UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒
x			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: ~~September 30, 2017~~March 31, 2023 or

☐
o			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to

____________

Commission file number: 001-36066

PARATEK PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

~~Delaware~~

~~33-0960223~~

Delaware

33-0960223

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

75 Park Plaza

Boston, MA 02116

(617) 807-6600

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

Securities registered pursuant to Section 12(b) of the Act:


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

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 ☒x 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 ☒x 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.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company

☐

Emerging growth company

☐

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 ☐o No ☒

As of ~~October 31, 2017~~April 30, 2023, there were ~~27,941,015~~57,282,239 shares of the registrant's common stock, par value $0.001 per share, outstanding.

~~TABLE~~OF CONTENTS

			~~Page~~

Table of Contents

TABLE OF CONTENTS


		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)		2

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~20 2 2		2

	Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~20 2 2		3

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Th ree Months Ended ~~September 30, 2017~~March 31 , 202 3 and ~~2016~~20 2 2		4

	Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 20 2 2	5

	Notes to Unaudited Condensed Consolidated Financial Statements		5 6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23 28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33 39

Item 4.	Controls and Procedures		33 39

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		34 41

Item 1A.	Risk Factors		34 41

Item 6.	Exhibits		34 42

		SIGNATURES		37
	44

Table of Contents

PART I – ~~FINANCI~~ALFINANCIAL INFORMATION

~~Item 1.~~

Item 1. Financial Statements

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and par value amounts)

(unaudited)


	September 30, 2017			December 31, 2016				March 31, 2023		December 31, 2022
Assets							Assets
Current assets							Current assets
Cash and cash equivalents	$	32,995		$	52,962		Cash and cash equivalents	$	45,026	$	34,248
Available-for-sale securities		130,445			75,076
Restricted cash		162			817		Restricted cash	125		125
Other receivable		—			323
Accounts receivable, net							Accounts receivable, net	36,891		74,657
Inventories, net							Inventories, net	13,989		16,565
Other receivables							Other receivables	275		3,381
Prepaid and other current assets		2,604			2,922		Prepaid and other current assets	14,708		7,866
Total current assets		166,206			132,100		Total current assets	111,014		136,842
Restricted cash		250			250
Fixed assets, net		1,922			1,188		Fixed assets, net	601		616
Intangible assets, net		229			1,015
Goodwill		829			829		Goodwill	829		829
Right-of-use assets							Right-of-use assets	1,639		1,782
Long-term inventories, net							Long-term inventories, net	35,590		31,314
Other long-term assets		298			350		Other long-term assets	1,155		1,155
Total assets	$	169,734		$	135,732		Total assets	$	150,828	$	172,538
Liabilities and stockholders’ equity
Liabilities and Stockholders’ Deficit							Liabilities and Stockholders’ Deficit
Current liabilities							Current liabilities
Accounts payable	$	2,858		$	4,418		Accounts payable	$	5,318	$	5,308
Other accrued expenses		8,340			6,428
Accrued contract research		4,599			9,566
Accrued expenses							Accrued expenses	26,633		31,210
Other current liabilities							Other current liabilities	794		870
Total current liabilities		15,797			20,412		Total current liabilities	32,745		37,388
Long-term debt		49,079			38,974		Long-term debt	257,695		256,946
Contingent obligations		84			655
Long-term lease liabilities							Long-term lease liabilities	1,375		1,468
Accrued long-term compensation							Accrued long-term compensation	45,636		45,325
Other liabilities		4,902			4,099		Other liabilities	2,415		2,453
Total liabilities		69,862			64,140		Total liabilities	$	339,866	$	343,580
Commitments and contingencies (Note 15)
Stockholders’ equity
Stockholders’ deficit							Stockholders’ deficit
Preferred stock:							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; no shares issued and outstanding							Undesignated preferred stock: $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.001 par value; 200,000,000 shares authorized; 57,282,239 shares issued and outstanding as of March 31, 2023; and 200,000,000 shares authorized; 56,651,559 shares issued and outstanding as of December 31, 2022							Common stock, $0.001 par value; 200,000,000 shares authorized; 57,282,239 shares issued and outstanding as of March 31, 2023; and 200,000,000 shares authorized; 56,651,559 shares issued and outstanding as of December 31, 2022	57		56
Additional paid-in capital		548,144			451,947		Additional paid-in capital	761,497		759,351
Accumulated other comprehensive loss		(80	)		(16	)

Accumulated deficit		(448,220	)		(380,362	)	Accumulated deficit	(950,592)		(930,449)
Total stockholders’ equity		99,872			71,592
Total liabilities and stockholders’ equity	$	169,734		$	135,732
Total stockholders’ deficit							Total stockholders’ deficit	(189,038)		(171,042)
Total liabilities and stockholders’ deficit							Total liabilities and stockholders’ deficit	$	150,828	$	172,538

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)

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,
	2023		2022
Product revenue, net	$	26,213	$	19,918
Government contract service revenue	1,806		2,172
Government contract grant revenue	2,028		2,099
Collaboration and royalty revenue	1,189		672
Net revenue	$	31,236	$	24,861
Expenses:
Cost of product revenue	6,244		3,494
Research and development	7,308		7,478
Selling, general and administrative	33,489		27,602
Total operating expenses	47,041		38,574
Loss from operations	(15,805)		(13,713)
Other income and expenses:
Interest income	221		107
Interest expense	(4,476)		(4,479)
Other (losses) gains, net	(22)		175
Net loss before provision for income taxes	$	(20,082)	$	(17,910)
Provision for income taxes	(61)		—
Net loss	(20,143)		(17,910)
Other comprehensive (loss)
Unrealized (loss) on available-for-sale securities, net of tax	—		(171)
Comprehensive loss	$	(20,143)	$	(18,081)
Basic and diluted net loss per common share	$	(0.35)	$	(0.35)
Weighted average common stock outstanding
Basic	56,903,420		52,149,538
Diluted	56,903,420		52,149,538

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

For the Nine Months Ended
September 30,

2017

2016

Net loss

$
(67,176
)

$
(85,182
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

979

941

Stock-based compensation expense

13,018

8,102

Noncash interest expense

354

772

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 payable and accrued expenses

(5,094
)

1,474

Other liabilities and other assets

798

(438
)
Net cash used in operating activities

(56,189
)

(69,867
)
Investing activities

Purchase of fixed assets, net

(1,165
)

(314
)
Purchase of marketable securities

(149,356
)

(93,250
)
Proceeds from maturities of marketable securities

93,750

24,966

Increase (decrease) in restricted cash

655

(1,197
)
Net cash used in investing activities

(56,116
)

(69,795
)
Financing activities

Proceeds from issuance of long-term debt, net of costs

9,915

—

Proceeds from exercise of stock options

321

11

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

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest

$
2,338

$
—


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(20,143)	$	(17,910)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	47		144
Stock-based compensation expense	2,146		2,469
Noncash interest expense	1,029		1,521
Changes in operating assets and liabilities
Accounts receivable, other receivables, prepaid, and other current assets	34,030		4,234
Inventories	(1,699)		(6,900)
Operating lease right-of-use asset	143		221
Accounts payable and accrued expenses	(4,568)		(2,010)
Operating lease liability	(94)		(245)
Accrued long-term compensation	311		—
Other liabilities and other assets	(112)		(634)
Net cash provided (used) by operating activities	11,090		(19,110)
Investing activities
Purchase of fixed assets	(32)		(36)
Purchase of marketable securities	—		(15,160)
Net cash used in investing activities	(32)		(15,196)
Financing activities
Proceeds from sale of common stock, net of costs	—		3,091

Proceeds from the employee stock purchase plan and stock options	—		6
Principal payments on long-term debt	(280)		—
Net cash (used) provided by financing activities	(280)		3,097
Net increase (decrease) in cash, cash equivalents and restricted cash	10,778		(31,209)
Cash, cash equivalents and restricted cash at beginning of period	34,373		80,617
Cash, cash equivalents and restricted cash at end of period	$	45,151	$	49,408
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	1,934	$	1,181

SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES

Paid in-kind interest included in accrued expenses	$	653	$	1,161

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands, except share amounts)

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount
Balances at December 31, 2022	56,651,559	$	56	$	759,351	$	—	$	(930,449)	$	(171,042)
Exercise of stock options	—	—		—		—		—		—
Issuance of common stock, net of expenses	—	—		—		—		—		—
Vesting of restricted stock unit awards	630,680	1		—		—		—		1
Employee stock purchase plan expense	—	—		—		—		—		—
Unrealized (loss) on available-for-sale securities, net of tax	—	—		—		—		—		—
Stock-based compensation expense	—	—		2,146		—		—		2,146
Net loss	—	—		—		—		(20,143)		(20,143)
Balances at March 31, 2023	57,282,239	$	57	$	761,497	$	—	$	(950,592)	$	(189,038)

	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount
Balances at December 31, 2021	51,711,809	$	52	$	739,053	$	(9)	$	(866,883)	$	(127,787)
Exercise of stock options	729	—		6		—		—		6
Issuance of common stock, net of expenses	884,230	1		3,090		—		—		3,091
Vesting of restricted stock unit awards	426,582	—		—		—		—		—
Employee stock purchase plan expense	—	—		36		—		—		36
Unrealized (loss) on available-for-sale securities, net of tax	—	—		—		(171)		—		(171)
Stock-based compensation expense	—	—		2,433		—		—		2,433
Net loss	—	—		—		—		(17,910)		(17,910)
Balances at March 31, 2022	53,023,350	$	53	$	744,618	$	(180)	$	(884,793)	$	(140,302)

Table of ContentsParatekPharmaceuticals, Inc.

~~Not~~es

Paratek Pharmaceuticals, Inc.

Notes to U~~naud~~ite~~d Con~~dense~~d Conso~~li~~dat~~ed Fi~~nan~~ci~~al Stat~~eme~~nts~~

(unaudited)

Unaudited Condensed Consolidated Financial Statements

(unaudited)

1. Description of the business

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 is of concern.~~caused by susceptible pathogens. The Company ~~believes~~retains worldwide commercial rights to omadacycline, ~~if approved, will be used~~with the exception in the ~~emergency room, hospital~~People’s Republic of China, Hong Kong, Macau and ~~community care settings.~~Taiwan, where it has entered into a collaboration agreement with Zai Lab (Shanghai) Co., Ltd., or Zai. The Company has designed omadacycline 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, is a new, once-daily, tetracycline-derived compound designed for use in the treatment~~National Medical Products Administration, or NMPA, 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, oral bioavailability, does not cross the blood-brain barrier, and favorable pharmacokinetic, or PK, properties that the Company believes make it particularly well-suitedChina approved NUZYRA for the treatment of ~~inflammatory acne~~adult patients with CABP and ABSSSI in December 2021. China’s National Healthcare Security Administration added the ~~community setting. The~~intravenous formulation of NUZYRA to the country's National Reimbursement Drug List for the treatment of CABP and ABSSSI in January 2023, resulting in millions of patients gaining access to this once daily broad-spectrum antibiotic.

SEYSARA® (sarecycline) is an FDA-approved product which the Company has exclusively licensed in the U.S. ~~development~~ and ~~commercialization~~the People’s Republic of China, Hong Kong and Macau, and Taiwan, certain rights to ~~sarecycline~~Almirall, LLC, or Almirall. SEYSARA is currently being marketed by Almirall in the U.S. as a once-daily oral therapy for the treatment of moderate to severe acne vulgaris. With respect to ~~Allergan plc, or Allergan, while retaining~~the Company’s technology as it relates to sarecycline, the 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,~~develop sarecycline for acne in China, with a submission to 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,NMPA expected 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.

2023, according to Almirall.

The Company has incurred significant losses since ~~its~~ inception in 1996. The Company has generated an accumulated deficit of ~~$448.2~~$950.6 million through ~~September 30, 2017~~March 31, 2023 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 upon the Company’s current operating plan,~~NUZYRA. As of March 31, 2023, the Company ~~anticipates that its existing~~had cash and cash equivalents of $45.0 million on hand.

The Company's current level of cash and ~~marketable securities will enable the Company~~cash equivalents may not be sufficient to fund ~~its operating expenses and capital expenditure requirements through at least~~operations for the next twelve months following the issuance of these financial statements.As a result, substantial doubt is deemed to exist regarding the Company’s ability to continue as a going concern for a period of one year from the ~~filing date~~issuance of ~~this Quarterly Report on Form 10-Q.~~ these financial statements.

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 partnership opportunities, government funding and ~~strategic collaborations.~~ active management of cash and expenses through operational efficiencies. Such activities may not succeed. The failure of the Company to obtain sufficient funds on acceptable terms could have a material adverse effect on the Company’s business, results of operations, and financial condition.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

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, as filed~~2022, or the 2022 Form 10-K, and in the Company’s other filings with the U.S. Securities and Exchange Commission, or ~~SEC, on March 2, 2017, and elsewhere in this report.~~

the SEC.

Table of Contents

2. Summary of Significant Accounting Policies and Basis of Presentation

~~Summary of Significant Accounting Policies~~

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):

	~~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~~

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

Basis of Presentation

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,~~2022, 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, 2023 and December 31, 2022, results of operations for the three month periods ended March 31, 2023 and March 31, 2022, cash flows for the ~~interim~~three month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~

March 31, 2022 and changes in stockholders’ deficit for the three month periods ended March 31, 2023 and March 31, 2022.

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.~~2023. 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,~~2022, and notes thereto, which are included in the Company’s ~~Annual Report on~~2022 Form 10-K.

Summary of Significant Accounting Policies

As of March 31, 2023, the Company’s significant accounting policies and estimates, which are detailed in the Company’s 2022 Form 10-K, ~~for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.~~

have not changed.

Principles of Consolidation

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~~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.

Use of Estimates

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.

Segment and Geographic Information

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 operating segment.

Concentration of Credit Risk

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

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amounts. The Company has no 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, 2023 includes $31.5 million due from customers for sales of NUZYRA, net of prompt payment discounts, chargebacks, rebates and certain fees. Accounts receivable as of March 31, 2023 also includes $1.4 million of government contract service revenue earned under contract with the Biomedical Advanced Research and Development Authority, or the BARDA contract, $2.5 million of government contract grant revenue earned under the BARDA contract, and estimated revenue earned of $1.5 million of royalties on NUZYRA sales under the Zai Collaboration Agreement (as defined below), 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 Zai Collaboration Agreement, Almirall Collaboration Agreement and the Tetraphase License Agreement.

3. Marketable Securities

The Company did not hold any marketable securities as of March 31, 2023 or December 31, 2022.

4. Cash and Cash Equivalents and ~~Marketable Securities~~

Restricted Cash

The following istable provides a ~~summary~~reconciliation of ~~available-for-sale securities as~~cash, cash equivalents, and restricted cash reported within the condensed consolidated statement of ~~September 30, 2017 and December 31, 2016~~cash flows that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):

Amortized Cost

Unrealized Gains

Unrealized Losses

Fair Value

September 30, 2017

U.S. treasury securities

$
128,728

$
—

$
(79
)

$
128,649

Government agencies

1,797

—

(1
)

1,796

Total

$
130,525

$
—

$
(80
)

$
130,445

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, 2023		March 31, 2022
Cash and cash equivalents	$	45,026	$	49,033
Short-term restricted cash	125		250
Long-term restricted cash	—		125
Total cash, cash equivalents and restricted cash shown on the condensed consolidated statement of cash flows	$	45,151	$	49,408

~~No available-for-sale securities held as of September 30, 2017 and December 31, 2016 had remaining maturities greater than one year.~~

~~4. Restricted Cash~~

Short-term restricted cash

~~Intermezzo Reserve~~

As 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 agreement, or the Royalty Sharing Agreement, executed by the Company on October 28, 2016 with the Special Committee of the Company’s Board 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 as of December 31, 2016, was the remainder of the Intermezzo reserve of $0.1 million, established in accordance with the Merger Agreement, which was comprised of unpaid legal fees.

~~Letter of Credit~~

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.

~~Long-term restricted cash~~

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~~had a cash-collateralized irrevocable standby letter of credit in the amount of $0.3 million ~~as of September 30, 2017 and December~~at March 31, ~~2016,~~2022, naming the landlord as beneficiary.

~~5. Fixed Assets~~

~~Fixed assets, net, consists~~The $0.3 million letter of credit was refunded to the Company in April 2022 under the terms of the ~~following (in thousands):~~

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

~~6. Intangible Assets, Net~~

~~Intangible assets consist~~original lease agreement. The Company executed an amendment to the existing lease agreement in April 2021. In accordance with the amendment, the cash-collateralized irrevocable standby letter of ~~the following (in thousands):~~

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

~~Intermezzo product rights and the TO-2070 license rights were acquired through the Merger.~~ credit was reduced to an insignificant amount as of March 31, 2023. Refer to Note 8, ~~License and Collaboration Agreements,~~ 14, Leases, 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 ofdetails.

5. Inventories

The following table presents inventories, net (in thousands):


	March 31, 2023		December 31, 2022
Raw materials	$	903	$	903
Work in process	34,999		30,007
Finished goods	13,677		16,969
Total inventories	$	49,579	$	47,879

When recorded, inventory reserves reduce the carrying value of ~~the intangible asset over its fair~~inventories to their net realizable value.

~~In April 2016, the first generic equivalent of Intermezzo was launched. Although the generic was off the market~~ The Company reviews inventories on hand at least quarterly and records provisions for ~~a short period, it re-entered in September 2016. Since the generic launch, a recoverability test has been performed each reporting period~~estimated excess, slow-moving 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~~obsolete inventory, as well as inventory with a carrying value in excess of ~~the asset in periods up to and including~~net realizable value. No inventory reserves existed as of March 31, ~~2017. During the quarter ended June 30, 2017, Intermezzo product sales projections significantly declined. As such, the Company performed a recoverability test~~2023 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.~~

7.2022.

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6. Net Loss Per Share ~~Available to Common Stockholders~~

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.

Common equivalent shares result from stock options and RSUs, warrants to purchase shares of common stock, common stock issuable upon conversion of convertible debt and shares issuable under the employee stock purchase plan (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method). The two-class method is used for outstanding warrants as it is considered to be a participating security, and it is more dilutive than the treasury stock method.

The Company was in a net loss position as of March 31, 2023 and March 31, 2022. The following outstanding shares subject to stock options ~~restricted stock units~~ and RSUs, warrants to purchase shares of common stock, common stock issuable upon conversion of convertible debt and shares issuable under the Company’s employee stock purchase plan were antidilutive due to a net loss in the periods presented and, therefore, were excluded from the dilutive securities computation for the three months ended March 31, 2023 and 2022 as indicated below:


	March 31,
	2023	2022
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	1,356,778	2,163,682
Unvested restricted stock units	4,268,858	7,071,933
Shares subject to warrants to purchase common stock	426,866	432,240
Shares issuable under employee stock purchase plan	57,678	459,870
Totals	16,487,541	20,505,086

(1) The number of shares is based on the maximum number of shares issuable on exercise or conversion of the related securities as of March 31, 2023 and 2022. Such amounts have not been adjusted for the treasury-stock method or weighted-average outstanding calculations as required if the securities were dilutive.

7. Government Contract Revenue

Biomedical Advanced Research and Development Authority

In December 2019, the Company entered into the BARDA contract, which is a five-year contract with an option to extend to ten years. The BARDA contract could result in payments to the Company of up to approximately $303.6 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. The BARDA contract supports the development of NUZYRA for the treatment of pulmonary anthrax, FDA post-marketing requirements, or PMRs, associated with the initial NUZYRA approval, and the ability for BARDA to procure up to 10,000 treatment courses of NUZYRA for use against potential biothreats. In September 2021, the Company and BARDA modified the original BARDA contract, herein referred to as the amended BARDA contract, to provide additional funding to expand the development of NUZYRA under an FDA Animal Efficacy Rule development program to support a supplemental New Drug Application, or sNDA, to the FDA to include post-exposure prophylaxis, or PEP, in addition to the treatment of pulmonary anthrax, herein referred to as the amended option.

Under the terms of the original BARDA contract, approximately $59.4 million was awarded to the Company by BARDA in December 2019 for the development of NUZYRA for the treatment of pulmonary anthrax and the purchase of an initial 2,500 treatment courses of NUZYRA. As part of this initial $59.4 million award, a $37.9 million procurement of

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NUZYRA was delivered to and accepted by BARDA in June 2021, and the amount earned from this procurement was recognized in net U.S. sales of NUZYRA during the three months ended June 30, 2021. The Company has been periodically drawing down the remaining $21.5 million of the initial award based on costs incurred during the development program.

Two additional contractual services under the original BARDA contract were initiated by BARDA in March 2020 that awarded the Company approximately $76.8 million for reimbursement of existing FDA PMRs and approximately $20.4 million for reimbursement of manufacturing-related requirements, which the Company has been drawing down based on costs incurred. This additional staged funding is expected to 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.

BARDA initiated the amended option in September 2021 that expanded the development of NUZYRA under an FDA Animal Efficacy Rule development program to support an sNDA that will include PEP in addition to the treatment of pulmonary anthrax for a revised total of approximately $31.6 million.

A second procurement, the purchase of an additional 2,500 treatment courses of NUZYRA for a total of $36.4 million, was delivered to and accepted by BARDA in December 2022. The amount earned from this procurement was recognized in net U.S. sales of NUZYRA during the three months ended December 31, 2022.

The remaining options under the amended BARDA contract include a maximum of approximately $79.0 million to provide for two additional purchases of NUZYRA anthrax treatment courses, each of which may be exercised at BARDA’s discretion upon achievement of specific development milestones related to the anthrax treatment development program. Under the amended contract, the Company and BARDA agreed on specific development milestones to trigger BARDA’s options for the third and fourth procurements of NUZYRA anthrax treatment courses. The option for the third procurement will be triggered by BARDA's receipt of positive top-line data in PEP and treatment of inhalation anthrax from a combination of pilot and pivotal efficacy studies in animal models, which the Company anticipates will be available in 2024. The option for the fourth procurement will be triggered by the Company’s receipt of sNDA approval from the FDA for treatment of inhalation anthrax, which the Company anticipates will follow the third procurement by approximately 18-24 months.

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 tranches of up to 2,500 anthrax treatment courses of NUZYRA each.

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.

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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. The transaction price was allocated as follows: $21.5 million to research and ~~nine~~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 was 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 will 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, upon transfer of control of the product. As such, the related revenue for these performance obligations is recognized at a point in time as product revenue within the Company’s consolidated statement of operations. As of December 31, 2021, the product procurement performance obligation (ii) was completed and $37.9 million of product revenue was earned and recognized due to the delivery and acceptance of the first procurement under the BARDA contract.

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.

In September 2021, BARDA exercised the amended option under the amended BARDA contract, to fund an FDA Animal Rule development program to support an sNDA to include PEP against, in addition to the treatment of, pulmonary anthrax. The Company is treating these services as a separate $31.6 million contract for accounting purposes since the completion of a late-stage development program was determined at the contract outset to be optional services that did not represent a material right. The additional services added as part of the amended option were distinct and the increased transaction price is reflective of the entity’s standalone selling prices of the additional promised services. The Company’s late-stage development program obligations are satisfied over time as work progresses. Research and development services performed under the amended option will be recognized as government contract service revenue over time as the performance obligation is satisfied.

The Company recognized $1.8 million and $2.2 million of government contract service revenue under the BARDA contract during the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~March 31, 2022, respectively.

As of March 31, 2023, the aggregate amount of transaction price allocated to remaining performance obligations, excluding unexercised contract options, was $54.4 million. The Company expects to recognize this amount as ~~indicated below:~~

revenue over the next three to six years.

September 30,

2017

2016

Excluded potentially dilutive securities ⁽¹⁾:

Shares subject to outstanding options to purchase
common stock

3,575,633

2,786,882

Unvested restricted stock units

1,186,503

440,500

Shares subject to warrants to purchase common stock

84,828

42,306

Shares issuable under employee stock purchase plan

36,539

36,539

Totals

4,883,503

3,306,227

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

~~(1)~~

The number of shares is based on the maximum number of shares issuable on exercise or conversion of the related securities as of September 30, 2017 and 2016. Such amounts have not been adjusted for the treasury stock method or weighted average outstanding calculations as required if the securities were dilutive.

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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 $2.0 million and $2.1 million of government contract grant revenue under the BARDA contract during the three months ended March 31, 2023 and March 31, 2022, respectively.

Contract Balances

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, 2023, $0.8 million of unbilled accounts receivable was recorded and is a component of accounts receivable, net on the Company’s condensed consolidated balance sheet. As of December 31, 2022, $1.0 million 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, 2023 and December 31, 2022, there was no deferred revenue recorded as a component of other current liabilities on the Company’s condensed consolidated balance sheet associated with the BARDA contract. The Company recognized the deferred revenue balance into net NUZYRA product revenue upon delivery of the second BARDA procurement in December 2022. In conjunction with the second NUZYRA procurement, the Company also recorded a $0.3 million contract asset, as a component of prepaid and other current assets, on the Company's consolidated balance sheet as of December 31, 2022. As of March 31, 2023, a net contract asset of $0.2 million was recorded as a component of prepaid and other current assets on the Company's consolidated balance sheet.

8. License and Collaboration Agreements

Tetraphase Pharmaceuticals, Inc.

In March 2019, Paratek and Tetraphase Pharmaceuticals, Inc., or Tetraphase, which later became a subsidiary of La Jolla Pharmaceutical Company, both of which are now a subsidiary of Innoviva, Inc, 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 XERAVATM, 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. La Jolla is currently selling XERAVATM (Eravacycline) in the U.S.

The Tetraphase License Agreement will continue until the expiration of and payment by Tetraphase of all Tetraphase's payment obligations, which is when there are no longer any valid claims of the licensed Paratek patents that would be infringed, in the absence of a license, by a manufacture, use, or sales of the licensed product. The principal licensed patent under the Tetraphase License Agreement is expected to expire in October 2023.

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, 2023 and March 31, 2022 under the Tetraphase License Agreement.

Zai Lab (Shanghai) Co., Ltd.

In 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

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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, Hong Kong, Macau and Taiwan, or the Zai territory, for all human therapeutic and preventative uses other than biodefense. Zai ~~will be~~is 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 million~~ in ~~potential regulatory milestone payments and $40.5 million in potential commercial milestone payments,~~ ~~the next being~~April 2017, $5.0 million upon approval by the ~~U.S. Food & Drug Administration, or~~ FDA of a ~~New Drug Application, or~~ NDA submission in the CABP indication. in October 2018, $3.0 million upon submission of the first regulatory approval application for a licensed product in the People’s Republic of China in December 2019, and a $6.0 million milestone payment upon regulatory approval of omadacycline for the treatment of adults with ABSSSI and CABP in the People’s Republic of China in December 2021. Paratek is also eligible to receive up to $40.5 million in potential future commercial milestone payments. 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 Zai territory.

The Zai Collaboration Agreement will continue, on a region-by-region basis, until the expiration of and payment by Zai of all Zai’s payment obligations, which is until the later of: (i) the abandonment, expiry or final determination of invalidity of the last valid claim within the Paratek patents that covers the licensed product in the region in the Zai 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) 2032, 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”.~~606. The Company determined that there were ~~five deliverables~~six material promises under the Zai Collaboration Agreement: (i) an exclusive license to develop, manufacture and commercialize omadacycline in the ~~territory;~~Zai territory, (ii) an the initial technology transfer ~~of technology~~; (iii) a transfer of certain materials and materials know-how, (iv) ~~an additional transfer of materials;~~optional manufacturing services, (v) optional regulatory support 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 revenue recognition criteria are met.

(vi) optional commercialization support. The Company determined that ~~all five deliverables listed above had~~the exclusive license and initial technology transfer were not distinct from one another, as the license has limited value without the transfer of the Company’s technology, which will allow Zai to develop the manufacturing process and commercialize omadacycline in the Zai territory in the timeline anticipated under the agreement. Without the technology transfer, Zai would incur additional costs to recreate the Company’s know-how. Therefore, the license and initial technology transfer are combined as a single performance obligation. The transfer of materials is a single distinct performance obligation. The Company evaluated the option rights for manufacturing services, regulatory support and commercialization support to determine whether they represent or include material rights to Zai and concluded that the options were not issued at a discount, and therefore do not represent material rights. As such, they are not considered performance obligations at the outset of the arrangement.

Based on these assessments, the Company ~~on a stand-alone basis and therefore five units of accounting were identified. The Company~~ determined ~~however,~~ that two performance obligations existed at the ~~best estimate for the selling price~~outset of the Zai Collaboration Agreement: (i) the exclusive license combined with the initial technology transfer ~~of technology,~~and (ii) the transfer of certain ~~materials and materials know-how, the additional transfer of materials and participation on the JSC and JDC were all inconsequential. As such, the~~materials. The Company has recognized ~~the total arrangement consideration~~$21.5 million in milestone revenue, 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~~described above, under the Zai Collaboration Agreement as of ~~$7.5~~March 31, 2023. The performance obligation to deliver the license was satisfied in 2017 and research and development services were completed by December 2021. Milestone payments are recognized as revenue when the risk of significant reversal is resolved, generally when the milestone event occurs. Therefore, the $6.0 million ~~which represents~~milestone payment upon regulatory approval of NUZYRA in the ~~upfront payment. During~~People’s Republic of China was recognized in December 2021.

As of March 31, 2023 and December 31, 2022 there was no deferred revenue recorded as a component of other current liabilities on the ~~three months ended September 30, 2017, the Company did not recognize revenue under~~Company’s condensed consolidated balance sheet associated with the Zai Collaboration Agreement.

~~Allergan plc~~

Almirall, LLC

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.

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Under the terms of the ~~Allergan~~Almirall 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 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.~~

~~The~~Almirall Collaboration Agreement.

In February 2020, the Company ~~earned an upfront fee~~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 ~~amount~~rest of ~~$4.0 million~~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 Almirall Collaboration Agreement contains two performance obligations: (i) an exclusive license to research, develop and commercialize tetracycline products for use in the U.S. for the treatment of acne and non-exclusive rights to 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. The options provided to Almirall for additional development services do not provide Almirall with a material right as these services will not be provided at a significant or incremental discount. As such, the option services are not performance obligations. As the performance obligation to deliver the license was satisfied in 2007 and research and development services were completed by December 2010, all subsequent milestone payments are recognized as revenue when the risk of ~~an Investigational New Drug Application~~significant reversal is resolved, generally when the milestone event occurs. The Company recognized all Almirall milestones in ~~2010, and $2.5 million upon initiation of Phase 2 trials in 2012. In December 2014,~~prior years. There are no milestones left to be recognized under the ~~Company also earned $4.0 million upon initiation of Phase 3 trials associated with 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 to pay~~

Royalty payments are recognized when the sales occur. During the three months ended March 31, 2023 and March 31, 2022, the Company ~~royalties~~recognized $0.5 million of royalty revenue, for ~~each tetracycline compound it commercializes~~sales of SEYSARA in the U.S. by Almirall under the ~~Allergan~~Almirall Collaboration ~~Agreement expires on~~Agreement. Royalty revenue recognized for sales of SEYSARA in the ~~later~~U.S. is estimated using third-party data and an approximation of discounts and allowances to calculate net product sales, to which the Company then applies the applicable royalty percentage specified in the Almirall Collaboration Agreement. Differences between actual and estimated royalty revenues are adjusted for 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, which grants the 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 treatment of acne in all countries other than the U.S. and (ii) a license agreement with Almirall that is specific to the greater China region, or the China License, under which we 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, we may terminate the China License.

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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.

Tufts University

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, or 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.

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~~was 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.~~omadacycline and a payment of $100,000 to Tufts for achieving the second milestone following its first marketing application submitted in the U.S. The third, and final, payment of $150,000 became due upon FDA approval of omadacycline in October 2018. 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,~~agreement, based on the applicable field of use for such product, the Company ~~agreed~~will be obligated to pay Tufts (i) a percentage, ranging from 10% to 14% (ten percent to fourteen percent), for compounds other than omadacycline, and a percentage in the single digits for the compound omadacycline, 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 (ii) the lesser of (a) 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 (b) the amount of royalty payments that would have been paid by the Company to Tufts if ~~the Company~~it 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~~

During the ~~right to convert the Company’s exclusive license to a non-exclusive license if~~three months ended March 31, 2023 and March 31, 2022, the Company ~~does not commercialize a product licensed~~incurred $0.4 million and $0.3 million of royalty expense, respectively, under the ~~agreement within a specified time period.~~

~~Purdue Pharma L.P.~~

Tufts License Agreement.

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Past Collaborations

Novartis International Pharmaceutical Ltd.

In ~~July~~September 2009, the Company and ~~Purdue Pharma L.P.~~Novartis International Pharmaceutical Ltd., or ~~Purdue~~Novartis, which merged into Novartis Pharma AG, a wholly owned subsidiary of Novartis AG, 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:~~

~~Purdue Pharma paid~~which we reconciled shared development costs and expenses and granted Novartis a right of first negotiation with respect to commercialization rights of omadacycline following approval of omadacycline from the FDA, European Medicines Agency, or EMA, or any regulatory agency, but only to the extent the Company ~~a $25.0 million non-refundable license fee in August 2009, and non-refundable intellectual property milestone payments~~had not previously granted such commercialization rights related to omadacycline to another third-party as of ~~$10.0 million in each of December 2011 and August 2012;~~

any such approval. The Company transferred the Intermezzo NDA to Purdue Pharma, and Purdue Pharma is obligated to assume the expense associated with maintaining the NDA and further development of Intermezzo in the United States, including any expense associated with post-approval studies;

~~Purdue Pharma is obligated to commercialize Intermezzo in the United States at its expense using commercially reasonable efforts;~~

~~Purdue Pharma is obligated~~also agreed to pay Novartis a 0.25% royalty, to be paid from net sales received by the Company ~~tiered base royalties on net sales~~in any country following the launch of ~~Intermezzo~~omadacycline in the United States ranging from the mid-teens up to the mid-20% level, with each such royalty tiers subject to an increase by a percentage in the low single digits upon a specified anniversary of regulatory approval of Intermezzo. The base royalty is tiered depending upon the achievement of certain fixed net sales thresholds by Purdue Pharma, which net sales levels reset each year for the purpose of calculating the royalty. The royalty tiers are subject to reductions upon generic entrythat country and ~~patent expiration. Purdue Pharma is obligated to pay royalties~~continuing until the later of 15expiration of the last active valid patent claim covering such product in the country of sale and 10 years from the date of first commercial sale in such country. The first royalty payment became payable as of March 31, 2019. The amended Novartis Letter Agreement resulted in a long-term liability in the ~~United States~~amount of $2.4 million and $2.5 million as of March 31, 2023 and December 31, 2022, respectively, included within “Other Liabilities” on the Company’s consolidated balance sheet. In addition, short-term liabilities of $0.3 million and $0.4 million included within “Other Current Liabilities” on our consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively, represent the portion of royalty payments due to Novartis within twelve months of each balance sheet date. There are no other payment obligations under the Novartis Agreement or the ~~expiration of patent claims~~amended Novartis Letter Agreement.

For additional information related to ~~Intermezzo;~~these agreements, as well as the Company’s other significant collaborative agreements, please read Note 6, License and

Collaboration Agreements, to the consolidated financial statements included within the Company’s 2022 Form 10-K.

~~Purdue Pharma is obligated to pay~~9. Capital Stock

On May 17, 2021, 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 ~~an additional $70.0~~$50.0 million ~~upon the achievement of certain net sales targets for Intermezzo in the United States.~~

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 event with respect to 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 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 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, to the extent that either occurred prior to the second anniversary of the closing date of the Merger. On October 28, 2016, in satisfaction of 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.

~~Shin Nippon Biomedical Laboratories Ltd.~~

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.

~~9. Capital Stock~~

~~In October 2015 and February 2017, Paratek Pharmaceuticals, Inc. entered into Controlled Equity Offering~~^SM Sales Agreements, or the 2015 Sales Agreement and 2017 Sales Agreement, respectively, and collectively, the Sales Agreements, with Cantor Fitzgerald & Co., or Cantor, under which the Company could, at its discretion, 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. The offering of shares of the Company’s common stock pursuant to the Sales Agreement ~~during~~will terminate upon the ~~nine months ended September 30, 2017.~~ ~~The Company received $45.9 million in proceeds, after deducting commissions~~earlier of ~~$1.4 million, from~~(i) the sale of ~~2,006,007~~ ~~shares of~~all common stock assubject to the Sales Agreement, or (ii) termination of ~~November 1, 2017, under~~ the ~~2017~~ Sales ~~Agreement.~~ Agreement in accordance with its terms.

As of ~~November 1, 2017, $2.7~~April 30, 2023, $23.3 million ~~remain~~remains available for sale under the ~~2017~~ Sales Agreement.

~~Warrants to Purchase Common Stock~~

~~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% of~~

On May 11, 2020, the ~~Company’s common stock, were exchanged for 9,614 warrants to purchase common stock in connection~~Company filed a registration statement on Form S-3 with the ~~Merger. These 9,614 warrants~~SEC, as amended on June 19, 2020 and declared effective on July 9, 2020, 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 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~~sell 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~~securities in an aggregate amount of ~~common stock in total) at an exercise price~~up to $250.0 million. As of ~~$24.47 per share, or~~April 30, 2023, $223.3 million remains available on this shelf registration statement, with $23.3 million reserved for potential sales under the ~~Hercules Warrants, on September 30, 2015, which expire five years from issuance or at the consummation~~Sales Agreement.

Table of ~~a Public Acquisition, as defined in each of the Hercules Warrant agreements.~~

~~As described in Note 13,~~ ~~Long-term Debt, in connection 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:~~

Contents

	~~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~~

~~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.

10. ~~Other~~ Accrued Expenses

~~Other accrued~~

Accrued expenses consist of the following (in thousands):

	September 30, 2017		December 31, 2016
						March 31,		December 31,
						2023		2022
Accrued sales allowances					Accrued sales allowances	$	10,748	$	9,555
Accrued compensation					Accrued compensation	4,934		11,339
Accrued interest					Accrued interest	3,906		2,392
Accrued commercial					Accrued commercial	2,680		2,668
Accrued inventory					Accrued inventory	70		327
Accrued contract research					Accrued contract research	2,056		1,989
Accrued professional fees					Accrued professional fees	567		702
Accrued manufacturing					Accrued manufacturing	720		826
Accrued other					Accrued other	460		1,132
Accrued legal costs		218		358	Accrued legal costs	492		280
Accrued compensation		2,595		2,609
Intermezzo payable		93		105
Accrued professional fees		1,468		1,118
Accrued contract manufacturing		3,760		1,940
Accrued other		206		298
Total	$	8,340	$	6,428	Total	$	26,633	$	31,210

11. Fair Value Measurements

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 is near current market rates.~~defined in Note 13, Long-TermDebt), was $192.1 million as of March 31, 2023 and $227.2 million as of December 31, 2022. The fair value of the Company’s ~~long-term~~ debt was determined using Level 32 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~~There were no financial assets and liabilities ~~that have been~~ measured at fair value as of ~~September 30, 2017~~March 31, 2023 and December 31, 2016, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. 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):

2022.

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

~~Marketable Securities~~

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.

~~Contingent Consideration~~

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):~~

Contingent
liability—
former
Transcept
stockholders

Balances At December 31, 2016

$
655

Change in fair value

(571
)
Balances At September 30, 2017

$
84

12. Stock-Based ~~Compensation~~

~~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. Incentive Compensation

Stock-based Compensation

The following table presents stock-based compensation expense included in the Company’s condensed consolidated statements of operations and comprehensive income (loss) (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
	2017		2016		2017		2016			2023		2022
Research and development expense	$	1,258	$	871	$	4,312	$	2,530	Research and development expense	$	306	$	177
General and administrative expense		2,824		1,788		8,706		5,572
Selling, general and administrative expense									Selling, general and administrative expense	1,840		2,292
Total stock-based compensation expense	$	4,082	$	2,659	$	13,018	$	8,102	Total stock-based compensation expense	$	2,146	$	2,469

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

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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:


	Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016				2023		2022
Volatility		75.8	%		73.5	%	Volatility	66.6	%	62.0	%
Weighted average risk-free interest rate		2.0	%		1.4	%
Risk-free interest rate							Risk-free interest rate	3.8	%	2.1	%
Expected dividend yield		0.0	%		0.0	%	Expected dividend yield	0.0	%	0.0	%
Expected life of options (in years)		5.8			5.8		Expected life of options (in years)	6.1		5.8

Stock ~~Option~~ Plan Activity

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 shareholders held on June 9, 2015. As of March 31, 2023, there are 4,527,745 shares ~~authorized~~available for future issuance under the 2015 Plan.

The Company recognizes the stock-based compensation expense of awards subject to 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 requisite service period that does not change the estimate of the total stock-based compensation expense (i.e., it does not affect the grant-date fair value or quantity of awards to be recognized) is recognized prospectively over the remaining requisite service period.

During the three months ended March 31, 2023, the Company’s Board of Directors granted 140,000 RSUs to directors of the Company under the 2015 Plan. The RSU awards granted to directors of the Company during the three months ended March 31, 2023, are subject to time-based vesting over a period of one year.

Performance-based RSU, or PRSU, awards granted to certain executives and employees of the Company in prior years remained outstanding and probable as of March 31, 2023, and will vest as follows: 15/55 of the February 2020 grants will vest on achievement of certain clinical milestones related to NUZYRA, and 25/55 and 10/55 of the March 2021 grants will vest on certain net product revenue achievements and on achievement of certain clinical milestones related to NUZYRA, respectively.

The Company’s Board of Directors adopted the Paratek Pharmaceuticals, Inc. 2015 Inducement Plan, ~~may be increased by~~or the ~~number~~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 not 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, 2023, 341,500 shares remain available for grant under that ~~again~~plan, as well as any shares underlying outstanding stock options that may become available for grant ~~as a result of forfeited or terminated awards or shares withheld in satisfaction~~pursuant to the plan’s terms. It is therefore possible that the Company may, based on the business and recruiting needs 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 for issuanceCompany, issue additional stock options under the 2015 ~~Plan will be automatically increased each year pursuant to an “evergreen” provision contained in the 2015~~Inducement Plan. The number of shares available for issuance will automatically increase on January 1 of each year, for the period commencing on (and including) January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to 5% of the total number of shares of common stock outstanding on December 31 of 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.

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~~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. In October 2018 and March 2022, the Company’s Board of Directors approved the reserve of an additional 500,000 shares and 750,000 shares, respectively, for the 2017 Inducement Plan, for a total of 1,800,000 shares reserved for issuance under it.

During the ~~nine~~three months ended ~~September 30, 2017,~~ March 31, 2023, the Company’s Board of Directors granted ~~176,000~~8,400 stock options and ~~35,000 restricted stock unit~~7,000 RSU awards ~~or RSUs,~~ to employees of the Company under the 2017 Inducement Plan. The stock option awards are generally subject to time-based vesting over a period of one to four years. The RSU awards ~~made to an employee of the Company is~~are generally subject to time-based vesting, with 100% of the shares of common stock subject to the ~~RSUs~~RSU award vesting three years from the grant date. ~~Although the Company does not currently anticipate the issuance~~As of ~~additional stock options under the 2015 Inducement Plan,~~ ~~73,167~~March 31, 2023, 758,514 shares remain available for grant under the ~~2015~~2017 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 optionPlan, as well as any shares underlying awards are subject to time-based vesting over a period of one to four years. The RSU awards made to directors of the Company are subject to time-based vesting, with 100% of the shares of common stock subjectthat may become available for grant pursuant to the ~~RSUs vesting one year from the grant date. The grants also included performance-based RSU, or PRSU, awards to certain executives and employees~~plan’s terms.

Table of the Company. The PRSU awards issued during the quarter ended June 30, 2017 have vested or will vest as follows: 20% of the PRSUs vested upon 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 PRSUs 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.

Contents The Company recognizes compensation cost for awards with performance conditions if and when the Company concludes that it is probable that the performance condition will be achieved over the requisite service period. Since the First Milestone was achieved during the quarter ended September 30, 2017, and the Company believes it is more likely than not that the Second Milestone will be achieved prior to the fifth anniversary of the date of grant, the Company recognized compensation cost, 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 shares remained available for issuance under either the Paratek Pharmaceuticals, Inc. 2006 Equity Incentive Plan, as amended, or the Paratek Pharmaceuticals, Inc. 2014 Equity Incentive Plan.

~~Total shares available for future issuance under the 2015 Plan are 688 shares as of September 30, 2017.~~

Stock ~~options~~

Options

A summary of stock option activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 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, 2022	1,374,152	$	11.14	5.84
Granted	8,400	$	1.99
Exercised	—	$	—
Cancelled or forfeited	(25,774)	$	7.51
Outstanding at March 31, 2023	1,356,778	$	11.15	5.59
Exercisable at March 31, 2023	1,088,991	$	12.97	4.82	$	—

The total intrinsic value of stock options granted, cancelled or forfeited was insignificant for the three months ended March 31, 2023.

Restricted Stock Units

A summary of ~~restricted stock unit~~RSU activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 is as follows:

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, 2022	4,752,538	$	5.10
Granted	147,000	2.05
Released	(630,680)	4.36
Forfeited	—
Unvested balance at March 31, 2023	4,268,858	$	5.11

Total unrecognized stock-based compensation expense for all stock-based awards was ~~$22.3~~$9.1 million as of ~~September 30, 2017.~~March 31, 2023. This amount will be recognized over a ~~weighted average~~weighted-average period of ~~2.04~~1.28 years.

~~13. Long-term Debt~~

~~On September 30, 2015,~~

2009 Employee Stock Purchase Plan

In June 2009, at the annual meeting of stockholders, the stockholders of the Company ~~entered into~~approved the ~~Loan Agreement with Hercules~~2009 Employee Stock Purchase Plan, or the 2009 ESPP. As of March 31, 2023, 36,539 shares were available for issuance under the 2009 ESPP. Since the merger involving privately-held Paratek Pharmaceuticals, Inc. and ~~certain other lenders, and Hercules Technology Growth Capital,~~Transcept Pharmaceuticals, Inc. ~~(as agent). Under the Loan Agreement, Hercules provided~~, the Company ~~with access~~has not made the 2009 ESPP available to ~~term loans with~~employees.

2018 Employee Stock Purchase Plan

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 ESPP Share Pool represented 3% of the total number of shares of our common stock outstanding as of March 31, 2018. 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 was December 1, 2018. As of March 31, 2023, 21,139 shares remained available for issuance under the 2018 ESPP.

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Revenue Performance Incentive Plan

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 ~~aggregate principal amount~~incentive pool of up to ~~$40.0~~$50.0 million, ~~or collectively,~~plus accrued interest during the ~~Term Loan.~~ period between the awards’ vesting date and payment dates. Each participant will be allocated a percentage of the incentive pool.

The ~~Company initially drew a principal amount of $20.0 million, which was funded on September 30, 2015. The remaining $20.0 million under~~incentive pool will be divided into two equal tranches with the ~~Loan Agreement was available to be drawn at~~first tranche vesting upon the Company’s ~~option~~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 ~~minimum increments~~each tranche of ~~$10.0 million~~their awards in four 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. Participants subsequently added to the plan, will vest on a weighted basis over three years, subject to their continued employment with the Company through the applicable vesting date. 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, ~~2016,~~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 ~~Draw Period. The Term Loan~~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 ~~repayable in monthly installments commencing on April~~not achieved prior to the change of control, the Tranche 1 ~~2018 through maturity on September 1, 2020. The interest rate was~~milestone will be deemed to be achieved at a percentage equal to the greater of ~~(i) 8.5%~~(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.

The Tranche 1 milestone vested on January 31, 2023, upon the Company's achievement of cumulative net product revenues over $300.0 million. Amounts payable from the 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 awards 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 that are immediately payable on closing with respect to an award in connection with a change in control will be paid in cash.

The Company recognizes 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 under Tranche 1 of the Plan was deemed probable during 2021. The performance condition under Tranche 2 was deemed probable during 2022. Accordingly, approximately $0.3 million of compensation expense was recognized during the three months ended

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March 31, 2023. An insignificant amount of compensation expense was recognized during the three months ended March 31, 2022. Compensation cost of $45.6 million and $45.3 million is included in accrued long-term compensation in the Company’s consolidated balance sheet as of March 31, 2023 and December 31, 2022, respectively.

13. Long-Term Debt

R-Bridge Loan Agreement

On 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 ~~(ii)~~ the ~~sum of 8.5%, plus~~R-Bridge Lender. Pursuant to 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~~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, and such royalties, 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 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 ~~Term Loan was payable at maturity, including~~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 ~~event~~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 (8th) 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 (8th) 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, 2023, the Company was ~~being accrued~~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.

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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 pay the Capped Amount 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. No events of default had occurred under the R-Bridge Loan Agreement through March 31, 2023.

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 our loan arrangement with Hercules Capital, Inc.

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 ~~loan~~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 respect to 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 condensed consolidated balance sheets at March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Principal debt including paid-in-kind interest	$	59,526	$	59,806
Unamortized debt discount and issuance costs	(1,139)		(1,205)
Carrying value	$	58,387	$	58,601

In accordance with the terms of the R-Bridge Loan Agreement, the Company repaid approximately $0.3 million of the outstanding principal balance during the three months ended March 31, 2023, comprised of the excess of the Collection Amount over accrued interest on the loan for the three months ended December 31, 2022.

The Company recognized coupon interest expense of $1.1 million and an insignificant amount of amortization expense on debt issuance costs, on the R-Bridge Loan Agreement for each of the three months ended March 31, 2023 and March 31, 2022.

Convertible Senior Subordinated Notes

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

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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 an additional $25.0 million aggregate principal amount of Notes, which was exercised in full on 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 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 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 ~~method. Borrowings under~~rate of 5.47% and recorded as additional interest expense.

The Company evaluated the ~~Loan Agreement were collateralized by substantially~~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 ~~assets~~proceeds received from the Notes was recorded as a liability on the condensed consolidated balance sheet.

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The following table summarizes the impact of the ~~Company.~~

~~Upon~~Notes on the Company’s condensed consolidated balance sheets at March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Principal debt	$	165,000	$	165,000
Unamortized debt issuance costs	(1,236)		(1,511)
Carrying value	$	163,764	$	163,489

The Company recognized coupon interest expense of $2.0 million and amortization expense on the debt issuance costs of $0.3 million on the Notes for each of the three months ended March 31, 2023 and March 31, 2022.

Royalty-Backed Loan Agreement

On February 25, 2019, the Company, through its wholly-owned subsidiary Paratek Royalty Corporation, or the Subsidiary, entered into a royalty-backed loan agreement, or the Royalty-Backed Loan Agreement, with Healthcare Royalty Partners III, L.P., or HCRP. Pursuant to the terms of the 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 ~~Event~~interest reserve account. The Company also paid $1.2 million in other lender fees related to the Royalty-Backed Loan Agreement.

Under the Royalty-Backed Loan Agreement, the outstanding principal balance will bear interest at an annual rate of ~~Default, an additional 5.0%~~12.0%. Payments of interest ~~would~~under the Royalty-Backed Loan Agreement are made quarterly out of the 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 loan will be ~~applied~~used to repay the principal of the loan until the balance is fully repaid and ~~Hercules could,~~any royalty shortfalls will be capitalized and added to the principal balance of the loan. In addition, the Subsidiary will make 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 matures on May 1, 2029, at ~~its option, accelerate and demand payment of all or any part~~which time, if not earlier repaid in full, the 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~~Subsidiary; any termination of ~~common stock resulting in proceeds~~the Almirall Collaboration Agreement; and certain bankruptcy or insolvency events.

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The following table summarizes the impact of the Royalty-Backed Loan Agreement on the Company’s condensed consolidated balance sheets at March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Principal debt including paid-in-kind interest	$	37,041	$	36,388
Unamortized debt issuance costs	(1,496)		(1,532)
Carrying value	$	35,545	$	34,856

During the three months ended March 31, 2023, $0.7 million of paid-in-kind interest was capitalized and added to the ~~Company of approximately $1.0 million. The excess of proceeds received by the Company over the fair value~~principal balance of the ~~common stock issued was allocated as a reduction~~loan, which represents the shortfall between the interest owed, and the Almirall Collaboration Agreement royalty payments received.

The Company recognized coupon interest expense of $1.1 million and $1.0 million for the three months ended March 31, 2023 and March 31, 2022, respectively, and an insignificant amount of amortization expense on the debt issuance costs on the Royalty-Backed Loan Agreement for each of the ~~fees paid to Hercules in conjunction with obtaining the initial $20.0 million draw of the Term Loan.~~

three months ended March 31, 2023 and March 31, 2022.

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. Issuance costs related to the unfunded amount were~~liability rather than capitalized as ~~prepaid~~an asset in accordance with ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.

Long-term debt on the Company’s consolidated balance sheets at March 31, 2023 and ~~were to be amortized ratably through~~December 31, 2022 includes the ~~end~~carrying value of the ~~Draw Period.~~

~~In connection with the~~R-Bridge 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 drawNotes and the ~~remaining unfunded $20.0 million.~~ Royalty-Backed Loan Agreement.

14. Leases

Operating Leases

The ~~$208,000~~Company leases its Boston, Massachusetts and King of ~~costs allocated to the initial $20.0 million draw were recorded as a debt discount~~Prussia, Pennsylvania office spaces under non-cancelable operating leases expiring in 2023 and ~~are being amortized as additional interest expense over the term of the loan using the effective interest method.~~ 2026, respectively.

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~~executed an amendment to the ~~Loan Agreement, or the Second Amendment, which~~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 extended the ~~date~~lease term for the remaining 4,153 rentable square feet of office space through August 2023 for an additional commitment of $0.4 million. In accordance with the amendment, a cash-collateralized irrevocable standby letter of credit for the lease was reduced to an insignificant amount as of March 31, 2023.

The Company executed an amended lease agreement on ~~which~~its King of Prussia office space in November 2022. The amended lease agreement extended the ~~Company must begin making amortization payments under~~lease term through September 2026 for an additional commitment of $1.2 million.

The total operating lease liability is presented on the ~~Loan Agreement from April 1, 2018 to January 1, 2019, or the Amortization Date. Upon commencement~~Company’s condensed consolidated balance sheet based on maturity dates. Approximately $0.5 million 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, andtotal operating liabilities is ~~being accrued as interest expense over the term of the loan using the effective interest method. Borrowings~~classified 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“Other Current Liabilities” 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 installmentsportion due within twelve months of ~~principal~~March 31, 2023, 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~~$1.4 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~~is classified 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)“Long-Term Lease Liability”. ~~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):

Fiscal Year

2017

$
—

2018

—

2019

27,616

2020

22,384

2021 and Thereafter

—

Total

$
50,000

14. 15. Income Taxes

The Company recorded aan insignificant provision for income taxes infor the three ~~and nine~~ months ended ~~September 30, 2017 of $0~~March 31, 2023 and ~~$0.8 million, respectively. The~~no provision for income taxes ~~consists of current tax expense, which represents China withholding taxes on~~for the ~~upfront payment earned under the Zai Collaboration Agreement.~~

three months ended March 31, 2022.

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

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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~~

16. Product Revenue

To date, the Company’s only source of product revenue has been from NUZYRA product sales beginning in February 2019 when NUZYRA launched in the U.S. The following table summarizes balances and activity in each 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.

~~15.~~product revenue allowance and reserve categories (in thousands):


	Chargebacks, discounts and fees		Government and other rebates		Returns		Patient assistance		Total
Balance at December 31, 2022	$	1,409	$	7,552	$	413	$	181	$	9,555
Provision related to current period sales	2,304		9,421		284		476		12,485
Adjustment related to prior period sales	—		124		—		—		124
Credit or payments made during the period	(2,322)		(8,078)		(490)		(524)		(11,414)
Balance at March 31, 2023	$	1,391	$	9,019	$	207	$	133	$	10,750

17. Commitments and Contingencies

~~Leases~~

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:~~

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

~~Commercial Supply Agreements~~

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.

~~Intermezzo Patent Litigation~~

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.

~~Patent Term Adjustment Suit~~

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.

~~Other Legal Proceedings~~

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, 2023, 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.

~~16.~~

In July 2021, the Company entered into a supply agreement with CARBOGEN AMCIS AG, or Carbogen, that provides for the terms and conditions under which Carbogen will manufacture and supply to the Company the active pharmaceutical ingredient for the Company’s omadacycline product in bulk quantities, or the Carbogen Product. Under this agreement, the Company is responsible for the cost and supply of crude omadacycline that Carbogen requires to manufacture the Carbogen Product and perform related services. The Company is obligated to initially pay Carbogen an amount in the high six-digit U.S. dollar range per batch of Carbogen Product that the Company orders, and the price may be adjusted in accordance with the terms of the agreement. The Company may also request that Carbogen perform certain services related to the Carbogen Product, for which the Company will pay reasonable compensation to Carbogen.

The agreement will remain in effect for a fixed initial term. If neither party has provided notice of its intent to terminate the agreement prior to the end of the initial term, then the Agreement will automatically be extended for a fixed period of time. The agreement may be terminated under certain circumstances, including by either party delivering notice of termination following the initial term, or by either party due to a material uncured breach by the other party or the other party’s insolvency.

In November 2016, the Company entered into a manufacturing and services agreement, or MSA, with CIPAN, which was later amended and restated in April 2018, and further amended in February 2019, December 2019, July 2020, December 2020, January 2022, and February 2023, collectively, the CIPAN Agreements. The CIPAN Agreements provide the terms and conditions under which CIPAN will manufacture and supply to the Company increased quantities of minocycline starting material and crude omadacycline, or the CIPAN Products, for purification into omadacycline and, subsequently, for use in the Company’s products that contain omadacycline tosylate as the active pharmaceutical ingredient.

Additionally, the CIPAN Agreements included an investment by the Company in a new facility area to increase the manufacturing capacity for production of crude omadacycline. The Company was required to make advance payments to CIPAN upon completion of certain milestones within the CIPAN Agreements.

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The term of the CIPAN Agreements will continue throughout the term that the Company receives benefit from the new facility area. The Company may renew the CIPAN Agreements for additional periods and can terminate the CIPAN Agreements at any time by delivery, within a certain time period, of prior written notice to CIPAN. Following the first renewal term, CIPAN may terminate the MSA in its entirety by delivery, within a certain time period, of prior written notice to the Company.

Under the CIPAN Agreements, the Company will purchase product in batches from CIPAN in quantities to be set forth on purchase orders submitted to CIPAN, within a certain time period, prior to the requested date of delivery. The Company will provide CIPAN with a rolling forecast with a best estimate of the quantities that will be ordered each month.

18. Recent Accounting Pronouncements

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 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 guidancethese standards 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 2016-16 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 adoptioncomprehensive loss and related disclosures.

Table 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~~Contents

Item 2. Management’s Discussion and ~~requires an entity to apply a one-step quantitative test~~Analysis of Financial Condition and ~~record the amount~~Results 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.

Operations

~~Item 2.~~

~~Management’s Discussion and Analysis of~~ ~~Financial Condition and 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,~~2022, as filed with the U.S. Securities and Exchange Commission, or the SEC, on March ~~2, 2017, our Quarterly Report on~~16, 2023, or the 2022 Form ~~10-Q for the quarter ended March 31, 2017, as filed with the SEC on May 4, 2017, and elsewhere in this report.~~ 10-K. 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.

Company Overview

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 antibiotic for the treatment of adult patients with community-acquired bacterial pneumonia, or ~~IV,~~CABP, and acute skin and skin structure infections, or ABSSSI, caused by susceptible pathogens. We retain worldwide commercial rights to omadacycline, with the exception in the People’s Republic of China, Hong Kong, Macau and Taiwan, where we have entered into a collaboration agreement with Zai Lab (Shanghai) Co., Ltd., or Zai. The National Medical Products Administration, or NMPA, of China approved NUZYRA for the treatment of adult patients with CABP and ABSSSI in December 2021. China's National Healthcare Security Administration added the intravenous formulation of NUZYRA to the country's National Reimbursement Drug List for treatment of CABP and ABSSSI in January 2023, resulting in millions of patients gaining access to this once daily broad-spectrum antibiotic.

SEYSARA® (sarecycline) is an FDA-approved product which we have exclusively licensed in the U.S. and the People’s Republic of China, Hong Kong, Macau and Taiwan, certain rights to Almirall, LLC, or Almirall. SEYSARA is currently being marketed by Almirall in the U.S. as a once-daily oral therapy for the treatment of moderate to severe acne 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., the People's Republic of China, Hong Kong, Macau and Taiwan, 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 NMPA expected in 2023, according to Almirall.

We believe that ~~omadacycline~~NUZYRA has the potential to become the primary ~~antibiotic~~ choice of physicians for use as a once-daily broad-spectrum monotherapy oral and IV antibiotic for ~~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 is of concern. ~~We believe omadacycline, if approved, will be~~NUZYRA is used in the emergency room, hospital, and community care settings. We have designed ~~omadacycline~~NUZYRA 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,~~dosing adjustments for patients on concomitant medications and a ~~favorable safety~~generally safe and ~~tolerability~~well-tolerated profile.

In NUZYRA also has the ~~fall of 2013, the U.S. Food and Drug Administration, or the FDA, agreed~~potential 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~~used as a once-daily oral and IV ~~formulations~~antibiotic for the treatment of non-tuberculous mycobacteria, or NTM, and pulmonary anthrax, where it could be suitable for both the treatment and post-exposure prophylaxis of anthrax as a priority medical countermeasure.

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In December 2019, we entered into the BARDA contract, which is a five-year contract with an option to extend to ten years. The BARDA contract could result in payments to the Company of up to approximately $303.6 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. The BARDA contract supports the development of NUZYRA for the treatment of pulmonary anthrax, FDA post-marketing requirements, or PMRs, associated with the initial NUZYRA approval, and the ability for BARDA to procure up to 10,000 treatment courses of NUZYRA for use against potential biothreats. In September 2021, we and BARDA modified the original BARDA contract, herein referred to as the amended BARDA contract, to provide additional funding to expand the development of NUZYRA under an FDA Animal Efficacy Rule development program to support a sNDA, to the FDA to include post-exposure prophylaxis, or PEP, in addition to the treatment of pulmonary anthrax, herein referred to as the amended option.

Under the terms of the original BARDA contract, approximately $59.4 million was awarded to us by BARDA in December 2019 for the development of NUZYRA for the treatment of pulmonary anthrax and the purchase of an initial 2,500 treatment courses of NUZYRA. As part of this initial $59.4 million award, a $37.9 million procurement of NUZYRA was delivered to and accepted by BARDA in June 2021, and the amount earned from this procurement was recognized in net U.S. sales of NUZYRA during the second quarter of 2021. The Company has been periodically drawing down the remaining $21.5 million of the initial award based on costs incurred during the development program.

Two additional contractual services under the original BARDA contract were initiated by BARDA in March 2020 that awarded us approximately $76.8 million for reimbursement of existing FDA PMRs and approximately $20.4 million for reimbursement of manufacturing-related requirements, which the Company has been drawing down based on costs incurred. This additional staged funding is expected to 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 our manufacturing activities for NUZYRA.

The second procurement, the purchase of an additional 2,500 treatment courses of NUZYRA for a total of $36.4 million, was delivered to and accepted by BARDA in December 2022. The amount earned from this procurement was recognized in net U.S. sales of NUZYRA during the fourth quarter of 2022.

The remaining government options under the amended BARDA contract include a maximum of approximately $79.0 million to provide for two additional purchases of NUZYRA anthrax treatment courses, each of which may be exercised at BARDA’s discretion upon achievement of specific development milestones related to the anthrax treatment development program. The Company and BARDA agreed under the amended contract on specific development milestones to trigger BARDA’s options for the third and fourth procurements of NUZYRA anthrax treatment courses. The third procurement will be triggered by BARDA's receipt of positive top-line data in PEP and treatment of inhalation anthrax from a combination of pilot and pivotal efficacy studies in animal models, which the Company anticipates will be available in 2024. The option for the fourth procurement will be triggered by the Company’s receipt of sNDA approval from the FDA for treatment of inhalation anthrax, which is anticipated to follow the third procurement by approximately 18-24 months.

We continue to make significant progress in the ~~United States.~~ pulmonary anthrax development program under the amended BARDA Bioshield contract. Several omadacycline PK studies have been completed in rabbits and in non-human primates to derive the doses to be tested in upcoming pilot efficacy, or dose range finding, studies for the treatment of inhalation anthrax in both rabbits and non-human primates. The first oral omadacycline PK study in non-human primates was also completed marking the initiation of the development program for the post exposure prophylaxis indication. We completed the first Animal Rule pilot efficacy study in 2022, which revealed that all three doses of omadacycline demonstrated one-hundred percent efficacy; all animals survived at day 45 which is the primary endpoint in an anthrax treatment model during which all non-treated animals died by Day 3.

In addition, we have evaluated minimum inhibitory concentrations, or MICs, of omadacycline against more than 130 anthrax strains. In these in vitro studies, omadacycline continued to ~~Qualified Infectious~~demonstrate potent MICs and is considered effective against all anthrax isolates that were tested, including a strain resistant to doxycycline and a strain resistant to ciprofloxacin. Omadacycline MIC values in all of these strains remained unchanged and consistent with very potent in vitro activity which was not impacted in either of these resistant anthrax strains.

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Together with BARDA, we also continue to advance our efforts to onshore the manufacturing of NUZYRA to the U.S. We have completed the knowledge transfer and development stage of our manufacturing process for the active pharmaceutical ingredient, or API, of omadacycline to our U.S. onshoring partners and are currently in the engineering stage of the initiative. We have completed knowledge transfer and the initiation of the process development work for production of vials. U.S.-based commercial supply production of tablets was implemented in 2022 and we anticipate U.S.-produced vials will be available by 2024.

The breadth of the utility of NUZYRA as a countermeasure against bioterrorism was affirmed when NUZYRA was added to the Center for Disease ~~Product,~~Control and Prevention's updated report, "Antimicrobial Treatment and Prophylaxis of Plague: Recommendations for Naturally Acquired Infections and Bioterrorism Response" in July 2021. Accordingly, NUZYRA is now listed as an alternative agent for the treatment, pre-exposure prophylaxis, and postexposure prophylaxis of primary bubonic and pharyngeal plague infections in adults 18 years of age and over.

We continue to pursue a number of other life-cycle opportunities for NUZYRA. In May 2021, the FDA approved our supplemental new drug application, or ~~QIDP, designation, on November 4, 2015,~~sNDA, for the oral-only loading dose regimen for patients diagnosed with CABP, based upon the results of a study that demonstrated an oral-only loading dose regimen has a comparable PK profile to the approved IV loading dose regimen in patients with CABP that was established in the Phase 3 CABP registration study.

Additionally, we have also discussed trial designs and potential registration pathways with the FDA to determine the efficacy and safety of omadacycline in patients afflicted with 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 the constellation of non-specific symptoms and a lack of disease state awareness by clinicians.

NTM is a rare and orphan disease with no FDA-approved therapies in the U.S. In August 2021, the FDA granted ~~omadacycline~~orphan drug designation for NUZYRA for the treatment of NTM infections caused by Mycobacterium abscessus, or MAB, and Mycobacterium avium complex, or MAC. In October 2021, we initiated a double-blinded, placebo-controlled, randomized monotherapy Phase 2b clinical study for the treatment of MAB patients who are not receiving other treatments. The study size will be approximately 75 subjects randomized in a 1.5 to 1 ratio and therapy will last for 12 weeks with an efficacy endpoint assessment at that time point. Due to the small numbers of patients with this rare disease, we expect this study will complete enrollment by the end of 2023.

The FDA granted Fast Track designation for the ~~development~~oral and IV formulations 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, 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~~NUZYRA for the treatment of ~~ABSSSI (OASIS-1)~~NTM caused by both MAB and ~~CABP (OPTIC). Both studies utilized initiation of IV therapy with transitions to oral-based treatment~~MAC in July 2022. We hosted an Investor Day in October 2022 that updated investors on ~~clinical response. Our third Phase 3 clinical study (OASIS-2) was an oral-only administration of omadacycline~~the global market opportunity for NTM in ~~ABSSSI compared to oral-only linezolid.~~ ~~All three Phase 3 clinical studies resulted~~both MABand MAC, and laid the foundation for ex-U.S. partnering discussions. This event highlighted the significant global unmet medical need for patients suffering from this chronic, rare and life-threatening pulmonary disease, summarized key takeaways from our ongoing scientific program 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 inNTM that includes the first ~~quarter of 2018 and to the European Medicines Agency, or EMA, in the second half of 2018.~~

~~In the two pivotal~~randomized, placebo-controlled 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 of2b 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~~being conducted in patients with ~~a UTI. This Phase 1b UTI study was completed. Data from this study showed that omadacycline achieved proof of principle,~~NTM pulmonary disease caused by ~~demonstrating high concentration levels of omadacycline~~MAB. In February 2023, we held our fifth meeting 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 pathogenslast 12 months with the ~~potential to pose a serious threat to public health, provides an opportunity for more frequent interactions with the FDA,~~Pharmaceuticals 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 ReductionDevices Agency, or ~~DTRA/ Joint Science~~PMDA, and ~~Technology Office and Joint Program Executive Office~~have aligned on the registration program 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,~~NTM abscessus in Japan. The completion of this regulatory process is ~~a new, once-daily, tetracycline-derived compound designed for use~~an important milestone 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 acnecreating momentum in the community setting. We have exclusively licensed U.S. development and commercialization rights to sarecycline for the treatment of acne to Allergan plc, or Allergan, while retaining development and commercialization rightsour ongoing discussions with potential partners in the rest of the world. Allergan currently holds 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 sarecycline for the treatment of moderate to severe acne vulgaris met their 12-week primary efficacy endpoints. In addition, a 9-month long-term safety extension study was completed. The safety results from the long-term study are generally consistent with results from the two 12-week studies. Based on these clinical data, Allergan intends to file an NDA with the FDA in the fourth quarter of 2017 for the treatment of acne.

this country.

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, 2023 was ~~$448.2~~$950.6 million and our net loss for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 was ~~$67.2~~$20.1 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

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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.~~

~~We do not expect~~next several years.

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.

~~Recent Financing Activities~~

Business Update Regarding COVID-19

The COVID-19 pandemic continues to negatively impact public health and economic conditions around the world and is continuing to affect health care institutions and patient access. Certain COVID-19 related restrictions on in-person promotional access to some health care institutions remain 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 business and healthcare effects of the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain.

For additional information on the various risks posed by the COVID-19 pandemic, refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk and Item 1A. Risk Factors included in the 2022 Form 10-K.

Financial Operations Overview

Product Revenue, Net

Product revenue, 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 to health care providers or dispense the product to patients. In ~~October 2015~~addition to distribution agreements with customers, we enter into arrangements with health care providers and ~~February 2017, we entered into Controlled Equity Offering~~^SM ~~Sales Agreements,~~ payers that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts with respect to 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 sharespurchase of our ~~common stock, with a sales value~~product. Product revenue is recognized net of reserves for all variable consideration, including rebates, chargebacks, discounts and product returns.

Under the terms of the BARDA contract, BARDA can procure up to ~~$50 million under each Sales Agreement through Cantor. We provided Cantor with customary indemnification rights, and Cantor was entitled to a commission~~10,000 anthrax treatment courses of NUZYRA. As of March 31, 2023, the first two of four 2,500 treatment courses of NUZYRA have been purchased by BARDA. The product procurement performance obligations generate revenue at a ~~fixed rate~~point in time, which is upon transfer of 3%control of the ~~gross proceeds per share sold. Sales~~product. As such, the related revenue for these performance obligations is recognized at a point in time as product revenue within our consolidated statement of operations. Refer to Note 7, Government Contract Revenue to the interim condensed consolidated financial statements included in this report for further discussion of the ~~shares~~BARDA contract and related revenue recognition.

Government Contract Service Revenue

Government contract service revenue is recognized when earned under our BARDA contract and represents the ~~Sales~~reimbursement by BARDA of costs incurred by us for work performed to 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 Revenue to the interim condensed consolidated financial statements included in this report for further discussion of the BARDA contract and related revenue recognition.

Government Contract Grant Revenue

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-

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marketing bacterial surveillance study. Refer to Note 7, Government Contract Revenue to the interim condensed consolidated financial statements included in this report for further discussion of the BARDA contract and related revenue recognition.

Collaboration and Royalty Revenue

Collaboration and royalty revenue are recognized when revenue is earned under our collaboration and license agreements. Refer to Note 8, License and Collaboration Agreements ~~were~~ to ~~be made~~the interim condensed consolidated financial statements included in ~~transactions deemed to be “at~~this report for further discussion of the ~~market offerings”, as defined in Rule 415 under~~collaboration agreements and the ~~Securities Act~~related revenue recognition.

Cost of ~~1933, as amended. We received $36.9 million in proceeds, after deducting commissions~~Product Revenue

Cost 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.

~~Financial Operations Overview~~

~~Revenue~~

~~We have not yet generated any revenue from~~ product sales. All of our revenue to date has been derived from license fees, milestone payments, royalty income, reimbursements for research, development and manufacturing activities under licenses and collaborations, grant payments received from the National Institute of Health, or NIH, and other non-profit organizations. We do not expect to generate revenue from product sales prior to 2018, at the earliest.

~~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 Expense

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

●

~~expenses incurred under agreements with clinical research organizations, or CROs, and investigative sites that conduct our clinical trials;~~

●

~~the cost of acquiring and manufacturing preclinical and clinical study materials and developing manufacturing processes;~~

•expenses incurred under agreements with clinical research organizations, or CROs, and investigative sites that conduct our clinical trials;

●

~~direct employee-related expenses, including salaries, benefits, travel and stock-based compensation expense of our research and development personnel;~~

•the cost of acquiring and manufacturing preclinical and clinical study materials and developing manufacturing processes;

●

~~allocated facilities, depreciation, and other expenses, which include rent and maintenance of facilities, insurance and other supplies; and~~

•direct employee-related expenses, including salaries, benefits, travel and stock-based compensation expense of our research and development personnel;

●

~~costs associated with preclinical activities and regulatory compliance.~~

•allocated facilities, depreciation, and other expenses, which include rent and maintenance of facilities, insurance and other supplies; and

•costs associated with preclinical activities and regulatory compliance.

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:

●

~~the scope, rate of progress, and expense of our ongoing, as well as any additional, clinical trials and other research and development activities;~~

●

~~future clinical trial results;~~

•the scope, rate of progress, and expense of our ongoing, as well as any additional, clinical trials and other research and development activities;

●

~~potential changes in government regulation; and~~

•future clinical trial results;

●

~~the timing and receipt of any regulatory approvals.~~

•potential changes in government regulation; and

•the timing and receipt of any regulatory approvals.

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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.~~studies except as required by the BARDA contract. Our ~~external~~ research and development expenses for omadacycline and other projects during the three and ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 are as ~~follows (in thousands):~~

follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016			Three Months Ended March 31,
(in thousands)									(in thousands)	2023		2022
Omadacycline costs	$	7,982	$	14,362	$	32,087	$	55,028	Omadacycline costs	$	4,566	$	5,081
Other research and development costs		4,130		2,972		13,760		8,729	Other research and development costs	2,742		2,397
Total	$	12,112	$	17,334	$	45,847	$	63,757	Total	$	7,308	$	7,478

Selling, General and Administrative Expense

~~General~~

Selling, general and administrative ~~expense consists primarily~~expenses consist principally of ~~salaries~~compensation costs for our 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 and distribution fees for ~~personnel~~the sale of NUZYRA and professional fees for legal, consulting and ~~consulting fees.~~

~~Interest Expense~~

~~Interest expense represents interest incurred on the Hercules Term Loan and the adjustment of our marketable securities to amortized cost.~~

accounting services.

Interest Income

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

Interest Expense

Interest expense represents interest incurred on the 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.

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Results of Operations

Comparison of the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~

2022


	Three Months Ended September 30,										Three Months Ended March 31,
(in thousands)	2017			2016			$ Change			(in thousands)	2023		2022		$ Change
License and royalty revenue	$	12		$	—		$	12
Operating expenses:
Product revenue, net										Product revenue, net	$	26,213	$	19,918	$	6,295
Government contract service revenue										Government contract service revenue	1,806		2,172		(366)
Government contract grant revenue										Government contract grant revenue	2,028		2,099		(71)
Collaboration and royalty revenue										Collaboration and royalty revenue	1,189		672		517
Net revenue										Net revenue	$	31,236	$	24,861	$	6,375
Expenses:										Expenses:
Cost of product revenue										Cost of product revenue	6,244		3,494		2,750
Research and development		12,112			17,334			(5,222	)	Research and development	7,308		7,478		(170)
General and administrative		8,219			5,949			2,270
Changes in fair value of contingent consideration		(22	)		(170	)		148
Selling, general and administrative										Selling, general and administrative	33,489		27,602		5,887
Total operating expenses		20,309			23,113			(2,804	)	Total operating expenses	47,041		38,574		8,467
Loss from operations		(20,297	)		(23,113	)		2,816		Loss from operations	(15,805)		(13,713)		(2,092)
Other income and expenses:										Other income and expenses:
Interest income										Interest income	221		107		114
Interest expense		(1,408	)		(820	)		(588	)	Interest expense	(4,476)		(4,479)		3
Interest income		389			309			80
Other loss, net		(8	)		(4	)		(4	)
Net Loss	$	(21,324	)	$	(23,628	)	$	2,304
Other (losses) gains, net										Other (losses) gains, net	(22)		175		(197)
Net loss before provision for income taxes										Net loss before provision for income taxes	$	(20,082)	$	(17,910)	$	(2,172)
Provision for income taxes										Provision for income taxes	(61)		—		(61)
Net loss										Net loss	(20,143)		(17,910)		(2,233)

Product Revenue, Net

~~Research~~

Net product revenue recognized on sales of NUZYRA in the U.S. was $26.2 million and ~~Development Expense~~

~~Research and development expenses were $12.1~~$19.9 million for the three months ended ~~September 30, 2017 compared~~March 31, 2023 and March 31, 2022, respectively. The increase in net product revenue is primarily the result of an increase in sales volume due to ~~$17.3~~higher customer demand during the three months ended March 31, 2023.

Government Contract Service Revenue

Government contract service revenue earned under our BARDA contract was $1.8 million and $2.2 million for the three months ended March 31, 2023 and March 31, 2022, respectively. The decrease in government contract service revenue was primarily due to the timing of work performed to develop NUZYRA for the treatment of pulmonary anthrax and for the U.S. onshoring of NUZYRA manufacturing, all of which is reimbursed under the BARDA contract.

Government Contract Grant Revenue

Government contract grant revenue earned under our BARDA contract was $2.0 million and $2.1 million for the ~~same~~three months ended March 31, 2023 and March 31, 2022, respectively. Government contract grant revenue recognized in both periods represents the reimbursement under the BARDA contract of costs incurred for our on-going post-marketing required clinical studies.

Collaboration and Royalty Revenue

Collaboration and royalty revenue was $1.2 million and $0.7 million for three months ended March 31, 2023 and March 31, 2022, respectively. Royalty revenue recognized primarily reflects royalty revenues earned on sales of NUZYRA in China and on sales of SEYSARA in the United States. 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 we then applied the applicable royalty percentage specified in the Almirall Collaboration Agreement. Differences

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between actual and estimated royalty revenue will be adjusted in the period in ~~2016. The decrease~~which they become known, which is expected to be the following quarter.

Cost of Product Revenue

Cost of product revenue was ~~driven primarily by lower clinical study costs associated with~~$6.2 million for 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 priorthree months ended March 31, 2023, compared to ~~launch.~~

~~General and Administrative Expense~~

~~General and administrative expenses were $8.2~~$3.5 million for the three months ended ~~September 30, 2017~~March 31, 2022. The $2.7 million increase is primarily the result of an increase in NUZYRA product sales and product samples distributed and an increase in inventory revaluation amortization during the three months ended March 31, 2023.

Research and Development Expense

Research and development expenses were $7.3 million for the three months ended March 31, 2023, compared to ~~$5.9~~$7.5 million for the ~~same period~~three months ended March 31, 2022. The decrease in ~~2016. The~~research and development expenses was primarily due to the timing of costs incurred for activities reimbursed under the BARDA contract, partially offset by an increase ~~was driven primarily by higher employee~~in compensation ~~costs as we continue to expand our team and engage in pre-commercial activities.~~

costs.

We anticipate ~~that our general~~an increase in research and ~~administrative~~development expenses ~~will increase~~ in future periods as we ~~expand~~continue development of NUZYRA for the treatment of and PEP against pulmonary anthrax, continue the work on our ~~pre-commercialization efforts.~~

~~Changes in Fair Value~~FDA post-marketing requirements, and continue the onshoring of ~~Contingent Obligations~~

~~During~~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 Expense

Selling, general and administrative expenses were $33.5 million for the three months ended ~~September 30, 2017 and 2016, we recorded a $22,000 decrease and $0.2~~March 31, 2023, compared to $27.6 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~~March 31, 2022. The $5.9 million increase is primarily the result of costs incurred in connection with the NUZYRA community expansion and ~~2016 reflects~~travel costs as a ~~corresponding decline~~result of the easing of COVID-19 restrictions.

We expect a modest increase in ~~projected Intermezzo sales.~~

selling, general and administrative expenses in future periods 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. This will include costs for travel, in-person training events and sales meetings, executing marketing and promotional programs, engaging consultants, legal and other professional fees, and other operating expenses.

Other Income and Expenses

Interest expense for the three months ended ~~September 30, 2017~~March 31, 2023 represents interest incurred on the Notes of $2.2 million, the R-Bridge Loan Agreement ~~as amended,~~ of ~~$1.4~~$1.1 million, the Royalty-Backed Loan Agreement of $1.1 million. Interest income for the three months ended ~~September 30, 2017~~March 31, 2023 represents interest earned on our money market funds.

Interest expense for the three months ended March 31, 2022 represents interest incurred on the Notes of $2.2 million, R-Bridge Loan Agreement of $1.2 million, and the Royalty-Backed Loan Agreement of $1.0 million, and insignificant interest expense related to money market funds and marketable securities. Interest income for the three months ended March 31, 2022 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.~~

~~Results of Operations~~

~~Comparison of the nine months ended September 30, 2017 and 2016~~

securities.

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

~~Revenue~~

~~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 Expense~~

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 Expense~~

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.

~~Impairment of Intangible Assets~~

~~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.~~

~~Changes in Fair Value of Contingent Obligations~~

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.

~~Other Income and Expenses~~

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~~

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.

Liquidity and Capital Resources

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 April 30, 2023, $223.3 million ~~to the public in one or more registered offerings. Under~~remains available on this shelf registration statement, ~~we completed an underwritten offering on~~with $23.3 million reserved for potential sales under our Sales Agreement (as defined below). 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 from time to time, based upon instructions (including any price, time or size limits or other customary parameters or conditions we may impose). We will pay BTIG a commission of 3% of

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the gross sales proceeds of any common stock sold through BTIG 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 ~~November1, 2017, $2.7~~April 30, 2023, $23.3 million ~~remain~~remains available for sale under the ~~2017~~ Sales Agreement.

We have used and we intend to continue to use the net proceeds from the ~~above-described~~above offerings of our common stock and the 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 R-Bridge Loan Agreement, the Notes, and the Royalty-Backed Loan Agreement.

As of ~~September 30, 2017,~~March 31, 2023, we had cash and cash equivalents ~~and marketable securities~~ of ~~$163.4 million.~~

$45.0 million.

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


	Nine Months Ended September 30,							Three Months Ended March 31,
(in thousands)	2017			2016			(in thousands)	2023		2022
Net cash used in operating activities	$	(56,189	)	$	(69,867	)
Net cash provided (used) by operating activities							Net cash provided (used) by operating activities	$	11,090	$	(19,110)
Net cash used in investing activities	$	(56,116	)	$	(69,795	)	Net cash used in investing activities	$	(32)	$	(15,196)
Net cash provided by financing activities	$	92,338		$	61,298
Net cash (used) provided by financing activities							Net cash (used) provided by financing activities	$	(280)	$	3,097

Operating Activities

~~Cash~~

Net cash provided by operating activities was $11.1 million for the three months ended March 31, 2023, compared to net cash used in operating activities of $19.1 million for the ~~nine~~three months ended ~~September 30, 2017 of $56.2 million is primarily the result of our $67.2 million~~March 31, 2022. 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 primarily consists of our net losses adjusted for non-cash items and changes in components of operating assets and liabilities as follows:

–for the ~~nine~~three months ended ~~September 30, 2016 of $69.9 million is primarily the result of our $85.2 million~~March 31, 2023, a net loss of $20.1 million was adjusted for non-cash items, including stock-based compensation expense of $2.1 million, non-cash interest expense of $1.0 million, and a net decrease of $28.0 million due to changes in operating assets and liabilities. The significant items in the change in operating assets and liabilities include a net decrease in accounts receivable, other receivables, prepaid, and other current assets of $34.0 million, partially offset ~~in part~~ by ~~a $1.5 million~~an increase in accounts payable and accrued expenses, accrued long-term compensation, inventories, and other liabilities and other assets of $6.1 million.

–for the three months ended March 31, 2022, a net loss of $17.9 million was adjusted for non-cash items including stock-based compensation expense of $2.5 million and non-cash interest expense of $1.5 million and a ~~decrease~~net increase of ~~$4.3~~$5.3 million due to changes in ~~prepaid~~operating assets and liabilities. The significant items in the change in operating assets and liabilities include a net increase in accounts payable and accrued expenses, ~~mainly associated with the clinical development of omadacycline. The remainder is the net impact~~inventories, and other liabilities and other assets of $9.8 million, ~~in non-cash items, including $9.7 million in depreciation, amortization and stock-based compensation expense, $0.2 million in non-cash interest expense,~~offset by a ~~$0.1 million~~ decrease in ~~contingent obligations to former Transcept stockholders offset by $0.1 million~~accounts receivable, other receivables, prepaid, and other current assets of ~~interest earned on our marketable securities.~~

$4.2 million.

Investing Activities

Net cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2017 consisted~~March 31, 2023 consists of ~~$149.4 million investment~~

~~in short-term marketable securities (U.S. treasury~~ ~~and government agency securities) offset by proceeds from maturities of marketable securities of $93.8 million. We also purchased $1.2 million~~insignificant purchases of fixed assets for our new offices 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 and government agency securities) partially offset by proceeds by maturities of marketable securities of $25.0 million. The netassets.

Net cash used in investing activities ~~for~~during the ~~nine~~three months ended ~~September 30, 2016 is also the result~~March 31, 2022 consists of ~~an increase~~$15.2 million in ~~restricted cash primarily representing a letter~~purchases of ~~credit~~maturities of ~~$0.8 million.~~

marketable securities.

Financing Activities

Net cash ~~provided by~~used in financing activities during the ~~nine~~three months ended ~~September 30, 2017 primarily represents~~March 31, 2023 consists of $0.3 million in a principal repayment of long-term debt under our R-Bridge Loan Agreement.

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Net cash provided by financing activities during the three months ended March 31, 2022 consists of $3.1 million in net proceeds ~~of $82.1 million received from~~raised through the sale of shares of our common stock under the Sales Agreements, $9.9 million drawn under the Third Tranche under the Loan Agreement, as amended, 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 result 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.

Agreement.

Future Funding Requirements

We ~~have not generated any~~began generating revenue from product ~~sales.~~sales when we launched NUZYRA in the U.S. in February 2019. We ~~do not know~~also began earning royalties on net sales of SEYSARA in the U.S. when ~~if ever, we~~Almirall launched the product in January 2019 and on net sales of NUZYRA in the greater China region when Zai launched the product in December 2021. Our future funding requirements will depend on our ability to generate ~~any~~continued revenue from ~~product sales.~~sales of NUZYRA, and our partners, Almirall and Zai's, ability to generate continued revenue from sales of SEYSARA and NUZYRA, respectively. We do not expect to generate any other revenue ~~from product sales~~ unless and until ~~either we or either of~~ our ~~partners, Allergan or Zai, obtain~~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 regulatory approval of any of our product candidates, we anticipate that we~~in the greater China region. 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 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 will also be an important component to satisfying future funding requirements.

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 few years as we:

•conduct additional clinical trials of omadacycline;

•seek regulatory approvals for ~~omadacycline;~~

additional indications for omadacycline, such as omadacycline for the treatment of NTM;

~~establish a~~•continue to augment our sales, marketing and distribution infrastructure to commercialize NUZYRA and ~~increases to~~increase our manufacturing ~~demand~~capacity and capabilities to ~~commercialize omadacycline; and~~

satisfy demand;

~~add personnel to~~ •support our ~~product development and~~ planned commercialization ~~efforts.~~

efforts;

•build product inventory; and

~~Based upon~~

•service and pay down our ~~current operating plan,~~debt.

As of March 31, 2023, we ~~anticipate that our existing~~had $45.0 million of cash and cash equivalents on hand. Our current level of cash and ~~marketable securities, the remaining $10.0 million we~~cash equivalents may ~~borrow under the Loan Agreement, as amended, and anticipated regulatory and commercial milestone payments from our collaborations with Allergan and Zai will enable us~~not be sufficient to fund operations for the next twelve months following the issuance of the financial statements included in this Quarterly Report on Form 10-Q.As a result, there is substantial doubt regarding our ~~operating~~ability to continue as a going concern for a period of one year from the date of this filing.

We expect to finance future cash needs primarily through a combination of product sales, royalties, public or private equity offerings, debt or other structured financings, strategic partnership opportunities, government procurements and active management of cash and expenses through operational efficiencies. Such activities may not succeed. Our failure to obtain sufficient funds on acceptable terms would be expected to have a material adverse effect on our business, results of operations, and ~~capital expenditure requirements through the second quarter of 2019.~~financial condition.

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:

•the progress of clinical development of ~~omadacycline;~~

omadacycline in additional indications, including NTM and pulmonary anthrax;

•the costs and timing of commercialization activities for NUZYRA;

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•product revenue received from commercial sales of NUZYRA;

•royalty revenue received from commercial sales of SEYSARA by Almirall;

•timing and amount of actual reimbursements and NUZYRA purchases under the BARDA contract;

•the ability of Zai to develop, manufacture and commercialize omadacycline in the Zai territory;

•the number and characteristics of other product candidates that we may pursue;

•the scope, progress, timing, cost and results of research, preclinical development and clinical trials;

•the costs, timing and outcome of seeking, obtaining, maintaining and ~~obtaining~~expanding FDA and non-U.S. regulatory approvals;

•the costs associated with manufacturing and ~~establishing~~maintaining high quality sales, marketing and distribution capabilities;

•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights;

•our need and ability to hire additional management, scientific, commercial, operations and medical personnel;

•the effect of competing products that may limit market penetration of our ~~product candidates;~~

products;

•

~~our need to implement additional internal systems and infrastructure, including financial and reporting systems; and~~

•our need to implement additional internal systems and infrastructure, including financial and reporting systems;

•resources required to develop and implement policies and processes to promote ongoing compliance with applicable healthcare laws and regulations;

•costs required to ensure that our and our partners’ business arrangements with third parties comply with applicable healthcare laws and regulations;

•the economic and other terms, timing and success of our existing collaboration and licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under such ~~arrangements.~~

arrangements; and

•the effect of the COVID-19 pandemic on the economy generally and on our business and operations specifically, including our sales of NUZYRA, sales by our collaboration partners with respect to which we are entitled to royalties, our third-party manufacturers and supply chain, our research and development efforts, our clinical trials and our employees.

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, complicated by the 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

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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.

Critical Accounting Policies and Estimates

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,amortization of the debt discount and issuance costs under the R-Bridge Loan Agreement, manufacturing and clinical accruals, useful lives for depreciation and amortization of long-lived assets and valuation allowances on deferred tax assets. ~~Actual~~We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results ~~could~~of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may 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~~,these estimates under different assumptions 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.~~

conditions.

Recent Accounting Pronouncements

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

~~Off-Balance Sheet Arrangements~~

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

~~Contractual Obligations and Commitments~~

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 have been no other material changes in our contractual obligations and commitments as of September 30, 2017, 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 Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017.~~

~~Item 3.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Our cash and cash equivalents ~~and investments~~ balance as of ~~September 30, 2017~~March 31, 2023 consisted 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 in short-term marketable securities. Due to~~including interest rate changes resulting from the ~~short-term duration~~impact of ~~our investment portfolio and~~ the ~~low-risk profile of our investments, an immediate 100 basis point~~COVID-19 pandemic. However, a sudden change in interest rates would not have a material effect 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%~~5.0% of total liabilities as of ~~September 30, 2017.~~

March 31, 2023.

~~Item 4.~~

Item 4. Controls and Procedures

Management’s Evaluation of our Disclosure Controls and Procedures

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, 2023, 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, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

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Changes in Internal Control over Financial Reporting

During the three months ended ~~September 30, 2017,~~March 31, 2023, 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.

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PART II

– OTHER INFORMATION

~~Item 1.~~

Item 1. Legal Proceedings

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.

~~Item 1A.~~

Item 1A. Risk Factors

There have been no material changes from the risk factors set forth in ~~the Company’s Annual Report on~~our 2022 Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 2, 2017 and in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, as filed with the SEC on May 4, 2017.

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~~Item 6.~~

Item 6. Exhibits

EXHIBIT INDEX

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

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

Certificate of Amendment to the Amended and Restated Certificate of Incorporation.

Form 10-Q

001-36066

3.4

August 9, 2021

3.5

Amended and Restated Bylaws.

Form 8-K

001-36066

3.1

March 14, 2023

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 Capital, Inc.

Form 8-K

001-36066

4.1

June 29, 2017

4.3

Warrant Agreement issued to Hercules Capital, Inc.

Form 10-Q

001-36066

4.5

August 2, 2018

4.4

Warrant Agreement, dated as of August 5, 2020 issued to Hercules Capital, Inc.

Form 10-Q

001-36066

4.9

August 10, 2020

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.

101.INS*

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

Table of Contents

Incorporated by Reference

Exhibit

No.

Exhibit Description

Schedule/

Form

File Number

Exhibit

Filing Date

101.CAL*

31.1*

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.~~

101.INS*

~~XBRL Instance Document.~~

101.SCH*

~~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*

101.LAB*

Inline XBRL Ta~~xono~~my Extension Labels Li~~nkb~~a~~se Do~~cument.

Taxonomy Extension Labels Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

~~Filed herewith.~~

104*

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

^	~~Confidential treatment has been requested as to certain portions, which portions have been omitted and submitted separately to the Securities and Exchange Commission.~~

_________________________

+	~~Management contract or compensatory plan, contract or arrangement.~~

*Filed herewith.

Table of Contents ~~SIGNATURES~~

SIGNATURES

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 7^th9th day of ~~November, 2017.~~

May 2023.


	Paratek Pharmaceuticals, Inc.

~~By:~~	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~~
	By:	~~Douglas W. Pagán~~ /s/ Sarah Higgins
		~~Chief Financial Officer~~ Sarah Higgins
		Vice President, Finance (Principal Financial and Accounting Officer)

	For the Nine Months Ended September 30,
	2017			2016
Net loss	$	(67,176	)	$	(85,182	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		979			941
Stock-based compensation expense		13,018			8,102
Noncash interest expense		354			772
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 payable and accrued expenses		(5,094	)		1,474
Other liabilities and other assets		798			(438	)
Net cash used in operating activities		(56,189	)		(69,867	)
Investing activities
Purchase of fixed assets, net		(1,165	)		(314	)
Purchase of marketable securities		(149,356	)		(93,250	)
Proceeds from maturities of marketable securities		93,750			24,966
Increase (decrease) in restricted cash		655			(1,197	)
Net cash used in investing activities		(56,116	)		(69,795	)
Financing activities
Proceeds from issuance of long-term debt, net of costs		9,915			—
Proceeds from exercise of stock options		321			11
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
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	2,338		$	—

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2017
U.S. treasury securities	$	128,728	$	—	$	(79	)	$	128,649
Government agencies		1,797		—		(1	)		1,796
Total	$	130,525	$	—	$	(80	)	$	130,445
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

	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

	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

	September 30,
	2017		2016
Excluded potentially dilutive securities ⁽¹⁾:
Shares subject to outstanding options to purchase common stock		3,575,633		2,786,882
Unvested restricted stock units		1,186,503		440,500
Shares subject to warrants to purchase common stock		84,828		42,306
Shares issuable under employee stock purchase plan		36,539		36,539
Totals		4,883,503		3,306,227

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

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

	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

Fiscal Year
2017	$	—
2018		—
2019		27,616
2020		22,384
2021 and Thereafter		—
Total	$	50,000

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