(Mark One)

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

For the quarterly period ended September 30, ~~2019~~2020

☐ 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 001-37929

Myovant Sciences Ltd.

(Exact name of registrant as specified in its charter)



~~Bermuda~~

	~~98-1343578~~
Bermuda		98-1343578
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Suite 1, 3rd Floor
11-12 St. James’s Square
London
SW1Y 4LB
United Kingdom		Not Applicable
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +44~~207~~ (207) 400 ~~3347~~3351

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

Title of each Class

Trading Symbol

Name of each exchange on which registered

Common Shares, $0.000017727 par value per share

MYOV

New York Stock Exchange

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 ~~Yes~~☒ ýNo o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ~~Yes~~☒ ýNo o

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



Large accelerated filer	ý☐	Accelerated filer	☐
Non-accelerated filer	o ☒	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. o

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

The number of shares outstanding of the Registrant’s common shares, $0.000017727 par value per share, on November ~~1, 2019,~~9, 2020, was ~~89,623,564.~~90,593,611.

Table of Contents

MYOVANT SCIENCES LTD.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2019~~

2020

TABLE OF CONTENTS



			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, ~~2019~~2020 and March 31, ~~2019~~2020 (Unaudited)			3
Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)			4
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)			5
Condensed Consolidated Statements of ~~Shareholders'~~Shareholders ’ (Deficit) Equity for the Three and Six Months Ended September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)			6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended ~~September~~S ept e mber 30, 2020 and 2019 ~~and 2018~~ (Unaudited)			8
Notes to Condensed Consolidated Financial Statements (Unaudited)			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2625
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4245
Item 4. Controls and Procedures			4245
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4346
Item 1A. Risk Factors			4346
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			8079
Item 3. Defaults Upon Senior Securities			8079
Item 4. Mine Safety Disclosures			8079
Item 5. Other Information			8079
Item 6. Exhibits			80

Signatures			81

Table of Contents

PART I.FINANCIAL INFORMATION

Item 1.Financial Statements

MYOVANT SCIENCES LTD.

Condensed Consolidated Balance Sheets

(unaudited; in thousands, except share and per share data)

September 30, 2019 March 31, 2019
Assets

Current assets:

Cash and cash equivalents $ 130,373

$ 156,074
Marketable securities 27,220
—
Prepaid expenses and other current assets 9,969

10,194
Income tax receivable 17

524
Total current assets 167,579

166,792
Property and equipment, net 2,288

2,071
Operating lease right-of-use asset 8,973
—
Other assets 5,162

4,114
Total assets $ 184,002

$ 172,977
Liabilities and shareholders’ equity

Current liabilities:

Accounts payable $ 5,819

$ 11,019
Interest payable 305
1,077
Accrued expenses 44,380

53,614
Operating lease liability 853
—
Due to Roivant Sciences Ltd. (RSL), Roivant Sciences, Inc. (RSI) and Roivant Sciences GmbH (RSG) 271

121
Current maturities of long-term debt 8,402
6,142
Total current liabilities 60,030

71,973
Deferred rent —

1,157
Deferred interest payable 5,323

2,273
Long-term operating lease liability 9,320
—
Long-term debt, less current maturities 92,075
93,240
Total liabilities 166,748

168,643
Commitments and contingencies (Note 12)

Shareholders’ equity:

Common shares, par value $0.000017727 per share, 564,111,242 shares authorized, 89,623,564 and 72,057,490 issued and outstanding at September 30, 2019 and March 31, 2019, respectively 2
1
Additional paid-in capital 657,780
505,851
Accumulated other comprehensive (loss) income (31 ) 507
Accumulated deficit (640,497 ) (502,025 )
Total shareholders’ equity 17,254

4,334
Total liabilities and shareholders’ equity $ 184,002

$ 172,977


	September 30, 2020		March 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	94,210	$	76,644
Marketable securities	17,086		2,997
Prepaid expenses and other current assets	5,612		8,269

Total current assets	116,908		87,910

Property and equipment, net	2,808		2,497
Operating lease right-of-use asset	10,423		11,146
Other assets	5,634		4,373
Total assets	$	135,773	$	105,926
Liabilities and shareholders’ deficit
Current liabilities:
Accounts payable	$	7,008	$	15,334


Interest payable (related party)	0		15
Accrued expenses	40,141		29,060
Deferred revenue	16,667		40,000
Operating lease liability	1,657		1,516
Amounts due to related parties	1,284		0


Total current liabilities	66,757		85,925

Long-term operating lease liability	10,127		10,996

Long-term debt, less current maturities (related party)	253,700		113,700
Other	4,968		3,582
Total liabilities	335,552		214,203
Commitments and contingencies (Note 11)
Shareholders’ deficit:
Common shares, par value $0.000017727 per share, 564,111,242 shares authorized, 90,581,003 and 89,833,998 issued and outstanding at September 30, 2020 and March 31, 2020, respectively	2		2

Additional paid-in capital	702,695		684,381
Accumulated other comprehensive loss	(11,540)		(1,646)
Accumulated deficit	(890,936)		(791,014)
Total shareholders’ deficit	(199,779)		(108,277)
Total liabilities and shareholders’ deficit	$	135,773	$	105,926

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

Table of Contents

MYOVANT SCIENCES LTD.

Condensed Consolidated Statements of Operations

(unaudited; in thousands, except share and per share data)


														Three Months Ended September 30,						Six Months Ended September 30,
	Three Months Ended September 30,						Six Months Ended September 30,							2020			2019			2020			2019
	2019			2018			2019			2018
License and milestone revenue													License and milestone revenue	$	0		$	0		$	33,333		$	0
Operating expenses:													Operating expenses:
Research and development ⁽¹⁾	$	50,803		$	53,813		$	101,920		$	105,154		40,521			50,803			84,707			101,920
General and administrative ⁽²⁾⁽¹⁾	16,603			10,310			30,755			19,052			31,316			16,603			54,144			30,755
Total operating expenses	67,406			64,123			132,675			124,206			Total operating expenses	71,837			67,406			138,851			132,675
Loss from operations													Loss from operations	(71,837)			(67,406)			(105,518)			(132,675)
Interest expense	3,788			1,580			7,581			3,197			Interest expense	0			3,788			0			7,581

Interest expense (related party)													Interest expense (related party)	2,115			0			4,299			0
Interest income	(942		)	—			(1,708		)	—			Interest income	(38)			(942)			(146)			(1,708)
Other expense (income), net	121			(21		)	(584		)	268
Other (income) expense, net													Other (income) expense, net	(6,718)			121			(10,287)			(584)
Loss before income taxes	(70,373		)	(65,682		)	(137,964		)	(127,671		)	Loss before income taxes	(67,196)			(70,373)			(99,384)			(137,964)
Income tax expense	195			88			508			233
Income tax (benefit) expense													Income tax (benefit) expense	(134)			195			538			508
Net loss	$	(70,568	)	$	(65,770	)	$	(138,472	)	$	(127,904	)	Net loss	$	(67,062)		$	(70,568)		$	(99,922)		$	(138,472)
Net loss per common share — basic and diluted	$	(0.79	)	$	(0.99	)	$	(1.68	)	$	(1.97	)	Net loss per common share — basic and diluted	$	(0.75)		$	(0.79)		$	(1.12)		$	(1.68)
Weighted average common shares outstanding — basic and diluted	88,798,398			66,666,876			82,667,061			64,997,698			Weighted average common shares outstanding — basic and diluted	89,744,142			88,798,398			89,523,389			82,667,061

(1) Includes ~~$26~~$1,291 and ~~$246~~$1,405 of ~~costs allocated from RSL, RSI, and RSG during~~expense (inclusive of third-party pass through costs) for the three ~~months ended September 30, 2019~~ and ~~2018, respectively, and $51 and $2,434 of costs allocated from RSL, RSI, and RSG during the~~ six months ended September 30, ~~2019~~2020, respectively, pursuant to the terms of the Company’s agreements with Sumitovant Biopharma Ltd. and ~~2018, respectively. Also includes share-based compensation expense~~Sunovion Pharmaceuticals Inc. (see Note ~~10)~~5).

⁽²⁾ Includes $224 and $949 of costs allocated from RSL, RSI, and RSG during the three months ended September 30, 2019 and 2018, respectively, and $422 and $2,174 of costs allocated from RSL, RSI, and RSG during the six months ended September 30, 2019 and 2018, respectively. Also includes share-based compensation expense (see Note 10).

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

(unaudited; in thousands)

Three Months Ended September 30, Six Months Ended September 30,
2019 2018 2019 2018
Net loss $ (70,568 ) $ (65,770 ) $ (138,472 ) $ (127,904 )
Other comprehensive income (loss):
Foreign currency translation adjustment 281
(72 ) (538 ) 353
Total other comprehensive income (loss) 281
(72 ) (538 ) 353
Comprehensive loss $ (70,287 ) $ (65,842 ) $ (139,010 ) $ (127,551 )


	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Net loss	$	(67,062)	$	(70,568)	$	(99,922)	$	(138,472)
Other comprehensive (loss) income:
Foreign currency translation adjustment	(6,419)		281		(9,894)		(538)
Total other comprehensive (loss) income	(6,419)		281		(9,894)		(538)
Comprehensive loss	$	(73,481)	$	(70,287)	$	(109,816)	$	(139,010)

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

(unaudited; in thousands, except share data)

Common Shares
Additional Paid
in Capital

Accumulated
Other Comprehensive
Income (Loss)

Accumulated
Deficit

Total
Shareholders’
Equity
Shares Amount
Balance at March 31, 2019 72,057,490
$ 1
$ 505,851
$ 507
$ (502,025 ) $ 4,334
Issuance of shares in connection with “at-the-market” equity offering, net of commissions of $79 106,494
—
2,546
—
—
2,546
Issuance of shares in connection with public equity offering, net of commissions and offering costs of $9,229 17,424,243
1
134,537
—
—
134,538
Share-based compensation expense —
—
6,410
—
—
6,410
Capital contribution — share-based compensation —
—
42
—
—
42
Capital contribution from RSI and RSG —
—
106
—
—
106
Foreign currency translation adjustment —
—
—
(819 ) —
(819 )
Issuance of shares upon exercise of stock options and vesting of RSUs 34,399
—
314
—
—
314
Net loss —
—
—
—
(67,904 ) (67,904 )
Balance at June 30, 2019 89,622,626
2
649,806
(312 ) (569,929 ) 79,567
Public equity offering, additional offering costs —
—
(80 ) —
—
(80 )
Share-based compensation expense —
—
7,879
—
—
7,879
Capital contribution — share-based compensation —
—
52
—
—
52
Capital contribution from RSI and RSG —
—
123
—
—
123
Foreign currency translation adjustment —
—
—
281
—
281
Issuance of shares upon vesting of RSUs 938
—
—
—
—
—
Net loss —
—
—
—
(70,568 ) (70,568 )
Balance at September 30, 2019 89,623,564
$ 2
$ 657,780
$ (31 ) $ (640,497 ) $ 17,254

Common Shares
Additional Paid
in Capital

Accumulated
Other Comprehensive
Income (Loss)

Accumulated
Deficit

Total
Shareholders’
Equity
Shares Amount
Balance at March 31, 2018 60,997,856
$ 1
$ 266,178
$ 24
$ (228,474 ) $ 37,729
Issuance of shares in connection with “at-the-market” equity offering, net of commissions and offering costs of $2,110 2,767,129
—
57,315
—
—
57,315
Issuance of shares in connection with Private Placement with RSL 1,110,015
—
22,500
—
—
22,500
Share-based compensation expense —
—
4,053
—
—
4,053
Capital contribution — share-based compensation —
—
191
—
—
191
Foreign currency translation adjustment —
—
—
425
—
425
Issuance of shares upon exercise of stock options 16,218
—
76
—
—
76
Net loss —
—
—
—
(62,134 ) (62,134 )
Balance at June 30, 2018 64,891,218
1
350,313
449
(290,608 ) 60,155
Share-based compensation expense —
—
4,529
—
—
4,529
Capital contribution — share-based compensation —
—
196
—
—
196
Capital contribution from RSI and RSG 212
212
Foreign currency translation adjustment —
—
—
(72 ) —
(72 )
Issuance of shares in connection with public equity offering, net of commissions and offering costs of $5,110 3,533,399
—
74,391
—
—
74,391
Issuance of shares upon exercise of stock options and vesting of RSUs 60,271
—
460
—
—
460
Net loss —
—
—
—
(65,770 ) (65,770 )
Balance at September 30, 2018 68,484,888
$ 1
$ 430,101
$ 377
$ (356,378 ) $ 74,101


	Common Shares			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Shareholders’ (Deficit) Equity
	Shares	Amount
Balance at March 31, 2020	89,833,998	$	2	$	684,381	$	(1,646)	$	(791,014)	$	(108,277)
Share-based compensation expense	—	—		7,812		—		—		7,812
Issuance of shares upon exercise of stock options and vesting of restricted stock units	303,014	—		2,190		—		—		2,190
Foreign currency translation adjustment	—	—		—		(3,475)		—		(3,475)
Net loss	—	—		—		—		(32,860)		(32,860)
Balance at June 30, 2020	90,137,012	2		694,383		(5,121)		(823,874)		(134,610)
Share-based compensation expense	—	—		6,924		—		—		6,924
Issuance of shares upon exercise of stock options and vesting of restricted stock units and performance share units	443,991	—		1,388		—		—		1,388
Foreign currency translation adjustment	—	—		—		(6,419)		—		(6,419)
Net loss	—	—		—		—		(67,062)		(67,062)
Balance at September 30, 2020	90,581,003	$	2	$	702,695	$	(11,540)	$	(890,936)	$	(199,779)

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

~~MYOVANT SCIENCES LTD.~~

~~Condensed Consolidated Statements~~Table of ~~Cash Flows~~

Six Months Ended September 30,
2019 2018
Cash flows from operating activities:

Net loss $ (138,472 ) $ (127,904 )
Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation 14,383
8,969
Depreciation and amortization ⁽¹⁾
726
191
Amortization of debt discount and issuance costs 1,095
936
Other items (369 ) 565
Changes in operating assets and liabilities:

Prepaid expenses and other current assets 225
(3,240 )
Income tax receivable 507
233
Other assets (799 ) (96 )
Accounts payable (5,200 ) 3,781
Interest payable (772 ) 18
Accrued expenses (9,304 ) 8,176
Operating lease liabilities (368 ) —
Due to RSL, RSI and RSG 150
(1,382 )
Deferred rent —
567
Deferred interest payable 3,050
305
Net cash used in operating activities (135,148 ) (108,881 )
Cash flows from investing activities:

Purchases of marketable securities (27,160 ) —
Purchases of property and equipment (532 ) (390 )
Net cash used in investing activities (27,692 ) (390 )
Cash flows from financing activities:

Proceeds from issuance of common shares in “at-the-market” equity offering, net of issuance costs paid 2,546
57,315
Proceeds from issuance of common shares in public equity offering, net of issuance costs paid 134,528
74,683
Proceeds from issuance of common shares in Private Placement with RSL —
22,500
Proceeds from stock option exercises 314
466
Net cash provided by financing activities 137,388
154,964
Net change in cash, cash equivalents and restricted cash (25,452 ) 45,693
Cash, cash equivalents and restricted cash, beginning of period 157,199
108,624
Cash, cash equivalents and restricted cash, end of period $ 131,747
$ 154,317
Non-cash financing activities:

Unpaid offering costs included in accounts payable and accrued expenses $ 70
$ 292
Stock options exercised receivables, included in prepaid expenses and other current assets $ —
$ (70 )


	Common Shares			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Shareholders’ (Deficit) Equity
	Shares	Amount
Balance at March 31, 2019	72,057,490	$	1	$	505,851	$	507	$	(502,025)	$	4,334
Issuance of shares in connection with “at-the-market” equity offering, net of commissions of $79	106,494	—		2,546		—		—		2,546
Issuance of shares in connection with public equity offering, net of commissions and offering costs of $9,229	17,424,243	1		134,537		—		—		134,538
Share-based compensation expense	—	—		6,410		—		—		6,410
Capital contribution from former controlling shareholder — share-based compensation	—	—		42		—		—		42
Capital contribution from former controlling shareholder	—	—		106		—		—		106
Foreign currency translation adjustment	—	—		—		(819)		—		(819)
Issuance of shares upon exercise of stock options and vesting of restricted stock units	34,399	—		314		—		—		314
Net loss	—	—		—		—		(67,904)		(67,904)
Balance at June 30, 2019	89,622,626	2		649,806		(312)		(569,929)		79,567
Public equity offering, additional offering costs	0	0		(80)		—		—		(80)
Share-based compensation expense	—	—		7,879		—		—		7,879
Capital contribution from former controlling shareholder — share-based compensation	—	—		52		—		—		52
Capital contribution from former controlling shareholder	—	—		123		—		—		123
Foreign currency translation adjustment	—	—		—		281		—		281
Issuance of shares upon vesting of restricted stock units	938	—		0		—		—		0
Net loss	—	—		—		—		(70,568)		(70,568)
Balance at September 30, 2019	89,623,564	$	2	$	657,780	$	(31)	$	(640,497)	$	17,254

⁽¹⁾
~~Includes amortization of operating lease right-of-use asset.~~

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

(unaudited; in thousands)


	Six Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net loss	$	(99,922)	$	(138,472)

Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	14,736		14,383
Depreciation and amortization (1)	1,146		726
Amortization of debt discount and issuance costs	0		1,095

Foreign currency transaction gain	(10,287)		(584)
Other	393		215
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	2,657		225

Income tax receivable	0		507
Other assets	(648)		(799)
Accounts payable	(8,326)		(5,200)

Interest payable	0		(772)
Interest payable (related party)	(15)		0
Accrued expenses	11,081		(9,154)
Deferred revenue	(23,333)		0
Operating lease liabilities	(728)		(368)
Deferred interest payable	0		3,050
Amounts due to related parties	1,284		0
Other liabilities	1,386		0
Net cash used in operating activities	(110,576)		(135,148)
Cash flows from investing activities:
Purchases of marketable securities	(28,874)		(27,160)
Maturities of marketable securities	14,785		0
Purchases of property and equipment	(734)		(532)
Net cash used in investing activities	(14,823)		(27,692)

Cash flows from financing activities:
Proceeds from issuance of common shares in “at-the-market” equity offering, net of issuance costs paid	0		2,546
Proceeds from issuance of common shares in public equity offering, net of issuance costs paid	0		134,528
Proceeds from related party debt financing	140,000		0
Proceeds from stock option exercises	3,578		314


Net cash provided by financing activities	143,578		137,388
Net change in cash, cash equivalents and restricted cash	18,179		(25,452)
Cash, cash equivalents and restricted cash, beginning of period	78,018		157,199
Cash, cash equivalents and restricted cash, end of period	$	96,197	$	131,747
Non-cash financing activities:



Offering costs included in accounts payable and accrued expenses	$	0	$	70

(1) Includes amortization of operating lease right-of-use assets.

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

Note 1—Description of Business

Myovant Sciences Ltd. ~~(or together~~(together with its wholly-owned subsidiaries, the ~~Company)~~“Company”) is a healthcare company ~~focused on developing innovative treatments~~that aspires to redefine care for ~~women’s health~~women and for men through purpose-driven science, empowering medicines, and transformative advocacy. The Company’s lead product candidate is relugolix, a once-daily, oral gonadotropin-releasing hormone (“GnRH”) receptor antagonist. Relugolix monotherapy tablet (120 mg) is under regulatory review in the U.S. for men with advanced prostate cancer. ~~The Company is developing a relugolix~~Relugolix combination tablet (relugolix 40 mg, ~~plus~~ estradiol 1.0 mg, and norethindrone acetate 0.5 mg) is under regulatory review in the U.S. and Europe for ~~the treatment of heavy menstrual bleeding associated~~women with uterine fibroids and is under development for ~~pain associated~~women with ~~endometriosis, relugolix 120 mg as a monotherapy for advanced prostate cancer, and an additional product candidate,~~endometriosis. The Company is also developing MVT-602, an oligopeptide kisspeptin-1 receptor agonist, for the treatment of female infertility as part of assisted reproduction. ~~Both relugolix and MVT-602 were licensed to the Company by~~

Takeda Pharmaceuticals International AG or(“Takeda”), a subsidiary of Takeda ~~on April 29, 2016.~~Pharmaceutical Company Limited, the originator of relugolix, granted the Company a worldwide license to develop and commercialize relugolix (excluding Japan and certain other Asian countries) and an exclusive right to develop and commercialize MVT-602 in all countries worldwide. On March 30, 2020, the Company entered into an exclusive license agreement with Gedeon Richter Plc. (“Richter”) for Richter to commercialize relugolix combination tablet for uterine fibroids and endometriosis in certain territories outside of the U.S. Under this agreement, the Company has retained all of its rights to relugolix combination tablet in the U.S. and Canada, as well as rights to relugolix in other therapeutic areas outside of women’s health.

The Company is an exempted company limited by shares incorporated under the laws of Bermuda in February 2016 under the name Roivant Endocrinology Ltd. The Company changed its name to Myovant Sciences Ltd. in May 2016. Since its inception, the Company has devoted substantially all of its efforts to identifying and in-licensing its product candidates, organizing and staffing the Company, raising capital, preparing for and advancing the clinical development of its product candidates, and preparing for potential future regulatory approvals and commercialization of ~~relugolix.~~relugolix combination tablet and relugolix monotherapy tablet.

The ~~Company has incurred,~~Company’s majority shareholder is Sumitovant Biopharma Ltd. (“Sumitovant”), a wholly-owned subsidiary of Sumitomo Dainippon Pharma Co., Ltd. (“Sumitomo Dainippon Pharma”). As of September 30, 2020, Sumitovant directly, and expects to continue to incur, significant operating losses and negative operating cash flows as it continues to develop its product candidates and prepares for potential future regulatory approvals and commercializationSumitomo Dainippon Pharma indirectly, own 48,641,181, or approximately 53.7%, of ~~relugolix. To date,~~ the Company has not generated any revenue, and it does not expect to generate revenue unless and until it successfully completes development and obtains regulatory approval for at least one of its product candidates. See Note 2(C), Summary of Significant Accounting Policies—Going Concern and Management’s Plans.Company’s outstanding common shares.

Note 2—Summary of Significant Accounting Policies

(A) Basis of Presentation

The Company’s fiscal year ends on March 31, and its first three fiscal quarters end on June 30, September 30 and December 31. The Company has determined that it has 1 operating and reporting segment as it allocates resources and assesses financial performance on a consolidated basis.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with ~~United States, or~~ U.S., generally accepted accounting principles or (“U.S. ~~GAAP,~~GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019,~~2020, filed with the U.S. Securities and Exchange Commission ~~or the SEC,~~(the “SEC”) on May ~~24, 2019.~~18, 2020. The unaudited consolidated balance sheet at March 31, ~~2019~~2020 has been derived from the audited consolidated financial statements at that date. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented have been included. Operating results for the three and six months ended September 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, ~~2020,~~2021, for any other interim period or for any other future year. There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on May 18, 2020.

Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification ~~or ASC,~~(“ASC”) and Accounting Standards Update ~~or ASU,~~(“ASU”), issued by the Financial Accounting Standards Board ~~or FASB.~~(“FASB”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed with the SEC on May 24, 2019, except for the adoptionTable of ~~ASU 2016-02,~~ ~~Leases~~ ~~(Topic 842), on April 1, 2019. See Note 2(H).~~Contents

~~(B) Use of Estimates~~

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, costs, and expenses, including the evaluation of the Company’s ability to continue as a going concern, share-based compensation expenses, research and development, or R&D, expenses and accruals, and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses incurred during the reporting period, that are not readily apparent from other sources. Estimates and assumptions are periodically reviewed in light of changes in circumstances, facts, or experience. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

~~(C) Going Concern and Management’s Plans~~

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements are issued. During the six months ended September 30, ~~2019,~~2020, the Company incurred net losses of ~~$138.5~~$99.9 million and used ~~$135.1~~$110.6 million of cash and cash equivalents in operations. The Company expects to continue to incur significant and increasing operating losses and negative operating cash flows as it continues to develop its product candidates and prepares for potential future regulatory approvals and commercialization of ~~relugolix.~~relugolix combination tablet and relugolix monotherapy tablet. In addition, the Company currently expects that its outstanding debt levels will increase in future periods, which will result in an increase in its quarterly interest payment obligations. The Company has not generated any product revenue to date and does not expect to generate product revenue unless and until it ~~successfully completes development and~~ obtains regulatory approval for at least one of its product candidates. Based on its current operating plan, the Company expects that its existing cash, cash equivalents, ~~and~~ marketable securities, and its ability to borrow under the terms of the Sumitomo Dainippon Pharma Loan Agreement (See Note 5) will be sufficient to fund its operating expenses and capital expenditure ~~requirements~~requirements at least through the end of the Company’s fiscal year ending March 31, ~~2020.~~2021. This estimate is based on the Company’s current assumptions, including assumptions relating to its ability to manage its spend, that might prove to be wrong, and it ~~could~~could use its available capital resources sooner than it currently expects. Current cash, cash equivalents, ~~and~~ marketable securities and amounts available under the Sumitomo Dainippon Pharma Loan Agreement will not be sufficient to enable the Company to complete all necessary development and regulatory activities and commercially launch ~~relugolix.~~relugolix combination tablet or relugolix monotherapy tablet. The Company anticipates that it will continue to incur net losses and negative operating cash flows for the foreseeable future.

To continue as a going concern, the Company will need, among other things, additional capital resources. The Company continually assesses multiple options to obtain additional funding to support its operations, including through financing activities in public or private capital markets. Management can provide no assurances that any sources of a sufficient amount of financing will be available to the Company on favorable terms, if at all. Although the Company expects to ~~negotiate and enter into a new term loan facility that~~draw under the ~~Company and~~ Sumitomo Dainippon Pharma ~~Co. Ltd. (“Sumitomo”) agreed to negotiate and enter into, and the Company expects to draw down on this term loan facility~~Loan Agreement on a quarterly basis, ~~after it becomes effective~~such draws are contingent upon the ~~close~~consent of the ~~transaction between Roivant Sciences Ltd. and~~Company’s board of directors. In addition, if Sumitomo Dainippon Pharma fails to own at least a majority of the Company’s outstanding common shares, it may become unlawful under Japanese law for Sumitomo Dainippon Pharma to fund loans to the Company, in which case the Company would not be able to continue to borrow under the Sumitomo Dainippon Pharma Loan Agreement. ASC 240-40, Going Concern, does not allow the Company to consider future financing activities that are uncertain in its assessment of the Company’s future cash burn for the purpose of its liquidity assessment. ~~For more information on the Company’s arrangements with Sumitomo, see Note 13(B), “Subsequent Events—Letter Agreement with Sumitomo Dainippon Pharma, Co. Ltd.”~~

Due to these uncertainties, there is substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements and footnotes have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

(B) Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets and liabilities, and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Determinations in which management uses subjective judgments include, but are not limited to, the evaluation of the Company’s ability to continue as a going concern, revenue recognition, share-based compensation expenses, research and development (“R&D”) expenses and accruals, leases, and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period, that are not readily apparent from other sources. Estimates and assumptions are periodically reviewed in light of changes in circumstances, facts, or experience. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, risks of failure or unsatisfactory results of nonclinical and clinical studies, the need to obtain additional capital to fund the future development of its product candidates and the commercialization of any product candidates that may obtain marketing approval, the need to obtain marketing approval for its product candidates, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, ability to transition from pilot-scale

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manufacturing to large-scale production of products, and dependence on third-party service providers such as contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs).

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. Through November 12, 2020, the date of issuance of this Quarterly Report on Form 10-Q, the Company’s results of operations and cash flows have not been significantly impacted by the COVID-19 pandemic. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments, and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of November 12, 2020.

(D) Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period, reduced, ~~where~~when applicable, for outstanding yet unvested shares of restricted common stock. The computation of diluted net loss per common share is based on the weighted-average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, restricted stock units, restricted stock awards, performance stock units, and warrants. In periods in which the Company reports a net loss, all common share equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equal. Potentially dilutive common shares have been excluded from the diluted net loss per common share computations in all periods presented because such securities have an anti-dilutive effect on net loss per common share due to the Company’s net loss. There are no reconciling items used to calculate the weighted-average number of total common shares outstanding for basic and diluted net loss per common share.

As of September 30, ~~2019~~2020, and ~~2018,~~2019, potentially dilutive securities were as follows:

September 30,
2019 2018
Stock options 7,676,460
5,115,494
Restricted stock awards (unvested) 775,651
1,057,707
Restricted stock units (unvested) 753,720
12,500
Performance stock units (unvested) 408,510
—
Warrants 73,710
73,710
Total 9,688,051
6,259,411


	September 30,
	2020	2019
Stock options	8,484,057	7,676,460
Restricted stock awards (unvested)	564,111	775,651
Restricted stock units (unvested)	2,703,287	753,720
Performance stock units (unvested)	722,071	408,510
Warrants	73,710	73,710
Total	12,547,236	9,688,051

(E) Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash deposits in banks and all highly liquid investments that are readily convertible to cash. The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. As of September 30, 2019, cash and cash equivalent balances are diversified between three financial institutions. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and the issuers of its money market funds and commercial paper. The Company maintains its cash deposits and cash equivalents in highly rated, federally insured financial institutions in excess of federally insured limits. The Company has established guidelines relative to diversification and maturities to maintain safety and liquidity. The Company has not experienced any credit losses related to these financial instruments and does not believe that it is exposed to any significant credit risk related to these instruments. Interest income consists of interest earned on money market funds and the accretion of discounts to maturity for commercial paper and corporate bonds.

Restricted cash consists of non-interest bearing legally restricted deposits held as compensating balances against the Company’s corporate credit card program and an irrevocable standby letter of credit provided as security for the Company’s office lease.

Cash as reported on the unaudited condensed consolidated statements of cash flows includes the aggregate amounts of cash, cash equivalents, and restricted cash and consists of the following (in thousands):


	September 30,					September 30,
	2019		2018			2020		2019
Cash and cash equivalents	$	130,373	$	153,717	Cash and cash equivalents	$	94,210	$	130,373
Restricted cash ⁽¹⁾	1,374		600		Restricted cash (1)	1,987		1,374
Total cash, cash equivalents and restricted cash	$	131,747	$	154,317	Total cash, cash equivalents and restricted cash	$	96,197	$	131,747

⁽¹⁾ ~~Included~~Restricted cash consists of funds held to satisfy the requirements of certain agreements that are restricted in their use and are included in other assets on the unaudited condensed consolidated balance sheets.

(F) Marketable Securities

Investments in marketable securities are held in a custodial account at a financial institution and managed by the Company’s investment advisor based on the Company’s investment guidelines. The Company considers all highly liquid investments in securities with a maturity of greater than three months at the time of purchase to be marketable securities. As of September 30, 2019, the Company’s marketable securities consisted of commercial paper and highly rated corporate bonds with maturities of greater than three months but less than twelve months at the time of purchase. These short-term commercial paper and corporate debt securities are classified as current assets on the Company’s unaudited condensed consolidated balance sheets under the caption marketable securities.

The Company classifies its marketable securities as available-for-sale at the time of purchase and reevaluates such designation at each balance sheet date. Unrealized gains and losses on available-for-sale ~~commercial paper and short-term corporate debt~~ securities are excluded from earnings and are recorded in accumulated other comprehensive (loss) income until realized. Any unrealized losses are evaluated for ~~other-than temporary~~other-than-temporary impairment at each balance sheet date. Realized gains and losses are determined based on the specific identification method and are recorded in other (income) expense, net.

The Company does not intend to sell its securities that are in an unrealized loss position, and it is unlikely that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be maturity. Factors considered in determining whether a loss is temporary include the length of time and extent to which the fair value has been less than the amortized cost basis and whether the Company intends to sell the security or whether it is more likely than not that the Company would be required to sell the security before recovery of the amortized cost basis. See Note 3 for additional information.

(G) Fair Value Measurements

The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy for financial instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following:

•Level ~~1-Valuations~~1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•Level ~~2-Valuations~~2—Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

•Level ~~3-Valuations~~3—Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments include cash, cash equivalents, ~~consisting of commercial paper, corporate bonds, and money market funds,~~ marketable securities, ~~consisting of commercial paper and corporate bonds,~~ accounts payable, amounts due to related parties, and ~~the Company’s~~ debt obligations. Cash, cash equivalents, ~~and~~ accounts payable, and amounts due to related parties are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. Marketable securities are recorded at their estimated fair value and are included in Level 2 of the fair value hierarchy.

(H) Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as subsequently amended, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The ~~carrying value~~core principle of the ~~Company’s debt approximates fair~~revenue model is that an entity recognizes revenue 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 to in exchange for those goods or services. The Company was required to adopt ASC 606 on April 1, 2018. As the Company did not have any effective contracts within the scope of this guidance prior to April 1, 2018, ASC 606 had no impact on the Company's consolidated financial statements and related disclosures upon adoption.

In accordance with ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation.

When applying the revenue recognition criteria of ASC 606 to license and collaboration agreements, the Company applies significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met,

assessing the recognition and future reversal of variable consideration, and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time. These judgments are discussed in more detail below.

•Licenses of intellectual property: If the licenses to intellectual property are determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are not distinct from other promises, the Company applies judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition accordingly.

•Milestone payments: At the inception of each arrangement that includes research, development or regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value ~~based on current interest rates for similar types of borrowings and~~ is included in ~~Level 2~~the transaction price. Milestone payments that are not within the Company’s control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the ~~fair value hierarchy.~~overall transaction price on a cumulative catch-up basis in earnings in the period of the adjustment.

•Royalties and commercial milestone payments: For arrangements that include sales-based royalties, including commercial milestone payments based on pre-specified level of sales, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Achievement of these royalties and commercial milestones may solely depend upon performance of the licensee.

~~(H)~~(I) Other (Income) Expense, Net

Other (income) expense, net consists primarily of the impact of changes in foreign currency exchange rates on the Company’s foreign exchange denominated liabilities, relative to the U.S. dollar. The impact of foreign exchange rates on the Company’s results of operations fluctuates period over period based on its foreign currency exposures resulting from changes in applicable exchange rates associated with its foreign denominated liabilities, such as the outstanding balance under the Sumitomo Dainippon Pharma Loan Agreement. The Company’s primary foreign currency exposure is currently the exchange rate between the Swiss franc and the U.S. dollar.

(J) Recently Adopted Accounting Standards

In ~~February 2016,~~August 2018, the FASB issued ASU ~~2016-02,~~2018-13, ~~Leases~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement ~~(Topic 842)~~(“ASU 2018-13”), which ~~is a comprehensive new lease standard that amends various aspects of existing accounting guidance for leases. The core principle of Topic 842 requires lessees to recognize on~~simplifies the consolidated balance sheets a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases with lease terms greater than twelve months. The lease liability is measured at the presentfair value of the unpaid lease payments and the right-of-use asset is derived from the calculation of the lease liability. Topic 842 also requires lessees to disclose key information about leasing arrangements. Topic 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application (“Transition Date”). An entity may choose to use either (i) its effective date or (ii) the beginning of the earliest comparative period presented in the financial statements as its date of initial application.measurement disclosure requirements. The Company adopted the new standard on April 1, ~~2019 and used the effective date as its date of initial application.~~

The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients,” which permitted it to not reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. As a result, the Company has continued to account for existing leases - i.e. leases for which the commencement date is before April 1, 2019 - in accordance with Topic 840 throughout the entire lease term, including periods after the effective date, with the exception that the Company applied the new balance sheet recognition guidance for operating leases and applied Topic 842 for remeasurements and modifications after the Transition Date.

The most significant impact of the adoption of Topic 842 on the Company’s unaudited condensed consolidated financial statements was the recognition of a $9.4 million operating lease right-of-use asset, a $0.8 million current operating lease liability, and a $9.8 million long-term operating lease liability on the Company’s unaudited condensed consolidated balance sheet related to its existing facility operating lease. In addition, the Company reclassified the $1.2 million deferred rent liability for its existing facility lease to the related operating lease right-of-use asset. There was no material impact to the Company’s unaudited condensed consolidated statement of operations, and no cumulative-effect adjustment to accumulated deficit. See Note 11 for additional information.

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement-Reporting Comprehensive Income~~ ~~(Topic 220):~~ ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~, or ASU 2018-02. ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the newly enacted federal corporate income tax rate under the Tax Cuts and Jobs Act, from accumulated other comprehensive (loss) income to retained earnings. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and early adoption is permitted. The Company adopted the new standard on April 1, 2019.2020. The adoption of ASU ~~2018-02 did not have an impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.~~

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Compensation-Stock Compensation~~ ~~(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,~~ or ASU 2018-07. ASU 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 is effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company adopted the new standard on April 1, 2019. The adoption of ASU 2018-072018-13 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related ~~disclosures~~.disclosures.

In ~~July~~November 2018, the FASB issued ASU ~~2018-09,~~2018-18, ~~Codification Improvements,~~ Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”). This guidance is intended to ~~make changes to a variety of topics to~~reduce diversity in practice and clarify ~~correct errors in, or make minor improvements to~~ the ~~ASC. Certain items in~~interaction between Topic 808, Collaborative Arrangements, and Topic 606, Revenue from Contracts with Customers. ASU 2018-18 provided guidance on whether certain transactions between collaborative arrangement participants should be accounted for with revenue under Topic 606. The Company adopted the ~~amendments in ASU 2018-09 will be effective for the Company in annual periods beginning after December 15, 2018.~~new standard on April 1, 2020. The adoption of ASU ~~2018-09 on April 1, 2019~~2018-18 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related ~~disclosures~~.disclosures.

~~Other recent accounting pronouncements issued by~~In August 2018, the FASB ~~(including its Emerging Issues Task Force)~~issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”), which amends ASU 2015-05, Customers Accounting for Fees in a Cloud Computing Agreement, to help entities evaluate the ~~American Institute~~accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The most significant change will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. Accordingly, the amendments in ASU 2018-15 require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation

costs to capitalize as assets related to the service contract and which costs to expense. The Company adopted ASU 2018-15 using the ~~SEC~~prospective method as of April 1, 2020. The adoption of ASU 2018-15 did not ~~or are not believed by the Company to,~~ have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

~~(I)~~(K) Recently Issued Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. These amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective prospectively for all entities as of March 12, 2020 through December 31, 2022. As of September 30, 2020, the Company has not modified its contract that will be impacted by reference rate reform. The Company will continue to assess the impact the adoption of this standard will have on its consolidated financial statements and related disclosures when its contract impacted by reference rate reform is modified.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses ~~(Topic~~(Topic 326): Measurement of Credit Losses on Financial Instruments~~, or~~ (“ASU ~~2016-13,~~2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASC 2016-13 and its amendments will be effective for annual and interim periods beginning after December 15, 2022 for smaller reporting companies. The Company is currently assessing the impact the adoption of this new standard will have on its ~~unaudited condensed~~ consolidated financial statements and related disclosures.

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-13,~~2019-12, ~~Fair Value Measurement~~Simplifying the Accounting for Income Taxes (Topic ~~820):~~ ~~Disclosure Framework-Changes~~740) (“ASU 2019-12”), that eliminates certain exceptions to the ~~Disclosure Requirements~~general principles in ASC 740 related to intra-period tax allocation, deferred tax liability and general methodology for ~~Fair Value Measurement, or~~calculating income taxes. ASU ~~2018-13.~~2019-12 also simplifies U.S. GAAP by making other changes for matters such as, franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. ASU 2018-13 amends the disclosure requirements in Topic 820 to promote the exercise of discretion by entities when considering fair value measurement disclosures and clarifies that materiality is an appropriate consideration when evaluating fair value measurement disclosure requirements. Certain required disclosures were added, modified, or removed, including removing the required disclosure of the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2018-132019-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company does not currently expect that the adoption of this new standard will have a material impact on its unaudited condensed consolidated financial statements and related disclosures.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software~~ ~~(Subtopic 350-40):~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, or ASU 2018-15, which amends ASC 350-40,~~ ~~Internal-Use Software~~, to include in its scope implementation costs of a cloud computing arrangement that is a service contract. Consequently, the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement is aligned with the guidance on capitalizing costs associated with developing or obtaining internal-use software. ASU 2018-15 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019.2020. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact the adoption of this standard will have on its consolidated financial statements and related disclosures.

Other recent accounting pronouncements issued by the FASB, (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by the Company to, have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

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Note 3—~~Marketable Securities~~

~~As of September 30, 2019, the Company’s $27.2 million marketable securities balance consisted of available-for-sale commercial paper~~Investments and ~~short-term corporate bonds. Unrealized gains on marketable securities as of September 30, 2019 were not material. There were no unrealized losses on marketable securities as of September 30, 2019.~~

~~There were 0 marketable securities as of March 31, 2019.~~

~~Note 4—~~Fair Value Measurements

As of September 30, 2019, and March 31, 2019, assets measured at fair value on a recurring basis consisted of money market funds and commercial paper, which are included in cash and cash equivalents on the unaudited condensed consolidated balance sheets, and short-term corporate bonds and commercial paper, which are included in marketable securities on the unaudited condensed consolidated balance sheets.Fair Value Measurements

The following table summarizes the Company’s assets ~~measured at~~that require fair value measurements on a recurring basis and their ~~assigned~~respective input levels ~~within~~based on the fair value hierarchy ~~as of September 30, 2019~~ (in thousands):


	Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
As of September 30, 2020
Money market funds (1)	$	291	$	0	$	0	$	291
Commercial paper (2)	0		56,159		0		56,159
Corporate bonds (1)	0		3,000		0		3,000
Municipal bonds (3)	0		512		0		512
U.S. Treasury bills (1)	10,000		0		0		10,000
Total assets	$	10,291	$	59,671	$	0	$	69,962

As of March 31, 2020
Money market funds (1)	$	11,348	$	0	$	0	$	11,348
Commercial paper (4)	0		7,042		0		7,042
Total assets	$	11,348	$	7,042	$	0	$	18,390

Level 1 Level 2 Level 3 Total Fair Value
Assets:

Money market funds $ 53
$ —
$ —
$ 53
Commercial paper —
130,953
—
130,953
Corporate bonds —
12,608
—
12,608
Total assets $ 53
$ 143,561
$ —
$ 143,614

(1) Included in cash and cash equivalents.

~~The following table summarizes the Company’s assets measured at fair value on a recurring basis~~(2) Includes $39.6 million in cash and ~~their assigned levels within the fair value hierarchy as of March 31, 2019 (in thousands):~~

Level 1 Level 2 Level 3 Total Fair Value
Assets:

Money market funds $ 83
$ —
$ —
$ 83
Commercial paper —
126,050
—
126,050
Total assets $ 83
$ 126,050
$ —
$ 126,133

cash equivalents and $16.6 million in marketable securities.

~~Money market funds are included~~(3) Included in ~~Level 1 of the fair value hierarchy~~marketable securities.

(4) Includes $4.0 million in cash and ~~are valued at the closing price reported by an actively traded exchange. Commercial paper~~cash equivalents and ~~short-term corporate bonds are included~~$3.0 million in Level 2 of the fair value hierarchy and are valued using third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.marketable securities.

There were 0 liabilities measured at fair value on a recurring basis as of September 30, ~~2019~~2020 or March 31, ~~2019. There were no transfers of assets or liabilities between the fair value hierarchy levels that occurred during the six months ended September 30, 2019.~~2020.

Note 5—4—Accrued Expenses

As of September 30, ~~2019,~~2020, and March 31, ~~2019,~~2020, accrued expenses consisted of the following (in thousands):

September 30, 2019 March 31, 2019
Accrued R&D expenses $ 36,620
$ 46,947
Accrued compensation-related expenses 3,800
5,024
Accrued professional service fees 1,053
370
Accrued other expenses 2,907
1,273
Total accrued expenses $ 44,380
$ 53,614


	September 30, 2020		March 31, 2020
Accrued R&D expenses	$	17,911	$	15,500
Accrued compensation-related expenses	12,330		9,309
Accrued commercial expenses	5,898		818
Accrued professional service fees	1,068		1,126

Accrued other expenses	2,934		2,307
Total accrued expenses	$	40,141	$	29,060

Note ~~6—Financing Arrangements~~5—Related Party Transactions

(A) ~~NovaQuest~~Sumitomo Dainippon Pharma Co., Ltd.

~~In October 2017,~~On December 27, 2019, the Company’s former controlling shareholder, Roivant Sciences Ltd. (“Roivant”), completed a transaction (the “Sumitomo-Roivant Transaction”) in which all of the Company’s outstanding common shares held directly or indirectly by Roivant and not already held by Sumitovant were transferred to Sumitovant, and Roivant transferred all of the outstanding equity of Sumitovant to Sumitomo Dainippon Pharma, resulting in Sumitovant directly, and Sumitomo Dainippon Pharma indirectly, owning 45,008,604, or approximately 50.2%, of the Company’s outstanding common shares on December 27, 2019. As of September 30, 2020, Sumitovant directly, and Sumitomo Dainippon Pharma indirectly, own 48,641,181, or approximately 53.7%, of the Company’s outstanding common shares.

Sumitomo Dainippon Pharma Loan Agreement

On December 27, 2019, the Company and its ~~subsidiaries, as guarantors, and NovaQuest Capital Management, or NovaQuest,~~subsidiary, Myovant Sciences GmbH (“MSG”), entered into ~~(i)~~ a ~~Securities Purchase~~Loan Agreement ~~or the NovaQuest Securities Purchase Agreement, and (ii) an Equity Purchase Agreement, or the NovaQuest Equity Purchase Agreement.~~with Sumitomo Dainippon Pharma (the “Sumitomo Dainippon Pharma Loan Agreement”). Pursuant to the ~~NovaQuest Securities Purchase~~Sumitomo Dainippon Pharma Loan Agreement, Sumitomo Dainippon Pharma agreed to make revolving loans to the Company ~~had the option, at its discretion, to issue up to $60.0 million~~in an aggregate principal amount of ~~notes~~up to $400.0 million. On December 30, 2019, the Company borrowed an initial amount of $113.7 million under the Sumitomo Dainippon Pharma Loan Agreement, the proceeds of which were used to repay all outstanding obligations of the Company to NovaQuest Capital Management and ~~concurrent with each purchase of notes, NovaQuest was obligated~~Hercules Capital, Inc. and to ~~purchase up to $20.0 million of~~satisfy certain other fees and expenses. Additional funds may be drawn down by the ~~Company’s common shares on a pro rata basis,~~Company once per calendar quarter, subject to certain terms and conditions, ~~through December 31, 2018. The equity purchase price for each such purchase was equal to 105%~~including consent of the ~~average~~Company’s board of directors. In addition, if Sumitomo Dainippon Pharma fails to own at least a majority of the ~~volume-weighted average price~~Company’s outstanding common shares, it may become unlawful under Japanese law for ~~the five consecutive trading days immediately prior~~Sumitomo Dainippon Pharma to fund loans to the ~~relevant purchase date.~~Company, in which case the Company would not be able to continue to borrow under the Sumitomo Dainippon Pharma Loan Agreement. Interest is due and payable quarterly, and the outstanding principal amounts are due and payable in full on the five-year anniversary of the closing date of the Sumitomo Dainippon Pharma Loan Agreement. Loans under the Sumitomo Dainippon Pharma Loan Agreement are prepayable at any time without premium or penalty upon 10 business days’ prior written notice.

The Company committed that it would issue at least $30.0 million aggregate principal amount of notes through December 31, 2018, subject to certain terms and conditions. The Company issued $6.0 million aggregate principal amount in October 2017 and $54.0 million aggregate principal amount in December 2018. WithLoans under the issuance of $6.0 million aggregate principal amount of notes in October 2017, NovaQuest purchased 138,361 common shares for $2.0 million, and with the issuance of $54.0 million aggregate principal amount of notes in December 2018, NovaQuest purchased 1,082,977 common shares for $18.0 million.

~~The notes~~Sumitomo Dainippon Pharma Loan Agreement bear interest at a rate ~~of 15%~~ per annum equal to 3-month LIBOR plus a margin of ~~which 5% is payable quarterly, and 10% is~~3% payable on the last day of each calendar quarter. LIBOR is currently expected to be phased out by the end of 2021, and if it becomes unavailable, the Company and Sumitomo Dainippon Pharma will negotiate in good faith to select an alternative interest rate and, if applicable as a ~~deferred basis on the earlier~~result of the Amortization Date (as defined below) and the repayment in full of the notes. The notes mature on October 16, 2023. The Company will be required to amortize the principal amount of the notes in equal quarterly installments commencing on November 1, 2020, subject to extension at the Company’s option to November 1, 2021, or the Amortization Date, provided certain terms and conditions are met. Early redemption of the notessuch alternative interest rate, margin adjustment that is ~~subject to~~consistent with industry accepted successor rates for determining a ~~redemption charge.~~LIBOR replacement. The Company’s obligations under the ~~NovaQuest Securities Purchase~~Sumitomo Dainippon Pharma Loan Agreement are ~~secured~~fully and unconditionally guaranteed by ~~a second-lien security interest in substantially all~~the Company and its subsidiaries. The loans and other obligations are senior unsecured obligations of the ~~Company’s~~Company, MSG, and ~~its subsidiaries’ respective assets (other than intellectual property).~~subsidiary guarantees. The ~~NovaQuest Securities Purchase~~Sumitomo Dainippon Pharma Loan Agreement includes customary ~~affirmative and restrictive covenants and~~ representations and warranties ~~including a minimum cash covenant that applies commencing on the Amortization Date,~~ and affirmative and negative covenants.

The Sumitomo Dainippon Pharma Loan Agreement also includes customary events of ~~default.~~default, including payment defaults, breaches of representations and warranties, breaches of covenants following any applicable cure period, cross acceleration to certain other debt, failure to pay certain final judgments, certain events relating to bankruptcy or insolvency, failure of material provisions of the loan documents to remain in full force and effect or any contest thereto by the Company or any of its subsidiaries and certain breaches by the Company under the Investor Rights Agreement. Upon the occurrence of an event of default, a default interest rate of an additional ~~5% may be applied~~5.0% will apply to the outstanding ~~note balance~~principal amount of the loans, Sumitomo Dainippon Pharma may terminate its obligations to make loans to the Company and ~~NovaQuest may~~ declare ~~all outstanding obligations~~the principal amount of loans to become immediately due and payable, and Sumitomo Dainippon Pharma may take such other actions as set forth in the ~~NovaQuest Securities Purchase~~Sumitomo Dainippon Pharma Loan Agreement.

~~Pursuant~~ Upon the occurrence of certain bankruptcy and insolvency events, the obligations of Sumitomo Dainippon Pharma to make loans to the ~~NovaQuest Equity Purchase Agreement, NovaQuest committed to purchase up to an additional $20.0 million~~Company would automatically terminate and the principal amount of the ~~Company’s common shares from time~~loans would automatically become due and payable. In addition, if it becomes unlawful for Sumitomo Dainippon Pharma to ~~time at~~maintain the Company’s discretion through December 31, 2018, with an option to extend the commitment through December 31, 2019, subject to certain terms and conditions. The Company committed that it would exercise its option to sell and issue a minimum of $10.0 million of its common sharesloans under the NovaQuest Equity Purchase Agreement through December 31, 2018, subject to certain terms and conditions. In December 2018, the Company exercised this option and issued and sold 1,203,307 common shares for $20.0 million. The purchase price for the common shares issued was equal to 105% of the average of the volume-weighted average price for the five consecutive trading days immediately prior to the relevant purchase date.

The Company incurred financing costs related to the NovaQuest Securities Purchase Agreement of $1.0 million. During each of the three and six-month periods ended September 30, 2019 and 2018, interest expense included $0.1 million and $0.2 million, respectively, of amortized deferred financing costs related to the NovaQuest notes.

~~Outstanding debt obligations to NovaQuest are as follows (in thousands):~~

September 30, 2019 March 31, 2019
Principal amount $ 60,000
$ 60,000
Less: unamortized debt issuance costs (523 ) (756 )
Loan payables less unamortized debt issuance costs 59,477
59,244
Less: current maturities —
—
Long-term debt, net of current maturities and unamortized debt issuance costs $ 59,477
$ 59,244

~~In October 2017, the Company, its subsidiaries, as guarantors, and Hercules Capital, Inc., or Hercules, entered into a~~Sumitomo Dainippon Pharma Loan Agreement or within 30 days of a change of control with respect to the ~~Hercules Loan Agreement, which provided up~~Company, the Company would be required to ~~$40.0 million~~repay the outstanding principal amount of ~~term loans, or~~ the ~~Term~~ Loans. A first tranche of $25.0 million principal amount was funded upon execution of the Hercules Loan Agreement in October 2017 and the remaining $15.0 million principal amount was funded in March 2018. The Term Loans bear interest at a variable per annum rate at the greater of (i) the prime rate plus 4.00% and (ii) 8.25%. The interest rate on the Term Loans was 9.00% as

As of September 30, ~~2019.~~

~~Pursuant~~2020, the outstanding loan balance of $253.7 million is classified as a long-term liability on the Company’s unaudited condensed consolidated balance sheets under the caption long-term debt, less current maturities (related party). As of September 30, 2020, approximately $146.3 million of borrowing capacity remains available to the Company, subject to the terms of the ~~Hercules~~Sumitomo Dainippon Pharma Loan Agreement. Interest expense under the Sumitomo Dainippon Pharma Loan Agreement the Term Loan Maturity Date has been extended from May 1, 2021 to November 1, 2021 as a result of the achievement of a financing milestone in July 2018. The Company is obligated to make monthly interest payments during the Interest-only Period, subject to certain terms and conditions, followed by monthly installments of principal and interest through the maturity date. The Interest-only Period was extended from June 1, 2019 to December 1, 2019 as a result of the achievement of a financing milestone during July 2018 and was further extended to June 1, 2020 as a result of the achievement of a certain clinical milestone in July 2019. Prepayment of the Term Loans is subject to a prepayment charge. The Company is also obligated to pay an end of term charge of 6.55% of the principal amount of the Term Loans funded under the Hercules Loan Agreement, on the earlier of the maturity date or the date that the Term Loans otherwise become due and payable.

The Company’s obligations under the Hercules Loan Agreement are secured by a first lien security interest in substantially all of the Company’s and its subsidiaries’ respective assets (other than intellectual property). The Hercules Loan Agreement includes customary affirmative and restrictive covenants and representations and warranties. The Hercules Loan Agreement also includes a minimum cash covenant which ceased to apply as a result of the achievement of a certain clinical milestone in July 2019.

Concurrent with each funding of the Term Loans, the Company was required to issue to Hercules a warrant, or the Warrants, to purchase a number of its common shares equal to 3.00% of the principal amount of the relevant Term Loan funded divided by the exercise price, which is based on the lowest three-day volume-weighted average price for the three consecutive trading days prior to the funding date for such Term Loan. The Warrants may be exercised on a cashless basis and are immediately exercisable through the seventh anniversary of the applicable funding date. In connection with the first tranche funded under the Hercules Loan Agreement, the Company issued a Warrant to Hercules exercisable for an aggregate of 49,800 of its common shares at an exercise price of $15.06 per common share. Concurrent with the funding of the second tranche, the Company issued a Warrant to Hercules exercisable for an aggregate of 23,910 of its common shares at an exercise price of $18.82 per common share. The Company accounted for the Warrants as equity instruments since they were indexed to the Company’s common shares and met the criteria for classification in shareholders’ equity (deficit). The relative fair value of the Warrants related to the first and second tranche funding were approximately $0.5$2.1 million and ~~$0.3~~$4.3 million ~~respectively, and were treated as a discount to the Term Loans. This amount is being amortized to interest expense using the effective interest method over the life of the Term Loans.~~

~~The Company estimated the fair value of the Warrants using the Black-Scholes model based on the following key assumptions:~~

Tranche 1 Tranche 2
Exercise price $15.06 $18.82
Common share price on date of issuance $14.39 $18.96
Volatility 73.2% 72.3%
Risk-free interest rate 2.15% 2.78%
Expected dividend yield —% —%
Contractual term (in years) 7.00 7.00

The Company issued the first tranche of the Term Loans at a discount of $2.1 million, including the relative fair value of the related Warrant, and incurred financing costs of $1.3 million. The second tranche of the Term Loans was issued at a discount of $1.3 million, including the relative fair value of the related Warrant. During the three and six-months ended September 30, 2019, interest expense included $0.4 million and $0.9 million, respectively, of amortized debt discount and issuance costs related to the Term Loans. Duringfor the three and six months ended September 30, ~~2018,~~2020 and is included in interest expense ~~included $0.3 million~~(related party) in the Company’s unaudited condensed consolidated statements of operations. There was 0 interest expense (related party) for the three and ~~$0.7 million, respectively, of amortized~~six months ended September 30, 2019.

Sumitomo Dainippon Pharma Loan Commitment

On August 5, 2020, the Company obtained a debt ~~discount and issuance costs related~~commitment letter from Sumitomo Dainippon Pharma, as amended by a letter dated September 29, 2020 (the “2020 Commitment Letter”), pursuant to which, subject to the ~~Term Loans.~~terms and conditions set forth therein, Sumitomo Dainippon Pharma has committed to provide an additional $200.0 million in unsecured revolving commitments (the “New Credit Facility”), the proceeds of which may be used for business operating expenditures of the Company and its subsidiaries. The commitments are in addition to the commitments made available to the Company and its subsidiaries by Sumitomo Dainippon Pharma under the existing Sumitomo Dainippon Pharma Loan Agreement.

~~Outstanding debt obligations~~The New Credit Facility described in the 2020 Commitment Letter will not be available to ~~Hercules are as follows (in thousands):~~the Company until the Company enters into a definitive agreement with Sumitomo Dainippon Pharma and the New Credit Facility becomes effective. Pursuant to the terms of the 2020 Commitment Letter, the New Credit Facility shall mature on the fifth anniversary of the closing of the

September 30, 2019 March 31, 2019
Principal amount $ 40,000
$ 40,000
End of term charge 2,620
2,620
Less: unamortized debt discount and issuance costs (1,620 ) (2,482 )
Loan payables less unamortized debt discount and issuance costs 41,000
40,138
Less: current maturities (8,402 ) (6,142 )
Long-term debt, net of current maturities and unamortized debt discount and issuance costs $ 32,598
$ 33,996

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~~Note 7—Related Party Transactions~~New Credit Facility. Sumitomo Dainippon Pharma will have the discretion, to require certain prepayments as Sumitomo Dainippon Pharma may request and/or to not allow the Company to draw down any remaining funds under the New Credit Facility, upon the occurrence of certain material business development transactions. In addition, as a condition to entering into the New Credit Facility, the Company shall be required to enter into an information sharing agreement with Sumitovant which will be on terms to be agreed between the Company and Sumitovant. The terms and conditions of the New Credit Facility shall otherwise be substantially identical to the terms of the existing Sumitomo Dainippon Pharma Loan Agreement, including with respect to the interest rate margins, except as otherwise agreed between the Company and Sumitomo Dainippon Pharma.

~~(A) Services Agreements~~Investor Rights Agreement

~~In July 2016,~~On December 27, 2019, the Company entered into ~~a services agreement~~an Investor Rights Agreement with ~~RSI, effective April 29, 2016,~~Sumitomo Dainippon Pharma and Sumitovant (the “Investor Rights Agreement”). Pursuant to the Investor Rights Agreement, among other things, the Company agreed, at the request of Sumitovant, to register for sale, under ~~which RSI~~the Securities Act of 1933, common shares beneficially owned by Sumitovant, subject to specified conditions and limitations. In addition, the Company agreed to periodically provide Sumitovant (i) certain ~~administrative~~financial statements, projections, capitalization summaries and ~~R&D~~other information and (ii) access to the Company’s books, records, facilities and employees during the Company’s normal business hours as Sumitovant may reasonably request, subject to specified limitations.

The Investor Rights Agreement also contains certain protections for the Company’s minority shareholders for so long as Sumitomo Dainippon Pharma or certain of its affiliates beneficially owns more than 50% of the Company’s common shares. These protections include: (i) a requirement that Sumitovant vote its shares for the election of independent directors in accordance with the recommendation of the Company’s board of directors (the “board”) or in the same proportion as the shareholders not affiliated with Sumitovant vote their shares; (ii) a requirement that the audit committee of the Company’s board be composed solely of 3 independent directors; (iii) a requirement that any transaction proposed by Sumitomo Dainippon Pharma or certain of its affiliates that would increase Sumitomo Dainippon Pharma’s beneficial ownership to over 60% of the outstanding voting power of the Company must be approved by the Company’s audit committee (if occurring prior to December 27, 2022), and be conditioned on the approval of shareholders not affiliated with Sumitovant approving the transaction by a majority of the common shares held by such shareholders; and a requirement that any related person transactions between Sumitomo Dainippon Pharma or certain of its affiliates and the Company must be approved by the Company’s audit committee.

Pursuant to the Investor Rights Agreement, the Company also agreed that at all times that Sumitomo Dainippon Pharma beneficially owns more than 50% of the Company’s common shares, Sumitomo Dainippon Pharma, by purchasing common shares in the open market or from the Company in certain specified circumstances, will have the right to maintain its percentage ownership in the Company’s common shares in the event of a financing event or acquisition event conducted by the Company, or specified other events, subject to specific conditions.

(B) Sumitovant

On May 18, 2020, the Company and Sumitovant entered into a consulting agreement, as amended on November 9, 2020, pursuant to which Sumitovant provides consulting services to the ~~Company. Under this services agreement,~~Company to support the Company ~~pays or reimburses RSI for expenses it, or third parties acting on its behalf, incurs for~~in commercial planning, commercial launch activities and implementation. Adele Gulfo, Sumitovant’s Chief Business and Commercial Development Officer and a member of the ~~Company. For any general and administrative, or G&A, and R&D activities performed by RSI employees, RSI charges the Company based upon the relative percentage~~Company’s board of ~~time utilized on Company matters by the respective employee. All other third-party pass-through costs are billed~~directors, provides services to the Company ~~at cost. The unaudited condensed consolidated financial statements include third-party expenses incurred~~ on behalf of ~~the Company that have been paid by RSI and RSL.~~

In February 2017, the Company and MSI amended and restated the services agreement, effective as of November 11, 2016, to include Myovant Sciences GmbH, or MSG, as a services recipient. In addition, in February 2017, MSG entered into a separate services agreement with RSG, effective as of November 11, 2016, for the provisioning of services by RSG to MSG in relation to services related to clinical development, administrative and finance and accounting activities. The Company refers to the amended and restated services agreement with RSI and the services agreement with RSG, collectively, as the Services Agreements.

~~Under the Services Agreements, for~~Sumitovant under this agreement. For the three and six months ended September 30, ~~2019 and 2018,~~2020, the Company incurred $0.2 million and $0.3 million of expense under this consulting agreement, which is included in general and administrative (“G&A”) expenses in the accompanying unaudited condensed consolidated statements of operations.

Market Access Services Agreement

On August 1, 2020, the Company’s subsidiary, MSG, entered into the Market Access Services Agreement with Sunovion Pharmaceuticals Inc. (“Sunovion”), a subsidiary of Sumitomo Dainippon Pharma. Pursuant to the Market Access Services Agreement, among other things, Sunovion agreed to provide to MSG certain market access services with respect to the distribution and sale of relugolix monotherapy (relugolix 120 mg) (“Prostate Cancer Product”) and relugolix combination tablet (relugolix 40 mg, estradiol 1.0 mg and norethindrone acetate 0.5 mg) (“Women’s Health Product,” and collectively with Prostate Cancer Product, the “Products”, and each a “Product”), including, among other things: (i) adding the Products to Sunovion’s agreements with its third party logistics providers; (ii) adding the Women’s Health Product to certain of Sunovion’s contracts with wholesalers, group purchasing organizations and integrated delivery networks and negotiating rates for the Products with certain market access customers; (iii) providing order-to-cash services; (iv) providing certain employees to provide market access account director services; (v) performing activities required in connection with supporting and

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maintaining contracts between the Company and market access customers for the coverage, purchase, or dispensing of the Products; (vi) managing the validation, processing and payment of rebates, chargebacks, and certain administrative, distribution and service fees related to the Products; (vii) providing MSG with price reporting metrics and other information required to allow the Company to comply with applicable government price reporting requirements; (viii) coordinating with MSG and any applicable wholesalers and distributors to address any recalls, investigations, or product holds; (ix) configuring, or causing to be configured, the appropriate software systems to enable Sunovion to perform its obligations under the Market Access Services Agreement; and (x) providing training and certain other ancillary support services to facilitate the foregoing.

MSG, in turn, appointed Sunovion as the exclusive distributor of the Women’s Health Product and a non-exclusive distributor of the Prostate Cancer Product, each in the United States, including all of its territories and possessions.

In order to facilitate Sunovion’s provision of these services, MSG agreed, among other things, to: (i) grant Sunovion a non-exclusive license under all intellectual property owned or controlled by MSG, solely for Sunovion’s use in connection with its performance of the contemplated services; (ii) provide Sunovion periodic reports of sales projections and estimated volume requirements, as well as such other information as Sunovion reasonably requests or may need to perform the services; (iii) comply with the provisions of any agreements between Sunovion and third parties pursuant to which the Products will be distributed or sold; (iv) cooperate with certain investigations related to orders and audits of MSG’s quality systems solely related, as reasonably determined by Myovant, to Sunovion’s performance of certain regulatory services, at Sunovion’s costs; and (v) promptly notify Sunovion in the event relugolix is recalled.

As consideration for the services, MSG will pay Sunovion an agreed-upon monthly service charge for each of the first two years of the Market Access Services Agreement term and any agreed regulatory and training service charges. After the second year of the Market Access Services Agreement term, the monthly service charges will be determined by the parties. In addition, MSG also agreed to (x) reimburse Sunovion for any pass-through expenses it incurs while providing the services, and (y) establish an escrow fund for use by Sunovion when managing any rebates, chargebacks and similar fees. For the three and six months ended September 30, 2020, the Company incurred $1.1 million of expense under this agreement (inclusive of third-party ~~pass-through~~pass through costs billed to the Company), which is included in G&A expense in the accompanying unaudited condensed consolidated statements of ~~$0.2 million~~operations.

The Market Access Services Agreement also contains customary representations and ~~$1.0 million, respectively, inclusive~~warranties by the parties and customary provisions related to confidentiality, indemnification and insurance. The initial term of the ~~mark-up. Under~~Market Access Services Agreement is three years. Thereafter, the term will be automatically extended for one-year periods, unless either party provides notice of its intent not to renew the Market Access Services Agreement at least nine (9) months prior to the expiration of the applicable term. Either party may also terminate the Market Access Services Agreement prior to the end of its term in the event of an uncured material breach by the other party, if there are certain changes of law, or if such other party becomes insolvent or undergoes a change of control. MSG may also terminate the Market Access Services Agreement with respect to one or both Products if Sunovion fails to satisfy certain market access milestones or for convenience upon payment of a break-up fee.

(D) Roivant Sciences Ltd.

As a result of the closing of the Sumitomo-Roivant Transaction described above, on December 27, 2019 all of the Company’s outstanding common shares held directly or indirectly by Roivant and not already held by Sumitovant were transferred to Sumitovant, and Roivant transferred all of the outstanding equity of Sumitovant to Sumitomo Dainippon Pharma. As a result of the transfer of these common shares, Roivant no longer beneficially owns any common shares of the Company. On December 27, 2019, the then existing Information Sharing and Cooperation Agreement between the Company and Roivant, the then existing Services Agreements ~~for~~between the Company and certain of its subsidiaries and Roivant and certain of its subsidiaries, and the then existing Option Agreement between the Company and Roivant were terminated. For three and six months ended September 30, 2019, ~~and 2018,~~ the Company ~~incurred expenses (inclusive of third-party pass-through costs billed to the Company) of~~paid or reimbursed Roivant approximately $0.2 million and $0.4 million ~~and $4.2 million, respectively, inclusive~~under the terms of the ~~mark-up. The Company has replaced substantially all of the services previously provided by RSI and RSG with its own internally developed capabilities or external professional service providers.~~

~~(B) Share-Based Compensation Expense Allocated to the Company by RSL~~

Share-based compensation expense has been and will continue to be allocated to the Company by RSL over the requisite service period over which RSL common share awards and RSL options are expected to vest and based upon the relative percentage of time utilized by RSL, RSI and RSG employees on Company matters.

then existing Services Agreements. In ~~relation to the RSL common share awards and options issued by RSL to RSL, RSI, RSG, and the Company’s employees,~~addition, the Company recorded share-based compensation expense allocated from Roivant of less than $0.1 million and ~~$0.2~~$0.1 million for the three ~~months ended September 30, 2019~~ and ~~2018, respectively, and $0.1 million and $0.4 million for the~~ six months ended September 30, 2019, respectively. NaN amounts were incurred during the three and ~~2018, respectively.~~six months ended September 30, 2020.

~~(C) Private Placement with RSL~~

~~See Note 9(B) for information regarding~~Roivant purchased 2,424,242 of the ~~Private Placement with RSL.~~

~~(D) Underwritten Public Equity Offering of Common Shares~~

~~As discussed~~Company’s common shares in ~~Note 9(A),~~ the ~~Company completed an~~Company’s June 4, 2019 underwritten public equity ~~offering of its common shares on June 4, 2019. RSL purchased 2,424,242 common shares in this~~ offering at the same price offered to the public of $8.25 per common share, for a total purchase price of $20.0 ~~million.~~million (see Note 7).

~~(E) Information Sharing and Cooperation Agreement with RSL~~

In July 2016, the Company entered into an information sharing and cooperation agreement, or the Cooperation Agreement, with RSL. The Cooperation Agreement, among other things: (1) obligates the Company to deliver periodic financial statements and other financial information to RSL and to comply with other specified financial reporting requirements; and (2) requires the Company to supply certain material information to RSL to assist it in preparing any future SEC filings. On May 24, 2019, the Company entered into Amendment No. 1 to the Cooperation Agreement, pursuant to which RSL has agreed, in connection with each of the Company’s next three public offerings of its common shares, that RSL will (1) provide to the Company and the underwriter(s) engaged by the Company in connection with such public offering an indication of interest for RSL to participate as a purchaser in such public offerings, and (2) enter into a customary lock-up agreement with the underwriters in connection with such public offerings.

Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of the mutual written consent of the parties or when RSL is no longer required by U.S. GAAP to consolidate the Company’s results of operations and financial position, account for its investment in the Company under the equity method of accounting or, by any rule of the SEC, include the Company’s separate financial statements in any filings it may make with the SEC.

~~(F) Fourth Amended and Restated Bye-Laws~~

On May 23, 2019, the Company’s board of directors approved, and the holder of a majority of the Company’s issued and outstanding common shares approved by written consent, an amendment and restatement of the Company’s bye-laws, to be the Company’s Fourth Amended and Restated Bye-Laws, which amends the Company’s bye-laws (1) to establish procedures for the appointment of a majority of the directors on the Company’s board by RSL at any time that RSL holds less than 50.0% but more than or equal to 35.0% of the aggregate voting rights attached to the Company’s issued and outstanding common shares, and (2) to remove the procedures and requirements of voting rights of such shares that are treated as controlled shares of a U.S. Person whose controlled shares constitute nine and one-half percent (9.5%) or more of the voting power of all of the Company’s issued common shares. The Fourth Amended and Restated Bye-Laws became effective on June 26, 2019.

Note 8—6—Income Taxes

The Company is not subject to taxation under the laws of Bermuda since it was organized as a Bermuda Exempted Limited Company, for which there is no current tax regime. The Company’s income tax expense is primarily based on income taxes in the U.S. for federal, state and local taxes. The Company’s effective tax rate for the three months ended September 30, 2020 and

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2019 was 0.20% and ~~2018 was~~ (0.28)~~% and (0.13)~~%, respectively. The Company’s effective tax rate for the six months ended September 30, 2020 and 2019 ~~and 2018~~ was ~~(0.37)~~(0.54)% and ~~(0.18)~~(0.37)%, respectively. The Company’s effective tax rate is driven by the Company’s jurisdictional earnings by location and a valuation allowance that eliminates the Company’s global net deferred tax assets.

The Company assesses the realizability of the deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary.

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures include deferring the due dates of tax payments and other changes to income and non-income-based-tax laws as well as providing direct government assistance through grants and forgivable loans. On March 27, 2020, the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic and the negative impacts that it is having on the global economy and U.S. companies. The CARES Act includes measures to assist companies, including temporary changes to income and non-income-based tax laws. The Company has implemented certain provisions of the CARES Act, such as deferring employer payroll taxes through the end of calendar year 2020. As of September 30, 2020, the Company has deferred $1.2 million of employer payroll taxes, of which 50% are required to be deposited by December 2021 and the remaining 50% by December 2022. The deferred payroll tax liability is included in other liabilities on the accompanying unaudited condensed consolidated balance sheet.

Note 9—7—Shareholders’ ~~Equity~~Deficit

(A) ~~Underwritten Public Equity Offering of Common Shares~~

On June 4, 2019, the Company completed an underwritten public equity offering of 17,424,243 of its common shares (including 2,272,727 common shares sold pursuant to the underwriters’ exercise in full of their option to purchase additional common shares) at a public offering price of $8.25 per common share. After deducting the underwriting discounts and commissions and offering costs payable by the Company, the net proceeds to the Company in connection with the underwritten public equity offering, including from the exercise of the over-allotment option, were approximately $134.5 million.

~~(B) Private Placement with RSL~~

In April 2018, the Company entered into a share purchase agreement, or the Purchase Agreement, with RSL, its controlling shareholder, pursuant to which the Company sold to RSL 1,110,015 of its common shares at a purchase price of $20.27 per common share, for gross proceeds of $22.5 million, in a private placement, or the Private Placement.

~~(C)~~ At-the-Market Equity Offering Program

In April 2018, the Company entered into a sales agreement ~~or the Sales Agreement,~~(the “Sales Agreement”) with Cowen and Company, LLC ~~or Cowen,~~(“Cowen”), to sell its common shares having an aggregate offering price of up to $100.0 million from time to time through an “at-the-market” equity offering program under which Cowen acts as the Company’s agent. During the six months ended September 30, 2019, ~~and 2018,~~ the Company issued and sold 106,494 ~~and 2,767,129, respectively,~~ of its common shares under the Sales Agreement. The common shares were sold at a weighted-average price of $24.65 ~~and $21.47~~ per common share ~~respectively,~~ for aggregate net proceeds to the Company of approximately $2.5 million ~~and $57.3 million, respectively,~~ after deducting underwriting commissions ~~and offering costs~~ paid by the Company. ~~During~~No shares were sold under the Sales Agreement during the three and six months ended September 30, 2020 and the three months ended September 30, ~~2019 and 2018, 0 shares were issued and sold under the Sales Agreement.~~2019. As of September 30, ~~2019,~~2020, the Company had approximately $10.4 million of capacity available to it under its “at-the-market” equity offering program.

(B) Underwritten Public Equity Offering of Common Shares

On June 4, 2019, the Company completed an underwritten public equity offering of 17,424,243 of its common shares at a public offering price of $8.25 per common share. After deducting the underwriting discounts and commissions and offering costs paid by the Company, the net proceeds to the Company in connection with the underwritten public equity offering, including from the exercise of the underwriters’ option to purchase additional common shares, were approximately $134.5 million.

Note ~~10—~~8—Share-Based Compensation

(A) Myovant 2016 Equity Incentive Plan

In June 2016, the Company adopted its 2016 Equity Incentive Plan, or as amended ~~the 2016 Plan,~~(the “2016 Plan”), under which 4.5 million common shares were originally reserved for issuance. Pursuant to the “evergreen” provision contained in the 2016 Plan, the number of common shares reserved for issuance under the 2016 Plan automatically increases on April 1 of each year, commencing on (and including) April 1, 2017 and ending on (and including) April 1, 2026, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on March 31 of the preceding fiscal year, or a lesser number of shares as determined by the Company’s board of directors. On April 1, ~~2019,~~2020, the number of common shares authorized for issuance increased automatically by ~~2.9~~3.6 million shares in accordance with the evergreen provision of the 2016 Plan. As of September 30, ~~2019,~~2020, a total of ~~1.5~~1.1 million common shares were available for future issuance under the 2016 Plan.

The Company’s employees, directors, officers and consultants are eligible to receive non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other share awards under the 2016 Plan.

~~(B) Stock Option Repricing~~

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On August 26, 2019 (the “repricing date”), the Company’s Board of Directors approved a stock option award repricing program (the “repricing”) whereby certain previously granted and still outstanding vested and unvested stock option awards held by current employees and certain executives were repriced on a 1-for-one basis to $7.78 per share, which represented the closing market price of the Company’s common shares on the repricing date. To be eligible to participate in the stock option repricing program, 735,428 vested stock option awards to certain executives as of the repricing date are subject to a one-year exercise restriction period beginning from the repricing date. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 5,095,013 vested and unvested stock options outstanding with original exercise prices ranging from $8.82 to $24.44, and a median exercise price of $17.28 per share, were repriced under this program.

The repricing resulted in incremental stock-based compensation expense of $9.2 million, of which $0.8 million related to vested employee stock option awards and was expensed on the repricing date, $1.1 million related to vested executive stock option awards and is being amortized over a one-year exercise restriction period beginning from the repricing date, and $7.3 million related to unvested stock option awards and is being amortized on a straight-line basis over the approximately 3.2 year remaining weighted average vesting period of those awards.

~~(C)~~(B) Stock Options

A summary of stock option activity under the Company’s 2016 Plan is as follows:



	Number of Options
Options outstanding at March 31, ~~2019~~2020	~~5,396,465~~7,723,302
Granted	~~2,470,900~~1,679,338
Exercised	~~(33,461~~(496,078)	)
Forfeited	~~(187,444~~(422,505)	)

Options outstanding at September 30, ~~2019~~2020	~~7,646,460~~8,484,057
Options vested and expected to vest at September 30, ~~2019~~2020	~~7,646,460~~8,484,057
~~Vested options subject to one-year exercise restriction period beginning on August 26, 2019~~	~~735,428~~
Options exercisable at September 30, ~~2019~~2020	~~1,684,887~~4,360,312

~~(D)~~(C) Restricted Stock Awards and Restricted Stock Units

A summary of restricted stock award and restricted stock unit activity under the Company’s 2016 Plan is as follows:



	Number of Shares
Unvested balance at March 31, ~~2019~~2020	~~956,066~~1,280,312
Granted	~~724,554~~2,465,139
Vested	~~(142,904~~(212,079)	)
Forfeited	~~(8,345~~(265,974)	)
Unvested balance at September 30, ~~2019~~2020	~~1,529,371~~3,267,398

~~(E)~~(D) Performance Stock Units

~~On August 26, 2019,~~A summary of performance stock unit activity under the ~~Company’s Board~~Company's 2016 Plan is as follows:


			Number of Shares
Unvested balance at March 31, 2020			299,870
Granted			568,976
Vested			(109,360)
Forfeited			(37,415)
Unvested balance at September 30, 2020			722,071

The vesting of ~~Directors granted~~ performance stock units ~~covering a total of 408,510 common shares, of which two-thirds of~~requires that certain performance conditions are achieved during the ~~shares (272,338 shares)~~performance period and is subject to ~~each performance stock unit vests based upon~~ the passage of time, and the remaining one-third of the shares (136,172 shares) subject to each performance stock unit vests only if the Company achieves certain clinical trial and regulatory milestones. Total share-based compensation expense associated with the performance stock units is based on the fair value of the Company’s common shares on the grant date, which equals the closing market price of the Company’s common shares on the grant date. The Company recognizes the share-based compensation expense related to the performance stock unit awards subject to time-based vesting on a straight-line basis over the requisiteemployee’s continued service period, which is generally the vesting period of the respective awards. The Company will recognize the share-based compensation expense related to the performance stock unit awards subject to vesting based upon the achievement of certain clinical trial and regulatory milestones only if such milestones are achieved. As of September 30, 2019, the performance conditions had not been met and were deemed not probable of being met.requirements.

~~(F)~~(E) Share-Based Compensation Expense

Share-based compensation expense was as follows (in thousands):

Three Months Ended September 30,
2019 2018
Share-based compensation expense recognized as:
R&D expenses $ 3,618
$ 1,846
G&A expenses 4,313
2,879
Total $ 7,931
$ 4,725

Six Months Ended September 30,
2019 2018
Share-based compensation expense recognized as:
R&D expenses $ 6,166
$ 3,407
G&A expenses 8,217
5,562
Total $ 14,383
$ 8,969


	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Share-based compensation expense recognized as:
R&D expenses	$	3,725	$	3,618	$	7,749	$	6,166
G&A expenses	3,199		4,313		6,987		8,217
Total	$	6,924	$	7,931	$	14,736	$	14,383

Share-based compensation expense is included in R&D and G&A expenses in the accompanying unaudited condensed consolidated statements of operations consistent with the grantee’s salary. ~~Share-based compensation expense presented in the table above includes share-based compensation expense allocated to the Company by RSL as described in Note 7(B).~~ Total unrecognized share-based compensation expense was approximately ~~$78.2~~$65.2 million as of September 30, ~~2019~~2020 and is expected to be recognized over a weighted-average period of approximately ~~2.9~~2.8 years.

~~(G) RSL RSUs~~

The Company’s Principal Executive Officer was granted 66,845 RSL RSUs during the fiscal year ended March 31, 2017. These RSUs will vest to the extent certain RSL performance criteria are achieved and certain RSL liquidity conditions are satisfied within specified years

Table of ~~the grant date, provided that the Company’s Principal Executive Officer has provided continued service to RSL or its subsidiaries through such date. As of~~Contents

Note 9—Leases

At September 30, ~~2019, the performance conditions had not been met and were deemed not probable of being met. For the three and six months ended September 30, 2019 and 2018,~~2020, the Company recorded 0 share-based compensation expense related to these RSL RSUs. As of September 30, 2019, there was $0.9 million of unrecognized compensation expense related to unvested RSL RSUs. The Company will recognize this share-based compensation expense upon achievement of the performance and market conditions through the requisite service period.

~~Note 11—Leases~~

~~The Company leases 40,232 square feet of~~has lease agreements, as lessee, for office space ~~located~~ in Brisbane, California, ~~pursuant~~which are accounted for as operating leases. The lease agreements do not contain a specified implicit interest rate; therefore, the Company’s estimated incremental borrowing rate was used to ~~an operating~~determine the present value of future minimum lease ~~agreement, as amended, that expires in May~~payments. The lease terms for the office space includes the non-cancelable period of ~~2026. The Company has the option to extend~~ the lease ~~term~~and any periods covered by renewal options that the Company is reasonably certain to exercise.

In September 2020, the Company entered into a vehicle leasing program for ~~an additional seven years but~~certain of its field-based employees. Each vehicle lease under this program will be executed separately for twelve-month periods and expire at varying times with renewal options for which the Company is not reasonably certain ~~that it~~to exercise. The rent expense for these short-term leases will ~~exercise the option and has therefore excluded it from~~be recognized on a straight-line basis over the lease term. The lease agreement, as amended, required the Company to deliver an irrevocable standby letter of credit for the duration of the lease in the amount of $0.5 million to the landlord, the amount of which is subject to reduction of approximately $0.2 million if certain conditions are met. terms.

The Company currently has no other significant operating, financing, or short-term leases.

The components of ~~operating~~the Company’s lease expense ~~for the Company’s Brisbane, California office space~~ were as follows (in thousands):


	Three Months Ended		Six Months Ended			Three Months Ended September 30,				Six Months Ended September 30,
	September 30, 2019		September 30, 2019			2020		2019		2020		2019
Operating lease cost	$	519	$	1,038	Operating lease cost	$	729	$	519	$	1,458	$	1,038

Variable lease cost ⁽¹⁾	46		55		Variable lease cost (1)	100		46		190		55
Total operating lease cost	$	565	$	1,093
Total lease cost					Total lease cost	$	829	$	565	$	1,648	$	1,093

⁽¹⁾ Variable lease cost includes common area maintenance and utilities costs which are not included in operating lease liabilities and which are expensed as incurred.

~~Supplemental cash flow~~Certain information related to the Company’s operating lease right-of-use ~~asset~~assets and operating lease liabilities for its Brisbane, California office space ~~was~~are as follows (in thousands):

Three Months Ended Six Months Ended
September 30, 2019 September 30, 2019
Cash paid for operating lease liabilities $ 501
$ 997


	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Cash paid for operating lease liabilities	$	734	$	501	$	1,463	$	997
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	0	$	0	$	0	$	9,181

As of September 30, ~~2019,~~2020, the Company’s operating ~~lease for its Brisbane, California office space~~leases had a weighted average remaining lease term of ~~6.7~~5.2 years and a weighted average discount rate of 12.3%. ~~There were no new leases added during the three and six months ended September 30, 2019.~~

As of September 30, ~~2019,~~2020, maturities of operating lease liabilities ~~for the Company’s Brisbane, California office space~~ were as follows (in thousands):

Years Ended March 31,
2020 (remainder of year) $ 1,009
2021 2,065
2022 2,128
2023 2,200
2024 2,339
Thereafter 5,307
Total lease payments 15,048
Less imputed interest ⁽¹⁾
(4,875 )
Present value of future minimum lease payments 10,173
Less operating lease liability, current portion (853 )
Operating lease liability, long-term portion $ 9,320


Years Ended March 31,
2021 (remainder of year)	$	1,476
2022	3,028
2023	3,127
2024	3,053
2025	2,409
Thereafter	2,898
Total lease payments	15,991
Less imputed interest	(4,207)
Present value of future minimum lease payments	11,784
Less operating lease liability, current portion	(1,657)
Operating lease liability, long-term portion	$	10,127

⁽¹⁾ ~~The Company~~’~~s lease contracts do not provide an implicit rate. The imputed interest was determined using the Company~~’s incremental borrowing rate, which represents an estimated rate of interest that it would have to pay to borrow equivalent funds on a collateralized basis over a similar term at the lease inception date.

Note ~~12—~~10—Development and Commercialization Agreement with Richter

On March 30, 2020, the Company entered an exclusive license agreement for Richter to commercialize relugolix combination tablet for uterine fibroids and endometriosis in Europe, the Commonwealth of Independent States including Russia, Latin

America, Australia, and New Zealand (the “Richter Development and Commercialization Agreement”). Under the agreement, the Company received an upfront payment of $40.0 million on March 31, 2020, is eligible to receive up to $40.0 million in regulatory milestone payments (of which $10.0 million was received in April 2020), $107.5 million in sales-related milestones, and tiered royalties on net sales following regulatory approval. Under the terms of the agreement, the Company will continue to lead global development of relugolix combination tablet. The Company has also agreed to assist Richter in transferring manufacturing technology from the Company’s CMOs to Richter to enable Richter to manufacture relugolix combination tablet. If requested by Richter, the Company has agreed to supply Richter with quantities of relugolix combination tablet for its territories pursuant to the Company’s agreements with its CMOs. Richter will be responsible for local clinical development, manufacturing, and all commercialization activities for its territories. The Company has also granted Richter an option to collaborate with the Company on relugolix combination tablet for future indications in women’s health other than fertility.

The Company determined that the transaction price under the Richter Development and Commercialization Agreement totaled $50.0 million, consisting of the upfront payment of $40.0 million received on March 31, 2020 and a $10.0 million regulatory milestone payment received in April 2020. No other regulatory milestones, sales-related milestones, or royalties on net sales following regulatory approval were included in the transaction price given the substantial uncertainty related to their achievement.

The Company concluded that Richter represented a customer and applied relevant guidance from ASC 606 to evaluate the accounting under the Richter Development and Commercialization Agreement. In accordance with this guidance, the Company identified one material combined performance obligation to grant a license to Richter to certain of its intellectual property and to deliver certain clinical and regulatory data packages for relugolix combination therapy, the drug used for both potential indications of uterine fibroids and endometriosis. The Company determined that its grant of a license to Richter to certain of its intellectual property was not distinct from the delivery of certain clinical and regulatory data packages pertaining to relugolix combination therapy. In evaluating the appropriate measure for the Company's performance under the combined performance obligation, the Company determined that revenues should be recognized as data packages are issued to Richter based on the relative value of the data packages delivered to date compared to the totality of the data packages it is obligated to deliver under the Richter Development and Commercialization Agreement. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Based upon the Company's assessment of its progress toward delivering relugolix combination therapy clinical and regulatory data packages to Richter, the Company concluded that as of September 30, 2020, it had satisfied approximately two-thirds of the combined performance obligation. As a result, the Company recognized $33.3 million of the transaction price as revenue during the six months ended September 30, 2020. There were 0 such amounts in the three months ended September 30, 2020 or the comparable prior year periods. As the Company currently expects to deliver the remaining substantive relugolix combination therapy data packages to Richter in the fourth quarter of the fiscal year ending March 31, 2021, the Company has recorded the remaining $16.7 million of the transaction price as deferred revenue, a current liability, on the unaudited condensed consolidated balance sheet as of September 30, 2020.

Upfront payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these agreements. Amounts payable to the Company are recorded as accounts receivable when the Company's rights to consideration is unconditional. The following table presents changes in the Company’s total contract liabilities during the six months ended September 30, 2020 (in thousands):


	Balance at						Balance at
	March 31, 2020		Additions		Deductions		September 30, 2020
Contract liabilities:
Deferred revenue, current	$	40,000	$	10,000	$	(33,333)	$	16,667

Deferred revenue related to the Richter Development and Commercialization Agreement as of September 30, 2020, which was comprised of the $50.0 million transaction price, including a $40.0 million upfront payment received in March, 2020 and a $10.0 million regulatory milestone received in April, 2020, less the revenue recognized from the effective date of the contract, will be recognized as revenue as the combined performance obligation is satisfied.

The Company had 0 receivables or contract assets as of September 30, 2020 or March 31, 2020. During the six months ended September 30, 2020, the Company's contract liabilities, which consisted of deferred revenue, decreased by $23.3 million. This decrease included deductions of $33.3 million related to revenue recognized during the six months ended September 30, 2020, partially offset by additions of $10.0 million related to a regulatory milestone received in April, 2020.

Note 11—Commitments and Contingencies

(A) Legal Contingencies

The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company accrues for loss contingencies when available information indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated. ~~In the~~For cases ~~where~~in which the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the loss contingency, including an estimable range, if possible. The Company is currently not involved in any material legal proceedings.

(B) Contract Service Providers

In the normal course of business, the Company enters into agreements with contract service ~~provides~~providers to assist in the performance of its R&D ~~activities. Expenditures to contract research organizations, or CROs,~~ and ~~contract~~clinical and commercial manufacturing ~~organizations, or CMOs, represent significant costs in the Company’s clinical development of its product candidates.~~activities. Subject to required notice periods and the Company’s obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. The Company expects to enter into additional collaborative research, contract research, clinical and commercial manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of capital resources.

The Company has agreed to indemnify its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification liability is unlimited; however, the Company holds directors’ and officers’ liability insurance which limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. In the normal course of business, the Company also enters into contracts and agreements with service providers and other parties with which it conducts business that contain indemnification provisions pursuant to which the Company has agreed to indemnify the party against certain types of third-party claims. The Company has agreed to indemnify Sumitomo Dainippon Pharma against certain losses, claims, liabilities and related expenses incurred by Sumitomo Dainippon Pharma, subject to the terms of the Sumitomo Dainippon Pharma Loan Agreement and the Investor Rights Agreement. The Company has also agreed to indemnify Sunovion against certain losses, claims, liabilities and related expenses incurred by Sunovion, subject to the terms of the Market Access Services Agreement. The Company has not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related ~~reserves were~~accruals have been established.

(D) Takeda Agreements

Under the ~~Takeda~~Company’s license agreement (the “Takeda License ~~Agreement,~~Agreement”) with Takeda, the Company will pay Takeda a fixed, high single-digit royalty on net sales of relugolix and MVT-602 products in the Company’s territory, subject to certain agreed reductions. Takeda will pay the Company a royalty at the same rate on net sales of relugolix products for prostate cancer in the Takeda Territory, subject to certain agreed reductions. Royalties are required to be paid, on a product-by-product and country-by-country basis, until the latest to occur of the expiration of the last to expire valid claim of a licensed patent covering such product in such country, the expiration of regulatory exclusivity for such product in such country, or 10 years after the first commercial sale of such product in such country. Under the Takeda License Agreement, there was no upfront payment and there are no payments upon the achievement of clinical development or marketing approval milestones. As the amount and timing of any potential future payments under the Takeda License Agreement are not probable and estimable, no such potential commitments have been included in the unaudited condensed consolidated balance sheet.

~~In May 2018,~~If the Takeda License Agreement is terminated in its entirety or with respect to relugolix for prostate cancer, other than for safety reasons or by the Company ~~entered into~~for Takeda’s uncured material breach, prior to receipt of the first regulatory approval of relugolix for prostate cancer in Japan, then the Company must either reimburse Takeda for its out of pocket costs and expenses directly incurred in connection with Takeda’s completion of the relugolix development for prostate cancer, up to an agreed upon cap, or complete by itself the conduct of any clinical studies of relugolix for prostate cancer that are ongoing as of the effective date of such termination, at its cost and expense.

Pursuant to a Commercial Manufacturing and Supply Agreement entered into with Takeda ~~or the Takeda~~(the “Takeda Commercial Supply ~~Agreement. Pursuant to the~~Agreement”), Takeda ~~Commercial Supply Agreement, Takeda has~~ agreed to supply the Company and the Company ~~has~~ agreed to obtain from Takeda certain quantities of relugolix drug substance according to agreed-upon quality specifications and in order to commercialize relugolix in accordance with the Takeda Agreement. Under the Takeda Commercial Supply Agreement, the Company will pay Takeda a fixed price per kilogram of relugolix drug substance through December 31, 2019. The Company has made, and Takeda has accepted an initial firm order to supply relugolix drug substance to the Company through December 31, 2019.specifications. For relugolix drug substance manufactured or delivered on or after ~~such date,~~December 31, 2019, the Company will pay Takeda a price per kilogram of relugolix drug substance to be agreed upon between the parties at the beginning of each fiscal year.

The initial term of the Takeda Commercial Supply Agreement began on May 30, 2018 and will continue for five years. At the end of the initial term, the Takeda Commercial Supply Agreement will automatically renew for successive one-year terms, unless either party gives notice of termination to the other at least 12 months prior to the end of the then-current term. The Takeda Commercial Supply Agreement may be terminated by either party upon 90 days’ notice of an uncured material breach of its terms by the other party, or immediately upon notice to the other party of a party’s bankruptcy. Each party will also have the right to terminate the Takeda Commercial Supply Agreement, in whole or in part, for any reason upon 180 days’ prior written notice to the other party, provided that any then-open purchase orders ~~including the initial firm order for relugolix drug substance through December 31, 2019,~~ will remain in effect and be binding on both parties. The Takeda Commercial Supply Agreement, including any then-open purchase ~~order~~orders thereunder, will terminate immediately upon the termination of the Takeda License Agreement in accordance with its terms.

The Takeda Commercial Supply Agreement also includes customary provisions relating to, among others, delivery, inspection procedures, warranties, quality management, storage, handling and transport, intellectual property, confidentiality and indemnification.

~~(E) Financing Arrangements~~

~~The Company has entered into financing arrangements with NovaQuest and Hercules. See Note 6 for additional information.~~

Note ~~13—~~12—Subsequent Events

During October 2019, the Company entered into a Sublease Agreement, or sublease, for 20,116 square feet of office space within the same building as its current corporate office space located in Brisbane, California. The sublease term expires on February 29, 2024, with total expected minimum payments over the sublease term of approximately $3.9 million, of which approximately $0.4 million relates to the fiscal year ended March 31, 2020 and approximately $3.5 million relate to each of the fiscal years ended March 31, 2021 through 2024. The sublease required the Company to deliver an irrevocable standby letter of credit to the sublessor for the duration of the lease in the amount of $0.2 million.

~~(B) Letter Agreement with~~ Sumitomo Dainippon Pharma ~~Co. Ltd.~~

On October 31, 2019, the Company’s largest shareholder, Roivant Sciences Ltd. (“RSL”) and certain of its affiliates (not including the Company) entered into an agreement with Sumitomo Dainippon Pharma, Co. Ltd. (“Sumitomo”) (such agreement, the “Sumitomo-Roivant Agreement”) which provides that upon the closing of the transactions contemplated thereby (the “Sumitomo Transactions”), a subsidiary of Sumitomo (such entity, the “Acquiring Entity”), will acquire RSL’s ownership interest in the Company and become a significant shareholder of the Company. The Company expects that, at or prior to the closing of the Sumitomo Transactions, RSL will ensure that the Acquiring Entity will obtain not less than a majority of the Company’s outstanding common shares by purchasing additional common shares at prices not below market trading prices and delivering such shares, or voting rights with respect thereto, to the Acquiring Entity.

~~On October 31, 2019, in connection with RSL’s entry into the Sumitomo-Roivant~~Loan Agreement the Company entered into a Letter Agreement with Sumitomo, pursuant to which Sumitomo has committed to enter into an agreement to provide the Company a $350.0 million low-interest, five-year term loan facility (the “Loan Facility”), with no repayments due until the end of the term to fund the Company’s operating expenditures. The Company expects to be able to access the Loan Facility on a quarterly basis, subject to certain terms and conditions. The Loan Facility is expected to be entered into and become effective upon or promptly following the closing of the Sumitomo Transactions.

Pursuant to the ~~Letter~~terms of the Sumitomo Dainippon Pharma Loan Agreement (see Note 5), the Company ~~will take~~is permitted to draw down funds once per calendar quarter, subject to certain ~~actions with respect~~conditions. In October 2020, the Company borrowed $60.0 million under the Sumitomo Dainippon Pharma Loan Agreement. Subsequent to this draw, approximately $86.3 million of borrowing capacity remains available to the ~~composition of its Board of Directors and~~Company.

(B) 2020 Inducement Plan

On November 4, 2020, the ~~committees~~Compensation Committee of the Board of Directors ~~as well as amending certain provisions of its bye-laws, and in connection with the closing~~ of the ~~Sumitomo Transactions,~~Company adopted the ~~Company and Sumitomo will also enter into an Investors Rights Agreement,~~Myovant Sciences Ltd. 2020 Inducement Plan (the “2020 Inducement Plan”), which, ~~will provide, among other things, that for so long as Sumitomo and its affiliates continue~~subject to ~~hold at least 50% of~~ the ~~outstanding common~~adjustment provisions thereof, reserved 1,000,000 shares of the Company’s common shares for issuance pursuant to equity awards granted under the 2020 Inducement Plan. The 2020 Inducement Plan was adopted without shareholder approval pursuant to the Listed Company ~~the Company’s Board of Directors will continue to include a minimum of 3 independent directors who, until Sumitomo and its affiliates cease to hold at least 35%~~Manual Rule 303A.08 (“Rule 303A.08”) of the ~~outstanding common shares~~New York Stock Exchange (the “NYSE”). The 2020 Inducement Plan provides for the grant of restricted stock units and non-qualified stock options, and contains terms and conditions intended to comply with the inducement award exception under the NYSE rules. In accordance with Rule 303A.08, awards under the 2020 Inducement Plan may only be made to individuals not previously employees of the Company, ~~will~~or being rehired following a bona fide period of interruption of employment, as an inducement material to such individuals’ entering into employment with the Company. An award is a right to receive the Company’s common shares pursuant to the 2020 Inducement Plan pursuant to a restricted stock unit award or a non-qualified stock option award. Through November 12, 2020, the date of issuance of this Quarterly Report on Form 10-Q, there have ~~approval rights over certain corporate actions, including related-party transactions between~~been no grants made pursuant to the ~~Company and Sumitomo. The Investors Rights Agreement will further include a standstill provision effective until Sumitomo or its affiliates cease to hold at least 35%~~terms of the ~~outstanding common shares~~2020 Inducement Plan.

Table of the Company, which provides, among other things, (a) a non-waivable condition requiring approval by a majority of the Company’s minority shareholders for any transaction that would cause Sumitomo or its subsidiaries to hold beneficial ownership of the Company of greater than 60% of the outstanding voting power of the Company. Additionally, for a standstill period of three years, any such transaction must also be made on a confidential basis to the Company’s independent directors and is subject to approval by a majority of the Company’s independent directors, or (b) that such transaction be effected under the circumstances set forth in a specified section of the Company’s Bye-Laws having to do with third-party acquisition proposals.Contents

Sumitomo has also agreed that upon the Company’s request, the parties will discuss terms upon which Sumitomo will provide the Company access to its U.S. commercial infrastructure and operational support as the Company moves forward with the commercialization of relugolix.

The Company has further agreed, until the closing of the Sumitomo Transactions, to reasonably assist and reasonably cooperate with RSL in complying with the interim operating covenants contained in the Sumitomo-Roivant Agreement that relate to the Company, in which RSL has agreed, among other things, to cause the Company to conduct its business in the ordinary course, including refraining from taking a list of actions without Sumitomo’s consent, including (subject to certain limitations) but not limited to incurring additional indebtedness, issuance of equity securities, granting of liens, and sales of assets.

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

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended March 31, ~~2019~~2020 included in our Annual Report on Form 10-K, filed with the ~~U.S. Securities and Exchange Commission, or the~~ SEC on May ~~24, 2019.~~18, 2020. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Myovant,” the “Company,” “we,” “us,” and “our” refer to Myovant Sciences Ltd. and its wholly-owned subsidiaries.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, ~~or the Securities Act,~~(the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, ~~or the Exchange Act.~~(the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “to be,” “will,” “would,” or the negative or plural of these words, or similar expressions or variations, although not all forward-looking statements contain these words. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those expressed or implied by these forward-looking statements.

The forward-looking statements appearing in a number of places throughout this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things:

•the impact of pandemics, epidemics or outbreaks of infectious diseases, including the effect that the COVID-19 pandemic and related “shelter-in-place” orders and other measures will have on our business operations, financial conditions and results of operations;

•the success and anticipated timing of our clinical ~~trials~~studies for relugolix combination therapy (relugolix 40 mg, plus estradiol 1.0 mg and norethindrone acetate 0.5 mg), relugolix 120 mg as a monotherapy, and MVT-602;

•the anticipated start dates, durations and completion dates of our ongoing and future nonclinical ~~studies~~ and clinical ~~trials;~~studies;

•the anticipated designs of our future clinical ~~trials;~~studies;

•the anticipated future regulatory submissions and the timing of, and our ability to, obtain and maintain regulatory approvals for relugolix combination ~~therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg), including in a single~~ tablet, relugolix ~~120 mg as a~~ monotherapy tablet, MVT-602 and any future product candidates;

•our ~~plans~~ability to successfully plan for and commercialize relugolix combination tablet and relugolix monotherapy tablet, if approved;

•our ability to procure sufficient quantities of commercial relugolix drug substance and drug product from approved third party CMOs;

•our ability to achieve commercial sales of any approved products, whether alone or in collaboration with others;

•our ability to obtain coverage ~~and adequate reimbursement~~ for our products if commercialized;

•the rate and degree of market acceptance and clinical utility of any approved products;

•our ability to initiate and continue relationships with third-party clinical research organizations and manufacturers;

•our ability to quickly and efficiently identify and develop new product candidates;

•our ability to hire and retain our management and other key ~~scientific or management~~ personnel;

•our ability to obtain, maintain and enforce intellectual property rights for our product candidates;

•our estimates regarding our results of operations, financial condition, liquidity, capital requirements, access to capital, prospects, growth and strategies;

•our ability to continue to fund our operations with the cash, cash equivalents, and marketable securities currently on hand, including our expectations ~~as to~~ for how long these capital resources will enable us to fund our operations;

•our expectations regarding potential future payments that we are eligible to receive from Richter under the ~~anticipated transfer~~Richter Development and Commercialization Agreement;

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•our ~~common shares held by Roivant Sciences Ltd. (“RSL”)~~ability to borrow under the Sumitomo Dainippon Pharma ~~Co. Ltd. (“Sumitomo”), which is expected~~Loan Agreement and our ability to ~~result in~~effect the new debt facility transaction with Sumitomo ~~obtaining voting rights over a majority of~~Dainippon Pharma pursuant to the 2020 Commitment Letter with Sumitomo Dainippon Pharma;

•third party collaboration partners' abilities to perform their obligations under our ~~common shares;~~agreements with them;

~~our anticipated transactions contemplated by the Letter Agreement by and between Sumitomo and us;~~

~~the potential for us to obtain a priority review voucher from RSL and Sumitomo and the likelihood and timing of when such priority review voucher is expected to be available and transferred to us;~~

•our ability to raise additional ~~capital;~~capital if needed, on acceptable terms to us;

•industry trends;

•developments and projections relating to our competitors or our industry; and

•the success of competing drugs that are or may become available.

Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors known and unknown that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, particularly in the section titled “Risk Factors” set forth in Part II. Item 1A. of this Quarterly Report on Form 10-Q, and in our other filings with the ~~United States, or U.S., Securities and Exchange Commission, or~~ SEC. These risks are not exhaustive. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

All brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Myovant,” the “Company,” “we,” “us,” and “our” refer to Myovant Sciences Ltd. and its wholly-owned subsidiaries.

Business Overview

We are a healthcare company ~~focused on developing innovative treatments~~that aspires to redefine care for ~~women’s health~~women and ~~prostate cancer.~~for men through purpose-driven science, empowering medicines, and transformative advocacy. Our lead product candidate is relugolix, ana once-daily, oral ~~once-daily small molecule that acts as a gonadotropin-releasing hormone, or~~ GnRH receptor ~~antagonist that~~antagonist. Relugolix monotherapy tablet (120 mg) is ~~currently being evaluated~~under regulatory review in ~~multiple Phase 3 clinical trials across three distinct indications. We are developing a relugolix~~the U.S. for men with advanced prostate cancer. Relugolix combination tablet (relugolix 40 mg, ~~plus~~ estradiol 1.0 mg, and norethindrone acetate 0.5 mg) is under regulatory review in the U.S. and Europe for ~~the treatment of heavy menstrual bleeding associated~~women with uterine fibroids and is under development for ~~pain associated~~women with ~~endometriosis, and relugolix 120 mg as a monotherapy for advanced prostate cancer. In addition, we~~endometriosis. We are also developing MVT-602, an oligopeptide kisspeptin-1 receptor agonist, for the treatment of female infertility as a part of assisted reproduction. ~~Both~~

Takeda granted us a worldwide license to develop and commercialize relugolix (excluding Japan and certain other Asian countries) and an exclusive right to develop and commercialize MVT-602 ~~were licensed~~in all countries worldwide. On March 30, 2020, we entered into an exclusive license agreement with Richter for Richter to ~~us by Takeda Pharmaceuticals International AG, or Takeda, on April 29, 2016.~~commercialize relugolix combination tablet for uterine fibroids and endometriosis in certain territories outside of the U.S. Under this agreement, we have retained all of our rights to relugolix combination tablet in the U.S. and Canada, as well as rights to relugolix in other therapeutic areas outside of women’s health.

Since our inception, we have devoted substantially all of our efforts to identifying and in-licensing our product candidates, organizing and staffing our company, raising capital, preparing for and advancing the clinical development of our product candidates and preparing for potential future regulatory approvals and commercialization of ~~relugolix.~~

On May 14, 2019, we announced that LIBERTY 1, the first of two Phase 3 studies evaluating once-daily relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and six key secondary endpoints, and on July 23, 2019, we announced that LIBERTY 2, the second of two Phase 3 studies evaluating relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and the same six key secondary endpoints. On July 23, 2019, we also announced that a separate clinical study of single-tablet relugolix combination therapy met all required and pre-specified U.S. Food and Drug Administration, or FDA, criteria for bioequivalence. The single-tablet regimen is the formulation intended to be offered to women should relugolix combination therapy receive FDA approval.

On November 12, 2019, we announced that RSL and Sumitomo have committed to us a priority review voucher (“PRV”) expected to become available in early December 2019. We plan to use the PRV in conjunction with our New Drug Application (“NDA”) submission for a once-daily, relugolix combination tablet ~~for the treatment~~and relugolix monotherapy tablet.

Our majority shareholder is Sumitovant, a wholly-owned subsidiary of ~~heavy menstrual bleeding~~Sumitomo Dainippon Pharma. As of September 30, 2020, Sumitovant directly, and uterine fibroids, potentially decreasing the standard FDA review time. We have decided to defer our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids until April 2020, which would allow inclusion of the complete 12-month safety data from the LIBERTY open-label extension study, key data that may positively impact the labeled duration of use of the combination tablet. The terms regarding how the PRV will be transferred to us will be determined in connection with the closing of the Roivant-SumitomoSumitomo Dainippon Pharma ~~transaction. The transfer is expected to be a related-party transaction and will not involve the issuance~~indirectly, own 48,641,181, or approximately 53.7%, of ~~Myovant~~our outstanding common shares. ~~We also plan to submit a Marketing Authorisation Application (MAA) to the European Medicines Agency in the first quarter of calendar year 2020.~~

Second Fiscal Quarter Ended September 30, ~~2019~~2020 and Recent ~~Business Highlights~~Corporate Updates

The following summarizes our second fiscal quarter ended September 30, ~~2019~~2020 and recent ~~business highlights:~~corporate updates, as well as anticipated upcoming milestones.

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Relugolix ~~Phase 3~~ Clinical Programs

•Prostate Cancer:

◦Relugolix monotherapy tablet is under Priority Review by the U.S. Food and Drug Administration (“FDA”) and is on track for a decision by its December 20, 2020 target action date. The NDA is supported by the positive Phase 3 HERO study results, including a 97% responder rate and six positive key secondary endpoints. Relugolix also demonstrated a lower incidence of major adverse cardiovascular events compared to leuprolide acetate, the current standard of care. The Phase 3 HERO study results were published in the New England Journal of Medicine on June 4, 2020.

◦On ~~July 23, 2019,~~September 29, 2020, we announced ~~that LIBERTY 2,~~results of an additional secondary endpoint of castration resistance-free survival assessed in the ~~second~~subgroup of ~~two~~men with metastatic prostate cancer from the Phase 3 ~~studies evaluating once-daily~~HERO study of relugolix monotherapy in advanced prostate cancer. Relugolix monotherapy had a similar rate of castration resistance-free survival compared to leuprolide acetate (74% vs. 75%, respectively), and did not achieve statistical superiority (p = 0.84).

◦On October 19, 2020, we presented an economic analysis of the Phase 3 HERO data at the Academy of Managed Care Pharmacy (“AMCP”) Nexus 2020 Virtual Meeting, demonstrating that treatment with relugolix may prevent one major adverse cardiovascular event for every 31 patients treated versus patients receiving leuprolide injections.

◦We currently expect to submit a Marketing Authorisation Application (“MAA”) to the European Medicines Agency (“EMA”) for relugolix monotherapy tablet for advanced prostate cancer in the first half of calendar year 2021.

•Uterine Fibroids:

◦In August 2020, the FDA accepted our New Drug Application (“NDA”) for relugolix combination ~~therapy~~tablet for the treatment of women with heavy menstrual bleeding associated with uterine fibroids, setting a target action date of June 1, 2021.

◦On September 14, 2020, we announced one-year data on bone mineral density (“BMD”) from the Phase 3 LIBERTY program. The BMD results from the LIBERTY program demonstrated maintenance of BMD through one year and were consistent with those observed in a separate prospective observational study of untreated, age-matched women with uterine fibroids. These findings were presented at the American Society for Bone and Mineral Research (“ASBMR”) 2020 Annual Meeting Virtual Event, held on September 11-15, 2020.

◦On March 9, 2020, we announced the submission of a MAA to the EMA for relugolix combination tablet for the treatment of women with moderate to severe symptoms associated with uterine fibroids. The application has completed validation and is now under evaluation by the EMA. We currently expect the European Commission decision on this application in 2021. If approved, this launch will be executed by Richter, our commercialization partner for relugolix combination tablet for the uterine fibroids and endometriosis indications in Europe and certain other international markets.

◦On October 21, 2020, we announced the presentation of data at the American Society for Reproductive Medicine (“ASRM”) 2020 Virtual Congress, including long-term extension data in women with symptomatic uterine ~~fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and the same six key secondary endpoints as LIBERTY 1. In the primary endpoint analysis, 71.2% of~~fibroids. Results indicated that women receiving once-daily relugolix combination therapy achieved the responder criteria compared with 14.7% of women receiving placebo (p < 0.0001). The 24-week study achieved the same six key secondary endpoints with statistical significance compared to placebo as those in LIBERTY 1 including mean changeexperienced, on average, a 90% reduction in menstrual blood loss from baseline ~~to week 24,~~at one year. Additionally, 87.7% of women achieved the responder criteria for reduction in ~~pain in women with pain~~menstrual blood loss at ~~baseline,~~one year, and lumbar spine and total hip BMD were maintained over one year. A poster presentation also described a validated exposure-response model simulating long-term effects of relugolix combination therapy on BMD at the lumbar spine that projected maintenance of BMD for at least three years. Other data from the LIBERTY program including improvement in quality of life, ~~amenorrhea (defined as no or negligible~~reduction in menstrual blood ~~loss), improvement~~loss in ~~anemia in those women with anemia at baseline,~~the first treatment cycle, and reduction in uterine ~~volume. The~~fibroid-associated pain, were also presented.

◦Additional data from the Phase 1 ovulation inhibition study from 67 healthy women treated with relugolix combination therapy, resulting in 100% ovulation inhibition and 100% return to ovulation or menses after discontinuation of treatment, were also presented at the ASRM 2020 Virtual Congress.

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•Endometriosis:

◦Data from the replicate Phase 3 SPIRIT 1 and SPIRIT 2 studies were presented at the ASRM 2020 Virtual Congress on October 20, 2020 in an oral presentation named the Prize Paper by the Endometriosis Special Interest Group. Relugolix combination therapy met both co-primary endpoints and resulted in significantly more women with clinically meaningful reductions in dysmenorrhea and non-menstrual pelvic pain compared with those on placebo over 24 weeks of therapy (p < 0.0001) in each study. Changes in BMD at the lumbar spine from both studies pooled over 24 weeks were minimal in the relugolix combination therapy groups. Specifically, relugolix combination therapy achieved both co-primary endpoints by demonstrating 74.5% and 75.2% of women with dysmenorrhea (menstrual pain) and 58.5% and 66.0% of women with non-menstrual pelvic pain achieving clinically meaningful reductions in pain, compared to 26.9% and 30.4% of women with dysmenorrhea and 39.6% and 42.6% of women with non-menstrual pelvic pain in the placebo group, in the SPIRIT 1 and SPIRIT 2 studies respectively (all p-values < 0.0001). On average, women receiving relugolix combination therapy had a 73.3% reduction on the 11-point (0 to 10) Numerical Rating Scale for dysmenorrhea from 7.3 (severe pain) to 1.8 (mild pain) in SPIRIT 1 and a 75.1% reduction in SPIRIT 2 with a decrease from 7.2 (severe pain) to 1.7 (mild pain). All seven key secondary endpoints measured at week 24 and compared to placebo achieved statistical significance in SPIRIT 1, including changes in mean dysmenorrhea and overall pelvic pain, impact of pain on daily activities as measured by the Endometriosis Health Profile-30 (“EHP-30”) pain domain, greater proportions of women not using analgesics (p-values < 0.0001), changes in mean non-menstrual pelvic pain (p = 0.0002), greater proportions of women not using opioids (p = 0.0005), and changes in mean dyspareunia (painful intercourse) (p = 0.0149). Six key secondary endpoints measured at week 24 and compared to placebo achieved statistical significance in SPIRIT 2, including changes in mean dysmenorrhea and overall pelvic pain, impact of pain on daily activities as measured by the EHP-30 pain domain, a greater proportion of women not using opioids (all p-values < 0.0001), changes in non-menstrual pelvic pain (p = 0.0012), and dyspareunia (painful intercourse) (p = 0.0489). A seventh key secondary endpoint ~~reduction~~evaluating change in ~~uterine fibroid volume,~~analgesic use did not achieve statistical ~~significance.~~

~~On July 23, 2019, we also announced that a separate clinical study~~significance in SPIRIT 2. Relugolix combination therapy was generally well-tolerated with minimal BMD loss over 24 weeks. The overall incidence of ~~single-tablet~~adverse events in the relugolix combination and placebo groups was similar (71.2% vs. 66.0% in SPIRIT 1; 80.6% vs. 75.0% in SPIRIT 2). In the relugolix combination therapy ~~met all required~~group, 3.8% and ~~pre-specified FDA criteria for bioequivalence, providing data necessary~~5.3% of women had adverse events leading to ~~include~~discontinuation of treatment versus 1.9% and 3.9% in the ~~one tablet, once-daily dosing regimen~~placebo group in SPIRIT 1 and SPIRIT 2, respectively. The only reported adverse events in at least 10% of women in the relugolix combination ~~therapy in the NDA submission~~group for ~~approval of the treatment~~SPIRIT 1 were headache and hot flashes and for ~~uterine fibroids.~~SPIRIT 2 were headache, nasopharyngitis, and hot flashes.

~~In October 2019, results from the LIBERTY 1 and LIBERTY 2 studies were presented in a late-breaking oral presentation at the 2019 American Society for Reproductive Medicines Scientific Congress.~~

◦We expect top-line data from the Phase 3 HERO trial evaluating the safety and efficacy of relugolix 120 mg in 934 men with advanced prostate cancer in the fourth quarter of calendar year 2019, and assuming positive data, we currently ~~plan~~expect to submit an NDA towith the FDA for ~~our once-daily, oral~~ relugolix ~~monotherapy~~combination tablet for ~~men~~the treatment of women with ~~advanced prostate cancer~~endometriosis-associated pain in the ~~second quarter~~first half of calendar year 2020. Enrollment of 139 additional men with metastatic prostate cancer in the HERO study was completed in July 2019. The objective of enrolling these men was to assess the secondary objective of demonstrating that relugolix can delay the time to progression of the lethal state of the disease, castration-resistant prostate cancer, as compared to leuprolide. 2021.

◦We currently expect to ~~present top-line results from this additional cohort, including~~submit an MAA to the ~~castration resistance-free survival endpoint, in the third quarter of calendar year 2020.~~

~~In August and October 2019, we completed patient recruitment~~EMA for relugolix combination tablet for the ~~Phase 3 SPIRIT 2~~treatment of women with endometriosis-associated pain in 2021. Richter will be the MAA sponsor.

Related Party Agreements

Market Access Services Agreement

On August 1, 2020, our subsidiary, MSG, entered into the Market Access Services Agreement with Sunovion Pharmaceuticals Inc. (“Sunovion”), a subsidiary of Sumitomo Dainippon Pharma, pursuant to which, among other things, Sunovion agreed to provide to MSG certain market access services with respect to the distribution and ~~SPIRIT 1 trials, respectively, evaluating~~sale of relugolix monotherapy tablet and relugolix combination tablet. MSG, in turn, appointed Sunovion as the ~~safety and efficacy~~exclusive distributor of relugolix combination ~~therapy in women with pain associated with endometriosis. We expect to report top-line results from SPIRIT 2~~tablet and ~~SPIRIT 1~~a non-exclusive distributor of relugolix monotherapy tablet, each in the ~~first and second quarters of calendar year 2020, respectively.~~

~~Corporate~~

~~On October 31, 2019, we entered into a Letter Agreement with Sumitomo in connection with the Sumitomo-Roivant Agreement pursuant to which Sumitomo will acquire~~United States, including all of ~~our common shares held by RSL. The Letter Agreement provides, among other things, that~~its territories and possessions. For the three and six months ended September 30, 2020, we ~~will enter into a loan~~incurred $1.1 million of expense under this agreement ~~with Sumitomo that will provide us with a $350.0 million term loan, that we will enter into an Investors Rights Agreement that~~(inclusive of third-party pass through costs billed to us), which is intended to provide certain protections for minority shareholders, that we will take certain corporate actions, and that until the transactions contemplated by the Sumitomo-Roivant Agreement close we reasonably assist RSLincluded in ~~complying with the interim operating covenants contained~~G&A expense in the ~~Sumitomo-Roivant Agreement that relate to us, in which RSL has agreed, among other things, to cause us to conduct our business in the ordinary course, including refraining from taking a list~~accompanying unaudited condensed consolidated statements of actions without Sumitomo’s consent, including (subject to certain limitations) but not limited to incurring additional indebtedness, issuance of equity securities, granting of liens, and sales of assets.operations. Additional information is included in Note ~~13(B)~~5 to ~~the~~our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Sumitomo Dainippon Pharma Loan Commitment

On ~~November 12, 2019,~~August 5, 2020, we ~~announced that Roivant Sciences~~obtained a debt commitment letter from Sumitomo Dainippon Pharma, as amended by a letter dated September 29, 2020 (the “2020 Commitment Letter”), pursuant to which, subject to the terms and conditions set forth therein, Sumitomo ~~have~~Dainippon Pharma has committed to provide us with an additional $200.0 million low-interest, five-year unsecured revolving term loan commitment, the proceeds of which may be used for business operating expenditures of us and our subsidiaries. The commitments are in addition to the commitments made available to us and our subsidiaries by Sumitomo

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Dainippon Pharma under the existing Sumitomo Dainippon Pharma Loan Agreement. Additional information is included in Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Manufacturing Update

In June 2020, the FDA issued a ~~priority review voucher~~warning letter to Takeda following a routine inspection of aseptic finished pharmaceuticals (drug product) manufacturing at Takeda’s manufacturing facility located at Takeda 4720, Mitsui, Hikari, Yamaguchi (the “Hikari Facility”). The warning letter indicated that the FDA was not satisfied with Takeda’s response to an FDA Form 483 issued to Takeda following the inspection and cited significant violations of current good manufacturing practice (“~~PRV”~~cGMP”) ~~expected~~for finished pharmaceuticals. The Hikari Facility is one of two CMOs included in our regulatory filings for the manufacture of relugolix drug substance. We will procure the commercial relugolix drug substance needed for our anticipated U.S. launch in advanced prostate cancer solely from Excella GmbH & Co. KG, the second source contract manufacturing organization included in our initial regulatory filings. We do not expect that the issues relating to ~~become available~~the Hikari Facility will have an effect on the FDA’s target action dates or EMA approval date for any of our regulatory filings or our launch readiness.

COVID-19 Pandemic

In December 2019, an outbreak of a novel strain of coronavirus, or COVID-19, was identified. Due to the rapid and global spread of the virus, in ~~early December 2019.~~March 2020, the World Health Organization categorized COVID-19 as a pandemic and it continues to spread throughout the U.S. and other countries across the world. To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders, closing schools, restricting travel, and social distancing guidelines and causing some businesses to suspend operations. It remains unclear how long these measures will remain in place and whether these measures will be effective. Further, recently it has been reported that the rate of the reported number of COVID-19 cases in the United States is increasing, which may further impact the effects that the COVID-19 pandemic may have on us.

Our priorities during the COVID-19 pandemic are protecting the health and safety of our employees and patients while continuing our mission to redefine care for women and for men. We ~~plan~~believe the safety measures we are taking in response to ~~use~~ the ~~PRV~~COVID-19 pandemic meet or exceed the guidance required from government and public health officials. Beginning in ~~conjunction with~~mid-March 2020, substantially all of our workforce began working from home and we curtailed employee travel. We have adopted remote working tools to minimize the disruption to our business activities. At this time, we have not identified a material change to our productivity as a result of these measures, but this could change, particularly if restricted travel, closed schools, and shelter-in-place orders are not removed or significantly eased.

To date, the impact of the COVID-19 pandemic on our ability to advance our clinical studies, regulatory activities, and preparation for the potential commercialization of our product candidates has been limited and all of our publicly announced milestones remain on track. We submitted our NDA ~~submission~~to the FDA for relugolix monotherapy tablet for the treatment of men with advanced prostate cancer in April 2020, which has been accepted by the FDA for Priority Review with a ~~once-daily,~~target action date of December 20, 2020. In May 2020, we submitted our NDA to the FDA for relugolix combination tablet for the treatment of women with heavy menstrual bleeding ~~and~~associated with uterine fibroids, ~~potentially decreasing~~which has been accepted by the ~~standard~~ FDA with a target action date of June 1, 2021. Regulatory agency pre-approval inspections are limited, and it is not clear if virtual inspections are acceptable due to COVID-19 and this may impact the FDA's review ~~time. We have decided to defer our NDA submission for a once-daily,~~process and timing of potential approval of these product candidates. Should relugolix monotherapy tablet or relugolix combination tablet ~~for~~receive regulatory approval, we will likely commercially launch these products in the ~~treatment~~COVID-19 environment. In response to the COVID-19 pandemic, health professionals may reduce staffing and reduce or postpone appointments with patients, or patients may cancel or miss appointments, resulting in fewer prescriptions. In addition, if our product candidates receive regulatory approval, our sales teams would likely have to make presentations to physicians and the medical community solely by virtual means instead of ~~heavy menstrual bleeding~~in-person, which could reduce the number of medical professionals we are able to present to, and ~~uterine fibroids until April 2020, which would allow inclusion~~these virtual meetings may not be as successful as in-person meetings. At this time, we do not anticipate a substantial impact from the COVID-19 pandemic on our supply chain and ability to launch relugolix monotherapy tablet or relugolix combination tablet.

The ultimate impact of the ~~complete 12-month safety data~~COVID-19 pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, our financial results, our clinical trials, our supply chains, our pre-launch commercial readiness activities, end user demand for our products, if approved, healthcare systems or the global economy as a whole. The extent to which the COVID-19 pandemic impacts us will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Refer to the risk factor titled “Business interruptions resulting from effects of pandemics or epidemics such as the ~~LIBERTY open-label extension study, key data that may positively impact the labeled duration of use~~novel strain of the ~~combination tablet.~~coronavirus known as COVID-19, may materially and

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adversely affect our business and financial condition,” as well as other risk factors included in the section titled “Risk Factors” set forth in Part II. Item 1A.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic and the negative impacts that it is having on the global economy and U.S. companies. The ~~terms regarding how the PRV will be transferred~~CARES Act includes various financial measures to ~~us will be determined in connection with the closing~~assist companies, including temporary changes to income and non-income-based tax laws. We have implemented certain provisions of the ~~Roivant-Sumitomo Dainippon Pharma transaction. The transfer is expected~~CARES Act, such as deferring employer payroll taxes through the end of calendar year 2020. As of September 30, 2020, we have deferred $1.2 million of employer payroll taxes, of which 50% are required to be ~~a related-party transaction~~deposited by December 2021 and ~~will not involve~~ the ~~issuance of Myovant shares.~~

remaining 50% by December 2022. The deferred payroll tax liability is included in other liabilities on the accompanying unaudited condensed consolidated balance sheet.

Financial History

We have historically funded our operations primarily from the issuance and sale of our common shares ~~from the issuance of notes to NovaQuest Capital Management, or NovaQuest,~~ and from ~~the Term Loans we have with Hercules~~debt financing arrangements. Additional information about our sources of funding is included under “—Liquidity and Capital ~~Inc., or Hercules.~~

AsResources—Sources of September 30, 2019, and March 31, 2019, we had an accumulated deficit of $640.5 million and $502.0 million, respectively. We had net losses of $70.6 million and $65.8 million for the three months ended September 30, 2019 and 2018, respectively, and $138.5 million and $127.9 million for the six months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, we had $157.6 million of cash, cash equivalents, and marketable securities available to us, as compared to $156.1 million of cash and cash equivalents available to us as of March 31, 2019.Liquidity” below.

Our Product Candidates

Relugolix

We are currently developing relugolix in three ~~target~~ indications: heavy menstrual bleeding associated with uterine fibroids; pain associated with endometriosis; and advanced prostate cancer. Relugolix is an oral, once-daily, small molecule that acts as a GnRH receptor antagonist that binds to and inhibits GnRH receptors in the anterior pituitary gland. Inhibition of GnRH receptors decreases the release of gonadotropins (luteinizing hormone (“LH”) and follicle-stimulating ~~hormone)~~hormone (“FSH”)), thereby decreasing the downstream production of estrogen and progesterone by the ovaries in women and testosterone by the testes in men.

As a GnRH receptor antagonist, relugolix has a ~~clinically validated~~clinically-validated mechanism of action in each of our three ~~target~~targeted indications. ~~Lowering~~The direct and rapid action of relugolix on the pituitary-gonadal axis is distinct from approved luteinizing hormone-releasing hormone (“LHRH”) agonists which are administered as depot injections and result in an initial surge in levels of gonadotropins, and estrogen and progesterone or testosterone, before resulting in pituitary desensitization and a fall in hormone levels ~~has previously been demonstrated to effectively decrease heavy menstrual bleeding~~over weeks. Approved LHRH agonist injections such as leuprolide acetate are used in women ~~with~~to treat the symptoms of uterine fibroids and endometriosis, but the adoption and duration of use is limited due to ~~reduce the pelvic pain associated with endometriosis.~~ BMD loss and vasomotor symptoms.

We are developing relugolix combination ~~therapy~~tablet (relugolix 40 mg, ~~plus~~ estradiol 1.0 mg and norethindrone acetate 0.5 mg) administered orally once-daily, with the goal of ~~optimizing estradiol~~maintaining estrogen levels in the low normal range to achieve the long-term benefit of relugolix on symptoms of uterine fibroids and endometriosis, while maintaining bone health and mitigating side effects from a low-estrogen state, such as vasomotor symptoms. We ~~expect to launch in our women’s health indications with a single-tablet regimen of relugolix combination therapy administered orally once-daily. We~~ have ~~recently conducted~~successfully completed a bioequivalence study, ~~to demonstrate~~which demonstrated the bioequivalence of ~~the single-tablet~~our relugolix combination tablet with relugolix combination therapy, ~~with~~ the co-administered regimen used in the LIBERTY and SPIRIT clinical ~~program~~programs (one relugolix 40 mg tablet ~~and~~plus one tablet containing estradiol 1.0 mg and norethindrone acetate 0.5 mg). ~~The single tablet met FDA bioequivalence criteria. Twelve-month stability~~We expect to launch in the women’s health indications with our single-tablet regimen.

Lowering estrogen and progesterone levels has been demonstrated, including in our two replicate Phase 3 LIBERTY studies, ~~are required for FDA approval~~to effectively decrease heavy menstrual bleeding and ~~we expect~~pain in women with uterine fibroids. Similarly, relugolix combination therapy has been demonstrated in our two replicate Phase 3 SPIRIT studies to reduce pelvic pain associated with endometriosis. Relugolix combination therapy achieved these results ~~from these studies by the end of calendar year 2019.~~while maintaining a generally well-tolerated safety profile. We believe our combination approach ~~with relugolix~~ has the potential to have a better safety and tolerability profile than the currently approved ~~GnRH~~LHRH agonist therapies and has the potential to be used longer-term. We further believe our single tablet combination approach also has certain benefits over other oral GnRH antagonist therapies that are currently approved or in development. The goal of ~~this longer-term treatment~~our relugolix combination tablet is to provide women with uterine fibroids and endometriosis a once-daily oral medical alternative to hysterectomy and other invasive procedures often recommended to treat these ~~conditions.~~conditions that is suitable for long-term use.

Decreasing testosterone slows the growth and progression of advanced prostate cancer, such as when the disease recurs or the prostate-specific antigen ~~or PSA,~~(“PSA”) is rising following prostatectomy or radiation ~~therapy. Relugolix monotherapy is~~therapy, when the disease progresses locally in the prostate bed, or when it becomes metastatic. We demonstrated in our Phase 3 ~~clinical evaluation as~~HERO program that relugolix can achieve

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sustained testosterone suppression to castrate levels (< 50 ng/dL) through 48 weeks in 96.7% of patients with a once-daily oral ~~treatment~~treatment. Relugolix was compared to ~~lower testosterone. It is being evaluated at~~the standard-of-care leuprolide injections in the HERO study and demonstrated superiority to leuprolide in the cumulative proportion of patients achieving sustained testosterone suppression (96.7% vs 88.0%). Data from this study are the basis for the NDA submission undergoing Priority Review for relugolix in advanced prostate cancer. We are developing a ~~three-times higher dose in~~distinct therapeutic candidate, relugolix monotherapy (120 mg), for men with advanced prostate cancer ~~than the women’s health indications (120 mg orally once-daily following~~which, if approved, we expect to commercialize as a ~~single 360 mg loading dose compared to 40 mg once daily). We are developing~~separately branded product from our ~~women’s health~~ relugolix combination ~~and our advanced prostate cancer relugolix monotherapy treatments with the potential of bringing to market two distinct branded products.~~

Myovant Sciences GmbH, our wholly-owned subsidiary, holds global commercial rights to relugolix, excluding Japan, China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam, including the territories and possessions of each of the foregoing. In May 2018, Takeda announced that it had entered into a licensing agreement granting ASKA Pharmaceutical Co., Ltd. exclusive commercialization rights to relugolix for uterine fibroids and exclusive development and commercialization rights to relugolix for endometriosis, in each indication in Japan, and in January 2019 Takeda and ASKA Pharmaceutical Co., Ltd. announced that Takeda obtained marketing authorization in Japan for Relumina^® ~~Tablets 40 mg (generic name: relugolix) for the improvement of symptoms of uterine fibroids including heavy menstrual bleeding, lower abdominal pain, lower back pain, and anemia.~~

tablet.

Our Phase 3 Program for the Treatment of Heavy Menstrual Bleeding Associated with Uterine Fibroids

We initiated a Phase 3 clinical program in January 2017, evaluating relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids. The program consisted of two multinational, replicate pivotal clinical studies (LIBERTY 1 and LIBERTY 2) ~~of relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) in women with uterine fibroids and heavy menstrual bleeding.~~. Women in the LIBERTY 1 and LIBERTY 2 studies underwent a screening period requiring up to two menstrual cycles to document heavy menstrual bleeding and were randomized in a 1:1:1 ratio to one of three groups. Women received treatment either with relugolix combination therapy for 24 weeks, relugolix 40 mg once-daily monotherapy for 12 weeks followed by relugolix combination therapy once-daily for an additional 12 weeks, or placebo once-daily for 24 weeks.

We enrolled 388 women in LIBERTY 1 and 382 women in LIBERTY 2. To be enrolled, women must have had a monthly menstrual blood loss volume of at least 80 mL in two consecutive cycles or 160 mL in one cycle, measured by the alkaline hematin method, a quantitative measure of menstrual blood loss from an assessment of collected menstrual products.

Eligible women who completed the LIBERTY 1 or LIBERTY 2 studies were offered the opportunity to enroll in an active treatment extension study in which all women ~~receive~~received relugolix combination therapy for an additional 28-week period for a total treatment period of 52 weeks, designed to evaluate the safety and sustained efficacy of longer-term treatment. ~~We expect the 12-month safety results from the open-label extension study in the first quarter of calendar year 2020.~~ Upon completion of this 52-week total treatment period, eligible women ~~can~~could elect to participate in a second 52-week randomized withdrawal study designed to provide two-year safety and efficacy data on relugolix combination therapy, and to evaluate the need for ~~maintenance therapy.~~maintenance therapy. We ~~are also conducting a one-year observational~~currently expect to present data from the LIBERTY randomized withdrawal study in the first quarter of ~~bone mineral density in women with uterine fibroids or endometriosis to provide additional context for our phase 3 clinical programs.~~calendar year 2021.

The primary efficacy endpoint for LIBERTY 1 and LIBERTY 2 was the proportion of all women enrolled who achieved a menstrual blood loss volume of less than 80 mL and at least a 50% reduction in menstrual blood loss volume from baseline during the last 35 days of the 24-week treatment period as measured by the alkaline hematin method. The secondary endpoints included the proportion of women who achieved amenorrhea (defined as no or negligible blood loss) during the last 35 days of treatment, reduction in pelvic pain, reduction in fibroid volume, reduction in uterine volume, percent change from baseline to week 24 in menstrual blood loss, increase in hemoglobin, and an assessment of the impact of therapy on quality-of-life. Safety, including ~~bone mineral density~~BMD changes as measured by dual-energy x-ray absorptiometry ~~(DXA)~~(“DXA”), was also assessed.

On May 14, 2019 and July 23, 2019, we announced positive top-line results for the LIBERTY 1 and LIBERTY 2 studies, respectively. ~~In addition, on July 23, 2019,~~On February 10, 2020, we announced ~~that~~positive safety and efficacy data from the Phase 3 LIBERTY long-term extension study. On September 14, 2020, we announced additional data on BMD in women with uterine fibroids from the LIBERTY program and from a ~~separate clinical~~prospective observational study ~~of single-tablet relugolix combination therapy met all required~~ and ~~pre-specified FDA criteria for bioequivalence, providing~~on October 21, 2020, we presented one-year efficacy and safety data ~~necessary to include~~from the ~~one tablet, once-daily dosing regimen of relugolix combination therapy in~~LIBERTY long-term extension study at the ~~NDA submission for approval of the treatment for uterine fibroids.~~ASRM 2020 Virtual Congress.

On ~~November 12, 2019,~~March 9, 2020, we announced ~~that Roivant Sciences and Sumitomo have committed~~the submission of a MAA to ~~us a priority review voucher (“PRV”) expected to become available in early December 2019. We plan to use~~ the ~~PRV in conjunction with our NDA submission~~EMA for ~~a once-daily,~~ relugolix combination tablet for the treatment of ~~heavy menstrual bleeding~~women with moderate to severe symptoms associated with uterine fibroids. This application has completed validation and is now under evaluation by the EMA. We currently expect the European Commission decision on this application in 2021. If approved, this launch would be executed by Richter, our commercialization partner for relugolix combination tablet for the uterine fibroids ~~potentially decreasing~~and endometriosis indications in Europe and certain other international markets. In May 2020, we submitted an NDA to the ~~standard~~ FDA ~~review time. We have decided to defer our NDA submission~~ for ~~a once-daily,~~ relugolix combination tablet for the treatment of women with heavy menstrual bleeding ~~and~~associated with uterine fibroids, ~~until April 2020,~~ which ~~would allow inclusion~~has been accepted by the FDA with a target action date of the complete 12-month safety data from the LIBERTY open-label extension study, key data that may positively impact the labeled duration of use of the combination tablet. The terms regarding how the PRV will be transferred to us will be determined in connection with the closing of the Roivant-Sumitomo Dainippon Pharma transaction. The transfer is expected to be a related-party transaction and will not involve the issuance of Myovant shares. We also also plan to submit a Marketing Authorisation Application (MAA) to the European Medicines Agency in the first quarter of calendar year 2020.

June 1, 2021.

LIBERTY 1

On May 14, 2019, we announced that LIBERTY 1 ~~the first of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding,~~ met its primary efficacy endpoint and six key secondary endpoints. ~~Relugolix~~The distribution of the change in BMD, including outliers, was similar for the relugolix combination therapy ~~maintained bone mineral density~~and placebo groups at ~~levels comparable to placebo over~~ 24 weeks, ~~and was generally well tolerated.~~as assessed by DXA.

In the primary endpoint analysis, 73.4% of women receiving ~~once-daily oral~~ relugolix combination therapy ~~(relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg)~~ achieved the responder criteria compared with 18.9% of women receiving placebo (p < 0.0001). A response was defined as a menstrual blood loss volume of less than 80 mL and a 50 percent or greater reduction from baseline in menstrual blood loss volume during the last 35 days of the 24-week treatment period measured using the alkaline hematin method. On average, women receiving relugolix combination therapy experienced an 84.3% reduction in menstrual blood loss from baseline, a clinically relevant secondary endpoint. A significantly

~~Bone mineral density was comparable between~~

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greater proportion of women suffering from moderate-to-severe pain from uterine fibroids at baseline experienced no pain or minimal pain during the last 35 days of treatment with relugolix combination therapy ~~and~~compared with women on placebo ~~groups. The distribution of the change in bone mineral density, including outliers, was similar for the relugolix combination therapy and placebo groups at 24 weeks, as assessed by DXA.~~(p < 0.0001).

~~The 24-week study~~LIBERTY 1 achieved six key secondary endpoints with statistical significance compared to placebo, including mean change in menstrual blood loss from baseline to week 24, reduction in pain in women with pain at baseline, improvement in quality of life, amenorrhea (defined as no or negligible blood loss), improvement in anemia in those women with anemia at baseline, and reduction in uterine volume. The seventh key secondary endpoint, reduction in uterine fibroid volume, did not achieve statistical significance.

The overall incidence of adverse events in the relugolix combination therapy and placebo groups was comparable (62% vs. 66%). In the relugolix combination therapy group, 5% of women discontinued treatment early due to adverse events compared with 4% in the placebo group. The only adverse event in the relugolix combination therapy arm occurring in at least 10% of women and more frequently than in the placebo arm was hot ~~flush~~flash (11% ~~versus~~vs. 8%). There were no pregnancies in the relugolix combination therapy group and one in the placebo group. There were two serious adverse events related to the study drug: one fibroid expulsion and one for pelvic pain.

LIBERTY 2

On July 23, 2019, we announced that LIBERTY 2 ~~the second of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding,~~ met its primary efficacy endpoint and the same six key secondary endpoints as were achieved in LIBERTY 1. ~~In addition,~~Changes in BMD were comparable between the relugolix combination therapy ~~maintained bone mineral density~~and placebo groups at ~~levels comparable to placebo over 24 weeks and~~the end of treatment as was ~~generally well tolerated.~~the distribution of the change in BMD, including outliers.

In the primary endpoint analysis, 71.2% of women receiving ~~once-daily~~ relugolix combination therapy achieved the responder criteria compared with 14.7% of women receiving placebo (p < 0.0001). A response was defined as a menstrual blood loss volume of less than 80 mL and a 50% or greater reduction from baseline in menstrual blood loss volume during the last 35 days of treatment measured using the alkaline hematin method. On average, women receiving relugolix combination therapy experienced a highly significant 84.3% reduction in menstrual blood loss from baseline to ~~Week~~week 24 (p < 0.0001). In addition, a significantly greater proportion of women suffering from moderate-to-severe pain from uterine fibroids at baseline experienced no pain or minimal pain during the last 35 days of treatment with relugolix combination therapy compared with women on placebo (p < 0.0001).

Changes in bone mineral density were comparable between the relugolix combination therapy and placebo groups at the end of treatment. The distribution of the change in bone mineral density, including outliers, was similar for the relugolix combination therapy and placebo groups at 24 weeks, as assessed by DXA.

~~The 24-week study~~LIBERTY 2 achieved six key secondary endpoints with statistical significance compared to placebo, including mean change in menstrual blood loss from baseline to week 24, reduction in pain in women with pain at baseline, improvement in quality of life, amenorrhea (defined as no or negligible blood loss), improvement in anemia in those women with anemia at baseline, and a reduction in uterine volume. The seventh key secondary endpoint, reduction in uterine fibroid volume, did not achieve statistical significance.

The overall incidence of adverse events in the relugolix combination therapy and placebo groups was comparable (60.3% vs. 58.9%). In the relugolix combination therapy group, 1.6% of women discontinued treatment early due to adverse events compared with 4.7% in the placebo group. There were no adverse events in the relugolix combination therapy group reported by at least 10% of women and more frequently than in the placebo group. The incidence of hot flashes in the relugolix combination therapy group was similar to placebo (5.6% ~~versus~~vs. 3.9%). There were no pregnancies in the relugolix combination therapy group and one in the placebo group. There were no serious adverse events related to study drug reported in this study.

LIBERTY Long-Term Extension Study

On February 10, 2020, we announced positive safety and efficacy data from the Phase 3 LIBERTY long-term extension study of relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids.

In the primary endpoint analysis, 87.7% of women achieved the responder criteria. The primary endpoint result in the one-year Phase 3 LIBERTY long-term extension study was consistent with the 24-week primary endpoint data from the pivotal LIBERTY 1 and LIBERTY 2 studies, demonstrating a durability of response through one year. In addition, women experienced, on average, an 89.9% reduction in menstrual blood loss from baseline at one year.

Changes in BMD through one year, as assessed by DXA every three months, demonstrated maintenance of bone density and were consistent with those in LIBERTY 1 and LIBERTY 2. The adverse events over one year were consistent with those observed in LIBERTY 1 and LIBERTY 2, with no new safety signals. Adverse events reported in more than 10% of women treated with relugolix combination therapy for one-year and more frequently than those reported in the placebo group after 6 months included only hot flashes (11% vs. 6%). There were no pregnancies reported in the relugolix combination therapy group.

In October 2020, we presented a poster at the ASRM 2020 Virtual Congress describing a validated exposure-response model simulating long-term effects of relugolix combination therapy on BMD at the lumbar spine. Simulations from this model were

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well correlated with the effect of relugolix combination therapy observed in the Phase 3 LIBERTY program and projected maintenance of BMD for at least three years.

Observational Bone Mineral Density Study

This prospective observational study was designed to characterize the longitudinal natural history of BMD in 262 premenopausal women with uterine fibroids over 52 weeks. Women with documented uterine fibroids by imaging who were not receiving treatment with GnRH agonists or antagonists were enrolled contemporaneously from U.S. centers that participated in the LIBERTY studies. BMD was assessed by DXA at baseline, week 24 and week 52. Mean BMD at the lumbar spine showed minimal changes over the 52-week observational period (0% at week 24 and -0.41% at week 52) and did not appear to be influenced by race or body mass index.

Our Phase 3 Program for the Treatment of Pain Associated with Endometriosis

We initiated a Phase 3 clinical program in June 2017, evaluating relugolix combination therapy in women with pain associated with endometriosis. The program ~~consists~~consisted of two multinational, replicate pivotal clinical ~~trials, which we refer to as SPIRIT~~studies (SPIRIT 1 and SPIRIT 2.2). Each ~~trial randomizes~~study randomized women 1:1:1 to one of three treatment ~~arms:~~arms. Women received treatment either with relugolix ~~40 mg once-daily co-administered in~~ combination ~~with commercially available low-dose hormonal~~ therapy for 24 weeks, ~~(1.0 mg estradiol and 0.5 mg norethindrone acetate);~~ relugolix 40 mg once-daily monotherapy for 12 weeks followed by relugolix ~~40 mg~~combination therapy once-daily ~~co-administered with low-dose hormonal therapy~~ for an additional 12 ~~weeks;~~weeks, or placebo once-daily for ~~a period of~~ 24 weeks.

We enrolled 623 and 638 patients in the SPIRIT 2 ~~trial~~ and ~~expect~~SPIRIT 1 studies, respectively. To be enrolled, women must have had a surgical diagnosis of endometriosis in the last 10 years and moderate-to-severe dysmenorrhea (menstrual pelvic pain) and non-menstrual pelvic pain.

Eligible women who completed the SPIRIT 1 or SPIRIT 2 studies were offered the opportunity to enroll ~~a similar number of patients~~ in ~~the replicate SPIRIT 1 trial. Eligible women completing the initial 24-week period are offered~~ an active treatment long-term extension ~~with~~study in which all women receive relugolix ~~40 mg once-daily co-administered in~~ combination ~~with low-dose hormonal~~ therapy for an additional 80-week period, orresulting in a total treatment period of up to 104 weeks, designed to evaluate the safety and sustained efficacy of longer-term treatment. We currently expect to announce one-year efficacy and safety data from the SPIRIT extension study in the first quarter of calendar year 2021.

The co-primary efficacy endpoints for the SPIRIT 1 and SPIRIT 2 ~~trials are~~studies were the proportion of all women enrolled with reductions in both dysmenorrhea ~~or menstrual pelvic pain,~~ and ~~nonmenstrual~~non-menstrual pelvic pain, as assessed by an endometriosis-specific patient questionnaire ~~administered~~based on the Numerical Rating Scale (“NRS”) completed daily on an electronic patient diary, with no increase in background pain medication. The NRS is an 11-point scale with 0 representing “no pain” and 10 representing “the worst pain you can imagine.” Secondary endpoints ~~will include~~included additional questionnaires assessing functional changes associated with endometriosis-specific pain and quality of life, and the use of pain medications to treat ~~endometriosis.~~endometriosis, including opioid medications. Safety, including ~~bone mineral density~~BMD changes as measured by DXA, ~~will be~~was also assessed.

~~In August~~On April 22, 2020 and ~~October 2019,~~June 23, 2020, we ~~completed patient recruitment for~~announced positive top-line results from the SPIRIT 2 and SPIRIT 1 ~~trials,~~studies, respectively. We currently expect to ~~report top-line results from SPIRIT 2 and SPIRIT 1~~submit an NDA with the FDA for relugolix combination tablet for the treatment of women with endometriosis-associated pain in the first ~~and second quarters~~half of calendar year 2021. We currently expect to submit an MAA to the EMA for relugolix combination tablet for the treatment of women with endometriosis-associated pain in 2021. Richter will be the MAA sponsor. Data from these Phase 3 studies were presented at the ASRM 2020 ~~respectively.~~Virtual Congress on October 20, 2020 and the presentation was named the Prize Paper by the Endometriosis Special Interest Group.

SPIRIT 1

On June 23, 2020, we announced that SPIRIT 1 met its co-primary efficacy endpoints and all seven key secondary endpoints. In addition, relugolix combination therapy was generally well-tolerated and resulted in minimal BMD loss over 24 weeks.

Relugolix combination therapy achieved both co-primary endpoints by demonstrating clinically meaningful pain reductions for 74.5% of women with dysmenorrhea (menstrual pain) and 58.5% of women with non-menstrual pelvic pain, compared to 26.9% and 39.6% of women in the placebo group, respectively (p < 0.0001). On average, women receiving relugolix combination therapy had a 73.3% reduction on the 11-point (0 to 10) NRS for dysmenorrhea from 7.3 (severe pain) to 1.8 (mild pain).

All seven key secondary endpoints measured at week 24 and compared to placebo achieved statistical significance, including changes in mean dysmenorrhea and overall pelvic pain, impact of pain on daily activities as measured by the EHP-30 pain domain, greater proportions of women not using analgesics (p-values < 0.0001), changes in mean non-menstrual pelvic pain (p = 0.0002), greater proportions of women not using opioids (p = 0.0005), and changes in mean dyspareunia (painful intercourse) (p = 0.0149).

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The overall incidence of adverse events in the relugolix combination and placebo groups was similar (71.2% vs. 66.0%). In the relugolix combination therapy group, 3.8% of women had adverse events leading to discontinuation of treatment versus 1.9% in the placebo group. The only reported adverse events in at least 10% of women in the relugolix combination group were headache and hot flashes. There was one pregnancy in the relugolix combination group and three in the placebo group.

SPIRIT 2

On April 22, 2020, we announced that SPIRIT 2 met its co-primary efficacy endpoints and six key secondary endpoints. In addition, relugolix combination therapy was generally well-tolerated and resulted in minimal BMD loss over 24 weeks.

In the co-primary endpoint analysis, 75.2% of women achieved a clinically meaningful reduction in dysmenorrhea versus 30.4% of women in the placebo group (p < 0.0001). For non-menstrual pelvic pain, relugolix combination therapy achieved a clinically meaningful reduction in 66.0% of women versus 42.6% of women in the placebo group (p < 0.0001). On average, women receiving relugolix combination therapy had a 75.1% reduction on the 11-point (0 to 10) NRS for dysmenorrhea from 7.2 (severe pain) to 1.7 (mild pain).

Six key secondary endpoints measured at week 24 and compared to placebo achieved statistical significance, including changes in mean dysmenorrhea and overall pelvic pain, impact of pain on daily activities as measured by the EHP-30 pain domain, a greater proportion of women not using opioids (all p-values < 0.0001), changes in non-menstrual pelvic pain (p = 0.0012), and dyspareunia (painful intercourse) (p = 0.0489). An endpoint evaluating change in analgesic use did not achieve statistical significance.

The overall incidence of adverse events in the relugolix combination therapy and placebo groups was similar (80.6% vs. 75.0%). In the relugolix combination therapy group, 5.3% of women discontinued treatment early due to adverse events versus 3.9% in the placebo group. The most frequently reported adverse events, reported in at least 10% of women in the relugolix combination therapy group, were headache, nasopharyngitis, and hot flashes. There were three pregnancies in the relugolix combination therapy group and five in the placebo group.

Bioequivalence Study of Relugolix Combination Therapy and Relugolix Combination Tablet

On July 23, 2019, we announced that a separate clinical study of our relugolix combination tablet met all required and pre-specified criteria for bioequivalence to the two tablets (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) used in our Phase 3 uterine fibroid and endometriosis clinical studies, providing data necessary to include the once-daily dosing regimen of relugolix combination tablet in our NDA and MAA submissions for the treatment of heavy menstrual bleeding associated with uterine fibroids and endometriosis. In December 2019, we successfully completed one-year stability studies, which are required for FDA approval of relugolix combination tablet.

Ovulation Inhibition Study

On April 22, 2020, we announced results from an open-label, single-arm ovulation inhibition study consisting of a pre-treatment period to confirm ovulatory status, an 84-day treatment period (three cycles) to assess the effects of relugolix combination therapy on ovulation inhibition, and a post-treatment follow-up period to determine the time to the return of ovulation. Ovulation inhibition was based on the Hoogland-Skouby scale. In this study, relugolix combination therapy achieved 100% ovulation inhibition in 67 healthy women with no women ovulating during the 84-day treatment period, as evaluated by the Hoogland-Skouby assessment scale (score < 5). Furthermore, 100% of women resumed ovulation or menses upon discontinuation of treatment with an average time to ovulation of 23.5 days.

In July 2020, we presented data from the ovulation inhibition study and additional data from the LIBERTY program showing improvement in patient-reported outcomes and in hemoglobin levels in women with anemia during the European Society of Human Reproduction and Embryology (“ESHRE”) virtual 36th Annual Meeting. Additional data from the ovulation inhibition study were also presented at the ASRM 2020 Virtual Congress in October 2020.

Our Phase 3 Program for the Treatment of Advanced Prostate Cancer

We initiated a Phase 3 clinical ~~trial~~study in March of 2017, evaluating the safety and efficacy of relugolix monotherapy in men with advanced prostate cancer, which we refer to as the HERO trial. We believe the HERO trial, if successful, will be sufficient to support the submission of an NDA based on an End-of-Phase 2 meeting held with the FDA. The European Scientific Advice procedure and an End-of-Phase 2 meeting with the Japanese health authority have also been completed supporting the design of the HERO trial for approval in those regions should it be successful.

study. The HERO ~~trial has completed enrollment after randomizing~~study randomized 934 men with advanced prostate cancer who ~~require~~required medical therapy to lower testosterone serum levels, also known as androgen deprivation therapy, ~~or ADT,~~ in a 2:1 ratio to treatment with either oral relugolix 120 mg once-daily (after a single oral loading dose of 360 mg) or a depot injection of leuprolide (per national or regional product label) for a period of at least 48 weeks. Based on FDA discussions, we believe that we will be required to conduct only one Phase 3 ~~trial~~study with a single relugolix arm to gain approval for relugolix in men with advanced prostate cancer in the U.S. Nonetheless, we ~~have~~ designed the ~~trial~~study to include a second arm with leuprolide to demonstrate that treatment with relugolix is noninferior to leuprolide in achieving sustained suppression of testosterone to

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castrate levels over 48 weeks, an outcome expected to be required for approval in other major markets such as Europe and Japan.

We enrolled 934 men in the HERO study for the primary endpoint analysis. To be enrolled, men must have had advanced prostate cancer that required androgen deprivation therapy for at least 48 weeks and included prostate cancer defined as biochemical or clinical relapse, advanced localized disease or newly diagnosed metastatic disease. Screening PSA was > 2.0 ng/mL and serum testosterone levels within the normal range.

The primary efficacy endpoint for HERO accepted by the FDA iswas testosterone suppression (≤(< 50 ng/dL) from week 5, day 1 through week 48, day 7. Relugolix ~~must~~monotherapy was required to demonstrate that the lower bound of the 2-sided 95% confidence interval for the percent of patients achieving testosterone suppression through 48 weeks iswas at least 90%. ~~The secondary efficacy endpoint is PSA reduction as a percentage change from baseline.~~ Testosterone suppression is an approvable endpoint in the U.S. and several hormonal therapies have been approved based on this endpoint. IfThe secondary endpoints included rapid suppression of testosterone at Day 4 and Day 15, profound suppression of testosterone at Day 15, rapid suppression of PSA at Day 15, and suppression of FSH at week 24. Testosterone recovery was also evaluated in a subset of men eligible to discontinue ADT at the ~~results~~completion for the 48-week study treatment.

On November 19, 2019, we announced that the Phase 3 HERO study met its primary efficacy endpoint with 96.7% (95% CI: 94.9%, 97.9%) of ~~this trial are favorable, we intend~~men achieving sustained testosterone suppression to ~~submit an NDA~~castrate levels. The study also met the tested key secondary endpoints, while demonstrating a 54% reduction in risk of major adverse cardiovascular events as compared with leuprolide injections administered every 3 months. The incidence of major adverse cardiovascular events was 2.9% in the relugolix group versus 6.2% in the leuprolide group. In men with a reported history of these major adverse cardiovascular events, the relugolix group had 80% fewer major adverse cardiovascular events reported compared to the ~~FDA. We may conduct additional clinical trials~~leuprolide acetate group (3.6% vs. 17.8%, respectively). More than 90% of men in the HERO study had at least one cardiovascular risk factor, including lifestyle risk factors such as tobacco use and obesity, comorbidities such as diabetes and hypertension, and prior history of a major adverse cardiovascular event.

Five key secondary endpoints demonstrated superiority to ~~further support~~leuprolide acetate, including rapid suppression of testosterone at Day 4 and Day 15, profound suppression of testosterone at Day 15, rapid suppression of PSA at Day 15, and suppression of FSH at week 24 (all p-values < 0.0001). In addition, relugolix demonstrated non-inferiority to leuprolide acetate on sustained testosterone suppression through 48 weeks (96.7% vs. 88.8%, respectively) with a between-group difference of 7.9% (95% CI: 4.1%, 11.8%), the ~~commercial potential~~primary endpoint required for regulatory submissions outside of the U.S. Superiority to leuprolide was also achieved as the lower bound of the 95% confidence interval for the between-group difference was greater than 0 (p-value < 0.0001). In addition, the pharmacodynamic results showed no testosterone flare after initiation of relugolix and mean testosterone levels returned to normal levels within 90 days after treatment discontinuation in ~~prostate cancer~~a subset of 184 patients.

The overall incidence of adverse events in the ~~U.S.~~relugolix and ~~other major markets. We currently expect~~leuprolide acetate groups was comparable (92.9% vs. 93.5%, respectively). In the relugolix group, 3.5% of men discontinued the study early due to ~~present top-line results from the HERO trial~~adverse events compared with 2.6% of men in the ~~fourth quarter~~leuprolide acetate group. The most frequently reported adverse events, reported in at least 10% of ~~calendar year 2019 and to submit an NDA to the FDA for our once-daily, oral relugolix monotherapy tablet for~~ men ~~with advanced prostate cancer~~ in the ~~second quarter~~relugolix group, were hot flashes, fatigue, constipation, diarrhea, and arthralgia (defined as pain in a joint). Major adverse cardiovascular events were reported in 2.9% of ~~calendar year 2020.~~men in the relugolix group versus 6.2% of men in the leuprolide acetate group in a prespecified safety analysis. These events included non-fatal myocardial infarction, non-fatal stroke, and all-cause mortality and were not adjudicated.

~~In addition, we~~We filed an amendment to the HERO study protocol to enroll 139 additional men with metastatic prostate cancer (total cohort of 434 men, including 295 men from the original HERO study) and to ~~assess~~add the secondary objective of demonstrating that relugolix can delay the time to progression to the lethal state of the disease, castration-resistant prostate cancer, as compared to ~~leuprolide. We believe~~leuprolide, that completed enrollment in July 2019. Castration-resistant prostate cancer is defined by disease progression despite achieving testosterone suppression to castrate levels (< 50 ng/dL). On September 29, 2020, we announced that relugolix had a ~~direct GnRH receptor antagonist, has~~similar rate of castration resistance-free survival in the potential to delay the time to castration-resistant disease as compared with leuprolide, a GnRH agonist, because relugolix more rapidly suppresses testosterone and PSA and more fully suppresses follicle-stimulating hormone than leuprolide. We completed enrollment of this additional cohortsubgroup of men with metastatic disease compared to leuprolide acetate and did not achieve statistical superiority through 48 weeks. In the subgroup of men with metastatic disease treated with relugolix, 74% were castration resistance-free through 48 weeks compared to 75% of men treated with leuprolide acetate (HR = 1.03 [95% CI: 0.68-1.57]; p = 0.84). In the secondary endpoint analysis, castration resistance-free survival was defined as the time from first dose to PSA progression per the Prostate Cancer Clinical Trials Working Group 3 (PCWG3) criteria or death from any cause. PSA progression was defined as a PSA increase ≥ 25% and ≥ 2 ng/mL above the nadir, and confirmed by a second PSA value ≥ 3 weeks later. The incidence of adverse events in the subgroup of men with metastatic disease was consistent with that observed in the primary analysis of HERO with no new safety signals observed.

In May 2020, efficacy and safety data from the Phase 3 HERO study were simultaneously published online in the New England Journal of Medicine and presented at the American Society of Clinical Oncology (“ASCO”)’s ASCO20 Virtual Scientific Program. In July 2020, these data were also presented in an oral presentation during the American Urological Association 2020

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Virtual Experience. Detailed secondary endpoint data showed notable differences in the rapid and profound suppression of testosterone, PSA response, and testosterone recovery after discontinuation of treatment. In the relugolix group, testosterone suppression to less than 50 ng/dL was achieved in 56.0% of men by Day 4 and 98.7% by Day 15, compared to 0.0% by Day 4 and 12.1% by Day 15 for men in the leuprolide acetate group. Additionally, in the relugolix group, profound testosterone suppression to less than 20 ng/dL was achieved in 78.4% of men at Day 15, compared to 1.0% at Day 15 for men in the leuprolide acetate group. A higher proportion of men in the relugolix group achieved a 50% reduction in PSA by Day 15 and confirmed at Day 29 compared to those in the leuprolide acetate group (79.4% vs. 19.8%, respectively). Within 90 days of treatment discontinuation, 54% of men in the relugolix group achieved normal testosterone levels (≥ 280 ng/dL) with a mean testosterone level of 288.4 ng/dL, compared to 3% of men in the leuprolide acetate group with a mean testosterone level of 58.6 ng/dL.

On October 19, 2020, we presented an economic analysis of the Phase 3 HERO data at the AMCP Nexus 2020 Virtual Meeting, demonstrating that treatment with relugolix may prevent one major adverse cardiovascular event for every 31 patients treated versus patients receiving leuprolide injections.

On April 21, 2020, we announced the submission of an NDA to the FDA for relugolix monotherapy tablet for the treatment of men with advanced prostate cancer. In June 2020, the FDA accepted for Priority Review this NDA, setting a target action date of December 20, 2020. In its acceptance letter, the FDA also stated that it is currently not planning to hold an advisory committee meeting for this application. If approved, relugolix would be the first and only oral GnRH receptor antagonist treatment for men with advanced prostate cancer. We currently expect to submit a MAA to the EMA for relugolix monotherapy tablet for advanced prostate cancer in ~~July 2019, and currently expect to report top-line results from this additional cohort, including~~ the ~~castration resistance-free survival endpoint, in the third quarter~~first half of calendar year ~~2020.~~

2021. We may conduct additional clinical studies to further support the commercial potential of relugolix in prostate cancer in the U.S. and other major markets.

MVT-602

As part of our license agreement with Takeda, ~~or the Takeda License Agreement,~~ we acquired the worldwide rights to MVT-602, our second product candidate, which previously ~~has~~had been evaluated in over 150 men. MVT-602 is an oligopeptide kisspeptin-1 receptor agonist. Kisspeptin, the ligand, is a naturally occurring peptide that stimulates GnRH release and is required for puberty and maintenance of normal reproductive function, including production of sperm, follicular maturation and ovulation, and production of estrogen and progesterone in women and testosterone in men. MVT-602 is being developed as a potential treatment for female infertility in women as part of assisted reproduction, such as in vitro fertilization, or IVF. Approximately 1.5 million assisted reproduction cycles are performed each year worldwide. Further, approximately 25% of women suffering from infertility have problems achieving ovulation, including the inability to produce fully matured eggs or the failure to ovulate, most commonly resulting from hormonal dysfunction in the GnRH-luteinizing hormone/follicle-stimulating hormone axis. We believe MVT-602 has the potential to be a safer alternative to human chorionic gonadotropin as a part of assisted reproduction for the treatment of female infertility.fertilization.

We believe that MVT-602, an analog of the naturally-occurring kisspeptin peptide in humans, may mimic natural physiology by inducing a luteinizing hormone surge during IVF and other assisted reproductive technologies, enhancing the likelihood of successful egg maturation and ovulation at the right time without the serious side effect of ovarian hyperstimulation syndrome, or OHSS. While assisted reproductive technologies are effective, typically resulting in pregnancy in 20% to 35% of patients, the standard procedure has remained largely unchanged since inception and has potentially serious side effects. The most serious side effect of assisted reproduction is OHSS. Severe OHSS has been reported to occur in up to 2% of the general assisted reproduction population, and in up to 20% of patients at high-risk for developing OHSS. OHSS is thought to occur as a result of the nonphysiologic elevations in luteinizing hormone that occur as a result of egg maturation triggered with human chorionic gonadotropin and to a lesser extent the GnRH receptor agonists.

By acting upstream in the GnRH-axis to promote the release of physiologically normal levels of key hormones in the assisted reproduction cycle such as luteinizing hormone, kisspeptin agonists, such as MVT-602, may have the potential to trigger egg maturation without causing OHSS. A recently published investigator-sponsored trial where a native kisspeptin peptide (specifically, kisspeptin 54) was used in place of human chorionic gonadotropin as the egg-maturation trigger in the assisted reproduction cycle showed that none of the 60 high-risk patients developed moderate-to-severe OHSS and resulted in a live birth rate of up to 65.1% at the maximally efficacious dose tested. These results validate the potential use of kisspeptin analogs as an alternative to the standard egg maturation trigger in assisted reproduction protocols. To our knowledge, MVT-602 is the only kisspeptin-1 receptor agonist in clinical development and thus has the potential to become a safe alternative egg-maturation trigger in this space.

In October 2018, we presented data from a Phase 1 ~~trial~~study of MVT-602 at the American Society offor Reproductive Medicine ~~(ASRM)~~ Annual Congress. Results of the study showed that administration of MVT-602 in healthy premenopausal women in the follicular phase produced a dose-related increase in ~~luteinizing hormone~~LH concentrations and expected effects on ~~follicle-stimulating hormone~~FSH and estradiol. A total of 24 women were randomized to one of three MVT-602 dose groups (0.3 µg, 1 µg or 3 µg) and then subsequently randomized within the assigned group to receive a single subcutaneous dose of ~~MVT-602~~MVT-602 or placebo in a 3:1 ratio. Results showed that administration of single subcutaneous doses of MVT-602 demonstrated dose-related increases in ~~luteinizing hormone~~LH concentrations and expected post-dose increases in ~~follicle-stimulating hormone~~FSH and estradiol concentrations, with little effect observed on progesterone as expected. No serious adverse events were reported, and no subject discontinued from the study due to an adverse event. Adverse events were similar between the placebo and MVT-602 groups with no apparent dose-related effects.

Further assessment of the exposure-response profile of MVT-602 was conducted in a Phase 2a study during the pre-ovulatory phase in 75 fertile women following a minimal controlled ovarian stimulation protocol. After ovarian stimulation, women were randomized to one of four MVT-602 dose groups (0.1 µg, 0.3 µg, 1 µg or 3 µg), to triptorelin, 0.2 mg, or to placebo. Top-line results from this Phase 2a study were presented at the European Society of Human Reproduction and Embryology in Vienna, Austria in June 2019. The study demonstrated that MVT-602 was generally well-tolerated and produced the desired ~~luteinizing hormone~~LH surge associated with high and dose-dependent rates of ovulation in healthy women following a minimal controlled ovarian stimulation protocol. This study ~~is intended to provide~~provides information for dose selection for a future study of MVT-602 in infertile women seeking pregnancy.

Financial Operations Overview

Revenue

To date, we have not generated any product revenue, and we do not expect to generate any revenue, from the sale of any products unless and until we obtain regulatory approval of and commercialize relugolix combination tablet, relugolix monotherapy tablet, MVT-602, or a potential future product candidate. Our revenue to date has been solely derived from the upfront and regulatory milestone payments we received from Richter under the Richter Development and Commercialization Agreement.

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Research and Development Expenses

~~Since our inception, our operations~~Our R&D expenses to date have been primarily ~~been limited~~attributable to the ~~in-licensing~~clinical development of our product candidates including the ~~rights to relugolix~~conduct of multiple Phase 3 and ~~MVT-602,~~earlier clinical studies, the expansion of our team, and the initiation ~~and ongoing~~of activities in preparation for our anticipated commercial launches such as the establishment of our ~~clinical programs.~~medical affairs function, as well as regulatory and certain manufacturing activities. Our ~~research and development, or~~ R&D expenses include program-specific costs, as well as ~~unallocated costs.~~costs that are not allocated to a specific program.

Program-specific costs primarily include third-party costs, which include expenses incurred under agreements with ~~contract research organizations, or~~ CROs and ~~contract manufacturing organizations, or~~ CMOs, the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, manufacturing costs in connection with producing materials for use in conducting nonclinical ~~studies~~ and clinical ~~trials,~~studies, as well as costs related to manufacturing activities in connection with preparations for our anticipated commercial launches and regulatory submissions for relugolix combination tablet and relugolix monotherapy tablet, and other third-party expenses directly attributable to the development of our product candidates.

Unallocated R&D costs primarily include employee-related expenses, such as salaries, share-based compensation, benefits and travel for employees engaged in R&D activities including clinical operations, biostatistics, regulatory, and medical affairs, and the cost of contractors and consultants who assist with R&D activities not specific to a ~~program.~~program and costs associated with nonclinical studies.

R&D activities have been, and will continue to be, central to our business model. We currently expect ~~our overall~~ R&D expenses ~~to decrease~~ over the next ~~few~~several quarters ~~as we expect~~ to ~~complete several of~~be at similar levels to our ~~Phase 3 studies. However, we also expect the decreases in clinical trial expenses will be partially offset by increases in other~~second quarter 2020 R&D expenses as ~~we prepare~~declining spend on our Phase 3 HERO, LIBERTY, and SPIRIT clinical programs, which are winding down, are expected to be offset by incremental expenses associated with certain life-cycle management activities, including clinical manufacturing expenses, the further build out of our medical affairs function and potential new investments in our pipeline. We also expect to incur additional regulatory expenses which may result in an increase in our R&D expense in periods where potential regulatory submissions for our product candidates and establish a medical affairs function, and incur manufacturing expenses in connection with preparations for our anticipated commercial launches of relugolix. Product candidates in later stages of clinical development, such as relugolix, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.occur.

~~We cannot determine with certainty the duration and costs of the current or future clinical trials of our product candidates.~~ The duration, costs and timing of clinical ~~trials~~studies and development of ~~relugolix, MVT-602 and any other~~our product candidates will depend on a variety of factors that include, but are not limited to:

the number of ~~trials~~studies required for approval;

the per patient ~~trial~~study costs;

the number of patients who participate in the ~~trials;~~

studies; the number of sites included in the ~~trials;~~

studies; the countries in which the ~~trials~~studies are conducted;

the length of time required to recruit and enroll eligible patients;

the number of patients who fail to meet the study’s inclusion and exclusion criteria;

the number of study ~~drugs~~drug doses that patients receive;

the drop-out or discontinuation rates of patients;

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

the duration of patient follow-up;

the timing and receipt of regulatory approvals;

the costs of clinical ~~trial material;~~study materials; and

the efficacy and safety profile of the product candidate.

In addition, the probability of success for relugolix combination ~~therapy,~~tablet, relugolix monotherapy tablet, MVT-602 and any other product candidates, if approved, will depend on numerous factors, including competition, manufacturing capability and commercial viability. As a result, we are unable to determine with certainty ~~the duration and completion costs of our clinical programs or when and~~ to what extent we will generate product revenue from commercialization and sale of any of our product ~~candidates.~~candidates that receive regulatory approval. Our R&D activities may be subject to change from time to time as we evaluate our priorities and available resources.

General and Administrative Expenses

~~General and administrative, or~~ G&A expenses consist primarily of personnel costs, ~~including~~such as salaries, benefits, share-based compensation and travel expenses for our executive, finance, human resources, legal, information technology, commercial operations and other administrative functions. G&A expenses also include ~~expenses incurred under agreements with third parties relating to~~professional fees for legal, accounting, auditing and tax services, and costs related to rent and facilities, ~~costs,~~insurance, information technology, ~~costs,~~ commercial operations, and general ~~overhead, costs billed to us under the Services Agreements and other costs allocated to us from RSL.~~

~~We anticipate that our~~overhead. G&A expenses ~~will~~also include costs incurred under our Market Access Services Agreement with Sunovion.

We expect G&A expense to increase in future periods as we ~~expand~~continue to build out our ~~operations. These increases will likely include costs related to~~commercial capabilities, particularly driven by the hiring of ~~additional personnel, costs to implement~~our oncology and upgrade certain information technology systems, professional services fees and additional rent and other facilities related costs. In particular, we expect to incur increased costs associated with establishingwomen’s health sales ~~marketing, and commercialization functions in advance of potential future regulatory approvals and commercialization of our product candidates.~~forces. If relugolix combination tablet, relugolix monotherapy tablet, or MVT-602 ~~obtains~~obtain regulatory approval for marketing, we expect sales, marketing, and commercialization costs to be significant.

Interest Expense

Interest expense consists of interest ~~payments~~expense related to our previously outstanding debt with Hercules Capital, Inc. (“Hercules”) and NovaQuest Capital Management (“NovaQuest”), which we repaid on December 31, 2019, as well as the associated non-cash amortization of debt discounts and issuance costs.

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Interest Expense (Related Party)

Interest expense (related party) consists of interest expense pursuant to the Sumitomo Dainippon Pharma Loan Agreement, which bears interest at a rate per annum equal to 3-month LIBOR plus a margin of 3% payable on the last day of each calendar quarter. In October 2020, we borrowed an additional $60.0 million under the Sumitomo Dainippon Pharma Loan Agreement. We believe the October 2020 draw down, as well as additional anticipated increases in our outstanding debt under the Sumitomo Dainippon Pharma Loan Agreement, to result in an increase in interest expense (related party) in future periods.

Interest Income

Interest income consists primarily of interest earned on ~~corporate bonds~~cash and ~~money market funds~~cash equivalents and the accretion of discounts to maturity for ~~commercial paper.~~

~~Results of Operations~~

~~The following table summarizes our results of operations for the three and six months ended September 30, 2019 and 2018 (in thousands):~~

Three Months Ended September 30, Six Months Ended September 30,
2019 2018 2019 2018
Operating expenses:
Research and development $ 50,803
$ 53,813
$ 101,920
$ 105,154
General and administrative 16,603
10,310
30,755
19,052
Total operating expenses 67,406
64,123
132,675
124,206
Interest expense 3,788
1,580
7,581
3,197
Interest income (942 ) —
(1,708 ) —
Other expense (income), net 121
(21 ) (584 ) 268
Loss before income taxes (70,373 ) (65,682 ) (137,964 ) (127,671 )
Income tax expense 195
88
508
233
Net loss $ (70,568 ) $ (65,770 ) $ (138,472 ) $ (127,904 )

~~Research and Development Expenses~~

~~For the three and six months ended September 30, 2019 and 2018, our R&D expenses consisted of the following (in thousands):~~

Three Months Ended September 30,
2019 2018 Change
Program-specific costs:
Relugolix $ 36,233
$ 43,384
$ (7,151 )
MVT-602 255
2,367
(2,112 )
Unallocated costs:
Share-based compensation 3,618
1,846
1,772
Personnel expense 7,738
5,145
2,593
Services Agreements —
291
(291 )
Other expense 2,959
780
2,179
Total R&D expenses $ 50,803
$ 53,813
$ (3,010 )

Six Months Ended September 30,
2019 2018 Change
Program-specific costs:
Relugolix $ 75,339
$ 86,223
$ (10,884 )
MVT-602 1,075
3,041
(1,966 )
Unallocated costs:
Share-based compensation 6,166
3,407
2,759
Personnel expense ⁽¹⁾
15,050
9,926
5,124
Services Agreements —
748
(748 )
Other expense ⁽¹⁾
4,290
1,809
2,481
Total R&D expenses $ 101,920
$ 105,154
$ (3,234 )

⁽¹⁾ ~~Certain prior period amounts have been reclassified to conform to the current period presentation.~~

R&D expenses decreased by $3.0 million, to $50.8 million, in the three months ended September 30, 2019 compared to $53.8 million in the three months ended September 30, 2018. R&D expenses in both periods primarily includes expenses related to our Phase 3 clinical studies, manufacturing expenses, as well as personnel-related expenses for employees engaged in R&D activities. R&D expenses related to our clinical studies have continued to decline, driven primarily by the wind down of our LIBERTY Phase 3 studies. The decrease in study costs were partially offset by increases in other R&D expenses related predominantly to our manufacturing activities in connection with preparations for our anticipated commercial launches and regulatory submissions for relugolix in multiple indications and jurisdictions, as well as increases in personnel expenses, share-based compensation expense, and other R&D expenses.

R&D expenses in the three months ended September 30, 2019 consisted primarily of CRO, drug supply and other study and manufacturing related costs of $33.7 million, personnel expenses of $7.7 million, and share-based compensation expense of $3.6 million.

R&D expenses in the three months ended September 30, 2018 consisted primarily of CRO, clinical drug supply and other study-related costs of $45.8 million, personnel expenses of $5.1 million, share-based compensation expense of $1.8 million, $0.1 million of which was allocated to us by RSL, and costs billed to us under the Services Agreements (see Note 7 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) of $0.2 million, including unallocated personnel expenses and third-party pass-through costs associated with our ongoing clinical and other research programs.

R&D expenses decreased by $3.2 million, to $101.9 million, in the six months ended September 30, 2019 compared to $105.2 million in the six months ended September 30, 2018. R&D expenses in both periods primarily includes expenses related to our Phase 3 clinical studies, manufacturing expenses, as well as personnel-related expenses for employees engaged in R&D activities. R&D expenses for the six months ended September 30, 2018 reflected a ramp up in relugolix Phase 3 study costs primarily related to study enrollment, whereas R&D expenses for the six months ended September 30, 2019 reflect declining relugolix Phase 3 study costs as certain studies are in the process of winding down. The decrease in relugolix Phase 3 study costs were partially offset by increases in other R&D expenses related predominantly to our manufacturing activities in connection with preparations for our anticipated commercial launches and regulatory submissions for relugolix in multiple indications and jurisdictions, as well as increases in personnel expenses, share-based compensation expense, and other R&D expenses.

R&D expenses in the six months ended September 30, 2019 consisted primarily of CRO, drug supply and other study and manufacturing related costs of $74.2 million, personnel expenses of $15.1 million, and share-based compensation expense of $6.2 million.

R&D expenses in the six months ended September 30, 2018 consisted primarily of CRO, clinical drug supply and other study-related costs of $87.7 million, personnel expenses of $9.9 million, share-based compensation expense of $3.4 million, $0.1 million of which was allocated to us by RSL, and costs billed to us under the Services Agreements (see Note 7 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) of $2.3 million, including unallocated personnel expenses and third-party pass-through costs associated with our ongoing clinical and other research programs.

~~General and Administrative Expenses~~

G&A expenses increased by $6.3 million, to $16.6 million, in the three months ended September 30, 2019 compared to $10.3 million in the three months ended September 30, 2018, primarily due to an increase in personnel-related expenses, share-based compensation, professional service fees, expenses related to commercial operations activities in advance of potential future regulatory approvals of relugolix, other general overhead and administrative expenses to support our headcount growth and expanding operations and the assumption of activities previously provided by Roivant Sciences, Inc. (“RSI”) and Roivant Sciences GmbH (“RSG”) under the Services Agreements, partially offset by a reduction of costs billed to us under the Services Agreements due to a decrease in the level of support provided by RSI and RSG as we have decentralized substantially all of our activities from RSL.

G&A expenses in the three months ended September 30, 2019 consisted primarily of personnel-related, commercial operations, and general overhead expenses of $10.4 million, share-based compensation expense of $4.3 million, professional service fees of $1.1 million, and rent and other facilities related costs of $0.6 million.

G&A expenses in the three months ended September 30, 2018 consisted primarily of personnel-related and general overhead expenses of $5.9 million, share-based compensation expense of $2.9 million, including $0.1 million of which was allocated to us by RSL, professional service fees of $0.6 million, and costs of $0.8 million billed to us under the Services Agreements, including personnel expenses, overhead allocations and third-party pass-through costs.

G&A expenses increased by $11.7 million, to $30.8 million, in the six months ended September 30, 2019 compared to $19.1 million in the six months ended September 30, 2018, primarily due to an increase in personnel-related expenses, share-based compensation, professional service fees, expenses related to commercial operations activities in advance of potential future regulatory approvals of relugolix, other general overhead and administrative expenses to support our headcount growth and expanding operations and the assumption of activities previously provided by RSI and RSG under the Services Agreements, partially offset by a reduction of costs billed to us under the Services Agreements due to a decrease in the level of support provided by RSI and RSG as we have decentralized substantially all of our activities from RSL.

G&A expenses in the six months ended September 30, 2019 consisted primarily of personnel-related, commercial operations, and general overhead expenses of $18.6 million, share-based compensation expense of $8.2 million, professional service fees of $2.5 million, and rent and other facilities related costs of $1.1 million.

G&A expenses in the six months ended September 30, 2018 consisted primarily of personnel-related and general overhead expenses of $9.9 million, share-based compensation expense of $5.6 million, including $0.2 million of which was allocated to us by RSL, professional service fees of $1.5 million, and costs of $1.9 million billed to us under the Services Agreements, including personnel expenses, overhead allocations and third-party pass-through costs.

~~Interest Expense~~

Interest expense was $3.8 million and $1.6 million for the three months ended September 30, 2019 and 2018, respectively, and $7.6 million and $3.2 million for the six months ended September 30, 2019 and 2018, respectively. The increase was primarily the result of higher outstanding debt balances under our financing arrangements during the three and six months ended September 30, 2019 as compared to the prior year periods.

~~Interest Income~~

Interest income was $0.9 million and $1.7 million for the three and six months ended September 30, 2019, respectively. There was no interest income for the three and six months ended September 30, 2018. During the three and six months ended September 30, 2019, we invested a portion of our cash in a combination of money market funds, commercial paper, and short-term corporate bonds. There were no such investments in the comparable prior year periods.marketable securities.

Other (Income) Expense, ~~(Income), net~~Net

Other (income) expense, ~~(income),~~ net consists primarily of the impact of changes in foreign currency exchange rates on our foreign exchange denominated ~~payables.~~liabilities, relative to the U.S. dollar. The impact of foreign exchange rates on our results of operations fluctuates period over period based on our foreign currency exposures resulting from changes in applicable exchange rates associated with our foreign denominated ~~payables.~~liabilities, such as our outstanding balance under the Sumitomo Dainippon Pharma Loan Agreement. Our primary foreign currency exposure is currently the exchange rate between the Swiss franc and the U.S. dollar.

Results of Operations

The following table summarizes our results of operations for the three and six months ended September 30, 2020 and 2019 (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
License and milestone revenue	$	—	$	—	$	33,333	$	—
Operating expenses:
Research and development	40,521		50,803		84,707		101,920
General and administrative	31,316		16,603		54,144		30,755
Total operating expenses	71,837		67,406		138,851		132,675
Loss from operations	(71,837)		(67,406)		(105,518)		(132,675)
Interest expense	—		3,788		—		7,581

Interest expense (related party)	2,115		—		4,299		—
Interest income	(38)		(942)		(146)		(1,708)
Other (income) expense, net	(6,718)		121		(10,287)		(584)
Loss before income taxes	(67,196)		(70,373)		(99,384)		(137,964)
Income tax (benefit) expense	(134)		195		538		508
Net loss	$	(67,062)	$	(70,568)	$	(99,922)	$	(138,472)

License and Milestone Revenue

License and milestone revenue for the six months ended September 30, 2020 was $33.3 million and represents the partial recognition of revenue associated with the $40.0 million upfront payment and a $10.0 million regulatory milestone payment under the Richter Development and Commercialization Agreement. We recognize revenue as we satisfy our combined performance obligation to Richter. There were no such amounts in the three months ended September 30, 2020 or the comparable prior year periods.

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Research and Development Expenses

For the three months ended September 30, 2020 and 2019, our R&D expenses consisted of the following (in thousands):


	Three Months Ended September 30,
	2020		2019		Change
Program-specific costs:
Relugolix	$	19,793	$	36,233	$	(16,440)
MVT-602	15		255		(240)
Unallocated costs:
Share-based compensation	3,725		3,618		107
Personnel expense	11,827		7,738		4,089

Other expense	5,161		2,959		2,202
Total R&D expenses	$	40,521	$	50,803	$	(10,282)

For the six months ended September 30, 2020 and 2019, our R&D expenses consisted of the following (in thousands):


	Six Months Ended September 30,
	2020		2019		Change
Program-specific costs:
Relugolix	$	45,686	$	75,339	$	(29,653)
MVT-602	239		1,075		(836)
Unallocated costs:
Share-based compensation	7,749		6,166		1,583
Personnel expense	23,663		15,050		8,613

Other expense	7,370		4,290		3,080
Total R&D expenses	$	84,707	$	101,920	$	(17,213)

R&D expenses decreased by $10.3 million, to $40.5 million, in the three months ended September 30, 2020 compared to $50.8 million in the three months ended September 30, 2019. The decrease in R&D expenses for three months ended September 30, 2020 reflects a decrease in clinical study costs as a result of the completion and continued wind down of our Phase 3 LIBERTY, HERO, and SPIRIT studies. This decrease was partially offset primarily by increased expenses by our medical affairs organization in preparation for our anticipated commercial launches, if approved, of relugolix monotherapy tablet for men with advanced prostate cancer and relugolix combination tablet for the women’s health indications, as well as an increase in personnel expenses.

R&D expenses for the three months ended September 30, 2020 consisted primarily of program-specific costs composed of CRO, drug supply and other study, regulatory, and manufacturing related costs of $19.8 million, personnel expenses of $11.8 million, share-based compensation expense of $3.7 million, and other R&D costs of $5.2 million, which primarily includes contractors, consultants, and information technology costs and other unallocated nonclinical research costs.

R&D expenses in the three months ended September 30, 2019 consisted primarily of CRO, drug supply and other study and manufacturing related costs of $33.7 million, personnel expenses of $7.7 million, share-based compensation expense of $3.6 million, and other R&D costs of $5.8 million, which primarily includes contractors and consultants.

R&D expenses decreased by $17.2 million, to $84.7 million, in the six months ended September 30, 2020 compared to $101.9 million in the six months ended September 30, 2019. The decrease in R&D expenses for the six months ended September 30, 2020 reflects a decrease in clinical study costs as a result of the completion and continued wind down of our Phase 3 LIBERTY, HERO, and SPIRIT studies. This decrease was partially offset primarily by increases in expenses by our medical affairs organization in preparation for our anticipated commercial launches and personnel expenses, as well as regulatory expenses in connection with regulatory submissions for relugolix combination tablet and relugolix monotherapy tablet, including fees related to our NDA submissions for relugolix combination tablet for heavy menstrual bleeding associated with uterine fibroids and relugolix monotherapy tablet for advanced prostate cancer.

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R&D expenses for the six months ended September 30, 2020 consisted primarily of program-specific costs composed of CRO, drug supply and other study, regulatory, and manufacturing related costs of $40.1 million, personnel expenses of $23.7 million, fees related to our NDA submissions for relugolix combination tablet for heavy menstrual bleeding associated with uterine fibroids and relugolix monotherapy tablet for advanced prostate cancer of $5.8 million, share-based compensation expense of $7.7 million, and other R&D costs of $7.4 million, which primarily includes contractors, consultants, and information technology costs and other unallocated nonclinical research costs.

R&D expenses in the six months ended September 30, 2019 consisted primarily of CRO, drug supply and other study and manufacturing related costs of $74.2 million, personnel expenses of $15.1 million, share-based compensation expense of $6.2 million, and other R&D costs of $6.5 million, which primarily include contractors and consultants.

General and Administrative Expenses

G&A expenses increased by $14.7 million, to $31.3 million, in the three months ended September 30, 2020 compared to $16.6 million in the three months ended September 30, 2019, primarily due to increases in expenses related to commercial readiness activities, personnel-related costs, and other general overhead expenses to support our organizational growth and anticipated commercial launches, if approved, of relugolix monotherapy tablet for men with advanced prostate cancer and relugolix combination tablet for the women’s health indications.

G&A expenses in the three months ended September 30, 2020 consisted primarily of commercial operations expenses of $10.0 million, personnel expenses of $8.6 million, general overhead, administrative and information technology expenses of $5.4 million, share-based compensation expense of $3.2 million, professional service fees of $2.0 million, and rent and other facilities-related costs of $0.9 million. For the three months ended September 30, 2020, G&A expenses also include $0.2 million of expense under a consulting agreement with Sumitovant and $1.1 million of expense (inclusive of third-party pass through costs billed to us) under our agreement with Sunovion. For additional information about these related party expenses, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

G&A expenses in the three months ended September 30, 2019 consisted primarily of personnel expenses of $4.5 million, commercial operations expenses of $2.6 million, share-based compensation expense of $4.3 million, general overhead, administrative and information technology expenses of $3.5 million, professional service fees of $1.1 million, and rent and other facilities-related costs of $0.6 million.

G&A expenses increased by $23.4 million, to $54.1 million, in the six months ended September 30, 2020 compared to $30.8 million in the six months ended September 30, 2019, primarily due to increases in expenses related to commercial readiness activities, personnel-related expenses, and other general overhead expenses to support our organizational growth and anticipated commercial launches of relugolix monotherapy tablet for men with advanced prostate cancer and relugolix combination tablet for the women’s health indications.

G&A expenses in the six months ended September 30, 2020 consisted primarily of personnel expenses of $16.2 million, commercial operations expenses of $15.6 million, general overhead, administrative and information technology expenses of $9.0 million, shared-based compensation expense of $7.0 million, professional service fees of $3.3 million, and rent and other facilities-related costs of $1.7 million. For the six months ended September 30, 2020, we incurred $0.3 million of expense under a consulting agreement with Sumitovant and $1.1 million of expense (inclusive of third-party pass through costs billed to us) under our agreement with Sunovion. For additional information about these related party expenses, see Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

G&A expenses in the six months ended September 30, 2019 consisted primarily of personnel expenses of $8.4 million, commercial operations expenses of $3.6 million, share-based compensation expense of $8.2 million, general overhead, administrative and information technology expenses of $7.0 million, professional service fees of $2.5 million, and rent and other facilities-related costs of $1.1 million.

Interest Expense

Interest expense was $2.1 million and $4.3 million in the three and six months ended September 30, 2020, respectively, related to the Sumitomo Dainippon Pharma Loan Agreement, compared to $3.8 million and $7.6 million in the three and six months ended September 30, 2019, respectively, related to our previously outstanding financing arrangements with NovaQuest and Hercules. The decrease in interest expense was driven by lower interest rates associated with the Sumitomo Dainippon Pharma Loan Agreement as compared to the previously outstanding debt obligations to NovaQuest and Hercules, which were repaid in December 2019.

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Interest Income

Interest income was less than $0.1 million for the three months ended September 30, 2020, approximately $0.1 million for the six months ended September 30, 2020, and $0.9 million and $1.7 million for the three and six months ended September 30, 2019, respectively. The decreases were primarily due to decreases in interest rates and lower balances in cash equivalents and marketable securities relative to the prior year periods.

Other (Income) Expense, Net

For the three months ended September 30, 2020, we recorded a foreign exchange gain of $6.7 million, and for the three months ended September 30, 2019, we recorded a foreign exchange loss of $0.1 ~~million, and for~~million. For the ~~three~~six months ended September 30, ~~2018,~~2020, we recorded a foreign exchange gain of ~~less than $0.1 million.~~

~~For the six months ended September 30, 2019, we recorded~~$10.3 million compared to a foreign exchange gain of $0.6 million ~~and~~ for the six months ended September 30, ~~2018, we recorded a~~2019. The foreign exchange ~~loss~~gains in the three and six months ended September 30, 2020 were primarily the result of ~~$0.3 million.~~foreign currency exchange gains on our outstanding balance under the Sumitomo Dainippon Pharma Loan Agreement.

Income Tax (Benefit) Expense

Our income tax (benefit) expense was ~~$0.2~~$(0.1) million and ~~$0.1~~$0.2 million for the three months ended September 30, 2020 and 2019, ~~and 2018, respectively, and~~respectively. Our income tax expense was $0.5 million ~~and $0.2 million~~ for both the six months ended September 30, ~~2019~~2020 and ~~2018, respectively.~~2019. Our effective tax rate for the three months ended September 30, 2020 and 2019 was 0.20% and ~~2018 was~~ (0.28)~~% and (0.13)~~%, respectively, and ~~(0.37)% and (0.18)%~~ for the six months ended September 30, 2020 and 2019 was (0.54)% and ~~2018,~~(0.37)%, respectively, and isare driven by our jurisdictional earnings by location and a valuation allowance that eliminates our global net deferred tax assets.

Liquidity and Capital Resources

Sources of Liquidity

WeSince our inception, we have funded our operations primarily from the issuance and sale of our common shares and from ~~the issuance of notes to NovaQuest and the funds received from our Term Loans with Hercules.~~

debt financing arrangements. As of September 30, ~~2019,~~2020, we had ~~$157.6~~cash, cash equivalents, marketable securities, and amounts available to us under the Sumitomo Dainippon Pharma Loan Agreement of $257.6 million, consisting of $111.3 million of cash, cash equivalents, and marketable securities and $146.3 million of borrowing capacity available to us under the Sumitomo Dainippon Pharma Loan Agreement, as compared to ~~$156.1~~cash, cash equivalents, marketable securities, and amounts available to us under the Sumitomo Dainippon Pharma Loan Agreement of $365.9 million, consisting of $79.6 million of cash, ~~and~~ cash equivalents, and marketable securities and $286.3 million of borrowing capacity available to us under the Sumitomo Dainippon Pharma Loan Agreement as of March 31, ~~2019.~~ 2020. Additional funds under the Sumitomo Dainippon Pharma Loan Agreement may be drawn down by us no more than once per calendar quarter, subject to certain terms and conditions, including consent of our board of directors. In October 2020, we borrowed an additional $60.0 million under the Sumitomo Dainippon Pharma Loan Agreement. On August 5, 2020, we obtained the 2020 Commitment Letter from Sumitomo Dainippon Pharma (amended September 29, 2020) pursuant to which, subject to the terms and conditions set forth therein, Sumitomo Dainippon Pharma has committed to provide us with an incremental $200.0 million, low-interest, five-year term loan commitment.

Pursuant to the Richter Development and Commercialization Agreement, we received an upfront payment of $40.0 million in March 2020, and are eligible to receive up to $40.0 million in regulatory milestones (of which $10.0 million was received in April 2020), up to $107.5 million in sales-related milestones, and tiered royalties on net sales following regulatory approval.

As of September 30, ~~2019,~~2020, we had approximately $10.4 million of capacity available to us under our “at-the-market” equity offering program that we established in April 2018.

Capital Requirements

For ~~the three months ended September 30, 2019 and 2018, we had net losses of $70.6 million and $65.8 million, respectively, and for~~ the six months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we had net losses of $99.9 million and $138.5 million, ~~and $127.9 million,~~ respectively.As of September 30, ~~2019,~~2020, we had an accumulated deficit of ~~$640.5~~$890.9 million.

We have incurred, and expect to continue to incur, significant operating losses and negative operating cash flows as we continue to develop our product candidates and prepare for the potential future regulatory approvals and commercialization of ~~relugolix.~~relugolix combination tablet and relugolix monotherapy tablet. We have not generated any product revenue to date and do not expect to generate product revenue unless and until we ~~successfully complete development and~~ obtain regulatory approval for one of our product candidates. Our operating losses and negative operating cash flows may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical ~~trials,~~studies, anticipated regulatory filings, pre-commercialization and commercialization efforts and our expenditures on other R&D and G&A activities.

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We anticipate that our capital requirements will be significant as we:

~~advance~~•submit additional NDAs and other regulatory filings for our Phase 3 programs of relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) for the treatment of heavy menstrual bleeding associated with uterine fibroids and for pain associated with endometriosis and relugolix 120 mg as a monotherapy for advanced prostate cancer;product candidates;

•expand our chemistry, manufacturing, and control and other manufacturing related activities;

•seek to identify, acquire, develop, and commercialize additional product candidates;

•integrate acquired technologies into a comprehensive regulatory and product development strategy;

•maintain, expand, and protect our intellectual property portfolio;

•hire scientific, clinical, regulatory, quality, and administrative personnel;

•add operational, accounting, finance, quality, commercial, and management information systems and personnel;

•seek regulatory approvals for relugolix monotherapy tablet for the treatment of men with advanced prostate cancer and relugolix combination tablet for the treatment of women with heavy menstrual bleeding associated with uterine fibroids and any other product candidates that successfully complete clinical ~~trials;~~studies;

•establish a medical affairs group with a medical scientific liaison team;

•establish a sales, marketing, and distribution infrastructure and increase the scale of our external ~~manufacturing~~ capabilities to commercialize any product candidates for which we may obtain regulatory approval;

•service our debt obligations and associated interest payments; and

•operate as a public company.

Our primary use of cash has been to fund the development of relugolix combination therapy, relugolix monotherapy, and MVT-602. We expect our operating expenses to continue to increase over the near term as we expand our operations to continue to develop our product candidates and prepare for potential future regulatory approvals and commercialization of ~~relugolix.~~ relugolix combination tablet and relugolix monotherapy tablet. In addition, we currently expect that our outstanding debt levels will increase in future periods, which will result in an increase in our quarterly interest payment obligations.

Based on our current operating plan, we expect that our ~~existing~~ cash, cash equivalents, ~~and~~ marketable securities and amounts available to us under the Sumitomo Dainippon Pharma Loan Agreement will be sufficient to fund our operating expenses and capital expenditure requirements at least through the end of our fiscal year ending March 31, ~~2020.~~2021. This estimate is based on our current assumptions, including assumptions relating to our ability to manage our spend, that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our current cash, cash equivalents, ~~and~~ marketable securities, and amounts available to us under the Sumitomo Dainippon Pharma Loan Agreement will not be sufficient to enable us to complete all necessary development and regulatory activities and commercially launch ~~relugolix.~~relugolix combination tablet or relugolix monotherapy tablet. We anticipate that we will continue to incur net losses and negative operating cash flows for the foreseeable future.

To continue as a going concern, we will need, among other things, additional capital resources. We continually assess multiple options to obtain additional funding to support our operations, including through financing activities in public or private capital markets. We can provide no assurances that any sources of a sufficient amount of financing will be available to us on favorable terms, if at all. Although we expect to ~~negotiate and enter into a new term loan facility that we and~~draw under the Sumitomo ~~agreed to negotiate and enter into, and we expect to draw down on this term loan facility~~Dainippon Pharma Loan Agreement on a quarterly basis, ~~after it becomes effective~~such draws are contingent upon the ~~close~~consent of our board of directors. If Sumitomo Dainippon Pharma fails to own at least a majority of our common shares, it may become unlawful under Japanese law for Sumitomo Dainippon Pharma to fund loans to us, in which case we would not be able to continue to borrow under the ~~transaction between Roivant Sciences Ltd. and~~ Sumitomo Dainippon Pharma Loan Agreement. ASC 240-40, Going Concern, does not allow us to consider future financing activities that are uncertain in our assessment of our future cash burn for the purpose of our liquidity assessment. Due to these uncertainties, there is substantial doubt about our ability to continue as a going concern. If we are unable to raise capital in sufficient amounts and on terms acceptable to us, we may have to significantly delay, scale back, or discontinue operations.

Until such time, if ever, as we can generate substantial product revenue from sales of relugolix combination tablet, relugolix monotherapy tablet, MVT-602, or any future product candidate, we expect to ~~finance~~fund our operations through a combination of cash, cash equivalents, and marketable securities currently on hand, equity offerings, debt financings, structured transactions such as royalty financings, collaboration, license or development agreements, or other collaborations, as well as quarterly draws ~~on the new term loan facility that we have agreed to negotiate and enter into with Sumitomo referenced previously. However, we have agreed, until the closing of~~under the Sumitomo ~~Transactions,~~Dainippon Pharma Loan Agreement, subject to ~~reasonably assist and reasonably cooperate with RSL in complying with~~ the ~~interim operating covenants contained in the Sumitomo-Roivant Agreement that relate to us, in which RSL has agreed, among other things, to cause us to conduct~~consent of our ~~business in the ordinary course, including refraining from taking a list~~board of actions without Sumitomo’s consent, including (subject to certain limitations) but not limited to incurring additional indebtedness, issuance of equity securities, granting of liens, and sales of assets.directors. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our common shareholders’ ownership interest may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect our common shareholders’ rights. ~~Our existing financing agreements involve,~~The Sumitomo Dainippon Pharma Loan Agreement involves, and any agreements for

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future debt or preferred equity financings, if available, may involve, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, raising capital through equity offerings, making capital expenditures or declaring dividends.

In addition, if we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table sets forth a summary of our cash flows for the six months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Six Months Ended September 30,							Six Months Ended September 30,
	2019			2018				2020		2019
Net cash used in operating activities	$	(135,148	)	$	(108,881	)	Net cash used in operating activities	$	(110,576)	$	(135,148)
Net cash used in investing activities	$	(27,692	)	$	(390	)	Net cash used in investing activities	$	(14,823)	$	(27,692)
Net cash provided by financing activities	$	137,388		$	154,964		Net cash provided by financing activities	$	143,578	$	137,388

Operating Activities

For the six months ended September 30, 2020, we used $110.6 million in operating activities primarily due to our ongoing development and clinical studies, activities related to our preparation for potential regulatory approvals and commercialization of relugolix combination tablet and relugolix monotherapy tablet, and the expansion of our company. This was primarily attributable to a net loss for the period of $99.9 million, a net decrease of $23.3 million in deferred revenue consisting of the recognition of $33.3 million of previously deferred revenue, partially offset by an increase in deferred revenue of $10.0 million related to a regulatory milestone payment we received from Richter in April 2020, a non-cash foreign currency transaction gain of $10.3 million primarily related to the Sumitomo Dainippon Pharma debt outstanding, and a decrease of $8.3 million in accounts payable due to the timing of vendor invoice payments. These amounts were partially offset primarily by $14.7 million of non-cash share-based compensation expense and an increase of $11.1 million in accrued expenses primarily due to increases in accrued commercial, compensation-related, and R&D expenses.

For the six months ended September 30, 2019, we used $135.1 million in operating activities primarily due to our ongoing development and clinical ~~trials for relugolix and MVT-602,~~studies, activities related to our preparation for potential regulatory approvals and commercialization of relugolix combination tablet and relugolix monotherapy tablet, and the expansion of our company. This was primarily attributable to a net loss for the period of $138.5 million ~~and decreases~~along with a decrease of ~~$9.3~~$9.2 million in accrued expenses resulting primarily from a decrease in accrued R&D expenses and accrued compensation-related expenses and a decrease of $5.2 million in accounts payable due to the timing of vendor invoice payments. These amounts were partially offset by an increase of $3.1 million in deferred interest payable related to our outstanding debt with NovaQuest which is paid on a deferred basis pursuant to the terms of the NovaQuest Securities Purchase Agreement, $14.4 million of non-cash share-based compensation expense as a result of an increase in headcount, ~~and $1.8 million of total depreciation and amortization expense.~~

For the six months ended September 30, 2018, we used $108.9 million in operating activities primarily due to our ongoing development and clinical trials for relugolix and MVT-602. This was primarily attributable to a net loss for the period of $127.9 million along with an increase of ~~$3.2~~$3.1 million in ~~prepaid expenses~~deferred interest payable related to our previously outstanding debt with NovaQuest, and other current assets and a decrease of $1.4 million in amounts due to RSL, RSI, and RSG. These amounts were partially offset by an increase in accrued expenses of $8.2 million and an increase in accounts payable of $3.8 million which were primarily due to the progress of our ongoing Phase 3 clinical trials of relugolix, $9.0 million of non-cash share-based compensation expense as a result of an increase in headcount, and $1.1$1.8 million of total depreciation and amortization expense.

Investing Activities

For the six months ended September 30, 2020, we used $14.8 million in investing activities, of which $14.1 million was for the purchase of marketable securities, net of maturities, and $0.7 million was for the purchase of property and equipment.

For the six months ended September 30, 2019, we used $27.7 million ~~was used~~ in investing activities, of which $27.2 million was for the purchase of marketable securities and $0.5 million was for the purchase of property and equipment.

Financing Activities

For the six months ended September 30, ~~2018, $0.4~~2020, $143.6 million was ~~used in investing activities, all for~~provided by financing activities. This was primarily due to proceeds of $140.0 million borrowed under the ~~purchase~~Sumitomo Dainippon Pharma Loan Agreement and proceeds of ~~property and equipment.~~$3.6 million from the exercise of stock options under our 2016 Equity Incentive Plan.

~~Financing Activities~~

For the six months ended September 30, 2019, $137.4 million was provided by financing activities. This was primarily due to the net proceeds of $134.5 million we received from the issuance and sale of 17,424,243 common shares in our underwritten public equity offering ~~(including the exercise of the underwriters’ over-allotment option)~~ and ~~the net proceeds of~~ $2.5 million we received from the sale of 106,494 common shares through our “at-the-market” equity offering program. ~~In addition, we received proceeds of $0.3 million from the exercise of stock options under our 2016 Equity Incentive Plan.~~

For the six months ended September 30, 2018, $155.0 million was provided by financing activities. This was primarily due to the net proceeds of $74.7 million we received from the issuance and sale of 3,533,399 common shares in our underwritten public equity offering (including the partial exercise of the underwriters’ over-allotment option), $57.3 million we received from the sale of 2,767,129 common shares through our “at-the-market” equity offering program, and proceeds of $22.5 million we received from the sale of 1,110,015 common shares to RSL in a private placement. In addition, we received proceeds of ~~$0.5~~$0.3 million from the exercise of stock options under our 2016 Equity Incentive Plan.

Contractual Obligations

During the six months ended September 30, ~~2019,~~2020, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, ~~2019.~~

~~During October 2019, we entered into a Sublease~~2020, other than additional draws under the Sumitomo Dainippon Pharma Loan Agreement ~~or sublease, for 20,116 square feet of office space within the same building as~~(see Note 5 to our ~~current corporate office space located~~unaudited condensed consolidated financial statements included elsewhere in ~~Brisbane, California. The sublease term expires~~this Quarterly Report on February 29, 2024, with total expected minimum payments over the sublease term of approximately $3.9 million, of which approximately $0.4 million relates to the fiscal year ended March 31, 2020 and approximately $3.5 million relate to each of the fiscal years ended March 31, 2021 through 2024. The sublease required us to deliver an irrevocable standby letter of credit to the sublessor for the duration of the lease in the amount of $0.2 million.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the dates of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses ~~incurred~~ during the reporting periods. We base our estimates on historical experience and on various other information available to us at the time we make the estimates and judgments that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, or experience. Changes in estimates and assumptions are reflected in reported results in the period in which they become known.

We define our critical accounting policies as those under U.S. GAAP that require us to make subjective estimates and judgments about matters that are inherently uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

Our critical accounting policies are more fully described in “Critical Accounting Policies and Significant Judgments and Estimates” in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form ~~10-K.~~10-K for the fiscal year ended March 31, 2020, filed with the SEC on May 18, 2020. We believe there have been no material changes to our critical accounting policies and use of estimates as disclosed in our Annual Report on Form ~~10-K for the fiscal year ended March 31, 2019, filed with the SEC on May 24, 2019, other than to leases upon the adoption of ASU 2016-02,~~ ~~Leases~~ ~~(Topic 842), as discussed below.~~

~~Prior to April 1, 2019, we recognized our leases in accordance with ASC 840,~~ ~~Leases~~, and all of our leases were classified as operating leases. Rent expense was recognized on a straight-line basis over the terms of the leases and, accordingly, we recorded the cumulative difference between cash rent payments and the recognition of rent expense as a deferred rent liability. When an operating lease included lease incentives, such as rent abatements or leasehold improvement allowances, or required fixed escalations of the minimum lease payments, the aggregate rental expense, including such incentives or increases, was recognized on a straight-line basis over the term of the lease.

~~Effective April 1, 2019, we adopted ASU 2016-02,~~ ~~Leases~~ (Topic 842), under which all of our outstanding leases continue to be classified as operating leases. Rent expense is recognized on a straight-line basis. When an operating lease includes rent abatements or requires fixed escalations of the minimum lease payments, the aggregate rental expense is recognized on a straight-line basis over the term of the lease. When an operating lease includes lease incentives such as leasehold improvement allowances, the lease incentive is included in the right-of-use asset. Operating lease right-of-use assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. As our leases do not provide an implicit rate, in determining the net present value of lease payments, management used judgment in order to estimate the appropriate incremental borrowing rate, which is the rate incurred to borrow equivalent funds on a collateralized basis over a similar term in a similar economic environment.10-K.

Recent Accounting Pronouncements

For information regarding the impact of recently adopted accounting pronouncements and the expected impact of recently issued accounting pronouncements not yet adopted on our consolidated financial statements, see Note 2 ~~“Summary of Significant Accounting Policies,”~~ to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

~~Market risk is the potential loss arising from adverse changes in market rates~~Under SEC rules and ~~market prices such as interest rates, foreign currency exchange rates, and changes in the market value of equity instruments.~~

~~Our investment policy establishes guidelines for the investment of cash in~~regulations, because we are considered to be a ~~conservative and diversified investment portfolio which seeks~~“smaller reporting company,” we are not required to provide adequate liquidity for our operations while minimizing the loss of any principal. The securities permitted under our investment policy may be subject to market risk related to changes in interest rates and other market factors. We manage our sensitivity to these risks by investing in short-term, investment grade marketable securities. Due to the short-term duration of our investment portfolio, the limited amount of investments classified as marketable securities, and the low risk profile of our investments, we do not believe that a hypothetical 10% change in market rates would have a material impact on the realized value of our investments. As of September 30, 2019, we had cash, cash equivalents, and marketable securities of $157.6 million and as of March 31, 2019, we had cash and cash equivalents of $156.1 million.

~~We also have certain debt that bears interest at a prime-based variable rate. A hypothetical 10% change~~information in this ~~interest rate would have an approximate $0.4 million impact on our annual interest expense. We do not believe we are currently exposed to any material market risk.~~ Item 3.

We do not believe that we have any material exposures to foreign currency rate fluctuations. Although we conduct some R&D activities with vendors outside of the U.S., most of our transactions are denominated in U.S. dollars. For the six months ended September 30, 2019, we recorded a foreign exchange gain of $0.6 million, and for the six months ended September 30, 2018, we recorded a foreign exchange loss of $0.3 million. These amounts are included in other expense (income), net on the unaudited condensed consolidated statements of operations.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective at the reasonable assurance level. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

We continually seek to improve the efficiency and effectiveness of our internal control over financial reporting. During the quarter ended September 30, 2019, we implemented a company-wide enterprise resource planning (ERP) system to improve the efficiency of certain financial and related transactional processes. We have completed the implementation of certain processes, including the financial close and reporting and indirect procure-to-pay processes and where appropriate, we have modified the design and operation of certain internal control processes and procedures relating to the new ERP system. As we optimize and implement the remaining functionality under this ERP system over the next several quarters, we will continue to assess the impact on our internal control over financial reporting.

~~There were no other~~No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~that~~ occurred during the fiscal quarter ended September 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Myovant Sciences Ltd. have been detected.

Item 1.Legal Proceedings

From time to time, we may become involved in legal proceedings related to claims arising from the ordinary course of business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceedings against us that we believe could have a material adverse effect on our business, operating results, or financial condition.

Item 1A. 1A. Risk Factors

You should carefully consider the following risk factors, in addition to the other information contained in this Quarterly Report on Form 10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the events described in the following risk factors and the risks described elsewhere in this Quarterly Report on Form 10-Q occurs, our business, operating results and financial condition could be seriously harmed and the trading price of our common shares could decline and you could lose all or part of your investment in our common shares.

Summary Risk Factors

Our business is subject to a number of risks that our shareholders should be aware of before making a decision to invest in our common shares. These risks are more fully described below. These risks include, among others, the following:

•Business interruptions resulting from effects of pandemics or epidemics such as the novel strain of the coronavirus known as COVID-19, may materially and adversely affect our business and financial condition.

•We believe our current cash, cash equivalents, marketable securities, and current borrowing capacity under our Sumitomo Dainippon Pharma Loan Agreement will not be sufficient for us to fund our anticipated level of operations until we become cash flow positive. If we fail to obtain additional capital, including from the potential additional capital we may obtain from Sumitomo Dainippon Pharma as described in its 2020 Commitment Letter to us, we will not be able to complete the development of, seek regulatory approval for, and commercialize our product candidates.

•We are required to meet certain terms and conditions to draw down funds under the Sumitomo Dainippon Pharma Loan Agreement. If we are unable to meet such terms and conditions, we may not be able to access funding from the Sumitomo Dainippon Pharma Loan Agreement. The terms of the Sumitomo Dainippon Pharma Loan Agreement place restrictions on our operating and financial flexibility.

•We expect to incur significant operating losses and negative operating cash flows for the foreseeable future, and may never achieve or maintain profitability.

•We are heavily dependent on the success of relugolix combination tablet for our women’s health indications of uterine fibroids and endometriosis, relugolix monotherapy tablet for men with advanced prostate cancer, and MVT-602. If relugolix combination tablet, relugolix monotherapy tablet or MVT-602 do not receive regulatory approval or are not successfully commercialized, our business will be harmed.

•We do not have our own manufacturing capabilities and rely on third parties to produce clinical and commercial supplies of drug substance and drug product. If these third parties do not perform as we expect, do not maintain their regulatory approvals, or become subject to other negative circumstances, it may result in delay in our ability to develop and commercialize our products.

•Clinical studies are very expensive, time-consuming, difficult to design and implement, and involve uncertain outcomes. Clinical study failures can occur at any stage of clinical studies, and we could encounter problems that cause us to suspend, abandon or repeat clinical studies. We cannot predict with any certainty the timing for commencement or completion of current or future clinical studies.

•We are dependent on the research and development of relugolix and MVT-602 previously conducted by Takeda, and if Takeda did not conduct this research and development in compliance with applicable requirements this could result in increased costs and delays in our development of these product candidates. Reported data or other clinical development announcements by Takeda, its partners or sublicensees, may adversely affect our clinical development plan.

•The results of our clinical studies may not support our proposed claims for our product candidates. The results of previous clinical studies may not be predictive of future results, and interim or top-line data may be subject to change or qualification based on the complete analysis of data.



			MYOVANT SCIENCES LTD.


			By:			/s/ Frank Karbe
						Frank Karbe (Duly Authorized Officer and Principal Financial and Accounting Officer)



	September 30, 2019			March 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	130,373		$	156,074
Marketable securities	27,220			—
Prepaid expenses and other current assets	9,969			10,194
Income tax receivable	17			524
Total current assets	167,579			166,792
Property and equipment, net	2,288			2,071
Operating lease right-of-use asset	8,973			—
Other assets	5,162			4,114
Total assets	$	184,002		$	172,977
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	5,819		$	11,019
Interest payable	305			1,077
Accrued expenses	44,380			53,614
Operating lease liability	853			—
Due to Roivant Sciences Ltd. (RSL), Roivant Sciences, Inc. (RSI) and Roivant Sciences GmbH (RSG)	271			121
Current maturities of long-term debt	8,402			6,142
Total current liabilities	60,030			71,973
Deferred rent	—			1,157
Deferred interest payable	5,323			2,273
Long-term operating lease liability	9,320			—
Long-term debt, less current maturities	92,075			93,240
Total liabilities	166,748			168,643
Commitments and contingencies (Note 12)
Shareholders’ equity:
Common shares, par value $0.000017727 per share, 564,111,242 shares authorized, 89,623,564 and 72,057,490 issued and outstanding at September 30, 2019 and March 31, 2019, respectively	2			1
Additional paid-in capital	657,780			505,851
Accumulated other comprehensive (loss) income	(31		)	507
Accumulated deficit	(640,497		)	(502,025		)
Total shareholders’ equity	17,254			4,334
Total liabilities and shareholders’ equity	$	184,002		$	172,977



	Common Shares			Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity
	Shares	Amount		Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity
Balance at March 31, 2019	72,057,490	$	1	$	505,851		$	507		$	(502,025	)	$	4,334
Issuance of shares in connection with “at-the-market” equity offering, net of commissions of $79	106,494	—		2,546			—			—			2,546
Issuance of shares in connection with public equity offering, net of commissions and offering costs of $9,229	17,424,243	1		134,537			—			—			134,538
Share-based compensation expense	—	—		6,410			—			—			6,410
Capital contribution — share-based compensation	—	—		42			—			—			42
Capital contribution from RSI and RSG	—	—		106			—			—			106
Foreign currency translation adjustment	—	—		—			(819		)	—			(819		)
Issuance of shares upon exercise of stock options and vesting of RSUs	34,399	—		314			—			—			314
Net loss	—	—		—			—			(67,904		)	(67,904		)
Balance at June 30, 2019	89,622,626	2		649,806			(312		)	(569,929		)	79,567
Public equity offering, additional offering costs	—	—		(80		)	—			—			(80		)
Share-based compensation expense	—	—		7,879			—			—			7,879
Capital contribution — share-based compensation	—	—		52			—			—			52
Capital contribution from RSI and RSG	—	—		123			—			—			123
Foreign currency translation adjustment	—	—		—			281			—			281
Issuance of shares upon vesting of RSUs	938	—		—			—			—			—
Net loss	—	—		—			—			(70,568		)	(70,568		)
Balance at September 30, 2019	89,623,564	$	2	$	657,780		$	(31	)	$	(640,497	)	$	17,254



	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Money market funds	$	53	$	—	$	—	$	53
Commercial paper	—		130,953		—		130,953
Corporate bonds	—		12,608		—		12,608
Total assets	$	53	$	143,561	$	—	$	143,614



	September 30, 2019			March 31, 2019
Principal amount	$	60,000		$	60,000
Less: unamortized debt issuance costs	(523		)	(756		)
Loan payables less unamortized debt issuance costs	59,477			59,244
Less: current maturities	—			—
Long-term debt, net of current maturities and unamortized debt issuance costs	$	59,477		$	59,244



	Tranche 1	Tranche 2
Exercise price	$15.06	$18.82
Common share price on date of issuance	$14.39	$18.96
Volatility	73.2%	72.3%
Risk-free interest rate	2.15%	2.78%
Expected dividend yield	—%	—%
Contractual term (in years)	7.00	7.00



Years Ended March 31,
2020 (remainder of year)	$	1,009
2021	2,065
2022	2,128
2023	2,200
2024	2,339
Thereafter	5,307
Total lease payments	15,048
Less imputed interest ⁽¹⁾	(4,875		)
Present value of future minimum lease payments	10,173
Less operating lease liability, current portion	(853		)
Operating lease liability, long-term portion	$	9,320