1.Organization and Business Activities
Nabriva Therapeutics AG, together with its 100% owned and consolidated U.S. subsidiary Nabriva Therapeutics US, Inc., (“Nabriva”, “the Group” or the “Company”) is a clinical stage biopharmaceutical company engaged in the research and development of novel anti-infective agents to treat serious infections, with a focus on the pleuromutilin class of antibiotics. Nabriva was incorporated in Austria as a spin-off from Sandoz GmbH in October 2005 and commenced operations in February 2006. The Company’s headquarters are at Leberstrasse 20, A-1110 Vienna. Nabriva Therapeutics US, Inc. was founded and began operations in the United States in August 2014.
Liquidity
Since its inception, the Company incurred net losses and generated negative cash flows from its operations. To date, it has financed its operations through the sale of equity securities, including its initial public offering of ADSs and private placements of its common shares, convertible debt financings and research and development support from governmental grants and loans. As of December 31, 2016, the Company had cash and cash equivalents and short term investments of $83.9 million.
On December 19, 2016, the Company completed a rights offering and a related underwritten offering for the sale of an aggregate of 588,127 common shares resulting in aggregate gross proceeds of approximately $24.8 million and net proceeds to us of approximately $20.6 million, after deducting underwriting fees and offering expenses.
On September 23, 2015 the Company completed its initial public offering on the NASDAQ Global Market issuing 9,000,000 ADSs at a price to the public of $10.25 per ADS, representing 900,000 of its common shares. Each ADS represents one tenth of a common share. On September 30, 2015 the underwriters of its initial public offering exercised in full their over-allotment option to purchase an additional 1,350,000 ADSs, representing 135,000 common shares, at the initial public offering price of $10.25 per ADS, less underwriting discounts. Including the over-allotment ADSs, the Company sold an aggregate of 10,350,000 ADSs representing 1,035,000 common shares, in its initial public offering, which resulted in gross proceeds of approximately $106.1 million and net proceeds to the Company of approximately $92.4 million, after deducting underwriting discounts and offering expenses.
In connection with the Company’s April 2015 financing, it sold 730,162 common shares with contractual preference rights under a shareholders agreement, including the sale of 511,188 common shares at a price per share of €82.35 ($87.71) for €42.1 million ($44.8 million) in cash consideration and the sale of 218,974 common shares in exchange for certain contributions in-kind consisting of the conversion of outstanding convertible loans and silent partnership interests. The Company also agreed to sell a second tranche of common shares with contractual preference rights under the shareholders agreement to the investors in its April 2015 financing at their option for an aggregate purchase price of $70.0 million if the Company did not complete a public offering in the United States within specified parameters or by a specified date. Upon the closing of its initial public offering and the issuance of the shares for nominal value in satisfaction of the preferred dividend rights, all contractual preference rights under the shareholders agreement terminated.
Between 2011 and 2015 the Company entered into five convertible loan agreements with certain of its shareholders for proceeds in the aggregate amount of $18.2 million. All outstanding convertible loans converted into common shares with contractual preference rights under the shareholders agreement in connection with its April 2015 financing.
The Company entered into silent partnership agreements with certain of its shareholders for aggregate proceeds of $0.5 million in the second quarter of 2014 and $0.9 million in the first quarter of 2015. These agreements have terminated and the related claims for repayment were converted into common shares with contractual preference rights under the shareholders agreement in connection with its April 2015 financing.
Also during the second quarter of 2014, the Company entered into a €5.0 million ($6.6 million) loan agreement with Kreos that resulted in net proceeds of $6.2 million after deduction of the initial interest and principal payments and transaction costs at closing. In connection with the loan agreement, the Company granted Kreos Capital IV (Expert Fund) Limited a warrant to purchase its common shares with contractual preference rights under the shareholders agreement, which Kreos Capital IV (Expert Fund) Limited has exercised in full. As collateral for the loan, the Company pledged its intellectual property, fixed assets exceeding a book value of €1,000 the receivables related to the research premium and our bank accounts. In July 2015, Kreos Capital IV (UK) Limited agreed to release the Company from the pledge of its intellectual property upon the closing of its initial public offering. The Company prepaid the Kreos loan in accordance with the terms of the loan agreement in November 2015.
The Company expect that its existing cash, cash equivalents and short-term investments will be sufficient to enable it to fund its operating expenses and capital expenditure requirements at least into the second quarter of 2018 and to obtain top-line data for both its Phase 3 clinical trials of lefamulin. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could use its capital resources sooner than it currently expects. This estimate assumes, among other things, that the Company does not obtain any additional funding through grants and clinical trial support, collaboration agreements or debt financings.
If the Company is unable to raise capital when needed or on attractive terms, it could be forced to delay, reduce or eliminate its research and development programs or any future commercialization effort.