clearly and closely related to the debt host instrument or qualify for a scope exception from ASC 815.

The accounting for the R-Bridge Loan Agreement requires the Company to make certain estimates and assumptions, particularly about future royalties under the Zai Collaboration Agreement and sales of NUZYRA in the U.S. Such estimates and assumptions are utilized in determining the expected repayment term, amortization period of the debt discount and issuance costs, accretion of interest expense and classification between current and long-term portions of amounts outstanding. The Company amortizes the debt discount and issuance costs to interest expense over the expected term of the arrangement using the interest method based on projected cash flows. Similarly, the Company classifies as current debt for the R-Bridge Loan Agreement, amounts that are expected to be repaid during the succeeding twelve months after the reporting period end. However, the repayment of amounts due under the R-Bridge Loan Agreement is variable because the cash flows to be utilized for periodic payments is a function of amounts received by the Company with ~~access~~respect to ~~term loans~~the Royalty Interest and the Revenue Interest. Accordingly, the estimates of the magnitude and timing of amounts to be available for debt service are subject to significant variability and thus, subject to significant uncertainty. Therefore, these estimates and assumptions are likely to change, which may result in future adjustments to the portion of the debt that is classified as a current liability, the amortization of debt discount and issuance costs and the accretion of interest expense.

The amount of principal to be repaid in each of the five succeeding years is not fixed and determinable.

Other amounts that may become due and payable under the R-Bridge Loan Agreement, including amounts shared between the parties with respect to cash flows received in excess of pre-defined thresholds, are recognized as additional interest expense when they become probable and estimable.

The following table summarizes the impact of the R-Bridge Loan Agreement on the Company’s consolidated balance sheets at March 31, 2021 and December 31, 2020 (in thousands):

The Company recognized interest expense of $1.1 million and an insignificant amount of amortization expense on the debt issuance costs on the R-Bridge Loan Agreement for the three months ended March 31, 2021.

On April 18, 2018, the Company entered into a Purchase Agreement, or the Purchase Agreement, with several initial purchasers, or the Initial Purchasers, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and Leerink Partners LLC acted as representatives, relating to the sale of $135.0 million aggregate principal amount of 4.75% Convertible Senior Subordinated Notes due 2024, or the Notes, to the Initial Purchasers. The Company also granted the Initial Purchasers an option to purchase up to ~~$40.0~~an additional $25.0 million ~~or collectively, the Term Loan. The Company initially drew a~~aggregate principal amount of ~~$20.0 million,~~Notes, which was ~~funded~~exercised in full on ~~September~~April 20, 2018.

The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company agreed to indemnify the Initial Purchasers against certain liabilities.

In addition, J. Wood Capital Advisors LLC, the Company’s financial advisor, purchased $5.0 million aggregate principal amount of Notes in a separate, concurrent private placement on the same terms as other investors.

The Notes were issued by the Company on April 23, 2018, pursuant to an Indenture, dated as of such date, or the Indenture, between the Company and U.S. Bank National Association, as trustee, or the Trustee. The Notes bear cash interest at the annual rate of 4.75%, payable on November 1 and May 1 of each year, beginning on November 1, 2018, and mature on May 1, 2024 unless earlier repurchased, redeemed or converted. The Company will settle conversions of the Notes through delivery of shares of common stock of the Company, in accordance with the terms of the Indenture. The initial conversion rate for the Notes is 62.8931 shares of common stock (subject to adjustment as provided for in the Indenture) per $1,000 principal amount of the Notes, which is equal to an initial conversion price of approximately $15.90 per share, representing a conversion premium of approximately 20% above the closing price of the common stock of $13.25 per share on April 18, 2018.

Holders of the Notes may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date.

The Company may redeem for cash all or part of the Notes, at its option, on or after May 6, 2021, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 ~~2015.~~ consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company experiences a fundamental change, as described in the Indenture, prior to the maturity date of the Notes, holders of the Notes will, subject to specified conditions, have the right, at their option, to require the Company to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date of the Notes and following a notice of redemption of the Notes, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or redemption.

The ~~remaining $20.0 million~~Indenture provides for customary events of default. In the case of an event of default with respect to the Notes arising from specified events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. If any other event of default with respect to the Notes under the Indenture occurs or is continuing, the Trustee or holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare the principal amount of the Notes to be immediately due and payable.

After deducting costs incurred of $6.0 million, the Company raised net proceeds from the issuance of long-term convertible debt of $159.0 million in April 2018. All costs were deferred and are being amortized over the life of the Notes at an effective interest rate of 5.47% and recorded as additional interest expense.

The Company has evaluated the Indenture for derivatives pursuant to ASC 815, Derivatives and Hedging, or ASC 815, and identified an embedded derivative that requires bifurcation as the feature is not clearly and closely related to the host instrument. The embedded derivative is a default provision, which could require additional interest payments. The Company determined in the prior year that the fair value of this embedded derivative was nominal.

The Company evaluated the conversion feature and determined it was not within the scope of ASC 815 and therefore is not required to be accounted for separately. The Company concluded that the embedded conversion option is not subject to separate accounting pursuant to either the cash conversion guidance or the beneficial conversion feature guidance. Under the general conversion guidance in ASC 470, Debt, all of the proceeds received from the Notes was recorded as a liability on the condensed consolidated balance sheet.

The following table summarizes the impact of the Notes on the Company’s consolidated balance sheets at March 31, 2021 and December 31, 2020 (in thousands):

The Company recognized coupon interest expense of $2.0 million and amortization expense on the debt issuance costs of $0.2 million on the Notes for the three months ended March 31, 2021.

On February 25, 2019, the Company, through its wholly-owned subsidiary Paratek Royalty Corporation, or the Subsidiary, entered into the Royalty-Backed Loan Agreement was available to be drawn at the Company’s option in minimum increments of $10.0 million through December 31, 2016, or the Draw Period. The Term Loan was repayable in monthly installments commencing on April 1, 2018 through maturity on September 1, 2020. The interest rate was equalwith HCRP. Pursuant to the ~~greater of (i) 8.5%, or (ii) the sum of 8.5%, plus the “prime rate” as reported in The Wall Street Journal minus 5.75% per annum. An end of term charge equal to 4.5%~~terms of the ~~issued~~Royalty-Backed Loan Agreement, upon the satisfaction of the conditions precedent set forth therein, the Subsidiary borrowed a $32.5 million loan, which was secured by, and will be repaid based upon, royalties from the Almirall Collaboration Agreement. On May 1, 2019, the Company received $27.8 million, net of $0.5 million lender discount, $0.2 million in lender expenses incurred, and $4.0 million that was deposited into an interest reserve account. The Company also paid $1.2 million in other lender fees related to the Royalty-Backed Loan Agreement. During the three months ended March 31, 2021, the Company paid $1.0 million to HCRP based upon royalties earned from the Almirall Collaboration Agreement and outstanding interest payments due to HCRP.

Under the Royalty-Backed Loan Agreement, the outstanding principal balance will bear interest at an annual rate of 12.0%. Payments of interest under the Royalty-Backed Loan Agreement are made quarterly out of the ~~Term Loan was payable at maturity, including~~Almirall Collaboration Agreement royalty payments received since the immediately preceding payment date. On each interest payment date, any royalty payments in excess of accrued interest on the ~~event of any prepayment, and was being accrued as interest expense over~~loan will be used to repay the ~~term~~principal of the loan ~~using~~until the ~~effective interest method. Borrowings under~~balance is fully repaid. In addition, the Subsidiary made up-front payments to HCRP of (i) a 1.5% fee and (ii) up to $300,000 for HCRP’s expenses. The Royalty-Backed Loan Agreement ~~were collateralized by substantially all of~~matures on May 1, 2029, at which time, if not earlier repaid in full, the ~~assets of the Company.~~

~~Upon an Event of Default, an additional 5.0% interest would be applied and Hercules could, at its option, accelerate and demand payment of all or any part~~outstanding principal amount of the loan, together with ~~the prepayment~~any accrued and ~~end of term charges. An Event of Default is defined~~unpaid interest, and all other obligations then outstanding, shall be due and payable in the Loan Agreement as (i) failure to make required payments; (ii) failure to adhere to financial, operating and reporting loan covenants; (iii) an event or development occurs that would be reasonably expected to have a material adverse effect; (iv) false representations in the Loan Agreement; (v) insolvency, as described in the Loan Agreement; (vi) levy or attachments on any of the Company's assets; and (vii) default of any other agreement or subordinated debt greater than $1.0 million. In the event of insolvency, this acceleration and declaration would be automatic. In addition, in connection with the Loan Agreement, thecash. The Company agreed to provide Hercules with a contingent security interest in the Company's bank accounts. The Company's control of its bank accounts is not adversely affected unless Hercules elects to obtain unilateral control of the Company's bank accounts by declaring that an Event of Default has occurred. The principal of the Term Loan, which was not due within 12 months of September 30, 2017, has been classified as long-term as the Company determined that a material adverse effect resulting in Hercules exercising its rights under the subjective acceleration clause is remote.

Subject to certain terms, pursuant to the Loan Agreement, Hercules was also granted the right to participate in an amount of up to $2.0 million in subsequent sales and issuances of the Company's equity securities to one or more investors for cash for financing purposes in an offering that is broadly marketed to multiple investors and at the same terms as the other investors. On September 30, 2015, Hercules Technology Growth Capital, Inc. entered into a ~~Stock Purchase~~Pledge and Security Agreement in favor of HCRP, pursuant to which the Subsidiary’s obligations under the Royalty-Backed Loan Agreement are secured by a pledge of all of the Company’s holdings of the Subsidiary’s capital stock.

The Royalty-Backed Loan Agreement contains certain customary affirmative covenants, including those relating to: use of proceeds; maintenance of books and records; financial reporting and notification; compliance with laws; and protection of Company intellectual property. The Royalty-Backed Loan Agreement also contains certain customary negative covenants, barring the Subsidiary from: certain fundamental transactions; issuing dividends and distributions; incurring additional indebtedness outside of the ordinary course of business; engaging in any business activity other than related to the Almirall Collaboration Agreement; and permitting any additional liens on the collateral provided to HCRP under the Royalty-Backed Loan Agreement.

The Royalty-Backed Loan Agreement contains customary defined events of default, upon which any outstanding principal and unpaid interest shall be immediately due and payable. These include: failure to pay any principal or interest when due; any uncured breach of a representation, warranty or covenant; any uncured failure to perform or observe covenants; any uncured cross default under a material contract; any uncured breach of the Company’s representations, warranties or covenants under its Contribution and Servicing Agreement with the ~~Company to purchase 44,782 shares of common stock resulting in proceeds to the Company of approximately $1.0 million. The excess of proceeds received by the Company over the fair value~~Subsidiary; any termination of the ~~common stock issued was allocated as a reduction~~Almirall Collaboration Agreement; and certain bankruptcy or insolvency events.

The following table summarizes the impact of the ~~fees paid to Hercules in conjunction with obtaining~~Royalty-Backed Loan Agreement on the ~~initial $20.0~~Company’s consolidated balance sheets at March 31, 2021 and December 31, 2020 (in thousands):

The Company recognized interest expense of $1.0 million ~~draw~~and an insignificant amount of amortization expense on the ~~Term Loan.~~debt issuance costs on the Royalty-Backed Loan Agreement for the three months ended March 31, 2021.

Debt issuance costs ~~of $511,000 were ratably allocated to the initial $20.0 million draw and the remaining unfunded $20.0 million. Debt issuance costs related to the initial $20.0 million draw were~~are presented on the consolidated balance sheet as a direct deduction from the related debt ~~liability.~~liability rather than capitalized as an asset in accordance with ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance ~~costs~~Costs.

Long-term debt on the Company’s consolidated balance sheets at March 31, 2021 and December 31, 2020 includes the carrying value of the R-Bridge Loan Agreement, the Notes and the Royalty-Backed Loan Agreement.

The Company leases its Boston, Massachusetts and King of Prussia, Pennsylvania office spaces under non-cancelable operating leases expiring in 2021 and 2024, respectively.

The Company executed an amendment to the existing lease agreement on its Boston office space in April 2021. The amended lease agreement released 8,104 rentable square feet of office space and extends the lease term related to the ~~unfunded amount were capitalized as prepaid asset~~remaining 4,153 rentable square feet of office space by two years until August 2023, for an additional commitment of $0.4 million. In accordance with the amendment, the Company will be refunded the insignificant security deposit paid in July 2016.

The Company has also identified an embedded lease in its manufacturing and ~~were~~services agreement, or MSA, with CIPAN – Companhia Industrial Produtora de Antibióticos, or CIPAN, which was later amended and restated in April 2018, and further amended and restated in February 2019, December 2019, July 2020, and December 2020. For additional details relating to ~~be amortized ratably through the end~~ these agreements, refer to Note 18, Commitments and Contingencies of the ~~Draw Period.~~ 2020 Form 10-K.

The following tables contain a summary of the lease costs and other information pertaining to the Company’s operating leases for the three months ended March 31, 2021:

The total operating liability is presented on the Company’s condensed consolidated balance sheet based on maturity dates. $0.7 million of the total operating liabilities is classified under “other current liabilities” for the portion due within twelve months, and $1.4 million is classified under “long-term lease liability”.

In connection with the Loan Agreement, the Company issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P., a warrant to purchase 16,346 shares of the Company’s common stock (32,692 shares of common stock in total) at an exercise price of $24.47 per share. The Hercules Warrants’ total relative fair value of $288,000 at September 30, 2015 was determined using a Black-Scholes option-pricing model. The relative fair value of the Hercules Warrants was included as a discount to the Term Loan and also as a component of additional paid-in capital. See Note 9, ~~Capital Stock, for further description of the Hercules Warrants.~~

In addition to the Hercules Warrants, the Company paid fees to Hercules in conjunction with obtaining the Term Loan. The Hercules Warrants fair value and fees paid to Hercules, an aggregate of $572,000, were ratably allocated to the initial $20.0 million draw and the remaining unfunded $20.0 million. The $208,000 of costs allocated to the initial $20.0 million draw were recorded as a debt discount and are being amortized as additional interest expense over the term of the loan using the effective interest method. The $364,000 of costs allocated to the unfunded $20.0 million was recorded as prepaid expenses and were being amortized ratably through the end of the Draw Period. In the event the Company exercised its option to borrow additional funds, the remaining unamortized prepaid asset balance related would be reclassified and recorded as debt discount based upon a ratable allocation of the amount drawn compared to the remaining unfunded amount available to the Company and would amortize over the remaining life of the term loan using the effective interest method.

On December 12, 2016, the Company and Hercules entered into a second amendment to the Loan Agreement, or the Second Amendment, which extended the date on which the Company must begin making amortization payments under the Loan Agreement from April 1, 2018 to January 1, 2019, or the Amortization Date. Upon commencement of the Amortization Date, the Company will make amortization payments based upon an amortization schedule equal to thirty consecutive months, with the balance of outstanding loans due on the original maturity date of the Loan Agreement. The Second Amendment also increased the amount that the Company may borrow by $10.0 million, from up to $40.0 million to up to $50.0 million in multiple tranches. In connection with the Second Amendment the Company paid Hercules a $0.4 million amendment fee. In connection with the Second Amendment, the Company issued to each one of Hercules Technology II, L.P. and Hercules Technology III, L.P. a warrant to purchase 18,574 shares of its common stock (37,148 shares of common stock in total) at an exercise price of $13.46 per shares.

Under the Second Amendment, discussed above, the end of term charge was equal to 4.5% of the issued principal balance of the Loan Agreement, and was payable at maturity, including in the event of any prepayment, and is being accrued as interest expense over the term of the loan using the effective interest method. Borrowings under the Loan Agreement are still collateralized by substantially all of the assets of the Company.

On June 27, 2017, the Company and Hercules entered into a third amendment to the Loan Agreement, or the Third Amendment. The Third Amendment increased the amount that the Company may borrow by $10.0 million, from up to $50.0 million to up to $60.0 million, in multiple tranches. The additional $10.0 million tranche, or the Fourth Tranche, is available at the Company’s option through December 15 ~~2017. If drawn, the Fourth Tranche shall bear interest and have the same maturity as all other loans outstanding under the Loan Agreement.~~

The Company borrowed the first tranche of $20.0 million upon the closing of the Loan Agreement on September 30, 2015, and the second tranche of $20.0 million on December 12, 2016, or collectively, the Initial Tranches. Concurrently with the closing of the Third Amendment, the Company borrowed a third tranche of $10.0 million, or the Third Tranche. The Third Amendment extended the date on which the Company is required to begin making monthly principal installments under the Loan Agreement from January 1, 2019 to January 1, 2020, subject to the Company’s receipt of marketing approval for the Company’s lead product candidate, omadacycline, or the Interest Only Period Extension Event. Beginning on January 1, 2019, or, if the Company achieves the Interest Only Period Extension Event, January 1, 2020, the Company will make payments in equal monthly installments of principal and interest, with the balance of outstanding loans due on the original maturity date of the Loan Agreement. In connection with the Third Amendment, the Company paid Hercules a $0.1 million amendment fee.

The Third Amendment reduced the end of term charge due with respect to the Third Tranche from to 4.5% to 2.25% if the obligations under the Loan Agreement are repaid in full on or prior to September 30, 2017, following Hercules’ election not to consent to a proposed third-party, non-equity financing arrangement (excluding any stock issuance). ~~The end of term charge with respect to the Fourth Tranche, if drawn, is 2.25%.~~

If the Company prepays the loan prior to maturity, it will pay a prepayment charge, based on a percentage of the then outstanding principal balance, equal to (i) 1% with respect to the Third Tranche and the Fourth Tranche (if drawn) or (ii) 2% with respect to the Initial Tranches if the prepayment occurs prior to April 1, 2019, or equal to 0% if the prepayment occurs on or after April 1, 2019.

In connection with the borrowing of the Third Tranche, on June 27, 2017, the Company issued the Additional Warrant to Hercules Capital, Inc. that is exercisable for an aggregate of 5,374 shares of Common Stock at an exercise price of $23.26 per share. The Additional Warrant may be exercised on a cashless basis. The Additional Warrant is exercisable for a term beginning on the date of issuance and ending on the earlier to occur of five years from the date of issuance or the consummation of certain acquisitions of the Company as set forth in the Additional Warrant.

~~As of September 30, 2017, the Company has recorded a long-term debt obligation of $49.0 million, net of debt discount of $1.0 million.~~

Future principal payments, which exclude the 4.5% end of term charge of $0.7 million included within other liabilities on the balance sheet, in connection with the Loan Agreement, as of September 30, 2017, are as follows (in thousands):

The Company recorded a0 provision for income taxes infor the three ~~and nine~~ months ended ~~September 30, 2017 of $0~~March 31, 2021 and $0.8 million, respectively. The provision for income taxes consists of current tax expense, which represents China withholding taxes on the upfront payment earned under the Zai Collaboration Agreement.March 31, 2020.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of net operating loss carryforwards and research and development credits. Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets. Accordingly, a full valuation allowance has been established against the Company’s otherwise recognizable net deferred tax assets.

Previously, a component of the Company’s net operating losses related to tax deductions for the stock based compensation in excess of book compensation, or additional paid-in-capital net operating losses, would have been credited to additional paid-in-capital if they became utilizable in future periods. Under ASU 2016-09, any such excess deductions will be added to the existing net operating losses. This is not expected to have a material impact on the Company’s deferred tax assets or related disclosures.

To date, the Company’s only source of product revenue has been from NUZYRA product sales beginning in February 2019 when NUZYRA was launch in the U.S. The following table summarizes balances and activity in each of the product revenue allowance and reserve categories (in thousands):

The Company’s contractual obligations and commitments were reported in its Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017. The Company leases its Boston, Massachusetts and King of Prussia, Pennsylvania office spaces under non-cancelable operating leases expiring in 2021 and 2024, respectively.

The Company executed the third amendment to the lease agreement on its King of Prussia office space in October 2016. The lease agreement, as amended, is for 19,708 rentable square feet of office space, for a total commitment of $3.3 million with respect to which lease payments became due beginning once Paratek took control of such office space during the first quarter of 2017. The total lease commitment is over a seven-year and seven-month lease term. The lease contains rent escalation and a partial rent abatement period, which is being accounted for as rent expense under the straight-line method. The Company is required to make additional payments under the operating leases for taxes, insurance, and other operating expenses incurred during the operating lease periods.

~~As of September 30, 2017, future minimum lease payments under operating leases are as follows:~~

In July 2017, the Company entered into a master manufacturing services agreement and corresponding product agreement with Patheon UK Limited, or Patheon. The agreements provide for the terms and conditions under which Patheon will manufacture, package and supply to the Company omadacycline in injectable form, or the Patheon Products. Under these agreements, the Company is required to deliver to Patheon the active pharmaceutical ingredient needed to manufacture the Patheon Products. The Company is obligated to pay a supply price in the six-digit dollar range per batch of the Patheon Products, subject to adjustments as provided in the agreements. If the Company’s omadacycline product is approved, the Company will also be subject to an annual minimum purchase requirement in the six-digit euro range. If the Company desires for Patheon to conduct additional services other than those expressly set forth in the agreements, those would be subject to additional fees.

The Company’s agreements with Patheon will remain in effect for a fixed initial term, after which they will continue for successive renewal terms unless either the Company or Patheon have given written notice of termination within a certain period prior to the expiration of the applicable initial or then-current renewal term. The agreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or the other party’s insolvency.

In July 2012, the Company received notifications from three companies, Actavis Elizabeth LLC, or Actavis Elizabeth, Watson Laboratories, Inc.—Florida, or Watson, and Novel Laboratories, Inc., or Novel, in September 2012, from each of Par Pharmaceutical, Inc. and Par Formulations Private Ltd., together, the Par Entities, in February 2013 from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd., together, Dr. Reddy’s, and in July 2013 from TWi Pharmaceuticals, Inc., or Twi, stating that each has filed with the FDA an ANDA, that references Intermezzo. Refer to Item 3, Legal Proceedings, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 9, 2016, for a full description of the history of this litigation.

The United States District Court for the District of New Jersey, or the New Jersey District Court, held a consolidated trial between December 1, 2014 and December 15, 2014 involving Paratek, Purdue Pharma, and their patent infringement claims against Actavis Elizabeth, Novel, and Dr. Reddy’s. The New Jersey District Court then received post-trial briefing and held a February 13, 2015 post-trial hearing. On March 27, 2015, the New Jersey District Court issued an order and accompanying opinion finding that: (a) the asserted claims of U.S. Patent Nos. 7,682,628, 8,242,131, and 8,252,809, are invalid as obvious; (b) Actavis Elizabeth, Novel, and Dr. Reddy’s infringe the ‘131 patent; (c) Novel infringes the ‘628 patent; and (d) Novel and Dr. Reddy’s infringe the ‘809 patent. On April 9, 2015, the New Jersey District Court entered final judgment consistent with the March 27, 2015 opinion and order referenced above.

The Company and Purdue Pharma jointly appealed the New Jersey District Court’s final judgment as to the '131 patent to the United States Court of Appeals for the Federal Circuit on May 6, 2015. On January 8, 2016, the United States Court of Appeals for the Federal Circuit affirmed the decision of the New Jersey District Court, and no opinion accompanied the judgment. On September 14, 2016, the defendants filed a warrant of satisfaction of judgment in the New Jersey District Court for the costs having been fully paid to the defendants.

In January 2013, the Company filed suit in the Eastern District of Virginia against the United States Patent and Trademark Office, or the USPTO, seeking recalculation of the patent term adjustment of the ’131 Patent. Purdue Pharma has agreed to bear the costs and expenses associated with this litigation. In June 2013, the judge granted a joint motion to stay the proceedings pending a remand to the USPTO, in which the USPTO is expected to reconsider its patent term adjustment award in light of decisions in a number of appeals to the Federal Circuit, including Novartis AG v. Lee 740 F.3d 593 (Fed. Cir. 2014), or the Novartis decision. Since having issued final rules implementing the Novartis decision, the USPTO has been working through the civil action cases and issuing remand decisions. The Company’s case was on remand until the USPTO made its decision on the recalculation of the patent term adjustment. On September 28, 2016, the USPTO issued a decision that the patent term adjustment is 1,038 days, from which the ‘131 Patent expiration would be March 26, 2029.

In the ordinary course of business, the Company is from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements, employment and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, as of ~~September 30, 2017,~~March 31, 2021, the Company was not party to any ~~other~~ legal or arbitration proceedings that may have, or have had in the recent past, significant effects on the Company’s financial position. No governmental proceedings are pending or, to the Company’s knowledge, contemplated against the Company. The Company is not a party to any material proceedings in which any director, member of executive management or affiliate of the Company is either a party adverse to the Company or the Company’s subsidiaries or has a material interest adverse to the Company or the Company’s subsidiaries.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

~~Between May 2014 and May 2016, the FASB issued three ASUs changing the requirements for recognizing and reporting revenue, or together, herein referred to as the revenue ASUs: (i) ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers, or ASU 2014-09, (ii) ASU No. 2016-08,~~ ~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net), or ASU 2016-08, and (iii) ASU No. 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients~~, or ASU 2016-12. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. In ~~August 2015, the FASB issued ASU No. 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years beginning, and interim periods after, December 15, 2017. All subsequent ASUs related to ASU 2014-09, including ASU 2016-08 and ASU 2016-12, assumed the deferred effective date enforced by ASU 2015-14. Early adoption of the revenue ASUs is permitted for annual periods beginning, and interim periods after, December 15, 2016. A reporting entity may apply the amendments in the revenue ASUs using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. The Company expects to elect the full retrospective application as its transition method.

The Company has not yet completed its assessment of the impact of the adoption of this standard on its consolidated financial statements. The Company is in the process of evaluating its collaboration agreements with Zai, Allergan and Purdue to determine the impact the adoption of this standard may have on its consolidated financial statements and internal control over financial reporting. The new revenue ASUs may have a material impact on future revenue to be recognized under the Company’s Allergan Collaboration Agreement and Zai Collaboration Agreement. The Company does not believe the new revenue ASUs will have a material impact on revenue recognized related to its Purdue Collaboration Agreement.

~~The Company expects the accounting for contingent milestone payments under its collaboration agreements to change under ASC 606,~~ ~~Revenue from Contracts with Customers,~~ or ASC 606. ASC 606 does not contain guidance specific to milestone payments, thereby requiring contingent milestone payments to be considered in accordance with the overall model of ASC 606 as variable consideration. Revenue from contingent milestone payments may be recognized earlier under ASC 606 than under ASC 605, ~~Revenue Recognition~~, based on an assessment at each reporting date of the probability of achievement of the underlying milestone event. This assessment may, in certain circumstances, result in the recognition of revenue related to a contingent milestone payment before the milestone event has been achieved.

ASC 606 requires more robust disclosures than required by previous guidance, including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years, any significant reversals of revenue, and costs to obtain or fulfill contracts.

The Company may identify additional differences as it completes its assessment. Expected impacts from the adoption of this standard could differ upon the final adoption and implementation of the standard. In connection with the adoption of the standard, the Company is implementing several new internal controls, including controls to monitor the probability of achievement of contingent milestone payments.

~~In February~~June 2016, the FASB issued ASU No. ~~2016-02,~~ ~~Leases~~2016-13, Financial Instruments - Credit Losses (Topic ~~842)~~.326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. The ~~amendment requires a lessee~~FASB subsequently issued amendments to ~~recognize assets~~ASU 2016-13, which have the same effective date and ~~liabilities for leases with a maximum possible term~~transition date of ~~more~~January 1, 2023. These standards require that credit losses be reported using an expected losses model rather than ~~12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use~~ the leased asset (the underlying asset) for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including those interim periods within those fiscal years. The Companyincurred losses model that is currently ~~evaluating~~used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the ~~impact~~amortized cost of the investment. These standards limit the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. Based on the composition of our investment portfolio, accounts receivable and other financial assets, current market conditions and historical credit loss activity, the adoption of ~~ASU 2016-02 will have on its consolidated financial statements.~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230),~~ ~~or ASU 2016-15, which simplifies certain elements of cash flow classification. The new guidance~~these standards is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating the impact the adoption of ASU 2016-15 will have ~~on its consolidated financial statements.~~

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~, or ASU 2016-16. The amendments in ASU 2016-16 require an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory at the time that the transfer occurs. Current guidance does not require recognition of tax consequences until the asset is eventually sold to a third party. ASU 2016-16 is effective for fiscal years beginning, and interim periods after, December 15, 2017. Early adoption is permitted as of the first interim period presented in a year. A reporting entity must apply the amendments in ASU 2016-16 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. The Company is evaluating the impact of the adoption of ASU 2016-16 to its consolidated financial position and results of operations. The Company does not expect the adoption of ASU 2016-16expected to have a material ~~impact to its~~effect on the Company’s consolidated ~~financial position or results of operations.~~

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Restricted Cash, or ASU 2016-18. ASU 2016-18 requires an entity to reconcile and explain the period-over-period change in total cash, cash equivalents and restricted cash within its~~balance sheet, consolidated statements of ~~cash flows. ASU 2016-18 is effective for fiscal years beginning,~~operation and interim periods after, December 15, 2017. Early adoption is permitted. A reporting entity must apply the amendments in ASU 2016-18 using a full retrospective approach. The Company is currently evaluating the impact the adoption of the ASU will have on its consolidated financial statements.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment, or ASU 2017-04. ASU 2017-04 eliminates the current two-step approach used to test goodwill for impairment~~comprehensive loss and requires an entity to apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years beginning, including interim periods, after December 15, 2019 (upon the first goodwill impairment test performed during that fiscal year). Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. A reporting entity must apply the amendments in ASU 2017-04 using a prospective approach. The Company does not expect the adoption of ASU 2017-04 to have a material impact to its consolidated financial position or results of operations.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. All references to “Paratek,” “we,” “us,” “our” or the “Company” in this Quarterly Report on Form 10-Q mean Paratek Pharmaceuticals, Inc. and our subsidiaries.

This discussion contains certain forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potential,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward- looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, as filed with the U.S. Securities and Exchange Commission, or the SEC, on March ~~2, 2017, our~~29, 2021, or the 2020 Form 10-K, and this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2017, as filed with the SEC on May 4, 2017, and elsewhere in this report.~~2021. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and except as required by law, we undertake no obligation to update or revise these statements in light of future developments. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

We are a ~~clinical stage~~commercial-stage biopharmaceutical company focused on the development and commercialization of ~~innovative therapeutics based upon tetracycline chemistry. We have used our expertise in biology~~novel life-saving therapies for life-threatening diseases or other public health threats for civilian, government and ~~tetracycline chemistry to create chemically diverse~~military use. Our United States, or U.S., Food and biologically distinct small molecules derived from the minocycline core structure. We have generated innovative small molecule therapeutic candidates based upon medicinal chemistry-based modifications, according to structure-based activity, of all positions of the core tetracycline molecule. These efforts have yielded molecules with broad-spectrum antibiotic properties and narrow-spectrum antibiotic properties, and molecules with potent anti-inflammatory properties to fit specific therapeutic applications. This proprietary chemistry platform has produced many compounds that have shown interesting characteristics in various ~~in vitro~~ ~~and~~ ~~in vivo~~ ~~efficacy models. Omadacycline and sarecycline are examples of molecules that were synthesized from this chemistry discovery platform. Our two lead~~Drug Administration, or FDA, approved commercial product, ~~candidates are the antibacterials omadacycline and sarecycline~~

~~If approved, omadacycline will be the first in a new class of aminomethylcycline antibiotics. Omadacycline~~NUZYRA^® (omadacycline) is a ~~broad-spectrum, well-tolerated,~~ once-daily oral and intravenous ~~or IV, antibiotic. We believe that omadacycline has the potential to become the primary antibiotic choice of physicians for use as a broad-spectrum monotherapy~~ antibiotic for the treatment of adult patients with community-acquired bacterial pneumonia, or CABP, and acute ~~bacterial~~ skin and skin structure infections, or ABSSSI, ~~community-acquired bacterial pneumonia, or CABP, urinary tract infection, or UTI, and other serious community-acquired bacterial infections where resistance~~caused by susceptible pathogens. SEYSARA^® (sarecycline) is ~~of concern. We believe omadacycline, if approved, will be used in the emergency room, hospital and community care settings. We have designed omadacycline~~an FDA-approved product with respect to provide potential advantages over existing antibiotics, including activity against resistant bacteria, broad-spectrum antibacterial activity, oral and IV formulations with once-daily dosing, no known drug interactions, and a favorable safety and tolerability profile.

In the fall of 2013, the U.S. Food and Drug Administration, or the FDA, agreed to the design of our omadacycline Phase 3 studies for ABSSSI and CABP through the Special Protocol Assessment, or SPA, process. In addition, the FDA confirmed that positive data from the individual studies for ABSSSI and CABP would be sufficient to support approval of omadacycline for each indication and for both oral and IV formulations in the United States. In addition to Qualified Infectious Disease Product, or QIDP, designation, on November 4, 2015, the FDA granted omadacycline Fast Track designation for the development of omadacycline in ABSSSI, CABP, and complicated Urinary Tract Infections, or cUTIs. Fast Track designation facilitates the development and expedites the review of drugs that treat serious or life-threatening conditions and that fill an unmet medical need. In February 2016,which we reached agreement with the FDA on the terms of a pediatric program associated with the Pediatric Research and Equity Act. The FDA has granted Paratek a waiver from conducting studies with omadacycline in children less than eight years old due the risk of teeth discoloration, a known class effects of tetracyclines. In addition, the FDA has granted a deferral on conducting studies in children eight years and older until safety and efficacy is established in adults. In May 2016, we received confirmation from the FDA that the oral-only ABSSSI study design was acceptable and consistent with the currently posted guidance for industry.

Scientific advice received through the centralized procedure in Europe confirmed general agreement on the design and choice of comparators of the Phase 3 trials for ABSSSI and CABP and noted that approval based on a single study in each indication could be possible but would be subject to more stringent statistical standards than Market Authorization Applications, or MAA, programs that

conduct two pivotal Phase 3 studies per indication. We believe that the inclusion of the second Phase 3 oral-only study in ABSSSI strengthens the data package for submission of an MAA filing for approval in the European Union, or EU.

We held two pre-NDA meetings with the FDA. The first meeting was to discuss clinical and non-clinical topics and the second meeting was to discuss the CMC data components of our proposed submission package, the result of which was confirmation that we have a clear path towards our NDA submission. Following these regulatory meetings, we plan to begin a rolling submission of our NDAs to the FDA in December 2017. The final NDA submissions for both formulations are expected to be submitted during the first quarter of 2018.

To date, we have conducted more than 20 Phase 1 studies for omadacycline to characterize the effects of the drug on humans including how it is absorbed, metabolized, and excreted. These Phase 1 studies also included this evaluation in special populations like hepatic and renal failure patients. We have also conducted and completed three successful Phase 3 clinical studies. Our first two Phase 3 clinical studies were for the treatment of ABSSSI (OASIS-1) and CABP (OPTIC). Both studies utilized initiation of IV therapy with transitions to oral-based treatment on clinical response. Our third Phase 3 clinical study (OASIS-2) was an oral-only administration of omadacycline in ABSSSI compared to oral-only linezolid. All three Phase 3 clinical studies resulted in omadacycline demonstrating positive efficacy results and a generally safe and well tolerated profile. We plan to include these clinical data in the NDA submission to the FDA for the treatment of ABSSSI and CABP in the first quarter of 2018 and to the European Medicines Agency, or EMA, in the second half of 2018.

In the two pivotal Phase 3 studies in ABSSSI, omadacycline successfully met the primary endpoint for FDA by demonstrating statistical non-inferiority based upon the Early Clinical Response, or ECR, assessment at 48 to 72 hours after the first dose of study medication in the modified intent‑to‑treat, or mITT, population (all randomized subjects without a baseline sole Gram‑negative causative pathogen). Clinical success at the ECR assessment was based on reduction of the size of the primary lesion ≥ 20% without receiving any rescue antibacterial therapy. Clinical success was achieved in 84.8% of omadacycline subjects and in 85.5% of linezolid subjects in the IV-to-oral study (OASIS-1) and in 87.5% of omadacycline subjects and in 82.5% of linezolid subjects in the oral-only study (OASIS-2).

In the same two pivotal Phase 3 studies in ABSSSI, omadacycline also successfully met the primary endpoint for the EMA by demonstrating statistical non-inferiority based upon the investigator’s assessment of clinical outcome at the post therapy evaluation, or PTE, visit (7 to 14 days after the subject’s last day of study therapy), in the mITT and the clinically evaluable, or CE, population (defined as all mITT subjects who received study medication, had a qualifying ABSSSI, an assessment of outcome, and met all other evaluability criteria). Clinical success at the PTE assessment was based on resolution of the infection such that further antibacterial therapy was not needed, and the subject was alive and did not meet any clinical failure or indeterminate criteria. In the mITT population, clinical success at the PTE was achieved in 86.1% of omadacycline subjects and in 83.6% of linezolid subjects in the IV-to-oral study (OASIS-1) and in 84.2% of omadacycline subjects and in 80.8% of linezolid subjects in the oral-only study (OASIS-2). The corresponding efficacy results for the CE population were 96.3% of omadacycline subjects and 93.5% of linezolid subjects in the IV-to-oral study (OASIS-1) and 97.9% of omadacycline subjects and 95.5% of linezolid subjects in the oral-only study (OASIS-2).

In a single pivotal Phase 3 study in CABP (OPTIC), omadacycline successfully met the primary endpoint for FDA by demonstrating statistical non-inferiority based upon the ECR assessment at 72 to 120 hours after the first dose of study medication in the intent‑to‑treat, or ITT, population. Clinical success at the ECR assessment, defined as survival and improvement in at least two of four symptoms (cough, sputum production, pleuritic chest pain, dyspnea) without deterioration in any of the symptoms, was achieved in 81.1% of omadacycline subjects and in 82.7% of moxifloxacin subjects.

In a single pivotal Phase 3 study in CABP (OPTIC), omadacycline also successfully met the primary endpoint for EMA by demonstrating statistical non-inferiority based upon clinical success, as assessed by the investigator at the PTE visit in both the ITT and CE populations. Clinical success was achieved in 87.6% of omadacycline subjects and in 85.1% of moxifloxacin subjects in the ITT population and in 92.9% of omadacycline subjects and in 90.4% of moxifloxacin subjects in the CE population.

Across the entire Phase 3 pivotal study program, we have observed the following selected adverse events with the following incidence ranges: nausea (2.4% to 30.2%), vomiting (2.6% to 16.8%), headache (2.1% to 3.5%), alanine aminotransferase, or ALT, increased (2.8% to 5.2%), aspartate transaminase, or AST, increased (2.1% to 4.6%), and diarrhea (1.0% to 4.1%). Importantly, we have not had any reported cases of ~~clostridium difficile~~ ~~colitis or infection in patients treated with omadacycline in the entire safety database to date.~~

In May 2016, we initiated our first oral-only and IV-to-oral study of omadacycline dosed for five days in a Phase 1b clinical study in patients with a UTI. This Phase 1b UTI study was completed. Data from this study showed that omadacycline achieved proof of principle, by demonstrating high concentration levels of omadacycline in urine, across IV-to-oral and oral-only dosing regimens. In September 2017, we announced that omadacycline has been granted an additional QIDP designation by the FDA for the treatment of

uncomplicated urinary tract infections, or uUTI, for both the oral and the intravenous formulations. The QIDP designation, which is designed to speed the development of novel antibiotics for the treatment of pathogens with the potential to pose a serious threat to public health, provides an opportunity for more frequent interactions with the FDA, and a priority review of the supplemental new drug application for omadacycline in uUTI once submitted. We plan on initiating a Phase 2 UTI program, which consists of two studies, one in uUTI and one cUTI study. The Phase 2 UTI program will initiate as early as December 2017.

In October 2016, we announced that we entered into a Cooperative Research and Development Agreement, or CRADA, with the U.S. Army Medical Research Institute of Infectious Diseases, or USAMRIID, to study omadacycline against pathogenic agents causing infectious diseases of public health and biodefense importance. These studies are designed to confirm humanized dosing regimens of omadacycline in order to study the efficacy of omadacycline against biodefense pathogens, including Yersinia pestis, or plague, and Bacillus anthracis, or anthrax. Funding support for the trial has been made available through the Defense Threat Reduction Agency, or DTRA/ Joint Science and Technology Office and Joint Program Executive Office for Chemical and Biological Defense / Joint Project Manager Medical Countermeasure Systems / BioDefense Therapeutics.

Our second Phase 3 antibacterial product candidate, sarecycline, also known as WC3035, is a new, once-daily, tetracycline-derived compound designed for use in the treatment of acne and rosacea. We believe that, based upon the data generated to-date, sarecycline possesses favorable anti-inflammatory activity, plus narrow-spectrum antibacterial activity relative to other tetracycline-derived molecules, oral bioavailability, does not cross the blood-brain barrier, and favorable PK properties that we believe make it particularly well-suited for the treatment of inflammatory acne in the community setting. We have exclusively licensed in the U.S. ~~development~~ and ~~commercialization~~the People’s Republic of China, Hong Kong and Macau, or the greater China region, certain rights to ~~sarecycline for the treatment of acne to Allergan plc,~~Almirall, LLC, or ~~Allergan, while retaining development and commercialization rights~~Almirall. SEYSARA is currently being marketed by Almirall in the ~~rest of the world. Allergan currently holds~~U.S. as a non-exclusive license to develop and commercialize sarecycline for the treatment of rosacea in the United States. There are currently no clinical trials with sarecycline in rosacea underway. In March 2017, Allergan announced that two Phase 3 studies of sarecyclineonce-daily oral therapy for the treatment of moderate to severe acne ~~vulgaris met their 12-week primary efficacy endpoints.~~ vulgaris. With respect to our technology as it relates to sarecycline, we retain development and commercialization rights in all countries other than the U.S. and the greater China region, and in February 2020, we exclusively licensed from Almirall certain technology owned or in-licensed by Almirall or its affiliates that is necessary or useful to develop or commercialize sarecycline outside of the U.S. Almirall plans to develop sarecycline for acne in China, with a submission to the China National Medical Products Administration, or NMPA, expected in 2023.

During the first quarter of 2021, we completed the initial phase of our plan to expand our launch of NUZRYA into the community setting based on NUZYRA's product attributes, including its once-daily oral formulation, broad reimbursement coverage and infectious disease physician support. Our expansion of commercial promotion into the community setting focuses initially on ABSSSI, with a plan to broaden promotion to include CABP after the anticipated approval of the oral-only loading-dose regimen for CABP expected during the second quarter of 2021.

In ~~addition,~~December 2019, we entered into a ~~9-month long-term safety extension study was completed. The safety results from the long-term study are generally consistent~~five-year contract with ~~results from the two 12-week studies. Based on these clinical data, Allergan intends~~an option to ~~file an NDA~~extend to ten years with the ~~FDA in~~Biomedical Advanced Research and Development Authority, or BARDA, a division of the ~~fourth quarter~~U.S. Department of ~~2017~~Health and Human Services, or HHS, Office of the Assistant Secretary for Preparedness and Response, or ASPR, herein referred to as the BARDA contract. The BARDA contract supports the development of NUZYRA for the treatment of ~~acne.~~pulmonary anthrax, FDA post-marketing requirements, or PMRs, associated with the initial NUZYRA approval, and an option for BARDA to procure up to 10,000 treatment courses of NUZYRA for the Strategic National Stockpile, or SNS, for use against potential biothreats. Under the terms of the BARDA contract, an award of up to approximately $59.4 million for the development of NUZYRA for the treatment of pulmonary anthrax and the first procurement of NUZYRA have been funded by BARDA. Two additional contractual services have been funded by BARDA that awarded approximately $76.8 million for existing FDA PMRs and approximately $20.4 million for manufacturing-related requirements, both of which began in April 2020. Remaining optional funding includes the potential for approximately $12.7 million to support the development of NUZYRA for the prophylaxis of anthrax and a maximum of approximately $115.3 million to provide for three additional purchases of NUZYRA for the SNS, each of which will be triggered at BARDA’s discretion upon us demonstrating continued progress in the anthrax development program.

We have made significant progress in the pulmonary anthrax development program under the BARDA contract. A pharmacokinetic, or PK, study in rabbits was recently completed. In addition, we have evaluated minimum inhibitory concentrations,

or MICs, of omadacycline against over 130 anthrax strains. Omadacycline continued to demonstrate potent MICs and is considered effective against all bacteria tested. The collection of isolates had a strain resistant to doxycycline and a strain resistant to ciprofloxacin, the two antibiotics currently in the SNS after approval for the treatment of anthrax many years ago. Omadacycline activity was not impacted in either of those resistant strains.

Together with BARDA, we continue to make progress advancing our efforts to onshore the manufacturing of NUZYRA to the U.S. We have completed the knowledge transfer of our manufacturing process for the active pharmaceutical ingredient, or API, of omadacycline to our U.S. onshoring partners and are currently in the development stage of the initiative. The process flow, equipment selection and facility modifications have been planned and process development and engineering are expected to be completed in 2021. The manufacturing process validation will begin in early 2022, with the goal of commercial supply production in the U.S. by 2023.

On February 24, 2021, we announced that the first NUZYRA procurement under our contract with BARDA was expected to occur in the first half of 2021 and another procurement in the second half of 2021. The first procurement was contingent upon receipt of comments from the FDA on the pre-emergency use authorization, or pre-EUA, submitted in February 2020. As part of the ongoing review, supplemental mouse pharmacokinetic data requested by the FDA was submitted in November 2020. On March 2, 2021, we received feedback from the FDA with a recommendation to consider an additional in vitro model to further characterize the optimal pharmacokinetic parameters for pulmonary anthrax as part of the development program. We are in discussions with BARDA to align on the best approach to integrating the FDA recommendation into the development program. We were recently informed that BARDA has received all necessary approvals for and initiated the first procurement of NUZYRA. We expect the first procurement will be delivered and the related revenue recognized in the second quarter of 2021. We continue to anticipate the delivery of the next procurement of NUZYRA in the second half of 2021.

As part of the approval for NUZYRA, the FDA has waived the pediatric study requirement for ages 0 to < 8 years and deferred submission of pediatric studies for ages 8 to < 18 years. Specifically, the FDA has requested that we complete three pediatric studies, including a pediatric PK study followed by safety and efficacy studies in pediatric patients with both CABP and ABSSSI. In addition to pediatric requirements, as is often required for antibiotic approvals, the FDA has also required a U.S. surveillance study for five years from the date of marketing to monitor for the development of resistance to NUZYRA (omadacycline) in those organisms specific to the indications in the label. Lastly, FDA has required a second study be conducted in patients with CABP. We enrolled our first patient in this second CABP study in February 2021.

We also continue to pursue a number of other opportunities for NUZYRA. The first of these is the filing with the FDA of a supplemental new drug application, or sNDA, for the oral-only loading dose regimen for patients diagnosed with CABP. The sNDA includes the results of a study designed with agreement from the FDA to show that an oral-only loading dose regimen will have a comparable pharmacokinetic profile to the approved IV loading dose regimen in patients with CABP that was established in the Phase 3 registration study. Enrollment in this study was stopped early in 2020 due to COVID-19 restrictions at the clinical centers. Data obtained from the study was reviewed and determined to support the submission of the sNDA in July 2020. We believe consideration for this oral-only loading dose regimen is expected during the second quarter of 2021.

We have initiated discussions with the FDA to explore potential regulatory registration paths to determine the efficacy and safety of omadacycline in patients afflicted with non-tuberculous mycobacteria abscessus, or NTM, which are environmental organisms that can be found in soil, dust, and water, including natural and municipal water sources. Infection occurs when a person is exposed to NTM organisms. NTM can form difficult-to-eliminate biofilms, which are collections of microorganisms that stick to each other, and adhere to surfaces in moist environments. Although severe infection can affect the lymph nodes, skin, soft tissues, bones, and joints, the vast majority of NTM infection cases are pulmonary. The diagnosis of NTM infection is often delayed due to non-specific symptoms and a lack of disease state awareness by clinicians. NTM is a rare and orphan disease with no FDA-approved therapies, which we estimate has a potential $1.0 billion addressable market in the U.S.

Start-up activities for a Phase 2b clinical study for treatment of NTM with omadacycline are underway, with the initiation of patient enrollment planned for as early as the first half of 2021.This study is a placebo-controlled, randomized monotherapy study of NTM in patients who are not receiving other treatments. Study size will be approximately 75 subjects randomized in a 1.5 to 1 ratio. Therapy will last for 12 weeks with an efficacy endpoint assessment at that timepoint. Due to the small numbers of patients with this rare disease, we expect this study will complete enrollment within approximately two years from commencement.

Our data generation and medical affairs activities have progressed with the initiation of ten non-clinical and clinical studies in investigator-initiated research, or IIR, programs, and the publication of 19 omadacycline manuscripts that address the use of NUZYRA in special pathogens, populations or disease states that will further define its unique therapeutic profile. In parallel, real-world evidence from two ongoing observational studies and independent case series continue to be published in peer reviewed

journals that describe the clinical features and outcomes of patients with challenging infections, particularly in NTM and osteomyelitis, that receive omadacycline as a therapeutic agent.

Data generation will continue to expand throughout 2021 with additional evidence from our IIR programs in areas such as diabetic foot and C. difficile infections. In addition, non-clinical research studying the activity of omadacycline alone and in combination in an osteomyelitis model in rats and studies in M. abscessus and Mycobacterium avium complex will build on the growing library of scientific data for NUZYRA.

To date, we have devoted a substantial amount of our resources to research and development efforts, including conducting clinical trials for omadacycline, protecting our intellectual property and providing selling, general and administrative support for these operations. We have not yet submitted any product candidates for approval by regulatory authorities, and we do not currently have rights to any products that have been approved for marketing in any territory. We have not generated anybegan generating revenue from product sales ~~and to date~~in February 2019; as such, we have historically financed our operations primarily through ~~sale~~sales of our common ~~and convertible preferred~~ stock, debt financings, strategic collaborations, and grant funding.

In April 2017, Paratek Bermuda Ltd., a wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., and Zai Lab (Shanghai) Co., Ltd., or Zai, entered into a License and Collaboration Agreement, or the Zai Collaboration Agreement. Under the terms of the Zai Collaboration Agreement, the Company granted Zai an exclusive license to develop, manufacture and commercialize omadacycline in the People’s Republic of China, Hong Kong, Macau and Taiwan, or the territory, for all human therapeutic and preventative uses, other than biodefense. Zai will be responsible for the development, manufacturing and commercialization of the licensed product in the territory, at its sole cost with certain assistance from the Company. Under the terms of the Zai Collaboration Agreement, Paratek Bermuda Ltd. earned an upfront, nonrefundable license payment of $7.5 million during the nine months ended September 30, 2017.

We have incurred significant losses since our inception in 1996. Our accumulated deficit at ~~September 30, 2017~~March 31, 2021 was ~~$448.2~~$826.1 million and our net loss for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was ~~$67.2~~$18.3 million. A substantial amount of our net losses resulted from costs incurred in connection with our research and development programs and selling, general and administrative costs associated with our operations. The net losses and negative operating cash flows incurred to date, together with expected future losses, have had, and likely will continue to have, an adverse effect on our stockholders’ ~~equity~~deficit and working capital. The amount of future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate offsetting ~~revenue, if any.~~revenue. We expect to continue to incur significant expenses and operating losses for the ~~foreseeable future.~~next several years.

~~We do not expect~~While our BARDA contract is expected to significantly strengthen our cash position, unless we can generate a sufficient amount of revenue from ~~product sales unless and until~~our commercial products, we ~~or either of our partners, Allergan or Zai, successfully complete development and obtain marketing approval for one or more of our product candidates. Accordingly, we anticipate that we will~~may need to raise additional capital in order to ~~complete~~support and accelerate the ~~development and~~ commercialization of omadacycline and to advance the development of our other indications for omadacycline, such as NTM, or other product candidates. ~~Until~~If we ~~can~~cannot generate a sufficient amount of product or royalty revenue to finance our cash requirements, we expect to finance our future cash needs primarily through a combination of public ~~and~~or private equity offerings, debt or other structured financings, strategic collaborations, grant funding and ~~strategic collaborations.~~government funding. We may be unable to raise capital when needed or on attractive terms, which would force us to delay, limit, reduce or terminate our development programs or commercialization efforts. We will need to generate significant revenue to achieve and sustain profitability, and we may never be able to do so.

The COVID-19 pandemic continues to present a substantial public health and economic challenge around the world and is continuing to affect our employees, health care institutions, patients, communities and business operations, as well as the U.S. economy and financial markets. The COVID-19 related restrictions on in-person promotional access to health care institutions and the overall impact of COVID-19 restrictions on the health care and hospital environments could restrict the full potential of NUZYRA’s growth. The length of time and full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

To date, we and our partners have been able to continue to supply our products to our patients worldwide and currently do not anticipate any interruptions in supply for the foreseeable future. Regarding our clinical programs, enrollment in our study designed to show that an oral-only loading dose regimen will have a comparable pharmacokinetic profile to the approved IV loading dose regimen in patients with CABP that was established in the Phase 3 registration study was stopped early in 2020 due to COVID-19 restrictions at the clinical centers. We continue to assess the potential impact of the COVID-19 pandemic on our three clinical studies that have begun or will soon begin, our BARDA anthrax development program, as well as on our business and operations, including our sales, expenses, supply chain and other clinical studies.

Our office-based employees have been working from home since early March 2020. We suspended in-person interactions by our customer-facing personnel in healthcare settings during the majority of the second quarter of 2020. During this period of suspended in-person interactions, we engaged with our customers remotely in an effort to continue to support and educate healthcare professionals. In late June 2020, our customer-facing personnel began re-engaging with our customers in a manner consistent with guidance issued by the Centers for Disease Control and Prevention and other state and local mandates. Our customer-facing personnel are now operating through a hybrid model of both virtual and in-person engagement.

Our third-party contract manufacturing partners continue to operate their manufacturing facilities at or near normal levels. While we currently do not anticipate any interruptions in our supply chain, it is possible that the COVID-19 pandemic and response efforts may have an impact in the future on our and/or our third-party suppliers’ and contract manufacturing partners' ability to manufacture

~~In October 2015 and February 2017, we entered into Controlled Equity Offering~~^SM ~~Sales Agreements,~~our products or the 2015 Sales Agreement and 2017 Sales Agreement, respectively, and collectively, the Sales Agreements, with Cantor Fitzgerald & Co., or Cantor, under which we could, at our discretion, from time to time sell sharesproducts of our ~~common stock, with a sales value of up~~partners. The COVID-19 pandemic has prevented technical service, quality assurance and supply operations personnel from traveling to ~~$50 million under each Sales Agreement through Cantor. We provided Cantor with customary indemnification rights,~~our third-party contract manufacturing partners in Europe.

For additional information on the various risks posed by the COVID-19 pandemic, refer to Item 3. Quantitative and ~~Cantor was entitled to a commission at a fixed rate of 3% of the gross proceeds per share sold. Sales of the shares under the Sales Agreements were to be made~~Qualitative Disclosures About Market Risk and Item 1A. Risk Factors included in transactions deemed to be “at the market offerings”, as defined in Rule 415 under the Securities Act of 1933, as amended. We received $36.9 million in proceeds, after deducting commissions of $1.1 million, from the sale of 2,326,119 shares of common stock under the 2015 Sales Agreement during the nine months ended September 30, 2017. We received an additional $45.9 million in proceeds, after deducting commissions of $1.4 million, from the sale of 2,006,007 shares of common stock, as of November 1, 2017, under the 2017 Sales Agreement. As of November 1, 2017, $2.7 million remain available for sale under the 2017 Sales Agreement.this report.

~~We have not yet generated any~~Product revenue, ~~from~~net, is recognized when earned on sales of NUZYRA, which was approved by the FDA in October 2018 and launched in the U.S. in February 2019. NUZYRA is sold principally to a limited number of specialty distributors and specialty pharmacy providers in the U.S. These customers subsequently resell our product ~~sales. All~~to health care providers or dispense the product to patients. In addition to distribution agreements with customers, we enter into arrangements with health care providers and payers that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts with respect to the purchase of our product. Product revenue is recognized net of reserves for all variable consideration, including rebates, chargebacks, discounts and product returns.

Government contract service revenue is recognized when earned under our BARDA contract and represents the reimbursement by BARDA of costs incurred by us for work performed to ~~date has been derived from~~develop NUZYRA for the treatment of pulmonary anthrax and for the U.S. onshoring of NUZYRA manufacturing plus a small fixed administrative fee. Refer to Note 7, Government Contract Revenueto the interim condensed consolidated financial statements for further discussion of the BARDA contract and related revenue recognition.

The allocated consideration of government contract grant revenue is recognized when earned under our BARDA contract and represents the reimbursement by BARDA of costs incurred by us for FDA post-marketing requirements, or PMRs, associated with the approval of NUZYRA, including CABP and pediatric studies, as well as a five-year post-marketing bacterial surveillance study. Refer to Note 7, Government Contract Revenueto the interim condensed consolidated financial statements for further discussion of the BARDA contract and related revenue recognition.

Collaboration and royalty revenue are recognized when revenue earned under our collaboration and license ~~fees, milestone payments, royalty income, reimbursements~~agreements. Refer to Note 8, License and Collaboration Agreementsto the interim condensed consolidated financial statements for ~~research, development~~further discussion of the collaboration agreements and ~~manufacturing activities under licenses and collaborations, grant payments received from~~ the ~~National Institute~~related revenue recognition.

Cost of ~~Health, or NIH, and other non-profit organizations. We do not expect to generate revenue from~~Product Revenue

~~License~~ revenue represents ~~upfront fees~~the cost of the product itself, labor and ~~milestone payments received in connection with our Collaboration Agreements. Royalty~~overhead, and any reserve for excess or obsolete inventory, as well as stability studies, and inventory scrap. Cost of product revenue also represents ~~fifty percent~~royalties owed on net sales of ~~Intermezzo royalty income received pursuant to the royalty sharing agreement, or the Royalty Sharing Agreement, entered into by us in October 2016 with the Special Committee of our Board of Directors.~~NUZYRA.

Research and development expenses consisted primarily of costs directly incurred by us for the development of our product candidates, which include:

Research and development expenses also include gross reimbursable costs incurred related to research and development services performed for the treatment of pulmonary anthrax, services performed for U.S. manufacturing onshoring and security requirements, and services performed for FDA PMRs under the BARDA contract.

Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.

We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our products or product candidates for which we or any partner obtain regulatory ~~approval. We~~approval, such as NUZYRA and SEYSARA. Aside from the FDA approval of NUZYRA and SEYSARA in the U.S., we or our partners may never succeed in achieving regulatory approval for any of our other product candidates. The duration, costs and timing of clinical trials and development of our product candidates ~~will~~ depend on a variety of factors, including:

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that therapeutic candidate. For example, if the FDA, or

another regulatory authority, were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of the clinical development of product candidates, or if we experience significant delays in the enrollment in any clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

We are using available cash, cash equivalents, and marketable securities on hand and borrowings under our Loan Agreement (as defined below), as amended, with Hercules (as defined below) to complete our clinical studies of omadacycline as well as activities required to support an NDA submission for omadacycline for the treatment of ABSSSI and CABP, the manufacture of validation batches and commercial supply, to build our commercial and medical affairs teams, and for working capital and other general corporate purposes.

We manage certain activities, such as clinical trial operations, manufacture of clinical trial material, and preclinical animal toxicology studies, through third-party contract organizations. The only costs we track by each product candidate are external costs such as services provided to us by CROs, manufacturing of preclinical and clinical drug product, and other outsourced research and development expenses. We do not assign or allocate to individual development programs internal costs such as salaries and benefits, facilities costs, lab supplies and the costs of preclinical research and studies. Our ~~external~~ research and development expenses for omadacycline and other projects during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 are as ~~follows (in thousands):~~ follows:

~~General~~Selling, general and administrative ~~expense consists primarily~~expenses consist principally of ~~salaries~~compensation costs associated with our contract sales force, commercial support personnel, and medical affairs professionals, as well as personnel in executive and other ~~related~~administrative functions. Other selling, general and administrative expenses include marketing, trade, and other commercial costs ~~for personnel~~and distribution fees necessary to support the launch of NUZYRA and professional fees for legal, consulting and ~~consulting fees.~~accounting services.

Interest income represents interest earned on our money market funds and marketable securities.

Interest expense ~~represents~~represents interest incurred on the ~~Hercules Term~~R-Bridge Loan Agreement, the Notes, and the Royalty-Backed Loan Agreement (each as defined in Note 13, Long-Term Debt to the interim condensed consolidated financial statements), as well as the adjustment of our marketable securities to amortized cost.

	Three Months Ended March 31,
(in thousands)	2021			2020			$ Change
Product revenue, net	$	13,207		$	7,303		$	5,904
Government contract service revenue		973			337			636
Government contract grant revenue		1,613			—			1,613
Collaboration and royalty revenue		634			280			354
Net revenue	$	16,427		$	7,920		$	8,507
Expenses:
Cost of product revenue		2,751			1,471			1,280
Research and development		5,538			6,389			(851	)
Selling, general and administrative		22,359			23,638			(1,279	)
Total operating expenses		30,648			31,498			(850	)
Loss from operations		(14,221	)		(23,578	)		9,357
Other income and expenses:
Interest income		25			705			(680	)
Interest expense		(4,307	)		(4,826	)		519
Other gains (losses), net		157			82			75
Net loss	$	(18,346	)	$	(27,617	)	$	9,271

Net product revenue recognized on sales of NUZYRA in the U.S. was $13.2 million and $7.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. The increase in net product revenue is primarily the result of an increase in sales volume due to higher customer demand.

Government contract service revenue earned under our BARDA contract was $1.0 million and $0.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. The increase in government contract service revenue is primarily the result of costs incurred for the U.S. onshoring of NUZYRA manufacturing that began in April 2020.

Government contract grant revenue earned under our BARDA contract was $1.6 million during the three months ended March 31, 2021. No such government contract grant revenue was earned during the three months ended March 31, 2020 as BARDA exercised the option to award additional funding to support existing FDA PMRs in April 2020.

Collaboration and royalty revenue were $0.6 million and $0.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Royalty revenue recognized for sales of SEYSARA in the U.S. was estimated using third-party data and an approximation of discounts and allowances to calculate net product sales, to which the Company then applied the applicable royalty percentage specified in the Almirall Collaboration Agreement. Differences between actual and estimated royalty revenue will be adjusted in the period in which they become known, which is expected to be the following quarter.

Cost of product revenue was $2.8 million for the three months ended March 31, 2021, compared to $1.5 million for the three months ended March 31, 2020. The $1.3 million increase is primarily the result of an increase in NUZYRA product sales and royalties owed on net sales of NUZYRA. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, certain of the costs of NUZYRA units recognized as revenue during the three months ended March 31, 2021 were expensed prior to FDA approval in October 2018, and therefore are not included in cost of product revenue during the period. We expect cost of product revenue to increase in absolute dollars as product revenue increases.

Research and development expenses were $5.5 million for the three months ended March 31, 2021, compared to $6.4 million for the three months ended March 31, 2020. Included in R&D expenses for the three months ended March 31, 2021 was $2.7 million in costs reimbursed under the BARDA contract for the U.S. onshoring of NUZYRA manufacturing and for FDA PMRs. The $0.9 million decrease is primarily the result of primarily the result of lower third-party manufacturing scale-up and clinical study costs as well as lower stock-based compensation expense mainly due to timing of the achievement of performance-based vesting criteria.

We anticipate an increase in research and development expenses in future periods as we continue development of NUZYRA for the treatment of pulmonary anthrax, continue the work on our FDA PMRs, and continue the onshoring of our manufacturing process, the majority of which is reimbursable under the BARDA contract. We will also incur additional spend as we continue exploring pathways for NTM indications.

Selling, general and administrative expenses were $22.4 million for the three months ended March 31, 2021, compared to $23.6 million for the three months ended March 31, 2020. The $1.3 million decrease is primarily the result of a continued focus on driving operational efficiencies across the organization as well as lower stock-based compensation expense mainly due to timing of the achievement of performance-based vesting criteria.

We anticipate an increase in selling, general and administrative expenses in support of our expansion into the community setting and other commercial activities, as well as the continued costs of operating as a public company. These increases will likely include costs related to the NUZYRA community expansion, travel, in-person training events and sales meetings, the hiring of additional personnel, executing marketing and promotional programs, and engaging consultants, legal and other professional fees, and other operating expenses.

expense for the three months ended March 31, 2021 represents interest incurred on the R-Bridge Loan Agreement of $1.1 million, the Notes of $2.2 million, and the Royalty-Backed Loan Agreement of $1.0 million. Interest income for the three months ended March 31, 2021 represents interest earned on our money market funds and marketable securities.

Three Months Ended
September 30,

(in thousands)

2017

2016

$ Change

License and royalty revenue

$
12

$
—

$
12

Operating expenses:

Research and development

12,112

17,334

(5,222
)
General and administrative

8,219

5,949

2,270

Changes in fair value of contingent consideration

(22
)

(170
)

148

Total operating expenses

20,309

23,113

(2,804
)
Loss from operations

(20,297
)

(23,113
)

2,816

Other income and expenses:

Interest expense

(1,408
)

(820
)

(588
)
Interest income

389

309

80

Other loss, net

(8
)

(4
)

(4
)
Net Loss

$
(21,324
)

$
(23,628
)

$
2,304

Research and development expenses were $12.1 million for the three months ended September 30, 2017 compared to $17.3 million for the same period in 2016. The decrease was driven primarily by lower clinical study costs associated with the completion of our Phase 3 program for omadacycline.

We anticipate that our research and development expenses will increase in future periods as a result of our Phase 2 UTI program, payment of prescription drug user fees associated with our NDA submissions, manufacturing of validation batches of omadacycline and expansion of our medical affairs team prior to launch.

General and administrative expenses were $8.2 million for the three months ended September 30, 2017 compared to $5.9 million for the same period in 2016. The increase was driven primarily by higher employee compensation costs as we continue to expand our team and engage in pre-commercial activities.

~~We anticipate that our general and administrative expenses will increase in future periods as we expand our pre-commercialization efforts.~~

During the three months ended September 30, 2017 and 2016, we recorded a $22,000 decrease and $0.2 million decrease, respectively, in the fair value of our contingent obligation to former Transcept stockholders. The decrease in the fair value of our contingent obligation for the three months ended September 30, 2017 and 2016 reflects a corresponding decline in projected Intermezzo sales.

Interest expense for the three months ended ~~September 30, 2017~~March 31, 2020 represents interest incurred on the Hercules Loan Agreement ~~as amended,~~ of ~~$1.4~~$1.7 million, the Notes of $2.2 million, and the Royalty-Backed Loan Agreement of $1.0 million, partially offset by the net accretion of our marketable securities of $0.1 million. Interest income for the three months ended ~~September 30, 2017~~March 31, 2020 represents interest earned on our money market funds and marketable securities of $0.4 million. Interest expense for the three months ended September 30, 2016 represented interest incurred on the Loan Agreement of $0.6 million and the net amortization of our marketable securities of $0.2 million. ~~Interest income for the three months ended~~ ~~September~~ ~~30, 2016 represents interest earned on our money market funds and marketable securities of $0.3 million.~~

Nine Months Ended
September 30,

(in thousands)

2017

2016

$ Change

License and royalty revenue

$
7,544

$
—

$
7,544

Operating expenses:

Research and development

45,847

63,757

(17,910
)
General and administrative

25,299

19,896

5,403

Impairment of intangible asset

682

—

682

Changes in fair value of contingent consideration

(571
)

(50
)

(521
)
Total operating expenses

71,257

83,603

(12,346
)
Loss from operations

(63,713
)

(83,603
)

19,890

Other income and expenses:

Interest expense

(3,666
)

(2,368
)

(1,298
)
Interest income

979

788

191

Other loss, net

(23
)

1

(24
)
Loss before income taxes

$
(66,423
)

$
(85,182
)

$
18,759

Provision for income taxes

753

—

753

Net Loss

$
(67,176
)

$
(85,182
)

$
18,006

~~During the nine months ended September 30, 2017, we recognized revenue of $7.5 million under the Zai Collaboration Agreement, which represents the upfront license payment.~~ ~~Revenue also represents~~ ~~fifty percent of net royalties received pursuant to the Intermezzo Royalty Sharing Agreement entered into in October 2016. We did not earn revenue during the nine months ended September 30, 2016.~~

Research and development expenses were $45.8 million for the nine months ended September 30, 2017 compared to $63.8 million for the same period in 2016. The decrease was driven primarily by lower clinical study costs associated with the completion of our Phase 3 program for omadacycline. The decrease is also attributable to reduced manufacturing production costs for omadacycline since fewer production runs fell within the nine months ended September 30, 2017 compared to the same period in prior year.

General and administrative expenses were $25.3 million for the nine months ended September 30, 2017 compared to $19.9 million for the same period in 2016. The increase was driven primarily by higher employee compensation costs as we continue to expand our team and engage in pre-commercial activities.

~~We recorded an impairment charge of $0.7 million during the nine months ended~~ ~~September~~ ~~30, 2017. No such impairment was recorded during the nine months ended~~ ~~September~~ ~~30, 2016. The impairment charge was recorded in connection with an expected decline in Intermezzo sales.~~

During the nine months ended September 30, 2017 and 2016, we recorded a $0.6 million decrease and $0.1 million decrease, respectively, in the fair value of our contingent obligation to former Transcept stockholders. The decrease in the fair value of our contingent obligation for the nine months ended September 30, 2017 and 2016 reflects a corresponding decline in projected Intermezzo sales.

Interest expense for the nine months ended September 30, 2017 represents interest incurred on the Loan Agreement, as amended, of $3.5 million and the net amortization of our marketable securities of $0.2 million. Interest income for the nine months ended September 30, 2017 represents interest earned on our money market funds and marketable securities of $1.0 million. Interest expense for the nine months ended September 30, 2016 represents interest incurred on the Term Loan entered into with Hercules on September 30, 2015 of $1.9 million and the net amortization of our marketable securities of $0.4 million. Interest income for the nine months ended September 30, 2016 represents interest earned on our money market funds and marketable securities of $0.8 million.

Provision for income taxes for the nine months ended September 30, 2017 represents China withholding taxes on the upfront license payment we received under the Zai Collaboration Agreement. We recorded no provision for income taxes for the nine months ended September 30, 2016.securities.

On ~~January 12, 2015,~~May 11, 2020, we filed a registration statement on Form S-3 with the SEC, as amended on ~~April 24, 2015~~June 19, 2020 and declared effective on ~~April 27, 2015,~~July 9, 2020, to sell ~~shares~~certain of our ~~common stock, par value $0.001 per share,~~securities in an aggregate amount of up to ~~$200.0~~$250.0 million. As of March 31, 2021, $250.0 million ~~to the public in one or more registered offerings. Under~~remains available on this shelf registration ~~statement, we completed an underwritten offering on~~statement.

On May 5, 2015 of 3,089,000 shares of common stock at a public offering price of $24.50 per share, which includes 229,000 shares of common stock issued upon the exercise, in part, by the underwriters of an option to purchase additional shares. The aggregate proceeds received by us, after underwriting discounts and commissions and other offering expenses, were $70.4 million. We completed an underwritten offering in June 2016 of 4,887,500 shares of common stock at a public offering price of $13.00 per share, which includes 637,500 shares of common stock issued upon the exercise, in full, by the underwriters of an option to purchase additional shares from us. The net proceeds received by us, after underwriting discounts and commissions and other estimated offering expenses, were $59.3 million.

~~On September 30, 2015,~~17, 2021, we entered into ~~a Loan and Security~~an At-the-Market Sales Agreement, or the ~~Loan~~Sales Agreement, with ~~Hercules Technology II, L.P.~~BTIG, LLC, or BTIG, under which we may offer and Hercules Technology III, L.P., together, Hercules, and certain other lenders and Hercules Technology Growth Capital, Inc. (as agent). We executed three amendments to the Loan Agreement subsequent to September 30, 2015, providing access to term loans with ansell our common stock having aggregate ~~principal amount~~sales proceeds of up to ~~$60.0 million. As of September 30, 2017, we have drawn down on~~ $50.0 million ~~of the $60.0 million available~~from time to ~~us. An additional $10.0 million tranche is available at~~time through BTIG as our option through December 15, 2017. The last amendment executed during the quarter ended June 30, 2017 extended the date on which we are required to begin making monthly principal installments from January 1, 2019 to January 1, 2020, subject to our receipt of marketing approval for our lead product candidate, omadacycline, or the Interest Only Period Extension Event. Beginning on January 1, 2019, or, if we achieve the Interest Only Period Extension Event, January 1, 2020, we will make payments in equal monthly installments of principal and interest, with the balance of outstanding loans due on the original maturity date of the Loan Agreement. To date, we have issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P., a warrant to purchase 16,346 sharessales agent. Sales of our common stock (32,692 shares of common stock in total) at an exercise price of $24.47 per share and a warrant to purchase 18,574 shares of our common stock (37,148 shares of common stock in total) at an exercise price of $13.46 per share. We also have issued a warrant to Hercules Capital, Inc. that is exercisable for an aggregate of 5,374 shares of common stock at an exercise price of $23.26 per share.

In October 2015 and February 2017, we entered into the 2015 Sales Agreement and 2017 Sales Agreement, respectively, with Cantor, under which we could, at our discretion, from time to time sell shares of our common stock, with a sales value of up to $50 million under each Sales Agreement through Cantor. We provided Cantor with customary indemnification rights, and Cantor was entitled to a commission at a fixed rate of 3% of the gross proceeds per share sold. Sales of the shares under the Sales Agreements were toBTIG, if any, will be made ~~in transactions~~by any method permitted by law deemed to be an “at the market ~~offerings,”~~offering” as defined in Rule ~~415~~415(a)(4) under the Securities Act of 1933, as ~~amended. We received $36.9 million in proceeds, after deducting commissions of $1.1 million, from~~amended, including without limitation sales made directly on the ~~sale of 2,326,119 shares of~~Nasdaq Global Market or any other existing trading market for its common stock. BTIG will use commercially reasonable efforts to sell our common stock ~~under~~from time to time, based upon instructions (including any price, time or size limits or other customary parameters or conditions the ~~2015 Sales Agreement during~~Company may impose). We will pay BTIG a commission of 3% of the ~~nine months ended September 30, 2017. We received an additional $45.9 million in~~gross sales proceeds ~~after deducting commissions~~ of ~~$1.4 million, from the sale of 2,006,007 shares of~~any common stock ~~as of November 1, 2017,~~sold through BTIG under the ~~2017 Sales Agreement. As of November1, 2017, $2.7 million remain available for sale under the 2017~~ Sales Agreement.

We have used and we intend to continue to use the net proceeds from offerings of our common stock and the ~~above-described offerings,~~Notes, as well as ~~the Loan Agreement, as amended,~~other current and ~~anticipated regulatory and commercial milestone payments from our collaborations with Allergan and Zai~~,retired long-term debt agreements, together with our existing capital resources and future NUZYRA product sales, government contract revenue and royalty revenue, to ~~complete~~fund our ongoing company operations, including clinical studies of omadacycline, ~~as well as activities required to support an NDA submission for omadacycline for the treatment of ABSSSI and CABP, the manufacture of validation batches and~~NUZYRA commercial ~~supply, to build our commercial and medical affairs teams,~~operations, and for working capital and other general corporate purposes. Refer to Note 13, Long-Term Debt, for further details on our loan agreements, which include the Notes, the R-Bridge Loan Agreement, and the Royalty-Backed Loan Agreement.

As of ~~September 30, 2017,~~March 31, 2021, we had cash and cash equivalents ~~and marketable securities~~ of ~~$163.4~~$103.5 million.

The following table summarizes our cash provided by and used in operating, investing and financing ~~activities (in thousands):~~activities:

~~Cash~~Net cash used in operating activities was $21.5 million for the ~~nine~~three months ended ~~September 30, 2017 of $56.2~~March 31, 2021, compared to $30.3 million ~~is primarily~~for the ~~result of our $67.2 million~~three months ended March 31, 2020. The change in net loss, a $4.6 million net decrease in other current liabilities and a $0.6 million decrease in contingent obligations to former Transcept stockholders. This is offset by $15.0 million in non-cash items, including $14.0 million in depreciation, amortization and stock-based compensation expense and a $0.7 million impairment charge on our intangible asset. Cashcash used in operating activities ~~for the nine months ended September 30, 2016 of $69.9 million is~~ primarily ~~the result~~consists of our ~~$85.2 million~~ net loss offset in part by a $1.5 million increase in accounts payable and accrued expenses, and a decrease of $4.3 million in prepaid expenses mainly associated with the clinical development of omadacycline. The remainder is the net impact of $9.8 million inlosses adjusted for non-cash items ~~including $9.7 million~~and changes in ~~depreciation, amortization~~components of operating assets and stock-based compensation expense, $0.2 million in non-cash interest expense, a $0.1 million decrease in contingent obligations to former Transcept stockholders offset by $0.1 million of interest earned on our marketable securities.liabilities as follows:

Net cash ~~used in~~provided by investing activities during the ~~nine~~three months ended ~~September 30, 2017 consisted~~March 31, 2021 consists of ~~$149.4~~$20.0 million ~~investment~~

in ~~short-term marketable securities (U.S. treasury~~ ~~and government agency securities) offset by~~ proceeds from maturities of marketable securities, offset by $0.3 million in purchases of ~~$93.8 million. We also purchased $1.2~~fixed assets.

Net cash provided by investing activities during the three months ended March 31, 2020 consists of $63.0 million in proceeds from maturities of marketable securities, partially offset by $19.6 million of ~~fixed assets for our new offices~~investments in ~~Boston and King of Prussia and received a refund for an existing letter of credit of $0.8 million. During the nine months ended September 30, 2016, we invested $93.3 million of our cash in short-term~~ marketable securities (U.S. treasury securities) and ~~government agency securities) partially offset by proceeds by maturities~~$0.3 million in purchases of ~~marketable securities of $25.0 million. The net~~fixed assets.

Net cash used in ~~investing~~financing activities ~~for~~during the ~~nine~~three months ended ~~September 30, 2016 is also~~March 31, 2021 consists of $0.4 million in payments of debt issuance costs under the ~~result of an increase in restricted cash primarily representing a letter of credit of $0.8 million.~~

Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2017 primarily represents~~March 31, 2020 consists of $9.1 million in net proceeds ~~of $82.1 million received from~~raised through the sale of shares of our common stock ~~under~~through the At-the-Market Sales ~~Agreements, $9.9 million drawn under the Third Tranche under the Loan~~ Agreement ~~as amended,~~entered into in July 2019 with Jefferies LLC and $0.3 million from the exercise of stock options. Net cash provided by financing activities for the nine months ended September 30, 2016 is the result of net proceeds of $2.0 million received as a resultBTIG, LLC. Refer to Note 12, Common Stock¸ of our sales of shares of common stock under the Sales Agreement, net proceeds of $59.3 million from an underwritten public offering of 4,887,500 shares of common stock in June 2016 and the exercise of stock options.2020 Form 10-K for further details.

We ~~have not generated any~~began generating revenue from product ~~sales. We do not know~~sales when ~~if ever,~~ we launched NUZYRA in the U.S. in February 2019 and from royalties on net sales of SEYSARA in the U.S. when Almirall launched the product in January 2019. Our future funding requirements will depend on our ability to generate ~~any~~continued revenue from ~~product sales.~~sales of NUZYRA, and our partner, Almirall’s, ability to generate continued revenue from sales of SEYSARA, with respect to which we are entitled to tiered royalties in the U.S. and flat royalties in the greater China region. We do not expect to generate any other revenue ~~from product sales~~ unless and until ~~either we or either of~~ our ~~partners, Allergan or~~omadacycline greater China region partner, Zai, ~~obtain~~and our SEYSARA greater China region partner, Almirall, obtains regulatory approval of and ~~commercialize one or more of our~~commercializes its respective product ~~candidates. Subject to obtaining~~in the greater China region. Zai submitted the first regulatory approval application for a licensed product in the People’s Republic of ~~any of our product candidates, we anticipate that we~~China in December 2019, which was accepted by the China NMPA in February 2020 and, in April 2020, the NMPA granted priority review status for its application. We will ~~need~~require substantial additional funding ~~in connection with our continuing operations~~to meet FDA PMRs for NUZYRA, which we expect to continue to be funded through the BARDA contract. Additional resources will also be needed to support ~~pre-launch~~ and ~~commercial activities associated with our lead product candidate, omadacycline.~~

~~We have not completed~~accelerate the commercialization of NUZYRA, fund the development of ~~any~~omadacycline in other indications, including NTM and pulmonary anthrax, and to advance the development of potential other product ~~candidates.~~ candidates, and such funding may not be available on favorable terms or at all. BARDA’s procurements of NUZYRA for the SNS will also be an important component to satisfying future funding requirements. While it is difficult to predict with certainty, on February 24, 2021, we announced that the first NUZYRA procurement for the SNS under our contract with BARDA was expected to occur in the first half of 2021 and another procurement in the second half of 2021. The first procurement was contingent upon receipt of comments from the FDA on the pre-emergency use authorization, or pre-EUA, submitted in February 2020. As part of the ongoing review, supplemental mouse pharmacokinetic data requested by the FDA was submitted in November 2020. On March 2, 2021, we received feedback from the FDA with a recommendation to consider an additional in vitro model to further characterize the optimal pharmacokinetic parameters for pulmonary anthrax as part of the development program. We are in discussions with BARDA to align on the best approach to integrating the FDA recommendation into the development program. We were recently informed that BARDA has received all necessary approvals for and initiated the first procurement of NUZYRA. We expect the first procurement to be delivered and the related revenue recognized in the second quarter of 2021. We continue to anticipate the delivery of the next procurement of NUZYRA in the second half of 2021.

We expect to continue to incur significant ~~expenses~~expenditures and ~~increasing~~ operating losses for the ~~foreseeable future. We anticipate that our expenses will increase substantially~~next several years as we:

Based upon our current operating plan, we anticipate that our existing cash and cash equivalents ~~and marketable securities, the remaining $10.0~~of $103.5 million ~~we may borrow under the Loan Agreement,~~ as ~~amended, and anticipated regulatory and commercial milestone payments from~~of March 31, 2021, will extend our ~~collaborations with Allergan and Zai will enable us to fund our operating expenses and capital expenditure requirements~~cash runway through the ~~second quarter~~end of ~~2019.~~2023 with a pathway to cash flow break even.

We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our ~~product candidates,~~pharmaceutical products, especially given the constraints on in-person promotion of NUZYRA and reduced access to prescribers due to restrictions in access to hospitals during the COVID-19 pandemic, and the unknown extent to which we will maintain existing or enter into new collaborations with third parties to participate in the development and commercialization of our product and product candidates, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures ~~associated with~~that we will require to fund our ~~current~~continuing operations, including for our clinical development programs and ~~anticipated clinical trials.~~commercialization efforts for NUZYRA. Our future capital requirements will depend on many factors, including:

Until we can generate a sufficient amount of product and royalty revenue to finance our cash requirements, if ever, we expect to finance our future cash needs primarily through a combination of public ~~and~~or private equity offerings, debt or other structured financings, strategic collaborations, grant funding and ~~strategic collaborations.~~government funding. We do not have any committed external sources of funds other than the rights under the BARDA contract and the rights to contingent milestone payments ~~and~~and/or royalties under the ~~Allergan~~Almirall Collaboration Agreement, the Almirall China License, the Tetraphase License Agreement and the Zai Collaboration Agreement, which are terminable by ~~Allergan~~Almirall, Tetraphase and Zai, respectively, upon prior written ~~notice, and the undrawn balance of $10.0 million on the Third Amendment, available to use through December 15, 2017.~~notice. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect stockholders’ rights. ~~Additional~~Future debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Additionally, future equity or debt financing may be difficult to obtain on favorable terms, if at all, in light of increased volatility within the global financial markets as a result of the COVID-19 pandemic. If we raise additional funds through marketing and distribution arrangements or other collaborations, strategic alliances or

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

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to, among other items, ~~intangible assets,~~accounts receivable and related reserves, inventory and related reserves, goodwill, ~~contingent liabilities,~~accrued sales allowances, net product revenue, government contract service revenue, government contract grant revenue, collaboration and royalty revenue, leases, stock-based compensation arrangements, manufacturing and clinical accruals, useful lives for depreciation and amortization of long-lived assets and valuation allowances on deferred tax assets. Actual results could differ from those estimates.

~~As of January 1, 2017, we adopted ASU No. 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09~~. In connection with the adoption, we made an accounting policy change. Prior to adoption, we estimated forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from the estimates. We used historical data to estimate pre-vesting option forfeitures to the extent that actual forfeitures differed from our estimates, the difference was recorded as a cumulative adjustment in the period the estimates were revised. Upon adoption, we recognize the effect of forfeitures in compensation cost when they occur. We recorded a cumulative-effect catch-up adjustment to equity of $0.7 million upon adoption.

~~There have been no other material changes in our critical accounting policies during the nine months ended September 30, 2017, as compared to those disclosed in the~~ ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates”~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.~~

Refer to Note ~~16,~~ 18, Recent Accounting Pronouncements, to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and the year ended December 31, ~~2016~~2020, we did not engage in any off-balance sheet financing activities, including the use of structured finance, special purpose entities or variable interest entities.

We executed the third amendment to the lease agreement on our King of Prussia office space in October 2016. The lease agreement, as amended, was for 19,708 rentable square feet of office space, for a total commitment of $3.3 million, with respect to which lease payments became due beginning once we took control of such office space during the quarter ended March 31, 2017. The total lease commitment is over a seven-year and seven-month lease term. The lease contains rent escalation and a partial rent

abatement period, which will be accounted for as rent expense under the straight-line method. We are required to make additional payments under the operating lease for taxes, insurance, and other operating expenses incurred during the operating lease period.

In July 2017, we entered into a master manufacturing services agreement and corresponding product agreement with Patheon UK Limited, or Patheon. The agreements provide for the terms and conditions under which Patheon will manufacture, package and supply to us omadacycline in injectable form, or the Patheon Products. Under these agreements, we are required to deliver to Patheon the active pharmaceutical ingredient needed to manufacture the Patheon Products. We are obligated to pay a supply price in the six-digit dollar range per batch of the Patheon Products, subject to adjustments as provided in the agreements. If our omadacycline product is approved, we will also be subject to an annual minimum purchase requirement in the six-digit euro range. If we desire for Patheon to conduct additional services other than those expressly set forth in the agreements, those would be subject to additional fees.

Our agreements with Patheon will remain in effect for a fixed initial term, after which they will continue for successive renewal terms unless either we or Patheon have given written notice of termination within a certain period prior to the expiration of the applicable initial or then-current renewal term. The agreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or the other party’s insolvency.

~~For further details, refer to Note 15,~~ ~~Commitments and Contingencies, to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.~~

~~Other than as described above, there~~There have been no ~~other~~ material changes in our contractual obligations and commitments as of ~~September 30, 2017,~~March 31, 2021, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Contractual Obligations and Commitments” in our ~~Annual Report on~~2020 Form ~~10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.~~10-K.

Our cash and cash equivalents ~~and investments~~ balance as of ~~September 30, 2017~~March 31, 2021 consisted solely of cash and cash ~~equivalents, U.S. treasury securities~~ ~~and government agency~~ securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk.equivalents. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates, ~~particularly because our investments are~~including interest rate changes resulting from the impact of the COVID-19 pandemic. However, a sudden change in ~~short-term marketable securities. Due to the short-term duration of our investment portfolio and the low-risk profile of our investments, an immediate 100 basis point change in~~market interest rates would not be expected to have a material ~~effect~~impact on the fair market value of our ~~portfolio. We have the ability~~cash and ~~intention to hold our investments, although they are available for immediate sale, until maturity and, therefore,~~cash equivalents balance. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates on our ~~investment portfolio.~~cash and cash equivalents balance.

We engage CROs and contract manufacturers on a global scale. We may be subject to fluctuations in foreign currency rates in connection with certain of these agreements. We currently do not hedge any such foreign currency exchange rate risk. Transactions denominated in currencies other than U.S. dollars are recorded based on exchange rates at the time such transactions arise and were less than ~~10%~~1.0% of total liabilities as of ~~September 30, 2017.~~March 31, 2021.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of ~~September 30, 2017,~~March 31, 2021, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of ~~September 30, 2017,~~March 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level.

During the three months ended ~~September 30, 2017,~~March 31, 2021, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, as amended, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Information in response to this Item is incorporated herein by reference from Note ~~15,~~ 17, Commitments and Contingencies, to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

There have been no material changes from the risk factors set forth in our 2020 Form 10-K other than as set forth below.

If BARDA were to eliminate, reduce, or delay funding for our contract, we would experience a negative impact on our programs associated with such funding and perhaps on our ability to maintain the infrastructure necessary to maximize our NUZYRA commercial opportunity.

On December 18, 2019, we entered into a contract with BARDA to support the development of NUZYRA for the treatment of pulmonary anthrax and the fulfillment of FDA PMRs associated with NUZRYA’s initial approval. The BARDA contract also includes an option for BARDA to procure up to 10,000 treatment courses of NUZYRA for the SNS for use against potential biothreats. On March 2, 2021, we received feedback from the FDA with a recommendation to consider an additional in vitro model to further characterize the optimal pharmacokinetic parameters for pulmonary anthrax as part of the development program. We are in discussions with BARDA to align on the best approach to integrating the FDA recommendation into the development program. We were recently informed that BARDA has received all necessary approvals for and initiated the first procurement of NUZYRA. The three additional procurements of NUZYRA under the BARDA agreement have not yet been activated. Activation is contingent upon future progress in the ongoing anthrax development program. We continue to have discussions with BARDA regarding timing and logistics of future procurements. If BARDA were to eliminate, reduce, or materially delay funding, including with respect to further procurements under the BARDA contract, or prohibit reimbursement of some of our incurred costs, we would have to seek additional funding to continue development of NUZYRA for the treatment of anthrax or significantly decrease or cease the product’s development for that indication. Moreover, a loss of BARDA funding could jeopardize our ability to maintain the infrastructure needed to maximize NUZYRA’s commercial potential, and to fulfill NUZYRA’s FDA PMRs in a timely manner.

On May 17, 2021, Paratek Pharmaceuticals, Inc., or the Company, entered into an At-the-Market Sales Agreement, or the Sales Agreement, with BTIG, LLC, or BTIG, under which it may offer and sell its common stock having aggregate sales proceeds of up to $50.0 million from time to time through BTIG as its sales agent. Sales of the Company’s ~~Annual Report~~common stock through BTIG, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including without limitation sales made directly on ~~Form 10-K~~the Nasdaq Global Market or any other existing trading market for ~~the year ended December 31, 2016, as filed with the SEC on March 2, 2017 and in~~its common stock. BTIG will use commercially reasonable efforts to sell the Company’s common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay BTIG a commission of 3% of the gross sales proceeds of any common stock sold through BTIG under the Sales Agreement. The Company has also provided BTIG with customary indemnification rights.

The Company is not obligated to make any sales of common stock under the Sales Agreement. The offering of shares of the Company’s common stock pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Sales Agreement, or (ii) termination of the Sales Agreement in accordance with its terms.

The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of the Sales Agreement, a copy of which is filed herewith as Exhibit 1.1 to this Quarterly Report on Form 10-Q ~~for~~and is incorporated herein by reference. This Quarterly Report on Form 10-Q also incorporates by reference the ~~quarter ended March 31, 2017,~~Sales Agreement into the Registration Statement (as defined below).

The Company’s common stock is being offered and sold pursuant to the Company’s effective shelf registration statement on Form S-3 and an accompanying prospectus (Registration Statement No. 333-238150) declared effective by the U.S. Securities and Exchange Commission on July 9, 2020, or the Registration Statement, and a prospectus supplement dated May 17, 2021.

A copy of the opinion of Ropes & Gray LLP regarding the shares to be sold under the Sales Agreement is filed herewith as ~~filed with the SEC~~Exhibit 5.1 to this Quarterly Report on ~~May 4, 2017.~~

Incorporated by Reference

Exhibit
No.

Exhibit Description

Schedule/
Form

File Number

Exhibit

Filing Date

     3.1

Amended and Restated Certificate of Incorporation.

Form 8-K

001-36066

3.1

October 31, 2014

     3.2

Certificate of Amendment of Amended and Restated Certificate of Incorporation.

Form 8-K

001-36066

3.2

October 31, 2014

     3.3

Amended and Restated Bylaws.

Form 8-K

001-36066

3.1

April 16, 2015

     4.1

Specimen Common Stock Certificate.

Form S-3

333-201458

4.2

January 12, 2015

     4.2

Form of Warrant Agreement issued to Hercules        Technology II, L.P. and Hercules Technology III, L.P.

Form 8-K

001-36066

4.1

October 5, 2015

     4.3

Form of Warrant Agreement issued to Hercules Technology II, L.P. and Hercules Technology III, L.P.

Form 8-K

001-36066

4.1

December 13, 2016

     4.4

Warrant, dated as of April 7, 2014 issued to HBM Healthcare Investments (Cayman) Ltd.

Form 10-K

001-36066

10.22

April 2, 2015

     4.5

Warrant, dated as of April 18, 2014 issued to K/S Danish BioVenture.

Form 10-K

001-36066

10.23

April 2, 2015

     4.6

Warrant, dated as of April 7, 2014 issued to Omega Fund III, L.P.

Form 10-K

001-36066

10.24

April 2, 2015

   10.1*+

Employment Agreement, as amended, by and between the Company and Michael F. Bigham dated as of August 4, 2017.

   10.2*+

Employment Agreement, as amended, by and between the Company and William M. Haskel dated as of August 4, 2017.

   10.3*+

Employment Agreement, as amended, by and between the Company and Evan Loh, M.D. dated as of August 4, 2017.

   10.4*+

Employment Agreement, as amended, by and between the Company and Douglas W. Pagán dated as of August 4, 2017.

   10.5*+

Employment Agreement, as amended, by and between the Company and Adam Woodrow dated as of August 4, 2017.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Schedule/ Form	File Number	Exhibit	Filing Date

1.1*	At-the-Market Sales Agreement, dated May 17, 2021, by and between Paratek Pharmaceuticals, Inc. and BTIG, LLC.

3.1	Amended and Restated Certificate of Incorporation.	Form 8-K	001-36066	3.1	October 31, 2014

3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation.	Form 8-K	001-36066	3.2	October 31, 2014

3.3	Certificate of Elimination of Series A Junior Participating Preferred Stock	Form 8-K	001-36066	3.1	July 24, 2015

3.4	Amended and Restated Bylaws.	Form 8-K	001-36066	3.1	April 16, 2015

4.1	Specimen Common Stock Certificate.	Form S-3	333-201458	4.2	January 12, 2015

4.2	Form of Warrant Agreement issued to Hercules Technology II, L.P. and Hercules Technology III, L.P.	Form 8-K	001-36066	4.1	October 5, 2015

4.3	Form of Warrant Agreement issued to Hercules Technology II, L.P. and Hercules Technology III, L.P.	Form 8-K	001-36066	4.1	December 13, 2016

4.4	Warrant Agreement, dated as of June 27, 2017 issued to Hercules Capital, Inc.	Form 8-K	001-36066	4.1	June 29, 2017

4.5	Warrant Agreement, dated as of August 1, 2018 issued to Hercules Capital, Inc.	Form 10-Q	001-36066	4.5	August 2, 2018

4.6	Warrant, dated as of April 7, 2014 issued to HBM Healthcare Investments (Cayman) Ltd.	Form 10-K	001-36066	10.22	April 2, 2015

4.7	Warrant, dated as of April 18, 2014 issued to K/S Danish BioVenture.	Form 10-K	001-36066	10.23	April 2, 2015

4.8	Warrant, dated as of April 7, 2014 issued to Omega Fund III, L.P.	Form 10-K	001-36066	10.24	April 2, 2015

4.9	Warrant Agreement, dated as of August 5, 2020 issued to Hercules Capital, Inc.	Form 10-Q	001-36066	4.9	August 10, 2020

5.1*	Opinion of Ropes & Gray LLP.

23.1*	Consent of Ropes & Gray LLP (included in Exhibit 5.1).

31.1*	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of the Company’s Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

		Incorporated by Reference
Exhibit No.	Exhibit Description	Schedule/ Form	File Number	Exhibit	Filing Date

31.1*	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*	~~Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2*	~~Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

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101.SCH*	Inline XBRL Taxonomy Extension Schema Document.

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*	Inline XBRL Taxonomy ExtensionLabelsLinkbase Document.

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 717^thday of ~~November, 2017.~~May 2021.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	PRTK	The Nasdaq Global Market

Large accelerated filer	☐	Accelerated filer	☒
			☐
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company	☐☒
Emerging growth company	☐

		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	2

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020	2

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	3

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	4

	~~Notes to Unaudited~~ Condensed Consolidated ~~Financial Statements~~Statement of Stockholders’ Deficit for the Three Months Ended March 31, 2021 and 2020	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2324

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3334

Item 4.	Controls and Procedures	3335

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	3436

Item 1A.	Risk Factors	3436

Item 5.	Other Information	36

Item 6.	Exhibits	34

	~~SIGNATURES~~	37

	~~Balance sheet reclassification~~	~~Amount ($)~~
~~Increase to additional paid-in capital resulting from the Company's election to recognize forfeitures as they occur rather than applying an estimated forfeiture rate~~	~~Additional paid-in-capital~~		~~681~~
~~Charge to accumulated deficit for cumulative-effect adjustment from adoption of ASU 2016-09~~	~~Accumulated deficit~~		~~681~~

	September 30, 2017			December 31, 2016
Office equipment	$	928		$	443
Computer equipment		548			251
Computer software		787			787
Leasehold improvements		873			137
Construction-in-progress		—			391
Gross fixed assets		3,136			2,009
Less: Accumulated depreciation and amortization		(1,214	)		(821	)
Net fixed assets	$	1,922		$	1,188

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
License and royalty revenue	$	12		$	—		$	7,544		$	—
Operating expenses:
Research and development		12,112			17,334			45,847			63,757
General and administrative		8,219			5,949			25,299			19,896
Impairment of intangible asset		—			—			682			—
Changes in fair value of contingent consideration		(22	)		(170	)		(571	)		(50	)
Total operating expenses		20,309			23,113			71,257			83,603
Loss from operations		(20,297	)		(23,113	)		(63,713	)		(83,603	)
Other income and expenses:
Interest expense		(1,408	)		(820	)		(3,666	)		(2,368	)
Interest income		389			309			979			788
Other loss, net		(8	)		(4	)		(23	)		1
Loss before income taxes	$	(21,324	)	$	(23,628	)	$	(66,423	)	$	(85,182	)
Provision for income taxes		—			—			753			—
Net loss	$	(21,324	)	$	(23,628	)	$	(67,176	)	$	(85,182	)
Other comprehensive income:
Unrealized (loss) gain on available-for-sale securities, net of tax		16			(20	)		(64	)		14
Comprehensive loss	$	(21,308	)	$	(23,648	)	$	(67,240	)	$	(85,168	)
Net loss per share - basic and diluted	$	(0.77	)	$	(1.04	)	$	(2.54	)	$	(4.39	)
Weighted average common shares outstanding
Basic and diluted		27,776,218			22,627,711			26,453,219			19,391,443

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2017
December 31, 2020
U.S. treasury securities	$	128,728	$	—	$	(79	)	$	128,649	$	20,001	$	4	$	—	$	20,005
Government agencies		1,797		—		(1	)		1,796
Total	$	130,525	$	—	$	(80	)	$	130,445	$	20,001	$	4	$	—	$	20,005
December 31, 2016
U.S. treasury securities	$	62,574	$	—	$	(18	)	$	62,556
Government agencies		12,518		2		—			12,520
Total	$	75,092	$	2	$	(18	)	$	75,076

	March 31, 2021		March 31, 2020
Cash and cash equivalents	$	103,450	$	124,624
Short-term restricted cash		424		630
Long-term restricted cash		—		2,261
Total cash, cash equivalents and restricted cash shown on the condensed consolidated statement of cash flows	$	103,874	$	127,515

	March 31, 2021		December 31, 2020
Raw materials	$	720	$	720
Work in process		14,997		12,925
Finished goods		10,300		9,638
Total inventories, net	$	26,017	$	23,283

	September 30, 2017			December 31, 2016
Intermezzo product rights	$	212		$	1,410
TO-2070 asset		170			170
Gross intangible assets		382			1,580
Less: Accumulated amortization		(153	)		(565	)
Net intangible assets	$	229		$	1,015

	March 31, 2021		December 31, 2020
Balance Sheet Classification:
Inventories, net	$	14,207	$	14,555
Other long-term assets		11,810		8,728
Total inventories, net	$	26,017	$	23,283

	September 30,				March 31,
	2017		2016		2021		2020
Excluded potentially dilutive securities ⁽¹⁾:
Common stock issuable under outstanding convertible notes						10,377,361		10,377,361
Shares subject to outstanding options to purchase common stock		3,575,633		2,786,882		2,155,199		3,309,900
Unvested restricted stock units		1,186,503		440,500		6,471,549		4,444,454
Shares subject to warrants to purchase common stock		84,828		42,306		479,002		104,455
Shares issuable under employee stock purchase plan		36,539		36,539		606,816		798,187
Totals		4,883,503		3,306,227		20,089,927		19,034,357

	~~June 30,~~ ~~2017~~
~~Volatility~~		~~67.8~~	%
~~Weighted average risk-free interest rate~~		~~1.8~~	%
~~Expected dividend yield~~		~~0.0~~	%
~~Expected life of options (in years)~~		~~5.0~~

	Contingent liability— former Transcept stockholders
Balances At December 31, 2016	$	655
Change in fair value		(571	)
Balances At September 30, 2017	$	84

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2021		2020
Research and development expense	$	1,258	$	871	$	4,312	$	2,530	$	323	$	587
General and administrative expense		2,824		1,788		8,706		5,572
Selling, general and administrative expense										1,276		1,948
Total stock-based compensation expense	$	4,082	$	2,659	$	13,018	$	8,102	$	1,599	$	2,535

Fiscal Year
Remainder of 2017	$	177
2018		1,084
2019		1,156
2020		1,178
2021		964
2022 and Thereafter		1,422
Total	$	5,981

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested Balance At December 31, 2016		454,000		$	19.67
Granted		902,800			16.96
Released		(162,797	)		14.71
Cancelled		(7,500	)		13.73
Unvested Balance At September 30, 2017		1,186,503		$	18.33

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2020		3,393,425		$	4.41
Granted		3,479,375			6.85
Released		(389,700	)		6.31
Forfeited		(11,551	)		5.74
Unvested balance at March 31, 2021		6,471,549		$	5.61

	March 31, 2021			December 31, 2020
Gross proceeds	$	60,000		$	60,000
Unamortized debt discount and issuance costs		(1,621	)		(1,680	)
Carrying value	$	58,379		$	58,320

	For the Three Months Ended March 31, 2021
Lease cost (in thousands)
Operating lease cost	$	255
Variable lease cost		35
Total lease cost	$	290
Cash paid for amounts included in the measurement of lease liabilities:	$	298

Other information
Weighted average remaining lease term (in years)		2.9
Weighted average discount rate		8.75	%

	Chargebacks, discounts and fees			Government and other rebates			Returns			Patient assistance			Total
Balance at December 31, 2020	$	627		$	2,202		$	386		$	214		$	3,429
Provision related to current period sales		1,285			2,447			323			81			4,136
Adjustment related to prior period sales		(73	)		(157	)		—			—			(230	)
Credit or payments made during the period		(869	)		(1,911	)		(215	)		(121	)		(3,116	)
Balance at March 31, 2021	$	970		$	2,581		$	494		$	174		$	4,219

Paratek Pharmaceuticals, Inc.

By:		/s/ ~~Michael F. Bigham~~Evan Loh M.D.
	~~Michael F. Bigham~~	Evan Loh M.D.
	~~Chairman and~~	Chief Executive Officer (Principal Executive Officer)
By:		/s/ ~~Douglas W. Pagán~~Sarah Higgins
	~~Douglas W. Pagán~~	Sarah Higgins
	~~Chief Financial Officer~~	Vice President, Finance and Controller (Principal Financial and Accounting Officer)