Momenta Pharmaceuticals 10Q 2020 Q2 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended June 30, 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 000-50797

Momenta Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

04-3561634

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

301 Binney Street

Cambridge

02142

(Address of Principal Executive Offices)

(Zip Code)

(617) 491-9700

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	MNTA	The Nasdaq Global Select Market

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

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 ☒ No ☐

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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

As of August 3, 2020, there were 118,848,047 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

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MOMENTA PHARMACEUTICALS, INC.


		Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			4

PART I. FINANCIAL INFORMATION			6

Item 1.	Financial Statements (unaudited)	6

	Condensed Consolidated Balance Sheets as of J une 30 , 2020 and December 31, 2019	6

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019	7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2020 and 2019	8

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 , 2020 and 2019	9

	Notes to Unaudited, Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION			39

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 6.	Exhibits	67

SIGNATURES			68

Our logo, trademarks and service marks are the property of Momenta Pharmaceuticals, Inc. Other trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained or incorporated by reference in this Quarterly Report on Form 10-Q that are about future events or future results, or are otherwise not statements of historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on current expectations, estimates, forecasts, projections, intentions, goals, strategies, plans, prospects and the beliefs and assumptions of our management. In some cases, these statements can be identified by words such as "anticipate," "approach," "believe," "can." "contemplate," "continue," "could," "ensure," "hope," "likely," "opportunity," "pursue," "target," "project," "goal," "objective," "plan," "potential," "predict," "might," "estimate," "expect," "intend," "may," "seek", "should," "will," "would," "look forward" and other similar words or expressions, or the negative of these words or similar words or expressions. These statements include, but are not limited to, statements regarding our priorities, goals and strategies, including our change in strategic focus toward the discovery and development of our novel drug candidates for rare immune-mediated diseases, including M281, M254 and M230, the advancement of our late stage biosimilar candidate, M710, and our plans regarding our M923 program; our expectations regarding the enrollment in, timing of and release of results for the Company’s clinical trials, site activation, clinical supply and business in light of the COVID-19 pandemic; the use, efficacy, safety, potency, tolerability, dosing, convenience, differentiation and commercial potential of our products and product candidates; the design, timing and goals of clinical trials and the availability, timing and announcement of data and results; estimates of incidence of disease and patient populations; market potential and acceptance of our products and product candidates; the timing of regulatory filings, reviews and approvals; our expectations regarding the development and utility of our products and product candidates; development timelines for our product candidates; development, manufacture and commercialization of our products and product candidates; efforts to seek and manage relationships with collaboration partners, including without limitation for our novel therapeutic and biosimilar programs; the timing of launch of products and product candidates; market share and product revenues of our products and product candidates, including GLATOPA and Enoxaparin Sodium Injection; the timing, merits, strategy, impact and outcome of, and decisions regarding, legal proceedings; the settlement of certain legal proceedings; timing of biosimilar market formation; collaboration revenues and research and development revenues; the sufficiency of our current capital resources and projected milestone payments and product revenues for future operations; our future financial position, including but not limited to our future operating losses, our potential future profitability; our future expenses, including anticipated restructuring charges; the composition and mix of our cash, cash equivalents and marketable securities; our future revenues and our future liabilities; our funding transactions and our intended uses of proceeds thereof; the potential sale of our common stock pursuant to a sales agreement entered into with Stifel, Nicolaus & Company, Incorporated; product candidate development costs; receipt of contingent milestone payments; accounting policies, estimates and judgments; our estimates regarding the fair value of our investment portfolio; the market risk of our cash equivalents, marketable securities and derivative, foreign currency and other financial instruments; rights, obligations, terms, conditions and allocation of responsibilities and decision making under our collaboration agreements; the regulatory pathway for biosimilars; our strategy, including but not limited to our regulatory strategy, and scientific approach; the importance of key customer distribution arrangements; future capital requirements; reliance on our collaboration partners and other third parties; the competitive landscape; changes in, impact of and compliance with laws, rules and regulations; compliance with data privacy and data protection laws and regulations and protection of personal privacy; product reimbursement policies and trends; ability to offset future taxable income; pricing of pharmaceutical products, including our products and product candidates; our stock price; our intellectual property strategy and position; sufficiency of insurance; attracting and retaining qualified personnel; our internal controls and procedures; acquisitions or investments in companies, products and technologies; entering into collaboration and/or license arrangements; marketing plans; financing our planned operating and capital expenditure; materials used in our research and development; dilution; royalty rates; and vesting of equity awards.

Any forward-looking statements in this Quarterly Report on Form 10-Q involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Important factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this

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industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

MOMENTA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)


	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	191,124	$	382,515
Marketable securities	245,174		139,129
Collaboration receivable	6,608		8,013
Prepaid expenses and other current assets	14,465		9,470
Total current assets	457,371		539,127
Marketable securities, long-term	14,315		23,466
Property and equipment, net	10,808		11,499
Restricted cash	1,849		1,849
Intangible assets, net	1,153		1,730
Other long-term assets	37,783		40,694
Total assets	$	523,279	$	618,365
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,705	$	14,140
Accrued expenses	35,444		58,799
Accrued restructuring	34		34
Collaboration liabilities	2,203		4,123
Deferred revenue	711		895
Other current liabilities	28,629		28,113
Total current liabilities	71,726		106,104
Deferred revenue, net of current portion	917		940
Other long-term liabilities	55,319		56,861
Total liabilities	127,962		163,905
Commitments and contingencies (Notes 7 and 11)
Stockholders’ Equity:

Common stock, $0.0001 par value per share, 200,000 shares authorized; 119,163 shares issued and 118,595 shares outstanding at June 30, 2020 and 117,029 shares issued and 116,460 shares outstanding at December 31, 2019	12		12
Additional paid-in capital	1,527,801		1,491,147
Accumulated other comprehensive income	1,086		296
Accumulated deficit	(1,130,468)		(1,033,881)
Treasury stock, at cost, 568 shares at June 30, 2020 and December 31, 2019	(3,114)		(3,114)
Total stockholders’ equity	395,317		454,460
Total liabilities and stockholders’ equity	$	523,279	$	618,365

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

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MOMENTA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Collaboration revenue:
Product revenue	$	6,588	$	3,333	$	15,280	$	5,685
Research and development revenue	22		1,849		219		3,610
Total collaboration revenue	6,610		5,182		15,499		9,295
Operating expenses:
Research and development	38,842		32,131		73,049		60,103
General and administrative	25,339		46,609		39,903		70,815
Restructuring	—		132		—		158
Other operating expense	(193)		42,936		593		42,936
Total operating expenses	63,988		121,808		113,545		174,012
Operating loss	(57,378)		(116,626)		(98,046)		(164,717)
Other income, net	346		2,657		1,459		5,905
Net loss	$	(57,032)	$	(113,969)	$	(96,587)	$	(158,812)

Basic and diluted net loss per share	$	(0.48)	$	(1.16)	$	(0.82)	$	(1.61)
Weighted average shares used in computing basic and diluted net loss per share	117,865		98,595		117,495		98,396

Comprehensive loss:
Net loss	$	(57,032)	$	(113,969)	$	(96,587)	$	(158,812)
Net unrealized holding gain on available-for-sale debt securities	1,205		264		790		606
Comprehensive loss	$	(55,827)	$	(113,705)	$	(95,797)	$	(158,206)

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

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MOMENTA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2020		2019
Cash Flows from Operating Activities:
Net loss	$	(96,587)	$	(158,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment	1,545		10,032
Share-based compensation expense	24,237		7,136
Amortization of premium (discount) on investments	47		(1,146)
Amortization of intangibles	577		577
Gain on disposal of assets	(23)		(415)
Changes in operating assets and liabilities:
Collaboration receivable	1,405		6,973
Prepaid expenses and other current assets	(4,987)		(668)
Other long-term assets	2,911		5,185
Accounts payable	(9,435)		690
Accrued expenses	(22,229)		830
Accrued restructuring	—		(2,124)
Collaboration liabilities	(1,920)		(449)
Deferred revenue	(207)		(2,847)
Other liabilities	(1,026)		23,776
Net cash used in operating activities	(105,692)		(111,262)

Cash Flows from Investing Activities:
Purchases of property and equipment	(1,734)		(1,057)
Proceeds from disposal of equipment	44		2,449
Purchases of marketable securities	(225,673)		(194,527)
Proceeds from maturities and sales of marketable securities	129,522		176,790
Net cash used in investing activities	(97,841)		(16,345)

Cash Flows from Financing Activities:
Payment of financing fees related to public offering	(264)		—
Proceeds from issuance of common stock under stock plans	12,406		2,781
Net cash provided by financing activities	12,142		2,781

Net decrease in cash, cash equivalents and restricted cash	(191,391)		(124,826)
Cash, cash equivalents and restricted cash, beginning of period	384,364		286,232
Cash, cash equivalents and restricted cash, end of period	$	192,973	$	161,406

Non-Cash Activities:
Purchases of property and equipment included in accounts payable and accrued expenses	$	—	$	529
Receivable due from stock option exercises	$	1,105	$	—

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

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MOMENTA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


	Common Stock										Treasury Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Shares	Amount		Total Stockholders' Equity
Balances at December 31, 2018	98,695	$	10	$	1,208,025	$	(87)	$	(743,826)	(229)	$	(3,114)	$	461,008
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	237	—		2,577		—		—		—	—		2,577
Issuance of restricted stock	280	—		—		—		—		—	—		—
Cancellation/forfeiture of restricted stock	(36)	—		—		—		—		—	—		—
Share-based compensation expense	—	—		3,474		—		—		—	—		3,474
Unrealized holding gain on available-for-sale debt securities	—	—		—		342		—		—	—		342
Net loss	—	—		—		—		(44,843)		—	—		(44,843)
Balances at March 31, 2019	99,176	$	10	$	1,214,076	$	255	$	(788,669)	(229)	$	(3,114)	$	422,558
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	20	—		204		—		—		—	—		204
Issuance of restricted stock	55	—		—		—		—		—	—		—
Cancellation/forfeiture of restricted stock	—	—		—		—		—		(339)	—		—
Share-based compensation expense	—	—		3,662		—		—		—	—		3,662
Unrealized holding gain on available-for-sale debt securities	—	—		—		264		—		—	—		264
Net loss	—	—		—		—		(113,969)		—	—		(113,969)
Balances at June 30, 2019	99,251	$	10	$	1,217,942	$	519	$	(902,638)	(568)	$	(3,114)	$	312,719

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	Common Stock										Treasury Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Shares	Amount		Total Stockholders' Equity
Balances at December 31, 2019	117,029	$	12	$	1,491,147	$	296	$	(1,033,881)	(568)	$	(3,114)	$	454,460
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	615	—		8,869		—		—		—	—		8,869
Issuance of restricted stock	536	—		—		—		—		—	—		—
Financing fees related to public offering	—	—		11		—		—		—	—		11
Share-based compensation expense	—	—		4,823		—		—		—	—		4,823
Unrealized holding loss on available-for-sale debt securities	—	—		—		(415)		—		—	—		(415)
Net loss	—	—		—		—		(39,555)		—	—		(39,555)
Balances at March 31, 2020	118,180	$	12	$	1,504,850	$	(119)	$	(1,073,436)	(568)	$	(3,114)	$	428,193
Issuance of common stock pursuant to the exercise of stock options and employee stock purchase plan	382	—		3,537		—		—		—	—		3,537
Issuance of restricted stock	601	—		—		—		—		—	—		—
Share-based compensation expense	—	—		19,414		—		—		—	—		19,414
Unrealized holding gain on available-for-sale debt securities	—	—		—		1,205		—		—	—		1,205
Net loss	—	—		—		—		(57,032)		—	—		(57,032)
Balances at June 30, 2020	119,163	$	12	$	1,527,801	$	1,086	$	(1,130,468)	(568)	$	(3,114)	$	395,317

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

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MOMENTA PHARMACEUTICALS, INC.

NOTES TO UNAUDITED, CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Business Overview

Momenta Pharmaceuticals, Inc., referred to as Momenta or the Company, was incorporated in the state of Delaware in May 2001 and began operations in early 2002. Its facilities are located in Cambridge, Massachusetts. Momenta is a biotechnology company focused on developing novel therapeutics for rare immune-mediated diseases and other legacy products, including complex generics and biosimilars. The Company presently derives all of its revenue from its collaborations.

Basis of Presentation

In the opinion of management, the accompanying unaudited, condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company's financial statements for interim periods in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the Company's audited consolidated financial statements and the accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission, or the SEC, on February 27, 2020. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company's audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Consolidation

The accompanying unaudited, condensed consolidated financial statements reflect the operations of the Company and the Company’s wholly-owned subsidiaries, Momenta Pharmaceuticals Securities Corporation and Momenta Ireland Limited. Intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and judgments, including those related to revenue recognition and accrued research and development expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates.

Summary of Significant Accounting Policies

The Company's significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies" to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019, except as described below.

Newly Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies are required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”) and ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”) to provide additional guidance on the adoption of ASU 2016-13. ASU 2019-04 added Topic 326, Financial Instruments-Credit Losses, and made several amendments to the codification and also modified the accounting for available-for-sale debt securities. ASU 2019-05 provides targeted transition relief by providing an option to irrevocably elect the fair

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value option for certain financial assets previously measured at amortized cost basis. The new guidance was effective for the Company on January 1, 2020. The adoption of the standard had no material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Requirements for Fair Value Measurement. The new standard added, modified or removed disclosure requirements under Topic 820 for clarity and consistency. The new guidance was effective for the Company on January 1, 2020. The adoption of the standard had no material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No. 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. The amendment updates the accounting for implementation, setup, and other upfront costs for a customer in a hosting arrangement that is a service contract. The amendment may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The new guidance was effective for the Company on January 1, 2020 and was adopted prospectively. The adoption of the standard had no material impact on the Company's consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The amendment clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements. The amendment also adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606. Lastly, the amendment requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The new guidance was effective for the Company on January 1, 2020. The adoption of the standard had no material impact on the Company's consolidated financial statements.

2. Supplemental Cash Flow Statement Information

The following table summarizes the Company’s cash, cash equivalents and restricted cash as of June 30, 2020 and December 31, 2019:


	June 30, 2020		December 31, 2019
	(in thousands)
Cash and cash equivalents	$	191,124	$	382,515
Restricted cash	1,849		1,849
Total	$	192,973	$	384,364

3. Fair Value Measurements

The Company has certain assets recorded at fair value, which may be classified as Level 1, 2, or 3 within the fair value hierarchy:

Level 1 - Fair values are determined utilizing prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 - Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves, and foreign currency spot rates.

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

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The tables below present information about the Company’s assets that are regularly measured and carried at fair value on a recurring basis:


Description	June 30, 2020		Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	153,941	$	153,941	$	—	$	—
U.S. government agency securities	6,999		—		6,999		—
Commercial paper obligations	10,497		—		10,497		—
Overnight repurchase agreements	9,000		—		9,000		—
Marketable securities:
U.S. government agency securities	41,169		—		41,169		—
Corporate debt securities	150,481		—		150,481		—
Certificates of deposit	400		—		400		—
Commercial paper obligations	54,228		—		54,228		—
Asset-backed securities	13,211		—		13,211		—
Total	$	439,926	$	153,941	$	285,985	$	—


Description	December 31, 2019		Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	169,760	$	169,760	$	—	$	—
Overnight repurchase agreements	7,500		—		7,500		—
Corporate debt securities	4,006		—		4,006		—
Marketable securities:
U.S. government agency securities	19,794		—		19,794		—
Corporate debt securities	108,074		—		108,074		—
Certificates of deposit	1,800		—		1,800		—
Commercial paper obligations	18,228		—		18,228		—
Asset-backed securities	14,699		—		14,699		—
Total	$	343,861	$	169,760	$	174,101	$	—

Overnight repurchase agreements are classified as Level 2 due to the collateral including both U.S. government-sponsored enterprise securities and treasury instruments.

There were no changes in valuation techniques or transfers between the fair value measurement levels during the three and six months ended June 30, 2020 and 2019. The fair value of Level 2 instruments classified as marketable securities were determined through third party pricing services. For a description of the Company’s validation procedures related to prices provided by third party pricing services, refer to Note 2, “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019. The carrying amounts reflected in the Company’s condensed consolidated balance sheets for cash equivalents, collaboration receivable, other current assets, accounts payable, accrued restructuring, and accrued expenses approximate fair value due to their short-term maturities.

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4. Cash, Cash Equivalents and Marketable Securities

The following tables summarize the Company’s cash, cash equivalents and marketable securities as of June 30, 2020 and December 31, 2019:


As of June 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Cash, money market funds, commercial paper obligations, overnight repurchase agreements and U.S. government agency securities	$	191,122	$	2	$	—	$	191,124
U.S. government agency securities due in one year or less	41,092		77		—		41,169
Corporate debt securities due in one year or less	148,440		707		(1)		149,146
Corporate debt securities due after one year through two years	1,319		17		(1)		1,335
Certificates of deposit due in one year or less	400		—		—		400
Commercial paper obligations due in one year or less	54,006		222		—		54,228
Asset-backed securities due in one year or less	231		—		—		231
Asset-backed securities due after one year through three years	12,917		63		—		12,980
Total	$	449,527	$	1,088	$	(2)	$	450,613

Reported as:
Cash and cash equivalents	$	191,122	$	2	$	—	$	191,124
Marketable securities	258,405		1,086		(2)		259,489
Total	$	449,527	$	1,088	$	(2)	$	450,613


As of December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Cash, money market funds, corporate debt securities and overnight repurchase agreements	$	382,515	$	—	$	—	$	382,515
U.S. government agency securities due in one year or less	19,781		14		(1)		19,794
Corporate debt securities due in one year or less	98,440		212		(6)		98,646
Corporate debt securities due after one year through two years	9,393		35		—		9,428
Certificates of deposit due in one year or less	1,800		—		—		1,800
Commercial paper obligations due in one year or less	18,212		16		—		18,228
Asset-backed securities due in one year or less	660		1		—		661
Asset-backed securities after one year through three years	14,013		25		—		14,038
Total	$	544,814	$	303	$	(7)	$	545,110

Reported as:
Cash and cash equivalents	$	382,515	$	—	$	—	$	382,515
Marketable securities	162,299		303		(7)		162,595
Total	$	544,814	$	303	$	(7)	$	545,110

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5. Restricted Cash

The following table summarizes the amounts designated as collateral for letters of credit related to the lease of office and laboratory space in Cambridge, Massachusetts at both June 30, 2020 and December 31, 2019:


Property Location	Letter of Credit Amount		Balance Sheet Classification
	(in thousands)
320 Bent Street	$	748	Non-Current Asset
301 Binney Street, Fifth Floor	1,101		Non-Current Asset
Total	$	1,849

6. Supplemental Balance Sheet Information

Other Assets

As of June 30, 2020 and December 31, 2019, other long-term assets consisted of the following:


	June 30, 2020		December 31, 2019
	(in thousands)
Right-of-use operating lease assets	$	37,608	$	40,534
Other	175		160
Total other long-term assets	$	37,783	$	40,694

Accrued Expenses

As of June 30, 2020 and December 31, 2019, accrued expenses consisted of the following:


	June 30, 2020		December 31, 2019
	(in thousands)
Accrued compensation	$	4,979	$	6,177
Accrued research and development costs	7,476		13,051
Accrued legal settlement	20,000		35,000
Accrued professional fees	2,883		4,559
Accrued other	106		12
Total accrued expenses	$	35,444	$	58,799

Other Liabilities

As of June 30, 2020 and December 31, 2019, other current and long-term liabilities consisted of the following:

Other Current Liabilities


	June 30, 2020		December 31, 2019
	(in thousands)
Contract liability	$	22,751	$	21,456
Lease liability	5,733		5,448
Other	145		1,209
Total other current liabilities	$	28,629	$	28,113

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Other Long-Term Liabilities


	June 30, 2020		December 31, 2019
	(in thousands)
Lease liability	$	31,354	$	34,306
Contract liability	23,240		21,767
Other	725		788
Total other long-term liabilities	$	55,319	$	56,861

As of June 30, 2020, the Company included $22.8 million in other current liabilities and $23.2 million in other long-term liabilities in connection with its contractual obligations to Human Genome Sciences, Inc., or GSK, under a manufacturing services agreement. Refer to Note 11, "Commitments and Contingencies" herein.

7. Leases

The Company's operating leases primarily relate to its two leased premises and are described in the “Notes to Consolidated Financial Statements” in its Annual Report on Form 10-K for the year ended December 31, 2019.

Lease cost and other information related to the Company's operating leases were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)						(in thousands)
Lease cost	$	2,174	$	3,659	$	4,348	$	7,318
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	2,045	$	3,801	$	4,089	$	7,601

							June 30, 2020
Weighted-average remaining lease term (years)							5.4
Weighted-average discount rate							7.4		%

Future minimum lease payments and lease liabilities as of June 30, 2020 were as follows:


	Operating leases
	(in thousands)
July 1 to December 31, 2020	$	4,102
2021	8,351
2022	8,489
2023	8,380
2024	8,549
2025 and beyond	7,225
Total future minimum lease payments	$	45,096
Less: imputed interest	(8,009)
Total lease liability	$	37,087

Reported as:
Other current liabilities	$	5,733
Other long-term liabilities	31,354
Total lease liabilities	$	37,087

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8. License Agreements and Collaborative Arrangements

Contracts with Customers

2003 Sandoz Agreement

In 2003, the Company entered into a license agreement with Sandoz, or the 2003 Sandoz Agreement, to jointly develop, manufacture and commercialize enoxaparin sodium injection, a generic version of LOVENOX® (enoxaparin), in the United States, the licensed product. The Company and Sandoz agreed to exclusively work with each other to develop and commercialize the enoxaparin sodium injection for any and all medical indications within the United States. In addition, the Company granted Sandoz an exclusive license under its intellectual property rights to develop and commercialize injectable enoxaparin for all medical indications within the United States.

The term of the 2003 Sandoz Agreement extends throughout the development and commercialization of the products until the last sale of the products, unless earlier terminated by either party. Either party may terminate the 2003 Sandoz Agreement if the other party breaches the 2003 Sandoz Agreement or files for bankruptcy. Additionally, Sandoz may terminate the 2003 Sandoz Agreement for commercial viability reasons. Sandoz has agreed to indemnify the Company for various claims, and a certain portion of such costs may be offset against certain future payments received by the Company.

Sandoz began selling Enoxaparin Sodium Injection in July 2010. In June 2015, the Company and Sandoz amended the 2003 Sandoz Agreement to provide that Sandoz would pay the Company 50% of contractually defined profits on sales. Due to increased generic competition and resulting decreased market pricing for the licensed product, Sandoz did not record any profit on sales of the licensed product for the six months ended June 30, 2020 and 2019, and therefore the Company did not record product revenue for the licensed product in those periods. The Company is no longer eligible to receive milestones under the 2003 Sandoz Agreement.

The Company concluded that the 2003 Sandoz Agreement is within the scope of Topic 606. As of January 1, 2018, the Company had completed its performance obligations under the contract. The Company continues to be eligible to receive contractual profit share on Sandoz’ sales of the licensed product, which is recorded as product revenue. The Company recognizes revenue for profit share in the period the related sales occur. The Company recognizes research and development revenue related to on-going commercial services under the contract as those services are delivered, as they represent customer options for future services that reflect their standalone selling price.

In July 2018, Sandoz notified its customers and the Food and Drug Administration, or FDA, that it would discontinue supplying the licensed product. The Company expects any future revenues from Sandoz' sales of the licensed product, if any, to be minimal.

On July 10, 2020, the Company and Sandoz entered into an agreement pursuant to which the Company will (i) transfer all of its right, title and interest in the Enoxaparin product to Sandoz and (ii) terminate the 2003 Sandoz Agreement, as described under Note 12, "Subsequent Events" to our condensed consolidated financial statements.

2006 Sandoz Agreement

In 2006 and 2007, the Company entered into a series of agreements with Sandoz, or the 2006 Sandoz Agreement, where the Company and Sandoz agreed to exclusively collaborate on the development and commercialization of GLATOPA, a generic version of COPAXONE, among other potential products. Costs, including development costs and the costs of clinical studies, will be borne by the parties in varying proportions depending on the type of expense. For GLATOPA, the Company is generally responsible for all of the development costs in the United States. For GLATOPA outside of the United States, the Company shares development costs in proportion to its profit sharing interest. The Company is reimbursed for personnel costs and external costs incurred in the development of products to the extent development costs are borne by Sandoz, as described above. All commercialization costs are borne by Sandoz. Sandoz is responsible for funding legal expenses, except for personnel costs with respect to certain legal activities for GLATOPA; however 50% of legal expenses, including any patent infringement damages, can be offset against the profit-sharing amounts. Development costs, commercialization costs and legal costs have defined meanings under the 2006 Sandoz Agreement.

The term of the 2006 Sandoz Agreement extends throughout the development and commercialization of the products until the last sale of the products, unless earlier terminated by either party. The 2006 Sandoz Agreement may be terminated if either party breaches the 2006 Sandoz Agreement or files for bankruptcy, or, on a region-by-region basis, in the event clinical studies

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are needed in order to obtain marketing approval. Sandoz has agreed to indemnify the Company for various claims, and a certain portion of such costs may be offset against certain future payments received by the Company.

Sandoz commenced sales of GLATOPA 20 mg/mL in the United States in June 2015 and of GLATOPA 40 mg/mL in the United States in February 2018. Under the 2006 Sandoz Agreement, the Company earns 50% of contractually defined profits on Sandoz' worldwide net sales of GLATOPA. Profits on net sales of GLATOPA are calculated by deducting from net sales the costs of goods sold and an allowance for selling, general and administrative costs, which is a contractual percentage of GLATOPA net sales, and post-launch commercial milestones achieved.

Following FDA approval of Mylan N.V.'s generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL, which Mylan N.V. announced in October 2017, the Company is no longer eligible to earn $80.0 million in future post-launch commercial milestone payments. The Company is still eligible to receive up to $30.0 million in performance-based milestone payments for GLATOPA in the United States, although the Company believes it is not likely that the performance-based milestones will be achieved. None of these payments, once received, is refundable and there are no general rights of return.

On March 28, 2019, the Company and Sandoz entered into a settlement agreement with Teva Pharmaceuticals Industries Ltd. and related entities, or Teva, with respect to the suit against the Company in the United States District Court for the District of Delaware alleging infringement related to an additional patent for COPAXONE 40 mg/mL, U.S. Patent No. 9,155,775, with the Company's portion of the settlement payment offset against the Company's profit sharing interest from Sandoz on sales of GLATOPA. In the three months ended March 31, 2019, the Company's product revenue was reduced by $1.5 million for the Company's 50% share of the settlement payments.

The Company concluded that the 2006 Sandoz Agreement is within the scope of Topic 606. As of January 1, 2018, the Company had completed its performance obligations under the contract. The Company continues to be eligible to receive contractual profit share on Sandoz’ sales of GLATOPA, which is recorded as product revenue. The Company recognizes revenue for profit share in the period the related sales occur. The Company recognizes research and development revenue related to on-going commercial services under the 2006 Sandoz Agreement as those services are delivered, as they represent customer options for future services that reflect their standalone selling price.

Collaborative Arrangements

Mylan Collaboration Agreement

The Company and Mylan entered into a collaboration agreement, or the Mylan Collaboration Agreement, effective February 9, 2016, pursuant to which the Company and Mylan agreed to collaborate exclusively, on a worldwide basis, to develop, manufacture and commercialize 6 of the Company’s biosimilar candidates, including M710.

In November 2018, the Company delivered formal notice of the partial termination of the Mylan Collaboration Agreement with respect to five of the collaboration programs. In January 2019, Mylan and the Company agreed that such partial termination would be effective as of January 31, 2019. As a result, the Company is only advancing its late-stage biosimilar candidate M710, its proposed biosimilar to EYLEA under the Mylan Collaboration Agreement.

Under the terms of the Mylan Collaboration Agreement, Mylan paid the Company a non-refundable upfront payment of $45.0 million. In addition, the Company and Mylan equally share costs (including development, manufacturing, commercialization and certain legal expenses) and profits (losses) with respect to such product candidates. Mylan funded its share of collaboration expenses incurred by the Company, in part, through milestone payments totaling $60.0 million, which the Company received in 2016.

For the Company's remaining product candidate, M710, the Company and Mylan both have the right to terminate the program at each party's convenience. If one party decides not to continue development, manufacture and commercialization of this product candidate under the Mylan Collaboration Agreement, the other party will have the right to continue the development, manufacture and commercialization of such product candidate, and the terminating party will need to continue to fund its share of expenses for a pre-specified period, depending on the stage of the product candidate at the time of termination.

Under the Mylan Collaboration Agreement, the Company granted Mylan an exclusive license under the Company’s intellectual property rights to develop, manufacture and commercialize the product candidates for all therapeutic indications, and Mylan granted the Company a co-exclusive license under Mylan’s intellectual property rights for the Company to perform its development and manufacturing activities under the product work plans agreed by the parties, and to perform certain commercialization activities to be agreed by the joint steering committee for such product candidates if the Company exercises its co-commercialization option described below.

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The Company and Mylan established a joint steering committee, or JSC, consisting of an equal number of members from the Company and Mylan to oversee and manage the development, manufacture and commercialization of product candidates under the collaboration. Unless otherwise determined by the JSC, it is anticipated that, in collaboration with the other party, (a) the Company will be primarily responsible for nonclinical development activities and initial clinical development activities for product candidates; and regulatory activities for product candidates in the United States through regulatory approval; and (b) Mylan will be primarily responsible for additional (pivotal or Phase 3 equivalent) clinical development activities for product candidates; regulatory activities for the product candidates outside the United States; and regulatory activities for products in the United States after regulatory approval, when all marketing authorizations for the products in the United States will be transferred to Mylan. Mylan will commercialize any approved products, with the Company having an option to co-commercialize, in a supporting commercial role, any approved products in the United States. The JSC is responsible for allocating responsibilities for other activities under the collaboration.

The term of the collaboration will continue throughout the development and commercialization of M710 on a country-by-country basis until development and commercialization by or on behalf of the Company and Mylan pursuant to the Mylan Collaboration Agreement has ceased for a continuous period of two years in a given country, unless earlier terminated by either party pursuant to the terms of the Mylan Collaboration Agreement.

The Mylan Collaboration Agreement is accounted for as a collaboration arrangement pursuant to Topic 808.

Upfront Payments for License of Intellectual Property

The Company identified the following material promises under the contract: (i) licenses to develop, manufacture and commercialize the named product candidates (6 product candidates in total) and (ii) research and development services through FDA approval for each of the 6 product candidates. The Company’s participation in the joint steering committee was assessed as immaterial in the context of the contract. As the licenses for each of the products and the related research and development services for each of the product candidates are not capable of being distinct and are not distinct within the context of the contract, the Company concluded that each of the 6 bundles of a product license and the related research and development services through FDA approval should be combined as performance obligations. The Company next assessed whether each of the 6 bundles of a particular product license and the related research and development services is distinct from each other. The Company concluded that each of the 6 license and research and development services bundles is capable of being distinct, as Mylan can obtain benefit from each separately, and each is distinct within the context of the contract. Therefore, each of the 6 license and service bundles individually represent distinct performance obligations.

The Company determined that the upfront payment constituted the entirety of the consideration to be included in the transaction price to be allocated to the performance obligations at contract inception based on the stand-alone selling prices for each of the 6 license and service performance obligations. For the licenses, the relative stand-alone selling prices were based on an analysis of its existing license arrangements and other available data, with consideration given to the products’ stage of development at the time the licenses were delivered. The stand-alone selling prices of the research and development services were based on the nature and extent of the research and development services to be performed. Changes in the key assumptions used to determine the relative stand-alone selling prices would not have a significant effect on the allocation of the transaction price to the performance obligations.

The Company considered both input and output methods to determine a method that depicts its performance in transferring control of the goods and services promised. The Company concluded that costs incurred to date, as a proportion of the total estimated costs to bring each product candidate through FDA approval, depict the performance of the research and development services, as a measure of proportionate performance.

As a result of providing a notice of partial termination of the Mylan Collaboration Agreement in November 2018, specifically with respect to the five biosimilar programs other than M710, the Company concluded that it had changed the enforceable rights and obligations under the agreement, and therefore had modified the Mylan Collaboration Agreement. Because the remaining services to be performed prior to the effective date of termination for the five biosimilar programs are not distinct, the Company concluded that each represented a performance obligation that is partially satisfied as of the date the Company provided the notice of partial termination.

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As of June 30, 2020, $1.6 million of the transaction price remains allocated to unsatisfied performance obligations and is included in deferred revenue in the condensed consolidated balance sheets. The license and related research and development services performance obligations are expected to be delivered over a period through estimated FDA approval for M710 and through the termination date of the remaining product candidates.

Development milestones, sales-based milestones, and profit share related to the license of intellectual property will be recognized by analogy to the Company’s revenue accounting policies.

Collaboration Costs and Reimbursements

Collaboration costs incurred by the parties are subject to quarterly reconciliation such that the final amount of expense included in the Company's condensed consolidated statements of operations and comprehensive loss is equal to its 50% share of the total collaboration costs. The Company classifies the payments received or made under the cost sharing provisions of the arrangement as a component of research and development or general and administrative expense accordingly to reflect the joint risk sharing nature of the arrangement. To date, Mylan has funded its 50% share of development-related collaboration costs through contingent milestone payments, the Company has funded its 50% share of development-related collaboration costs through annual payments, while other shared collaboration costs have been reconciled by the parties with the owing party reimbursing the other party by making quarterly payments. The Company records a contract asset to reflect a receivable due from Mylan for Mylan’s 50% share of other shared collaboration costs and a contract liability to reflect the balance of any advance payment from Mylan to be applied towards Mylan’s 50% share of future development-related collaboration costs or a payable to Mylan for the Company's 50% share of development-related collaboration costs.

CSL License and Option Agreement

The Company and CSL, a wholly-owned indirect subsidiary of CSL Limited, entered into a License and Option Agreement, or the CSL License Agreement, effective February 17, 2017, pursuant to which the Company granted CSL an exclusive worldwide license to research, develop, manufacture and commercialize the M230 pre-clinical product candidate, an Fc multimer protein that is a selective immunomodulator of the Fc receptor. The CSL License Agreement also provides, on an exclusive basis, for the Company and CSL to conduct research on other Fc multimer proteins, and provides CSL the right to develop, manufacture and commercialize these additional research products globally. CSL's obligations under the CSL License Agreement are guaranteed by its parent company, CSL Limited.

Pursuant to the CSL License Agreement, CSL paid the Company a non-refundable upfront payment of $50.0 million. On August 28, 2017, the Company exercised a 50% co-funding option. This exercise allows the Company to participate in a cost-and-profit sharing arrangement, under which the Company funds 50% of global research and development costs and 50% of U.S. commercialization costs for all products developed, in exchange for a 50% share of U.S. profits and sales-based royalty payments in percentages ranging from a mid-single digit to low-double digits payable for territories outside of the United States. The Company is also entitled to up to $297.5 million in contingent clinical, regulatory and sales milestone payments, and additional negotiated milestone payments for a named research stage product should that enter development. The contract allows the Company to opt-out of the program in the future at the Company's discretion. If the Company were to do so, the Company's U.S. profit share would be reduced to sales-based royalties ranging from mid-single to low double digits and the milestone payments for which the Company is eligible would be increased by up to $252.5 million, depending on the timing of the opt-out decision.

Under the CSL License Agreement, the Company granted CSL an exclusive license under its intellectual property to research, develop, manufacture and commercialize product candidates for all therapeutic indications. CSL granted the Company a non-exclusive, royalty-free license under CSL’s intellectual property for the Company's research and development activities pursuant to the CSL License Agreement and the Company's commercialization activities under any co-promotion agreement with CSL. The Company and CSL formed a joint steering committee consisting of an equal number of members from the Company and CSL, to facilitate the research, development, and commercialization of product candidates.

The term of the CSL License Agreement commenced on February 17, 2017 and, unless earlier terminated, continues until the later of (i) the expiration of all payment obligations with respect to products under the CSL License Agreement, (ii) the Company is no longer co-funding development or commercialization of any products and (iii) the Company and CSL are not otherwise collaborating on the development and commercialization of products or product candidates. CSL may terminate the CSL License Agreement on a product-by-product basis subject to notice periods and certain circumstances related to clinical development. The Company may terminate the CSL License Agreement under certain circumstances related to the development of M230 and if no activities are being conducted under the CSL License Agreement. Either party may terminate the CSL

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License Agreement (i) on a product-by-product basis if certain patent challenges are made, (ii) on a product-by-product basis for material breaches, or (iii) due to the other party’s bankruptcy.

Upon termination of the CSL License Agreement, subject to certain exceptions, the licenses granted under the CSL License Agreement terminate. In addition, dependent upon the circumstances under which the CSL License Agreement is terminated, the Company or CSL has the right to continue the research, development, and commercialization of terminated products, including rights to certain data, for the continued development and sale of terminated products and, subject to certain limitations, obligations to make sales-based royalty payments to the other party.

After the Company exercised its co-funding option for a 50% share of U.S. profits, the Company has accounted for the CSL License Agreement as a collaboration arrangement pursuant to Topic 808. The Company’s accounting policy for collaborations analogizes to Topic 606, primarily in determining the appropriate recognition for the upfront license fee and other consideration.

Upfront Payments for License of Intellectual Property

The Company identified the following material promises under the contract: (i) license to research, develop, manufacture and commercialize M230 and (ii) to perform a technology transfer to CSL. The Company’s participation in the joint steering committee and other promises were assessed as immaterial in the context of the contract. As the licenses and technology transfer are not capable of being distinct and are not distinct within the context of the contract, the Company concluded that the bundle of the licenses and technology transfer should be combined as one performance obligation. The combined performance obligation was delivered in 2017. As the $50.0 million upfront payment reflected the transaction price at contract inception, all revenue related to the single performance obligation was recognized in prior periods. Development milestones, sales-based milestones, and profit share related to the license of intellectual property will be recognized by analogy to the Company’s revenue accounting policies.

Co-funding Costs and Reimbursements

The co-funding arrangement with CSL is a cost-sharing arrangement. Reimbursement by CSL for its share of the development effort is presented as a reduction of operating expenses, and reimbursement by the Company for its share of the development effort is recorded as an incremental operating expense, consistent with the Company’s accounting policy for collaboration arrangements. Such amounts are settled quarterly amongst the parties.

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License Agreement Summary

The following tables provide amounts by year indicated and by line item included in the Company's accompanying consolidated financial statements attributable to transactions arising from its license and collaboration arrangements. The dollar amounts in the tables below are in thousands.



	2003 Sandoz Agreement		2006 Sandoz Agreement		Mylan Collaboration Agreement		CSL Collaboration Agreement		Total
Contract assets
Collaboration receivables:
December 31, 2019	$	—	$	8,013	$	—	$	—	$	8,013
Revenue / cost recovery	—		15,292		13		—		15,305
Cash receipts	—		(16,710)		—		—		(16,710)
June 30, 2020	$	—	$	6,595	$	13	$	—	$	6,608

Contract liabilities
Deferred revenue:
December 31, 2019	$	—	$	—	$	1,835	$	—	$	1,835
Revenue recognition	—		—		(207)		—		(207)
June 30, 2020	—		—		1,628		—		1,628
Less: current portion	—		—		(711)		—		(711)
Deferred revenue, net of current portion - June 30, 2020	$	—	$	—	$	917	$	—	$	917

Collaboration liabilities:
December 31, 2019	$	—	$	—	$	3,142	$	981	$	4,123
Payments	—		—		(215)		(1,785)		(2,000)
Net collaboration costs incurred in the period	—		—		(1,706)		1,786		80
June 30, 2020	$	—	$	—	$	1,221	$	982	$	2,203

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	Three Months Ended June 30, 2020
	2003 Sandoz Collaboration Agreement		2006 Sandoz Collaboration Agreement		Mylan Collaboration Agreement		CSL License Agreement		Total Collaborations
Product revenue	$	—	$	6,588	$	—	$	—	$	6,588
Research and development revenue	—		7		15		—		22
Total collaboration revenue	$	—	$	6,595	$	15	$	—	$	6,610
Operating expenses:
Research and development expense	$	—	$	46	$	2,437	$	20	$	2,503
General and administrative expense	98		—		153		1		252
Net amount (recovered from) / payable to collaborators	—		—		268		983		1,251
Total operating expenses	$	98	$	46	$	2,858	$	1,004	$	4,006

	Three Months Ended June 30, 2019
	2003 Sandoz Collaboration Agreement		2006 Sandoz Collaboration Agreement		Mylan Collaboration Agreement		CSL License Agreement		Total Collaborations
Product revenue	$	—	$	3,333	$	—	$	—	$	3,333
Research and development revenue	—		343		1,506		—		1,849
Total collaboration revenue	$	—	$	3,676	$	1,506	$	—	$	5,182
Operating expenses:
Research and development expense	$	—	$	122	$	3,765	$	19	$	3,906
General and administrative expense	7,192		19		201		3		7,415
Net amount (recovered from) / payable to collaborators	—		—		452		2,245		2,697
Total operating expenses	$	7,192	$	141	$	4,418	$	2,267	$	14,018

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	Six Months Ended June 30, 2020
	2003 Sandoz Collaboration Agreement		2006 Sandoz Collaboration Agreement		Mylan Collaboration Agreement		CSL License Agreement		Total Collaborations
Product revenue	$	—	$	15,280	$	—	$	—	$	15,280
Research and development revenue	—		12		207		—		219
Total collaboration revenue	$	—	$	15,292	$	207	$	—	$	15,499
Operating expenses:
Research and development expense	$	—	$	48	$	9,918	$	35	$	10,001
General and administrative expense	188		—		330		3		521
Net amount (recovered from) / payable to collaborators	—		—		(1,711)		1,786		75
Total operating expenses	$	188	$	48	$	8,537	$	1,824	$	10,597

	Six Months Ended June 30, 2019
	2003 Sandoz Collaboration Agreement		2006 Sandoz Collaboration Agreement		Mylan Collaboration Agreement		CSL License Agreement		Total Collaborations
Product revenue	$	—	$	5,685	$	—	$	—	$	5,685
Research and development revenue	—		763		2,847		—		3,610
Total collaboration revenue	$	—	$	6,448	$	2,847	$	—	$	9,295
Operating expenses:
Research and development expense	$	—	$	176	$	6,543	$	77	$	6,796
General and administrative expense	11,492		44		469		13		12,018
Net amount (recovered from) / payable to collaborators	—		—		313		3,527		3,840
Total operating expenses	$	11,492	$	220	$	7,325	$	3,617	$	22,654

9. Share-Based Payments

The table below presents share-based compensation expense included in each of the financial statement line items:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)						(in thousands)
Research and development	$	6,934	$	1,153	$	8,869	$	2,240
General and administrative	12,480		2,509		15,368		4,896
Total share-based compensation expense	$	19,414	$	3,662	$	24,237	$	7,136

During the six months ended June 30, 2020, the Company granted 1,759,631 stock options with a per share weighted-average grant date fair value of $16.38 and 661,130 restricted stock units to its employees and board members.

2018 and 2019 Performance-Based Restricted Stock Units

Since October 2018 through the end of 2019, the Company granted performance-based restricted stock units, or PSUs, to its employees. The vesting of PSUs is subject to the Company achieving up to three possible performance milestones related to the Company's active novel programs and the employees' continued employment with the Company. One sixth of the units vests upon achievement of each milestone or, if achievement of the performance milestone occurs prior to the first anniversary of the grant date, on the first anniversary of the grant date. An additional one sixth of the units vests on the one-year anniversary of the performance milestone achievement date. At December 31, 2019, the Company concluded that it was probable that one of the possible performance milestones would be achieved and recognized approximately $5.3 million of stock compensation

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costs related to these awards. During the three months ended March 31, 2020, one of the performance milestones was met and 259,357 PSUs vested. An additional 15,630 PSUs related to achievement of the first milestone vested during the three months ended June 30, 2020. The remaining two performance milestones were met during the three months ended June 30, 2020 and 541,598 PSUs vested. For the six months ended June 30, 2020, the Company recognized approximately $13.5 million of stock-based compensation costs related to PSUs. As of June 30, 2020, up to 892,106 shares of the Company's common stock may be issued under unvested PSUs, subject only to a service condition.

10. Net Loss Per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period, which includes common stock issued and outstanding and excludes unvested shares of restricted stock awards and units. Diluted net loss per common share is calculated by dividing net loss by the weighted average number of common shares and potential shares from outstanding stock options and unvested restricted stock awards and restricted stock units determined by applying the treasury stock method.

For the three and six months ended June 30, 2020 and 2019, basic and diluted net loss per share were the same since all common stock equivalents were anti-dilutive. The following common stock equivalents were excluded from the calculation of net loss per share due to their anti-dilutive effect:


	June 30,
	2020	2019
	(in thousands)
Stock options	6,090	6,321
Restricted stock awards and units	997	869

11. Commitments and Contingencies

Legal Contingencies

The Company is involved in various litigation matters that arise from time to time in the ordinary course of business. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results of operations, financial condition and cash flows. The Company's general practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when losses are probable and reasonably estimable. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of any accrual on its consolidated balance sheets.

On October 14, 2015, The Hospital Authority of Metropolitan Government of Nashville and Davidson County, Tennessee, d/b/a Nashville General Hospital, or NGH, filed a class action suit against the Company and Sandoz in the United States District Court for the Middle District of Tennessee on behalf of certain purchasers of LOVENOX or generic Enoxaparin Sodium Injection alleging that the Company and Sandoz sought to prevent Amphastar from selling generic Enoxaparin Sodium Injection and thereby exclude competition for generic Enoxaparin Sodium Injection in violation of federal anti-trust laws. On December 10, 2019, the Company entered into a settlement agreement with NGH in which the Company agreed to pay an aggregate of $35.0 million as our portion of the consideration for the release of all alleged claims. The settlement agreement is subject to procedural requirements pursuant to Rule 23 of the Federal Rules of Civil Procedure and the Class Action Fairness Act. If the settlement is not completed, the Company will continue to vigorously defend against the suit. The Company recorded a $35.0 million liability in connection with the settlement in its consolidated balance sheets at December 31, 2019, of which $15.0 million was paid during the six months ended June 30, 2020 and $20.0 million was paid in July 2020.

Purchase Obligations

Under the Company's manufacturing agreement with GSK, as amended in June 2018, the Company is obligated to purchase or pay 100% of committed volumes at specified prices during the calendar years 2019 through 2022. The minimum purchase obligations are subject to annual price increases indexed to a measure of inflation and exclude the cost of raw materials and certain other charges. Consistent with the Company's decision to cease active development of M923, the Company has canceled its manufacturing runs scheduled through 2020 and recorded a charge of $20.9 million during the three months ended June 30, 2019 representing the present value of the minimum purchase obligations. Since the utility of the remaining minimum purchase commitments for the calendar year 2022 was deemed impaired at June 30, 2019, the Company

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recorded an additional charge of $22.0 million during the three months ended June 30, 2019. The Company's contractual obligations under the manufacturing services agreement were adjusted for the time value of money and changes in fair value, and amounted to $46.0 million as of June 30, 2020.

Leases

As of June 30, 2020, the Company had operating lease agreements for office and laboratory space in Cambridge, MA. Refer to Note 7, "Leases" for additional information regarding the Company's leases.

Other Funding Commitments

As of June 30, 2020, the Company had several ongoing clinical and nonclinical studies for its various pipeline programs. The Company enters into contracts in the normal course of business with contract research organizations and clinical sites for the conduct of clinical trials, professional consultants for expert advice and other vendors. These contracts are generally cancellable, with notice, at the Company's option and do not have significant cancellation penalties. The Company also enters into contracts in the normal course of business with contract manufacturing organizations to produce clinical and commercial materials. These contracts are generally cancellable, with notice, in advance of scheduled manufacturing events without significant penalty. In the event the Company cancels a scheduled manufacturing event within a contractually defined proximity to the scheduled manufacturing date, penalties may be payable to the contract manufacturing organization. As of June 30, 2020, the Company is not within such proximity to any scheduled manufacturing events, that if canceled, would trigger significant cancellation penalties.

Guarantees

The Company enters into certain agreements with other parties in the ordinary course of business that contain indemnification provisions. These typically include agreements with directors and officers, business partners, contractors, landlords and clinical sites. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. However, to date the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of these obligations is minimal.

12. Subsequent Events

The Company reviews all activity subsequent to the end of the quarter but prior to issuance of the condensed consolidated financial statements for events that could require disclosure or that could impact the carrying value of assets or liabilities as of the balance sheet date. The Company is not aware of any material subsequent events as of the date of filing this Quarterly Report on Form 10-Q, except as follows.

On July 10, 2020, the Company and Sandoz entered into an agreement pursuant to which the Company will (i) transfer all of its right, title and interest in the Enoxaparin product to Sandoz; (ii) terminate the 2003 Sandoz Agreement and (iii) pay $5.0 million to Sandoz by means of an offset, commencing January 1, 2021, to (x) 50% of the Company’s profit share interest from Sandoz on sales of GLATOPA and (y) what the Company’s profit share interest from Sandoz on sales of Enoxaparin would have been prior to the transfer, in the event of the relaunch of the Enoxaparin product.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many important factors, such as those set forth under “Risk Factors” in Part II., Item 1A. of this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

We are a biotechnology company focused on the discovery and development of novel biologic therapies for the treatment of rare immune-mediated diseases.

Prior to 2018, we had the dual focus of developing novel drug candidates and nurturing a portfolio of biosimilar and complex generic products and product candidates. In the beginning of 2018, we engaged in a strategic review of our business and made the decision that shareholder value could be enhanced by shifting our future investments to fully support our promising novel drug portfolio. Following this strategic review, we made the decision in September 2018 to restructure the company.

While we have terminated all future development of any new or early stage biosimilar and complex generic products, we have retained our commercial partnership with Sandoz AG, or Sandoz, for our generic versions of COPAXONE and LOVENOX, which are approved products. We believe that Sandoz's sales of GLATOPA, our generic version of COPAXONE, can generate cash flow to help fund our novel pipeline. Enoxaparin Sodium Injection, our generic version of LOVENOX, is not currently marketed by Sandoz. In addition, we are developing an EYLEA biosimilar, in collaboration with Mylan Ireland Limited, or Mylan, a wholly-owned indirect subsidiary of Mylan N.V., which is currently conducting a clinical trial in patients. If the results from this study are supportive, we believe this program has the potential to launch in the 2023 time frame and help fund our novel portfolio.

To date, we have devoted substantially all of our capital resource expenditures to the research and development of our product candidates. Although we were profitable in fiscal years 2010 and 2011, since that time we have been incurring operating losses and we expect to incur annual operating losses over the next several years as we advance our drug development portfolio. As of June 30, 2020, we had an accumulated deficit of approximately $1.1 billion. We will need to generate significant revenue to return to profitability. We expect that our return to profitability, if at all, will most likely come from the commercialization of the products in our drug development portfolio.

Novel Therapeutics

We believe our novel product candidates could be capable of treating a large number of immune-mediated disorders whose pathogenesis is driven in whole or in part by autoantibodies, immune complexes, and Fc receptor biology.

M281 (Nipocalimab) - Anti-FcRn Candidate

M281 is a fully-human anti-neonatal Fc receptor, or anti FcRn, aglycosylated immunoglobulin G, or IgG1, monoclonal antibody, engineered to reduce circulating IgG antibodies, by completely blocking endogenous IgG recycling via FcRn.

A Phase 1 randomized, double-blind, placebo-controlled study to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of M281 in 114 normal healthy volunteers was initiated in June 2016. The full results of the Phase 1 study were published on November 7, 2018. A total of 50 patients were enrolled in both the single ascending dose and multiple ascending dose portions of the study, both of which showed predictable pharmacokinetics, and commensurate, controllable and reproducible reductions in circulating IgG. The data showed M281 could achieve a full receptor occupancy with a single dose and a greater than 80% reduction in circulating IgG antibodies, with a mean reduction of 84%. M281 was well tolerated at all dose levels and no serious adverse events or unexpected safety findings were observed in either portion of the study.

In the fourth quarter of 2018, we commenced Vivacity-MG, our Phase 2 proof-of-concept clinical trial for the treatment of patients with generalized myasthenia gravis, or gMG, who have insufficient clinical response to the standard-of-care treatment.

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Also in the fourth quarter of 2018, we commenced Unity, our Phase 2 proof-of-concept clinical trial for the treatment of women at high risk for early onset hemolytic disease of the fetus and newborn, or HDFN. In the third quarter of 2019, we commenced Energy Study, our Phase 2/3 clinical trial in warm autoimmune hemolytic anemia, or wAIHA. In July 2019, the Food and Drug Administration, or FDA, granted Fast Track designation for our HDFN and wAIHA indications, which is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill unmet medical need. In July 2020, we announced that the FDA granted Rare Pediatric Disease and Orphan Drug designations for our HDFN indication.

M254 - Hyper-sialylated IgG Candidate

M254 is a hyper-sialylated immunoglobulin designed as a high potency alternative to IVIg, a therapeutic drug product that contains pooled, human immunoglobulin G, or IgG, antibodies purified from blood plasma. IVIg is used to treat many inflammatory diseases, including idiopathic thrombocytopenic purpura, or ITP, and chronic inflammatory demyelinating polyneuropathy, or CIDP. In nonclinical studies, M254 has been shown to have up to ten times more enhanced anti-inflammatory activity than IVIg in a variety of animal models of autoimmune disease.

We initiated a multi-part Phase 1/2 proof of concept clinical study in normal, healthy volunteers and patients with ITP in early 2019.

M230 (CSL730) - Recombinant Fc Multimer Candidate

M230 is a novel recombinant trivalent human IgG1 Fc multimer containing three IgG Fc regions joined to maximize activity. Nonclinical data have shown that M230 has enhanced avidity for the Fc receptors, matching the potency and efficacy of IVIg at significantly lower doses.

Pursuant to the License and Option Agreement, effective February 17, 2017, with CSL Behring Recombinant Facility AG, or CSL, a wholly-owned indirect subsidiary of CSL Limited, we granted CSL an exclusive worldwide license to research, develop, manufacture and commercialize M230. In August 2017, we exercised our 50% co-funding option, which is discussed further in Note 8, "License Agreements and Collaborative Arrangements" to our condensed consolidated financial statements.

CSL's Phase 1 clinical study in healthy volunteers to evaluate the safety and tolerability of M230 is continuing and CSL anticipates introducing a subcutaneous formulation into the Phase 1 clinical study in 2020.

Legacy Products

M710-Biosimilar EYLEA^® (aflibercept) Candidate

M710 is being developed as a biosimilar of EYLEA in collaboration with Mylan. In August 2018, Mylan initiated dosing of patients in the United States in our pivotal clinical trial. In December 2018 and February 2019, Mylan initiated dosing of patients in the European Union and Japan, respectively. This trial is a randomized, double-blind, active-control, multi-center study in patients with diabetic macular edema to compare the safety, efficacy and immunogenicity of M710 to EYLEA. Subject to development, marketing approval, patent considerations and litigation timelines, we expect U.S. market formation for biosimilar versions of EYLEA to be in the 2023 time frame.

GLATOPA^® (glatiramer acetate injection) 20 mg/mL—Generic Once-daily COPAXONE^® (glatiramer acetate injection) 20 mg/mL

In April 2015, the FDA approved the ANDA for GLATOPA 20 mg/mL, a generic equivalent of once-daily COPAXONE 20 mg/mL. GLATOPA 20 mg/mL was the first "AP" rated, substitutable generic equivalent of once-daily COPAXONE. Sandoz commenced sales of GLATOPA 20 mg/mL in June 2015. Under our collaboration agreement with Sandoz, we earn 50% of contractually defined profits on GLATOPA 20 mg/mL worldwide net sales.

In October 2017, Mylan N.V. announced the launch of its generic equivalents of once-daily COPAXONE 20 mg/mL and three-times-weekly COPAXONE 40 mg/mL. Following Mylan N.V.’s entry into the market, Sandoz has defended GLATOPA’s share of the 20 mg/mL glatiramer acetate injection market by using one or more contracting strategies, including but not limited to, lowering its GLATOPA 20 mg/mL price or increasing the discounts or rebates it offers for GLATOPA 20 mg/mL, which has decreased contractual profit share revenue. We estimate that the number of prescriptions for GLATOPA 20 mg/mL currently represents approximately 36% of the once-daily 20 mg/mL U.S. glatiramer acetate market.

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GLATOPA^®(glatiramer acetate injection) 40 mg/mL—Generic Three-times-weekly COPAXONE® (glatiramer acetate injection) 40 mg/mL

In February 2018, we announced that GLATOPA 40 mg/mL, a generic version of three-times-weekly COPAXONE 40 mg/mL, was approved by the FDA and launched by our collaborator, Sandoz.

Since Sandoz’s launch of GLATOPA 40mg/mL in February 2018, we believe Sandoz has encountered aggressive pricing and contracting tactics from competitors, which has limited uptake of the product and as a result we expect modest revenues for this product in the future. As of June 30, 2020, 40 mg/mL glatiramer acetate injection accounted for approximately 85% of the overall U.S. glatiramer acetate injection market (20 mg/mL and 40 mg/mL) based on volume prescribed.

GLATOPA refers to GLATOPA 20 mg/mL and GLATOPA 40 mg/mL, collectively.

Enoxaparin Sodium Injection—Generic LOVENOX®

Under the 2003 Sandoz Agreement, Sandoz is obligated to pay us 50% of contractually defined profits on sales of Enoxaparin Sodium Injection. In July 2018, Sandoz notified its customers and the FDA that it will discontinue supplying Enoxaparin Sodium Injection. Sandoz continues to evaluate alternate acceptable contract manufacturers at a price point that will allow for profitable and competitive sales and may decide to relaunch Enoxaparin Sodium Injection at a later date following regulatory approval. We expect future revenues from Sandoz' sales of Enoxaparin Sodium Injection, if any, to be minimal. On July 10, 2020 we and Sandoz entered into an agreement pursuant to which we will (i) transfer all of our right, title and interest in the Enoxaparin product to Sandoz and (ii) terminate the 2003 Sandoz Agreement as described under Note 12, "Subsequent Events" to our condensed consolidated financial statements.

Legal proceedings related to Enoxaparin Sodium Injection are described under Note 11, "Commitments and Contingencies" to our condensed consolidated financial statements.

Impact of COVID-19

We are closely monitoring how the spread of the novel coronavirus, COVID-19, is affecting our employees, business, preclinical studies and clinical trials. In response to the spread of COVID-19, our employees are working remotely, and we have suspended all business travel. In April 2020, we announced that we have temporarily suspended patient enrollment in our Energy Study, an adaptive Phase 2/3 clinical study of nipocalimab in wAIHA. We also announced that we expect to launch our Phase 2 study of M254 in CIDP in 2021, as opposed to the fourth quarter of 2020, as previously disclosed.

Disruptions caused by the COVID-19 pandemic may result in further difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials and the incurrence of unforeseen costs as a result of preclinical study or clinical trial delays. As a result, we expect that the COVID-19 pandemic may impact our business, revenues, results of operations and financial condition. At this time, there is significant uncertainty relating to the trajectory of the COVID-19 pandemic and impact of related responses. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, the ultimate impact of the pandemic on financial markets and the global economy, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. See Risk Factors, "The outbreak of the novel coronavirus disease, COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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Results of Operations

Comparison of Three Months Ended June 30, 2020 and 2019

Product revenue includes our contractually defined profits earned on Sandoz’ sales of GLATOPA.

The following data summarizes our collaboration revenues for the periods indicated:


	Three Months Ended June 30,												Change period over period
	2020		% of Total Collaboration Revenue		2019		% of Total Collaboration Revenue		2020 compared to 2019
Collaboration revenue:	(in thousands)		(%)		(in thousands)		(%)		(in thousands)		(%)
Product revenue	$	6,588	100	%	$	3,333	64	%	$	3,255	98	%
Research and development revenue	22		—	%	1,849		36	%	(1,827)		(99)	%
Total collaboration revenue	$	6,610	100	%	$	5,182	100	%	$	1,428	28	%

Product Revenue

Sandoz commenced sales of GLATOPA 20 mg/mL in the United States in June 2015 and GLATOPA 40 mg/mL in February 2018. We earn 50% of contractually defined profits on Sandoz’ worldwide net sales of GLATOPA.

We estimate that the number of prescriptions for GLATOPA 20 mg/mL represented approximately 36% of the once-daily 20 mg/mL U.S. glatiramer acetate market as of June 30, 2020.

Since Sandoz' launch of GLATOPA 40mg/mL in February 2018, we believe Sandoz has encountered aggressive pricing and contracting tactics from competitors, which has limited uptake of the product, and, as a result, we expect modest sales for the product in the future. As of June 30, 2020, 40 mg/mL glatiramer acetate injection accounted for approximately 85% of the overall U.S. glatiramer acetate injection market (20 mg/mL and 40 mg/mL) based on volume prescribed.

The increase in product revenue of $3.3 million, or 98%, from the three months ended June 30, 2019 to the three months ended June 30, 2020 was due to higher net sales of GLATOPA.

Research and Development Revenue

Research and development revenue generally consists of amounts earned by us under our collaborations for technical development, regulatory and commercial milestones, reimbursement of research and development services and reimbursement of development costs under our collaborative arrangements, and recognition of upfront arrangement consideration.

We expect to recognize revenue from the remaining balance of $1.6 million from Mylan's $45.0 million upfront payment on a quarterly basis in an amount commensurate with our progress towards meeting performance obligations with respect to M710 under the Mylan Collaboration Agreement.

The decrease in research and development revenue of $1.8 million, or 99%, from the three months ended June 30, 2019 to the three months ended June 30, 2020 was due to lower reimbursement revenue for GLATOPA expenses and lower revenue recognized from Mylan's upfront payment due to the partial termination of the Mylan Collaboration Agreement.

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Operating Expenses

The following table summarizes our operating expenses for the periods indicated:


	Three Months Ended June 30,												Change period over period
	2020		% of Total Operating Expenses		2019		% of Total Operating Expenses		2020 compared to 2019
	(in thousands)		(%)		(in thousands)		(%)		(in thousands)		(%)
Operating expenses:
Research and development	$	38,842	60	%	$	32,131	26	%	$	6,711	21	%
General and administrative	25,339		40	%	46,609		38	%	(21,270)		(46)	%
Other operating expense	(193)		—	%	42,936		36	%	(43,129)		(100)	%
Restructuring	—		—	%	132		—	%	(132)		(100)	%
Total operating expenses	$	63,988	100	%	$	121,808	100	%	$	(57,820)	(47)	%

Research and Development Expense

Research and development expenses consist of costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred. We track the external research and development costs incurred for each of our product candidates. Our external research and development expenses consist primarily of:

•expenses incurred under agreements with consultants, third-party contract research organizations, or CROs, and investigative sites where all of our nonclinical studies and clinical trials are conducted;

•costs of manufacturing clinical trial material, acquiring reference comparator materials and manufacturing nonclinical study supplies and other materials from contract manufacturing organizations, or CMOs, and related costs associated with release and stability testing; and

•costs associated with process development activities.

Internal research and development costs are associated with activities performed by our research and development organization and consist primarily of:

•personnel-related expenses, which include salaries, benefits and share-based compensation; and

•facilities and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation and amortization of leasehold improvements and equipment and laboratory and other supplies.

For our collaboration arrangements in which the parties share in collaboration expenses for products under the arrangement (cost sharing arrangements), we record the reimbursement by the collaborator for its share of the development effort as a reduction of research and development expense. Our share of costs incurred by collaborators is recorded as research and development expense.

The lengthy process of securing FDA approval for new drugs, generics and biosimilars requires the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals would materially adversely affect our product development efforts and our business overall. Accordingly, we cannot currently estimate with any degree of certainty the amount of time or money that we will be required to expend in the future on our product candidates prior to their regulatory approval, if such approval is ever granted. As a result of these uncertainties surrounding the timing and outcome of any approvals, we are currently unable to estimate when, if ever, our product candidates will generate revenues and cash flows.

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The following table sets forth the primary components of our research and development external expenditures, including the amortization of our intangible assets, for each of our principal development programs for the three months ended June 30, 2020 and 2019. The figures in the table include project expenditures incurred by us and reimbursed by our collaborators, but exclude project expenditures incurred by our collaborators. Although we track and accumulate personnel effort by percentage of time spent on our programs, a significant portion of our internal research and development costs, including salaries and benefits, share-based compensation, facilities, depreciation and laboratory supplies are not directly charged to programs. Therefore, our methods for accounting for internal research and development costs preclude us from reporting these costs on a project-by-project basis.


	Phase of Development	Three Months Ended June 30,
				2020			2019
External Costs Incurred by Product Area:		(in thousands)
Novel Therapeutics	Various (1)	$	19,734		$	16,130
Biosimilars	Various (2)	2,326			4,295
Complex Generics	(3)	47			122
Internal Costs		16,735			11,584
Total Research and Development Expenses		$	38,842		$	32,131

_______________________________________

(1)Our novel therapeutic programs include M281, for which we commenced two Phase 2 clinical trials during the fourth quarter of 2018 and announced in August 2019 that we commenced an additional Phase 2/3 clinical trial; M230, for which our licensee's, CSL's, Phase 1 study in healthy volunteers to evaluate safety and tolerability of M230 is ongoing; M254, for which we have initiated a Phase 1/2 clinical study in early 2019; as well as other discovery and nonclinical stage programs.

(2)Biosimilars include M710, a biosimilar candidate of EYLEA® (aflibercept). Mylan initiated a pivotal clinical trial in patients in the United States in August 2018, and in December 2018 and February 2019, initiated dosing of patients in the European Union and Japan, respectively. In November 2018, we provided notice to Mylan terminating our participation in the development of our biosimilar programs other than M710.

(3)Includes external costs for GLATOPA and Enoxaparin Sodium Injection. In July 2010, the first ANDA for Enoxaparin Sodium Injection was approved by the FDA, and Sandoz launched the product. In April 2015, the FDA approved the ANDA for once-daily GLATOPA 20 mg/mL. Sandoz launched GLATOPA 20 mg/mL in June 2015. In February 2018, the FDA approved the ANDA for three-times-weekly GLATOPA 40 mg/mL, and Sandoz launched the product. For more information on GLATOPA, see "Legacy Products" section above.

We expect research and development expense to increase for the foreseeable future as our current development programs progress and new programs are added.

External costs of our novel therapeutic programs increased by $3.6 million, or 22%, from the three months ended June 30, 2019 to the three months ended June 30, 2020, and were primarily driven by an increase in manufacturing and clinical trial activity for M254 as described in Note 1 in the above table, partially offset by a decrease in our share of CSL collaboration costs for M230. External expenditures for our biosimilars programs decreased by $2.0 million, or 46%, from the three months ended June 30, 2019 to the three months ended June 30, 2020, primarily due to a decrease in spending on M710 and M923. Internal costs increased by $5.2 million, or 44%, from the three months ended June 30, 2019 to the three months ended June 30, 2020 primarily due to an increase in share-based compensation expense related to PSUs, partially offset by a reduction in lease costs.

General and Administrative

General and administrative expenses consist primarily of salaries, share-based compensation and other related costs for personnel in general and administrative functions, professional fees for legal and accounting services, legal settlements, insurance costs, and allocated rent, facility and lab supplies, and depreciation expense.

For our collaboration arrangements in which the parties share in collaboration expenses for products under the arrangement (cost sharing arrangements), we record the reimbursement by the collaborator for its share of the development effort as a reduction of general and administrative expense. Our share of costs incurred by collaborators is recorded as general and administrative expense.

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We expect our general and administrative expenses, including internal and external legal and business development costs that support our various product development efforts, to vary from period to period in relation to our commercial, litigation and development activities.

The decrease of $21.3 million, or 46%, from the three months ended June 30, 2019 to the three months ended June 30, 2020 was primarily due to a payment of $21.0 million to Amphastar in June 2019 reflecting our portion of the settlement payment; lower legal fees and lower depreciation and rent costs due to the modification to the Bent lease in 2019; partially offset by an increase in share-based compensation expense related to PSUs.

Other Operating Expense

Other operating expense for the three months ended June 30, 2020 included a $0.2 million adjustment due to changes in the estimated fair value of the future contractual obligations under our manufacturing services agreement with Human Genome Sciences, Inc., or GSK. Other operating expense was $42.9 million for the three months ended June 30, 2019 and included a take-or-pay purchase obligation under our manufacturing agreement with GSK. Consistent with our decision to cease active development of M923, we canceled our manufacturing runs scheduled through 2020 and recorded a charge of $20.9 million in the three months ended June 30, 2019, representing the minimum purchase obligation. Since the utility of the remaining minimum purchase commitments for the calendar years 2021 through 2022 was deemed impaired at June 30, 2019, we recorded an additional charge of $22.0 million during the six months ended June 30, 2019.

Restructuring

Restructuring charges consist of severance, bonus, share-based compensation, and impairment of equipment associated with our workforce reduction in October 2018.

Other Income, Net

Other income, net includes other items of non-operating income and expense. Other income, net was $0.3 million and $2.7 million for the three months ended June 30, 2020 and 2019, respectively. The decrease of $2.4 million, or 89%, from the three months ended June 30, 2019 to the three months ended June 30, 2020 was primarily the result of interest expense recognized on the purchase commitments under our manufacturing agreement with GSK and lower interest income due to lower market yields on our investments.

Comparison of Six Months Ended June 30, 2020 and 2019

Product revenue includes our contractually defined profits earned on Sandoz’ sales of GLATOPA.

The following data summarizes our collaboration revenues for the periods indicated:


	Six Months Ended June 30,												Change period over period
	2020		% of Total Collaboration Revenue		2019		% of Total Collaboration Revenue		2020 compared to 2019
Collaboration revenue:	(in thousands)		(%)		(in thousands)		(%)		(in thousands)		(%)
Product revenue	$	15,280	99	%	$	5,685	61	%	$	9,595	169	%
Research and development revenue	219		1	%	3,610		39	%	(3,391)		(94)	%
Total collaboration revenue	$	15,499	100	%	$	9,295	100	%	$	6,204	67	%

Product Revenue

The increase in product revenue of $9.6 million, or 169%, from the six months ended June 30, 2019 to the six months ended June 30, 2020 was due to higher net sales of GLATOPA.

Research and Development Revenue

The decrease in research and development revenue of $3.4 million, or 94%, from the six months ended June 30, 2019 to the six months ended June 30, 2020 was due to lower reimbursement revenue for GLATOPA expenses and lower revenue recognized from Mylan's upfront payment due to the partial termination of the Mylan Collaboration Agreement.

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Operating Expenses

The following table summarizes our operating expenses for the periods indicated:


	Six Months Ended June 30,												Change period over period
	2020		% of Total Operating Expenses		2019		% of Total Operating Expenses		2020 compared to 2019
	(in thousands)		(%)		(in thousands)		(%)		(in thousands)		(%)
Operating expenses:
Research and development	$	73,049	64	%	$	60,103	35	%	$	12,946	22	%
General and administrative	39,903		35	%	70,815		40	%	(30,912)		(44)	%
Other operating expense	593		1	%	42,936		25	%	(42,343)		(99)	%
Restructuring	—		—	%	158		—	%	(158)		(100)	%
Total operating expenses	$	113,545	100	%	$	174,012	100	%	$	(60,467)	(35)	%

Research and Development Expense

The following table sets forth the primary components of our research and development external expenditures, including the amortization of our intangible assets, for each of our principal development programs for the six months ended June 30, 2020 and 2019. The figures in the table include project expenditures incurred by us and reimbursed by our collaborators, but exclude project expenditures incurred by our collaborators. Although we track and accumulate personnel effort by percentage of time spent on our programs, a significant portion of our internal research and development costs, including salaries and benefits, share-based compensation, facilities, depreciation and laboratory supplies are not directly charged to programs. Therefore, our methods for accounting for internal research and development costs preclude us from reporting these costs on a project-by-project basis.


	Phase of Development	Six Months Ended June 30,
				2020			2019
External Costs Incurred by Product Area:		(in thousands)
Novel Therapeutics	Various (1)	$	37,480		$	28,893
Biosimilars	Various (2)	7,308			7,174
Complex Generics	(3)	43			176
Internal Costs		28,218			23,860
Total Research and Development Expenses		$	73,049		$	60,103

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We expect research and development expense to increase for the foreseeable future as our current development programs progress and new programs are added.

External costs of our novel therapeutic programs increased by $8.6 million, or 30%, from the six months ended June 30, 2019 to the six months ended June 30, 2020, and were primarily driven by an increase in manufacturing and clinical trial activity for M254 and M281 as described in Note 1 in the above table, partially offset by a decrease in our share of CSL collaboration costs for M230. External expenditures for our biosimilars programs increased by $0.1 million, or 2%, from the six months ended June 30, 2019 to the six months ended June 30, 2020, primarily due to an increase in spending on M710, partially offset by a reduction in M923 costs. Internal costs increased by $4.4 million, or 18%, from the six months ended June 30, 2019 to the six months ended June 30, 2020 primarily due to an increase in share-based compensation expense related to PSUs, partially offset by a reduction in lease costs.

General and Administrative

The decrease of $30.9 million, or 44%, from the six months ended June 30, 2019 to the six months ended June 30, 2020 was primarily due to a payment of $21.0 million to Amphastar in June 2019 reflecting our portion of the settlement payment; lower legal fees and lower depreciation and rent costs due to the modification to the Bent lease in 2019; partially offset by an increase in share-based compensation expense related to PSUs.

Other Operating Expense

Other operating expense for the six months ended June 30, 2020 included a $0.6 million adjustment due to changes in the estimated fair value of the future contractual obligations under our manufacturing services agreement with Human Genome Sciences, Inc., or GSK. Other operating expense was $42.9 million for the six months ended June 30, 2019 and included a take-or-pay purchase obligation under our manufacturing agreement with GSK. Consistent with our decision to cease active development of M923, we canceled our manufacturing runs scheduled through 2020 and recorded a charge of $20.9 million in the three months ended June 30, 2019, representing the minimum purchase obligation. Since the utility of the remaining minimum purchase commitments for the calendar years 2021 through 2022 was deemed impaired at June 30, 2019, we recorded an additional charge of $22.0 million during the six months ended June 30, 2019.

Restructuring

Restructuring charges consist of severance, bonus, share-based compensation, and impairment of equipment associated with our workforce reduction in October 2018.

Other Income, Net

Other income, net includes other items of non-operating income and expense. Other income, net was $1.5 million and $5.9 million for the six months ended June 30, 2020 and 2019, respectively. The decrease of $4.4 million, or 75%, from the six months ended June 30, 2019 to the six months ended June 30, 2020 was primarily the result of interest expense recognized on the purchase commitments under our manufacturing agreement with GSK and lower interest income due to lower market yields on our investments.

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Equity Financings

In December 2019, we sold an aggregate of approximately 16.7 million shares of our common stock through an underwritten public offering at a price to the public of $15.50 per share. As a result of the offering, which includes the exercise in full of the underwriter’s option to purchase additional shares of common stock, we received aggregate net proceeds of approximately $244.2 million, after deducting underwriting discounts and commissions and other offering expenses.

In August 2019, we entered into a sales agreement, or Sales Agreement, with Stifel, Nicolaus & Company, Incorporated, or Stifel, pursuant to which we may sell from time to time, at our option, up to an aggregate of $100.0 million of shares of our common stock through Stifel, as sales agent or principal. Sales of the common stock, if any, will be made by methods deemed to be “at the market offerings.” We have agreed to pay Stifel a commission of up to 3% of the gross proceeds from the sale of the shares of our common stock, if any. The Sales Agreement will terminate upon the earliest of: (a) the sale of $100.0 million of shares of our common stock or (b) the termination of the Sales Agreement by us or Stifel. As of June 30, 2020, we have not sold any shares of common stock under this program.

In December 2018, we sold an aggregate of 20.0 million shares of common stock through an underwritten public offering at a price to the public of $11.50 per share. As a result of the offering, which includes the exercise in full of the underwriter’s option to purchase additional shares of common stock, we received aggregate net proceeds of approximately $217.8 million, after deducting underwriting discounts and commissions and other offering expenses.

Liquidity and Capital Resources

At June 30, 2020, we had $450.6 million in cash, cash equivalents and marketable securities. In addition, we also held $1.8 million in restricted cash.

We have funded our operations primarily through the sale of equity securities and payments received under our collaboration and license agreements, including our share of profits from Sandoz’ sales of Enoxaparin Sodium Injection and GLATOPA. We expect to fund our planned operating and expenditure requirements through a combination of current cash, cash equivalents and marketable securities; equity financings; and milestone payments and product revenues under existing collaboration agreements. We may also seek funding from new collaborations and strategic alliances, debt financings and other financial arrangements. Future funding transactions may or may not be similar to our prior funding transactions. There can be no assurance that future funding transactions will be available on favorable terms, or at all. We currently believe that our current capital resources and projected milestone payments and product revenues will be sufficient to meet our operating requirements through at least the third quarter of 2021.

Cash, Cash Equivalents and Marketable Securities

Our funds at June 30, 2020 were primarily invested in commercial paper, overnight repurchase agreements, asset-backed securities, United States treasury securities, corporate debt securities and United States money market funds, directly or through managed funds, with remaining maturities of 12 months or less. Our cash is deposited in and invested through highly rated financial institutions in North America. The composition and mix of cash, cash equivalents and marketable securities may change frequently as a result of our evaluation of conditions in the financial markets, the maturity of specific investments, and our near term liquidity needs.

We do not believe that our cash equivalents and marketable securities were subject to significant market risk at June 30, 2020.


	Six Months Ended June 30,
	2020		2019
	(in thousands)
Net cash used in operating activities	$	(105,692)	$	(111,262)
Net cash used in investing activities	$	(97,841)	$	(16,345)
Net cash provided by financing activities	$	12,142	$	2,781
Net decrease in cash, cash equivalents, and restricted cash	$	(191,391)	$	(124,826)

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Cash used in operating activities

The cash used in operating activities generally approximates our net loss adjusted for non-cash items and changes in operating assets and liabilities.

Cash used in operating activities was $105.7 million for the six months ended June 30, 2020 reflecting a net loss of $96.6 million, partially offset by non-cash charges of $2.1 million for depreciation and amortization of property, equipment and intangible assets and $24.2 million in share-based compensation. The net change in our operating assets and liabilities used cash of $35.4 million and resulted primarily from a $1.9 million decrease in collaboration liability, a $31.6 million decrease in accounts payable and accrued expenses, and $1.9 million in other net changes in our operating assets and liabilities.

Cash used in operating activities was $111.3 million for the six months ended June 30, 2019 reflecting a net loss of $158.8 million, which was partially offset by non-cash charges of $10.6 million for depreciation and amortization of property, equipment and intangible assets and $7.1 million in share-based compensation. The net change in our operating assets and liabilities used cash of $31.4 million and resulted primarily from $7.0 million in receivables due from Sandoz for our profit share interest and a $42.9 million increase in liabilities due to contractual obligations payable to GSK in 2020 through 2022, partially offset by $2.3 million in payments of termination benefits from our Workforce Reduction, recognition of $2.8 million in revenue on the upfront payment from Mylan, and payment of our $15.0 million contractual liability to GSK in respect to the June 2018 agreement amendment.

Cash used in investing activities

Cash used in investing activities of $97.8 million for the six months ended June 30, 2020 includes cash outflows of $225.7 million for purchases of marketable securities and $1.7 million for purchases of property and equipment, partially offset by cash inflows of $129.5 million from maturities of marketable securities and proceeds of less than $0.1 million from the disposal of equipment.

Cash used in investing activities of $16.3 million for the six months ended June 30, 2019 includes cash outflows of $194.5 million for purchases of marketable securities and $1.1 million for purchases of property and equipment, partially offset by cash inflows of $176.8 million from maturities of marketable securities and $2.4 million in proceeds from the disposal of equipment.

Cash provided by financing activities

Cash provided by financing activities of $12.1 million for the six months ended June 30, 2020 includes proceeds of $12.4 million from stock option exercises and purchases of shares of our common stock through our employee stock purchase plan, partially offset by a $0.3 million payment of financing fees related to the December 2019 public offering of common stock.

Cash provided by financing activities of $2.8 million for the six months ended June 30, 2019 consists solely of proceeds from stock option exercises and purchases of shares of our common stock through our employee stock purchase plan.

Contractual Obligations

Our contractual obligations in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 27, 2020, have not materially changed since we filed that report.

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Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2019 are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. There have been no material changes to our critical accounting policies since the filing of such Form 10-K.

New Accounting Standards

Please refer to Note 1 “Nature of Business and Basis of Presentation” to our condensed consolidated financial statements contained in Part I, Item I of this Quarterly Report on Form 10-Q for a discussion of new accounting standards.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk related to changes in interest rates. Our current investment policy is to maintain an investment portfolio consisting mainly of United States money market, government-secured, and high-grade corporate securities, directly or through managed funds, with maturities of twenty-four months or less. Our cash is deposited in and invested through highly rated financial institutions in North America. Our marketable securities are subject to interest rate risk and will fall in value if market interest rates increase. However, due to the conservative nature of our investments, low prevailing market rates and relatively short effective maturities of debt instruments, interest rate risk is mitigated. If market interest rates were to increase immediately and uniformly by 10% from levels at June 30, 2020, we estimate that the fair value of our investment portfolio would decline by an immaterial amount. We do not own derivative financial instruments in our investment portfolio. In addition, we are not materially exposed to foreign currency risks. Accordingly, we do not believe that there is any material market risk exposure with respect to derivative, foreign currency or other financial instruments that would require disclosure under this item.

Item 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial and Business Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of June 30, 2020. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial and Business Officer concluded that, as of June 30, 2020, our disclosure controls and procedures were effective at the reasonable assurance level.

There was no change in our internal control over financial reporting during the three months ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

For a discussion of legal matters as of June 30, 2020, please see Note 11, "Commitments and Contingencies" to our condensed consolidated financial statements included in this report, which is incorporated into this item by reference.

Item 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider the risks, uncertainties and other important factors described below in addition to other information included or incorporated by reference in this Annual Report on Form 10-K before purchasing our securities. The risks, uncertainties and other important factors described below are not the only ones we face. Additional risks, uncertainties and other important factors of which we are unaware, or that we currently believe are not material, may also affect us. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer.

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Risks Relating to Our Business

The outbreak of the novel coronavirus disease, COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.

In December 2019, a strain of novel coronavirus disease, COVID-19, was identified in Wuhan, China. This virus has been declared a pandemic and has spread to multiple global regions, including the United States, Europe, and Asia. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities have been closed and production has been suspended.

In response to the spread of COVID-19, we have suspended patient enrollment in our Energy Study, an adaptive Phase 2/3 clinical study of nipocalimab in wAIHA. We also announced that the Company expects to launch its Phase 2 study of M254 in CIDP in 2021, as opposed to the fourth quarter of 2020, as previously disclosed.

In line with guidance from the U.S. Centers for Disease Control and Prevention and the state of Massachusetts, our employees are working remotely, and we have suspended all business travel. As a result of the COVID-19 pandemic, we may experience additional business disruptions that could adversely impact our business, preclinical studies and clinical trials, including:

•delays or difficulties in enrolling patients in our clinical trials;

•delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

•diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

•interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

•interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

•interruption of, or delays in our or our third-party collaborators receiving, supplies of manufactured drug material from third-party manufacturers due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;

•interruptions in preclinical or clinical studies due to restricted or limited operations of our third party contractors, including independent clinical investigators, CROs, and other third-party services providers that assist us in managing, monitoring and otherwise carrying out these studies;

•limitations on our or our third party contractors’ employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of employee or family illness or the desire of employees to avoid contact with large groups of people;

•interruptions or delays in the operations of our third-party collaborators, which may impact the research, development, manufacturing or commercialization activities for our products and product candidates, including, without limitation, ongoing sales of GLATOPA; and

•interruption or delays to our other sourced discovery and clinical activities.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, the ultimate impact of the pandemic on financial markets and the global economy, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

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Our new corporate strategy and restructuring may not be successful.

On October 1, 2018, as a result of the previously disclosed strategic business review, we announced our intention to focus our resources on the discovery and development of our pipeline of novel drug candidates for immune-mediated diseases and the advancement of two of our late stage biosimilar assets, M923, our proposed biosimilar to HUMIRA, and M710, our proposed biosimilar to EYLEA. We have ceased active development activities for, and do not anticipate any future investments in, M923, due to changes in market opportunity relating to its launch. The success of this strategic shift will depend on our ability to successfully develop our novel and biosimilar candidates, hire and retain senior management or other highly qualified personnel, prioritize competing projects and efforts and obtain sufficient resources, including additional capital. Development of novel drug candidates is highly unpredictable due to the lengthy and expensive process of clinical drug development, potential for safety, efficacy or tolerability problems with such product candidates, unexpected expenses or inaccurate financial assumptions or forecasts, potential delays or unfavorable decisions of regulatory agencies and competition for targeted indications or within targeted markets. Our ability to develop and commercialize our biosimilar candidate depends on our ability to successfully navigate potential litigation efforts by our competitors, potential disputes with our collaboration partner and our collaboration partner's ability to supply and commercialize our product. Accordingly, there are no assurances our change in strategic focus will be successful, which may have an adverse effect on our results of operations or financial condition.

Also on October 1, 2018, as a result of our strategic business review, we restructured our executive team and commenced a reduction of our workforce by 50%. Our executive team and workforce after these actions may not be sufficient to fully execute our shift to a novel drug biotechnology company, and we may not be able to effectively retain or attract qualified executive management or employees needed to implement this strategy.

If we or our collaborative partners encounter difficulties or interruptions in our supply or manufacturing arrangements, including an inability by third party manufacturers to satisfy FDA quality standards and related regulatory requirements, our development and commercialization efforts may be materially harmed.

We have limited personnel with experience in, and we do not own facilities for, manufacturing any products. We depend upon our collaborators and other third parties, including sole source suppliers, to provide raw materials meeting FDA quality standards and related regulatory requirements, manufacture the drug substance, produce the final drug product and provide certain analytical services with respect to our products and product candidates. We cannot be certain that we will be able to obtain and/or maintain continuous supply and acceptable supply arrangements of those materials. In addition, our third-party manufacturers, some of which are located in foreign countries, may have the supply of materials to us impacted by public health epidemics or pandemic disease outbreaks, such as the COVID-19 pandemic, equipment failure, natural disaster, labor shortages, cyber-attack or geopolitical risks, including import trade restrictions or significant tariffs or other economic sanctions or other governmental action. If we are unable to arrange for third-party manufacturing, or to do so on commercially reasonable terms, we may not be able to complete development of our product candidates or market them, which could have a material adverse effect on our business.

The FDA and other regulatory authorities require that our products be manufactured according to current good manufacturing practices, or cGMP, regulations and that proper procedures are implemented to assure the quality of our sourcing of raw materials and the manufacture of our products. Any failure by us, our collaborators or our third-party manufacturers to comply with cGMP and/or scale-up manufacturing processes could lead to a delay in, or failure to obtain, regulatory approval of proposed products or the delay or cessation of commercial sales of our approved products . In addition, such failure could be the basis for action by the FDA to withdraw approvals for products previously granted to us and for other regulatory action, including product recall or seizure, fines, imposition of operating restrictions, total or partial suspension of production or injunctions. To the extent we rely on a third-party manufacturer, the risk of non-compliance with cGMPs may be greater and the ability to effect corrective actions for any such noncompliance may be compromised or delayed. For example, on February 17, 2017, we announced that Sandoz’ third party fill/finish manufacturer for GLATOPA, Pfizer Inc., received an FDA warning letter. The FDA applied a compliance hold on the approval of pending drug applications listing the Pfizer Inc. facility, including the ANDA for GLATOPA 40 mg/mL, until satisfactory resolution of the compliance observations in the FDA warning letter. On January 30, 2018, we announced that the FDA had changed the status of Pfizer’s manufacturing facility to Voluntary Action Indicated, which lifted the compliance hold and was followed by a marketing approval in February 2018. The FDA delay in ability to approve GLATOPA 40 mg/mL until satisfactory resolution of the compliance observations in the FDA warning letter greatly increased the risk to us and Sandoz of prior or contemporaneous competition from other generic versions of COPAXONE 40 mg/mL, limiting revenue. Any interruption or delay in a third-party's manufacturing of our products or product candidates could have a material adverse impact on our business, financial position and results of operations and could cause the market value of our common stock to decline.

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Moreover, in order to generate revenue from the sales of Enoxaparin Sodium Injection, GLATOPA 20 mg/mL and GLATOPA 40 mg/mL, sufficient quantities of such product must also be produced in order to satisfy demand. If these contract manufacturers and suppliers, which include sole source suppliers, are unable to manufacture sufficient quantities of product or breach or terminate their manufacturing arrangements with us or Sandoz, as applicable, the commercialization of the affected products could be delayed, which could have a material adverse effect on our business.

We have ceased active development of our biosimilar product candidate, M923, and if we do not resume development of the program our business may be adversely affected.

We have ceased active development activities for, and do not anticipate additional investment in, our wholly owned HUMIRA biosimilar, M923, due to changes in market opportunity relating to its launch. We may seek to license M923 to a third party entirely or opt to otherwise monetize M923 or to terminate the program, which could have a material adverse effect on our business, including paying our remaining take or pay minimum purchase obligation under our manufacturing agreement with GSK without receiving a benefit therefor.

The patient populations of the target indications for our novel therapeutic candidates are small and have not been established with precision. If the actual number of patients are smaller than we estimate, our revenue and ability to achieve profitability with respect to such candidates may be adversely affected.

We estimate that there are approximately 65,000 patients in the United States with generalized myasthenia gravis, or gMG, approximately 4,000 to 8,000 patients in the United States with hemolytic disease of the fetus and newborn, or HDFN, and approximately 45,000 patients in the United States with warm autoimmune hemolytic anemia, or wAIHA, all potential indications for our product candidate M281. We estimate that chronic idiopathic thrombocytopenic purpura, or ITP, a potential indication for our product candidate M254, affects approximately 30,000 to 40,000 patients in the United States. Our estimates of the size of these patient populations are based on published studies as well as internal analyses. If these studies or our analyses of them do not accurately reflect the number of patients with gMG, HDFN or ITP our assessment of the market may be inaccurate, making it difficult or impossible for us to meet our revenue goals if and when any of our product candidates receive regulatory approval, or to obtain or maintain profitability. The small population of gMG, HDFN or ITP patients may also create difficulties in the timely enrollment of patients in our clinical trials, especially in light of competing clinical trials or the availability of new therapies.

Since these candidates target small patient populations, the per-patient drug pricing must be higher in order to recover our development and manufacturing costs, fund adequate patient support programs, fund additional research and achieve profitability. Many of the other novel therapeutic product candidates will have indications in rare immune-mediated diseases and face similar risks. We may be unable to maintain or obtain sufficient sales volume at a price high enough to justify our product development efforts and our sales, marketing and manufacturing expenses.

We rely on third parties to conduct our clinical trials, and if they fail to fulfill their obligations, our development plans may be adversely affected.

We rely on independent clinical investigators, contract research organizations, or CROs, and other third-party services providers to assist us in managing, monitoring and otherwise carrying out our clinical trials. We have contracted, and we plan to continue to contract with, certain third-parties to provide certain services, including site selection, enrollment, monitoring, auditing and data management services. Although we depend heavily on these parties, we control only certain aspects of their activity and therefore, we cannot be assured that these third parties will adequately perform all of their contractual obligations to us in compliance with regulatory and other legal requirements and our internal policies and procedures. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities, We and our CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations.

If our third-party service providers cannot adequately and timely fulfill their obligations to us, or if the quality and accuracy of our clinical trial data is compromised due the failure by such third-party to adhere to our protocols or regulatory requirements or if such third parties otherwise fail to meet deadlines, our development plans and/or regulatory reviews for

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marketing approvals may be delayed or terminated. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Our current and near term product revenue is dependent on the continued successful commercialization of GLATOPA.

Our ability to generate GLATOPA product revenue depends, in large part, on Sandoz’ ability to continue to successfully manufacture and profitably commercialize GLATOPA.

Our ability to generate GLATOPA product revenue also depends in large part on Sandoz' ability to maintain market share and favorable pricing levels for GLATOPA 20 mg/mL and achieve profitable sales and market share for GLATOPA 40 mg/mL. In October 2017, Mylan N.V. announced the launch of its generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL. Following Mylan N.V.’s entry into the market, Sandoz has defended GLATOPA’s share of the 20 mg/mL glatiramer acetate injection market by using one or more contracting strategies, including but not limited to, lowering its GLATOPA 20 mg/mL price or increasing the discounts or rebates it offers for GLATOPA 20 mg/mL, which has decreased contractual profit share revenue. Since Sandoz' launch of GLATOPA 40 mg/mL, we believe Sandoz has encountered aggressive pricing and contracting tactics from competitors, which has limited uptake of the product and as a result we expect modest sales for the product in the future. Our near-term ability to generate GLATOPA 40 mg/mL product revenue will depend on Sandoz' ability to compete with Teva's three-times-weekly COPAXONE 40 mg/mL product and any generic equivalents. As of June 30, 2020, 40 mg/mL glatiramer acetate injection accounted for approximately 85% of the overall U.S. glatiramer acetate injection market (20 mg/mL and 40 mg/mL) based on volume prescribed. If other competitors receive approval to market generic versions of the 20 mg/mL or 40 mg/mL formulations of COPAXONE, our product revenue and profits would be further impacted, and as a result, our business, including our near-term financial results and our ability to utilize GLATOPA revenue to fund future discovery and development programs, may suffer.

If we or our collaborators are unable to establish and maintain key customer distribution arrangements, sales of our products, and therefore revenue, would be adversely impacted.

Drug products and biologics are sold through various channels, including retail, mail order, and to hospitals through group purchasing organizations, or GPOs. The distribution of such products is also managed by pharmacy benefit management firms, or PBMs, such as Express Scripts or CVS. These GPOs and PBMs rely on competitive bidding, discounts and rebates across their purchasing arrangements. We believe that we, in collaboration with commercial collaboration partners, will need to maintain adequate drug supplies, remain price competitive, comply with FDA regulations and provide high-quality products to establish and maintain relationships with GPOs and PBMs. The GPOs, PBMs and other customers with whom we or our collaborators have established contracts may also have relationships with our competitors and may decide to contract for or otherwise prefer products other than ours, limiting access of products to certain market segments. Our sales could also be negatively affected by any rebates, discounts or fees that are required by, or offered to, GPOs, PBMs, and customers, including wholesalers, distributors, retail chains or mail order services, to gain and retain market acceptance for our or our competitors’ products. For example, if PBMs, distributors and other customers contracted with Teva for net price discounts or rebates on COPAXONE 20 mg/mL and 40 mg/mL, or with Mylan N.V. for net price discounts or rebates on its generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL, in exchange for exclusivity or preferred status for COPAXONE prior to the February 2018 approval and launch of GLATOPA 40 mg/mL, our opportunity to capture market share would be significantly restricted for the term of these contracts. If we or our collaborators are unable to establish and maintain competitive distribution arrangements with all of these customers, sales of our products, our revenue and our profits would suffer.

Even if we receive approval to market our product candidates, the market may not be receptive to our product candidates upon their commercial introduction, which could adversely affect our ability to generate sufficient revenue from product sales to maintain or grow our business.

Even if our product candidates are successfully developed and approved for marketing, our success and growth will also depend upon the acceptance of our products by patients, physicians and third-party payers. Acceptance of our products will be a function of our products being clinically useful, being cost effective and demonstrating sameness, in the case of our generic product candidate, and biosimilarity or interchangeability, in the case of our biosimilar product candidates, with an acceptable side effect profile as compared to existing or future treatments. In addition, even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time.

Factors that we believe will materially affect market acceptance of our product candidates under development include:

•the timing of our receipt of any marketing approvals, the terms of any approval and the countries in which approvals are obtained;

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•the safety, efficacy and ease of administration of our products;

•the competitive pricing of our products;

•physician confidence in the safety and efficacy of our products;

•the absence of, or limited clinical data available from, sameness testing of our complex generic products and biosimilarity or interchangeability testing of our biosimilar products;

•the success and extent of our physician education and marketing programs;

•the clinical, medical affairs, sales, distribution and marketing efforts of competitors; and

•the availability and amount of government and third-party payer reimbursement.

If our products do not achieve market acceptance, we will not be able to generate sufficient revenue from product sales to maintain or grow our business.

If we are not able to retain our current management team or attract and retain qualified scientific, technical and business personnel, our business will suffer.

We recently restructured our management team and are dependent on the current members of our team for our business to succeed. In the restructuring we terminated a number of senior executives and many of the new members of our current management team have not had previous experience in senior executive positions and have duties that are in addition to those of our prior senior executives, all of which may affect our ability to further our business success. Our employment arrangements with our executive officers are terminable by either party on short notice or no notice. We do not carry key person life insurance on the lives of any of our personnel. The loss of any of our executive officers would result in a significant loss in the knowledge and experience that we, as an organization, possess and could cause significant delays, or outright failure, in the development and approval of our product candidates. In addition, there is intense competition from numerous pharmaceutical and biotechnology companies, universities, governmental entities and other research institutions, for human resources, including qualified executives and management, in the technical fields in which we operate, and we may not be able to attract and retain qualified personnel necessary for the successful development and commercialization of our product candidates. Another component of retention is the intrinsic value of equity awards, including stock options. Stock options granted to our executives and employees may be under pressure given the volatility of our stock performance and at such times may not always provide a retentive effect. In addition, our recent restructuring may negatively affect employee morale and our corporate culture, which may have a negative impact on retention and recruitment. If we lose key members of our management team, or are unable to attract and retain qualified personnel, our business could be negatively affected.

There is a substantial risk of product liability claims in our business. If our existing product liability insurance is insufficient, a product liability claim against us that exceeds the amount of our insurance coverage could adversely affect our business.

Our business exposes us to significant potential product liability risks that are inherent in the development, manufacturing and marketing of human therapeutic products. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, such claims could result in a recall of our products or a change in the approved indications for which they may be used. We cannot be sure that the product liability insurance coverage we maintain will be adequate to cover any incident or all incidents. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to maintain sufficient insurance at a reasonable cost to protect us against losses that could have a material adverse effect on our business. These liabilities could prevent or interfere with our product development and commercialization efforts.

Our business and operations would suffer in the event of system failures or security breaches.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our and our third party contractors' computer systems and networks. Our internal computer systems are vulnerable to breakdown or breach, including as a result of computer viruses, security breaches by individuals with authorized access, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. The increased use of mobile and cloud technologies can heighten these and other operational risks. Moreover, systems breaches are increasing in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect. Any breakdown or breach by employees or others may pose a risk that sensitive data, including clinical trial data, intellectual property, trade secrets or personal information belonging to us, our patients or our collaborators may be exposed to unauthorized persons or to the public. If such an event

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were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely on third parties to manufacture and commercialize our products and conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development and commercialization of our products and product candidates could be delayed, we could suffer reputational harm, we could be subject to regulatory action, and the trading price of our common stock could be adversely affected. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to breakdown or breach of our computer systems and other related breaches.

As we continue to evolve from a company primarily involved in discovery and development of pharmaceutical products into one that is also involved in the commercialization of multiple pharmaceutical products, we may have difficulty managing our growth and expanding our operations successfully.

As we advance an increasing number of product candidates through the development process, we will need to expand our development, regulatory, manufacturing, quality, distribution, sales and marketing capabilities or contract with other organizations to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various collaborative partners, suppliers and other organizations.

In addition, our ability to manage our operations and growth requires us to continue to improve our operational, financial and management controls, reporting systems and procedures. For example, some jurisdictions, such as the District of Columbia, have imposed licensing requirements for sales representatives. In addition, the District of Columbia and the Commonwealth of Massachusetts, as well as the federal government, by way of the Sunshine Act provisions of the Patient Protection and Affordable Care Act of 2010, have established reporting requirements that would require public reporting of consulting and research fees to health care professionals. Because the reporting requirements vary in each jurisdiction, compliance can be complex and expensive and may create barriers to entering the commercialization phase. The need to build new systems as part of our growth could place a strain on our administrative and operational infrastructure. We may not be able to make improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. Such requirements may also impact our opportunities to collaborate with physicians at academic research centers as new restrictions on academic-industry relationships are put in place. In the past, collaborations between academia and industry have led to important new innovations, but the new laws may have an effect on these activities. While we cannot predict whether any legislative or regulatory changes will have negative or positive effects, they could have a material adverse effect on our business, financial condition and potential profitability.

We may incur costs and allocate resources to identify and develop additional product candidates or acquire or make investments in companies or technologies without realizing any benefit, which could have an adverse effect on our business, results of operations and financial condition or cash flows.

Along with continuing to progress our current product candidates, the long-term success of our business also depends on our ability to successfully identify, develop and commercialize additional product candidates. Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs and product candidates that ultimately prove to be unsuccessful.

In addition, we may acquire or invest in companies, products and technologies. Such transactions involve a number of risks, including:

•we may find that the acquired company or assets does not further our business strategy, or that we overpaid for the company or assets, or that economic conditions change, all of which may generate a future impairment charge;

•difficulty integrating the operations and personnel of the acquired business, and difficulty retaining the key personnel of the acquired business;

•difficulty incorporating the acquired technologies;

•difficulties or failures with the performance of the acquired technologies or products;

•we may face product liability risks associated with the sale of the acquired company’s products;

•disruption or diversion of management’s attention by transition or integration issues and the complexity of managing diverse locations;

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•difficulty maintaining uniform standards, internal controls, procedures and policies;

•the acquisition may result in litigation from terminated employees or third parties; and

•we may experience significant problems or liabilities associated with product quality, technology and legal contingencies.

These factors could have a material adverse effect on our business, results of operations and financial condition or cash flows, particularly in the case of a larger acquisition or multiple acquisitions in a short period of time. From time to time, we may enter into negotiations for acquisitions that are not ultimately consummated. Such negotiations could result in significant diversion of management time, as well as out-of-pocket costs.

The consideration paid in connection with an acquisition also affects our financial results. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash to consummate any acquisition. To the extent we issue shares of stock or other rights to purchase stock, including options or other rights, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large one-time write-offs and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges.

If we fail to maintain appropriate internal controls in the future, we may not be able to report our financial results accurately, which may adversely affect our stock price and our business.

Our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the related regulations regarding our required assessment of our internal controls over financial reporting and our external auditors’ audit of that assessment requires the commitment of significant financial and managerial resources.

Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. If we are unable to maintain effective internal controls, we may not have adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002, as amended. This could result in a restatement of our financial statements, the imposition of sanctions, including the inability of registered broker dealers to make a market in our stock, or investigation by regulatory authorities. Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory requirements or by disclosure of an accounting, reporting or control issue could adversely affect the trading price of our stock and our business.

Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.

Because we have commenced and will continue to conduct clinical trials in the European Union, we and our CROs are subject to many rapidly evolving privacy and data protection laws and regulations in Europe. This requires us and our CROs to operate in a complex environment where there are significant constraints on how we can process personal data across our business. The European General Data Protection Regulation (the GDPR), which became effective in May 2018, has established stringent data protection requirements for companies doing business in or handling personal data of individuals in the European Union. The GDPR imposes obligations on data controllers and processors including the requirement to maintain a record of their data processing and to implement policies and procedures as part of their mandated privacy governance framework. In addition, the GDPR allows EU member states to make additional laws and regulations further regulating the processing of genetic, biometric or health data. Breaches of the GDPR could result in substantial fines, which in some cases could be up to four percent of our worldwide revenue. In addition, a breach of the GDPR or other data privacy or data protection laws or regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well potential civil claims including class action type litigation. There is a risk that we or our CROs may be subject to fines and penalties, litigation and reputational harm if we or they fail to properly process or protect the data or privacy of third parties or comply with the GDPR or other applicable data privacy and data protection regimes.

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Risks Relating to Our Financial Position and Need for Additional Capital

We have incurred a cumulative loss since inception. If we do not generate significant revenue, we may not return to profitability.

We have incurred significant losses since our inception in May 2001. At June 30, 2020, our accumulated deficit was approximately $1.1 billion. We may incur annual operating losses over the next several years as we expand our product development, commercialization and discovery efforts. In addition, we must successfully develop and obtain regulatory approval for our product candidates, and effectively manufacture, market and sell any products we successfully develop. Accordingly, we may not generate significant revenue in the longer term and, even if we do generate significant revenue, we may never achieve long-term profitability.

To be profitable, we and our collaborative partners must succeed in developing and commercializing products with significant market potential. This will require us and our collaborative partners to be successful in a range of challenging activities: developing product candidates, completing nonclinical testing and clinical trials of our product candidates; obtaining regulatory approval for product candidates through either existing or new regulatory approval pathways; clearing allegedly infringing patent rights; enforcing our patent rights; and manufacturing, distributing, marketing and selling products. Our potential profitability will also be adversely impacted by the entry of competitive products and, if so, the degree of the impact could be affected by whether the entry is before or after the launch of our products. We may never succeed in these activities and may never generate revenues that are significant enough to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become or remain profitable would depress our market value and could impair our ability to raise capital, expand our business, discover or develop other therapeutic candidates or continue our operations. A decline in the value of our company could cause our shareholders to lose all or part of their investment.

We will require substantial funds and may require additional capital to execute our business plan and, if additional capital is not available, we may need to delay, limit or cease our product development efforts or other operations. If we are unable to fund our obligations under our collaboration and license agreements, we may breach those agreements and our collaboration partners could terminate those agreements.

As of June 30, 2020, we had cash, cash equivalents and marketable securities totaling approximately $450.6 million. For the six months ended June 30, 2020, we had a net loss of $96.6 million and our operations used cash of $105.7 million. We will continue to require substantial funds to conduct research and development, process development, manufacturing, nonclinical testing and clinical trials of our product candidates, as well as funds necessary to manufacture and market products that are approved for commercial sale. Because successful development and commercialization of our product candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development and commercialize our products under development.

Our future capital requirements will depend on many factors, including but not limited to:

•the cost of advancing our product candidates and funding our development programs, including the costs of nonclinical and clinical studies, obtaining reference product for nonclinical and clinical studies, manufacturing nonclinical and clinical supply material, and obtaining regulatory approvals;

•the level of sales of GLATOPA 20 mg/mL and of GLATOPA 40 mg/mL;

•the successful commercialization of our other product candidates;

•the impact of prior or contemporaneous competition on our products and product candidates, such as Mylan N.V.'s generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL on GLATOPA 20 mg/mL and GLATOPA 40 mg/mL;

•the receipt of milestone payments under our CSL License Agreement;

•the timing of FDA approval of the products of our competitors;

•the cost of litigation maintaining and enforcing our intellectual property rights and defending intellectual property related claims, that is not otherwise covered by our collaboration agreements, or potential patent litigation with others, as well as any damages, including possibly treble damages, that may be owed to third parties should we be unsuccessful in such litigation;

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•the ability to enter into additional strategic alliances for our non-partnered programs, as well as the terms and timing of any milestone, royalty or profit share payments thereunder;

•the scope, progress, results and costs of our research and development programs, including completion of our nonclinical studies and clinical trials;

•the cost of acquiring and/or in-licensing other technologies, products or assets; and

•the cost of manufacturing, marketing and sales activities, if any.

We expect to finance and manage our planned operating and capital expenditure requirements principally through our current cash, cash equivalents and marketable securities, capital raised through our collaboration and license agreements and equity financings, contingent milestone payments, continuation and milestone payments and product revenues under existing collaboration and license agreements. We believe that these funds will be sufficient to meet our operating requirements through at least the third quarter of 2021. We may seek additional funding in the future through third-party collaborations and licensing arrangements, public or private debt financings or from other sources. Additional funds may not be available to us on acceptable terms or at all. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more of our research or development programs. We also may not be able to fund our obligations under one or more of our collaboration and license agreements, which could enable one or more of our collaborators to terminate their agreements with us, and therefore harm our business, financial condition and results of operations.

Raising additional capital by issuing securities or through collaboration and licensing arrangements may cause dilution to existing stockholders, restrict our operations or require us to relinquish proprietary rights.

We may seek to raise the additional capital necessary to fund our operations through public or private equity offerings, debt financings, and collaboration and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect our stockholders’ rights or, in the case of debt securities, require us to pay interest that would reduce our cash flows from operations or comply with certain covenants that could restrict our operations. If we raise additional funds through collaboration and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us.

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Risks Relating to Development and Regulatory Approval

Results of preclinical studies and early clinical trials may not be predictive of results of future clinical trials.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of clinical trials do not necessarily predict success in future clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and we could face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for the product candidates. Even if we, or our collaborators, believe that the results of clinical trials for our product candidates warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree and may not grant marketing approval of our product candidates.

If nonclinical studies and clinical trials are required for regulatory approval of our product candidates or any study or trial is delayed or not successful, we may incur additional costs, experience delays in obtaining, or ultimately be unable to obtain regulatory approval for commercial sale of those product candidates.

To obtain regulatory approval for the commercial sale of our novel product candidates, we are required to demonstrate through nonclinical studies and clinical trials that our product candidates are safe and effective. Nonclinical studies and clinical trials of novel product candidates are lengthy and expensive and there is a high probability of significant delays to or failure of novel product candidates during nonclinical studies or clinical trials.

To obtain regulatory approval for the commercial sale of our biosimilar product candidates, the BPCI Act requires nonclinical studies and clinical trials to demonstrate biosimilarity, unless the FDA in its discretion determines such studies and trials are not necessary.

A delay or failure of one of our product candidates during nonclinical studies or clinical trials, if required, can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, nonclinical studies and clinical trials, if required, that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:

•regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site;

•our nonclinical studies or clinical trials may produce negative or inconclusive results, and we may be required to conduct additional nonclinical studies or clinical trials or we may abandon projects that we previously expected to be promising;

•enrollment in our clinical trials may be slower than we anticipate, resulting in significant delays, and participants may drop out of our clinical trials at a higher rate than we anticipate;

•we might have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks;

•regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or if, in their opinion, participants are being exposed to unacceptable health risks;

•the cost of our clinical trials may be greater than we anticipate;

•the effects of our product candidates may not be the desired effects or may include undesirable health risks or our product candidates may have other unexpected characteristics; and

•we may decide to modify or expand the clinical trials we are undertaking if new agents are introduced that influence current standard of care and medical practice, warranting a revision to our clinical development plan.

The results from nonclinical studies of a product candidate and in initial human clinical studies of a product candidate may not predict the results that will be obtained in subsequent human clinical trials, if required. If we are required by regulatory authorities to conduct additional clinical trials or other testing of our product candidates that we did not anticipate, if we are

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unable to successfully complete our clinical trials or other tests, or if the results of these trials are not positive or are only modestly positive, we may be delayed in obtaining marketing approval for our product candidates or we may not be able to obtain marketing approval at all. Our product development costs will also increase if we experience delays in testing or approvals. Significant clinical trial delays could allow our competitors to bring products to market before we do and impair our ability to commercialize our product candidates. If any of these events occur, our business will be materially harmed.

Our product candidates may cause serious adverse events or undesirable side effects or have other properties which may delay or prevent their regulatory approval, limit the commercial profile of an approved label, or, result in significant negative consequences following marketing approval, if any.

Serious adverse events or undesirable side effects caused our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of health risks or unexpected characteristics. If unacceptable health risks arise in the development of our product candidates, we, the FDA, the IRBs at the institutions in which our studies are conducted, or the data safety monitoring board, or DSMB, could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related health risks could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. In addition, these health risks may not be appropriately recognized or managed by the treating medical staff. Any of these occurrences may harm our business, financial condition and prospects significantly.

If any of our product candidates receives marketing approval, and we or others later identify undesirable health risks caused by such products, a number of potentially significant negative consequences could result, including:

•regulatory authorities may withdraw approvals of such product;

•we may be required to recall a product or change the way such product is administered to patients;

•additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product;

•regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication;

•we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients;

•the product could become less competitive;

•we could be sued and held liable for harm caused to patients; and

•our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the product in question and could significantly harm our business, results of operations and prospects.

Interim, top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, top-line or preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the top-line or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Top-line or preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the top-line or preliminary data we previously published. As a result, top-line and preliminary data should be viewed with caution until the final data are available.

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From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between interim data and final data could significantly harm our business prospects. Disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

If the interim, top-line or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Even if we successfully complete necessary preclinical studies and clinical trials, provide evidence of therapeutic equivalence or provide evidence of biosimilarity or interchangeability, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. If we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we or they will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, export and import, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and comparable regulatory authorities in other countries. With the exception of our generic Enoxaparin Sodium Injection, GLATOPA 20 mg/mL and GLATOPA 40 mg/mL, we and our collaborators have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate.

Securing marketing approval requires the submission of extensive preclinical and clinical data; strength, quality, purity, identity and therapeutic equivalence data; or biosimilarity or interchangeability data, as applicable, and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application we submit, or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we or our collaborators ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved medicine not commercially viable.

Accordingly, if we or our collaborators experience delays in obtaining approval or if we or they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenue will be materially impaired.

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We have obtained Fast Track Designation for M281 for the treatment of HDFN and wAIHA, and we may seek Fast Track designation for other indications or for our other product candidates, but we might not receive such designations, and even if we do, such designations may not actually lead to a faster development or regulatory review or approval process.

If a product is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a product sponsor may apply for FDA Fast Track designation. We have obtained Fast Track designation for M281 for the treatment of HDFN and wAIHA, and we may seek Fast Track designation for other indications for M281 or for one or more of our other product candidates, but we might not receive such designations from the FDA. However, even if we receive Fast Track designation, Fast Track designation does not ensure that we will receive marketing approval or that approval will be granted within any particular timeframe. We may not experience a faster development or regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

Our opportunity to realize value from the potential of the biosimilars market is difficult and challenging due to the significant scientific and development expertise required to develop and consistently manufacture complex protein biologics.

The market potential of biosimilars may be difficult to realize, in large part due to the challenges of successfully developing and manufacturing biosimilars. Biologics are therapeutic proteins and are much more complex and much more difficult to characterize and replicate than small-molecule, chemically synthesized drugs. Proteins tend to be 100 to 1000 times larger than conventional drugs, and are more susceptible to physical factors such as light, heat and agitation. They also have greater structural complexity. Protein molecules differ from one another primarily in their sequence of amino acids, which results in folding of the protein into a specific three-dimensional structure that determines its activity. Although the sequence of amino acids in a protein is consistently replicated, there are a number of changes that can occur following synthesis that create inherent variability. Chief among these is the glycosylation, or the attachment of sugars at certain amino acids. Glycosylation is critical to protein structure and function, and thoroughly characterizing and matching the glycosylation profile of a targeted biologic is essential and poses significant scientific and technical challenges. Furthermore, it is often challenging to consistently manufacture proteins with complex glycosylation profiles, especially on a commercial scale. Protein-based therapeutics are inherently heterogeneous and their structure is highly dependent on the production process and conditions. Products from one production facility can differ within an acceptable range from those produced in another facility. Similarly, physicochemical differences can also exist among different lots of the same product produced at the same facility. The physicochemical complexity and size of biologics creates significant technical and scientific challenges in their replication as biosimilar products. Accordingly, the technical complexity involved and expertise and technical skill required to successfully develop and manufacture biosimilars poses significant barriers to entry. Any difficulties encountered in developing and producing, or any inability to develop and produce, biosimilars could adversely affect our business, financial condition and results of operations.

Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products abroad.

We intend in the future to market our products, if approved, outside of the United States, either directly or through collaborative partners. In order to market our products in the European Union and many other foreign jurisdictions, we must obtain separate regulatory approvals and comply with the numerous and varying regulatory requirements of each jurisdiction. The approval procedure and requirements vary among countries, and can require, among other things, conducting additional testing in each jurisdiction. The time required to obtain approval abroad may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval, and we may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in any other foreign country or by the FDA. We and our collaborators may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market outside of the United States. The failure to obtain these approvals could materially adversely affect our business, financial condition, and results of operations.

Even if we obtain regulatory approvals, our marketed products will be subject to ongoing regulatory review. If we fail to comply with continuing United States and foreign regulations, we could lose our approvals to market products and our business would be seriously harmed.

Even after approval, any pharmaceutical products we develop will be subject to ongoing regulatory review, including the review of clinical results that are reported after our products are made commercially available. Any regulatory approvals that we obtain for our product candidates may also be subject to limitations on the approved indicated uses for which the product

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may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, the manufacturer and manufacturing facilities we use to produce any of our product candidates will be subject to periodic review and inspection by the FDA, or foreign equivalent, and other regulatory agencies. We will be required to report any serious and unexpected adverse experiences and certain quality problems with our products and make other periodic reports to the FDA. The discovery of any new or previously unknown problems with the product, manufacturer or facility may result in restrictions on the product or manufacturer or facility, including withdrawal of the product from the market. Certain changes to an approved product, including in the way it is manufactured or promoted, often require prior FDA approval before the product as modified may be marketed. If we fail to comply with applicable FDA regulatory requirements, we may be subject to fines, warning letters, civil penalties, refusal by the FDA to approve pending applications or supplements, suspension or withdrawal of regulatory approvals, product recalls and seizures, injunctions, operating restrictions, refusal to permit the import or export of products, and/or criminal prosecutions and penalties.

Similarly, our commercial activities will be subject to comprehensive compliance obligations under state and federal reimbursement, Sunshine Act, anti-kickback and government pricing regulations. If we make false price reports, fail to implement adequate compliance controls or our employees violate the laws and regulations governing relationships with health care providers, we could also be subject to substantial fines and penalties, criminal prosecution and debarment or exclusion from participation in the Medicare, Medicaid, or other government reimbursement programs. Additionally, we may be subject to federal and state health information privacy, security and data breach notification laws, which govern the collection, use, disclosure and protection of health-related and other personal information. State laws may be more stringent, broader in scope or offer greater individual rights with respect to protected health information than federal privacy laws, and state laws may differ from each other, which may complicate compliance efforts.

Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance can also result in significant financial penalties. Similarly, failure to comply with the EU requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

In addition, the FDA’s policies may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.

We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. For example, certain policies of the current administration may impact our business and industry. Namely, the current administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. It is difficult to predict how these Executive Orders will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

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If third-party payers do not adequately reimburse customers for any of our approved products, they might not be purchased or used, and our revenue and profits will not develop or increase.

Our revenue and profits will depend heavily upon the availability of adequate reimbursement for the use of our approved product candidates from governmental and other third-party payers, both in the United States and in foreign markets. Reimbursement by a third-party payer may depend upon a number of factors, including the third-party payer’s determination that use of a product is:

•a covered benefit under its health plan;

•safe, effective and medically necessary;

•appropriate for the specific patient;

•cost-effective; and

•neither experimental nor investigational.

Obtaining coverage and reimbursement approval for a product from each government or other third-party payer is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to each payer. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. There is substantial uncertainty whether any particular payer will reimburse the use of any product incorporating new technology. Even when a payer determines that a product is eligible for reimbursement, the payer may impose coverage limitations that preclude payment for some uses that are approved by the FDA or comparable authority. Moreover, eligibility for coverage does not imply that any product will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our costs. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for lower-cost products that are already reimbursed, may be incorporated into existing payments for other products or services, and may reflect budgetary constraints and/or imperfections in Medicare, Medicaid or other data used to calculate these rates. Net prices for products may be reduced by mandatory discounts or rebates required by government health care programs or by any future relaxation of laws that restrict imports of certain medical products from countries where they may be sold at lower prices than in the United States.

There have been, and we expect that there will continue to be, federal and state proposals to constrain expenditures for medical products and services, which may affect payments for our products. The Centers for Medicare and Medicaid Services, or CMS, frequently change product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values. Third-party payers often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and both CMS and other third-party payers may have sufficient market power to demand significant price reductions. Due in part to actions by third-party payers, the health care industry is experiencing a trend toward containing or reducing costs through various means, including lowering reimbursement rates, limiting therapeutic class coverage and negotiating reduced payment schedules with service providers for drug products.

We also anticipate that application of the existing and evolving reimbursement regimes to biosimilar products will be somewhat uncertain. In the 2016 Physician Fee Schedule Final Rule, CMS made it clear that the payment amount for a biosimilar is based on the average sales price of all products included within the same billing and payment code. In general, this means that CMS will group biosimilar products that rely on a common reference product’s biologics license application into the same payment calculation, and these products will share a common payment limit and billing code. In the 2018 Physician Fee Schedule Final Rule, CMS reversed course and instead of classifying biosimilars with the same reference product in the same Healthcare Common Procedural System (“HCPCS”) code, CMS will establish a unique code for each biosimilar product; and instead of calculating a single blended payment rate, starting January 1, 2018, CMS calculates a payment rate specific to each biosimilar product. In addition, for qualifying biosimilars, instead of considering only the first biosimilar product for the reference product for OPPS pass-through payment status, each biosimilar is now eligible. It is unclear what effect, if any, CMS's changes this will have on private payers. Reimbursement uncertainty could adversely impact market acceptance of biosimilar products.

Our inability to promptly obtain coverage and profitable reimbursement rates from government-funded and private payers for our products could have a material adverse effect on our operating results and our overall financial condition.

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Federal legislation will increase the pressure to reduce prices of pharmaceutical products paid for by Medicare or may otherwise seek to limit healthcare costs, either of which could adversely affect our revenue, if any.

Healthcare reform legislation known as the Affordable Care Act that was enacted in 2010 could significantly change the United States health care system and the reimbursement of products. A primary goal of the law is to reduce or limit the growth of health care costs, which could change the market for pharmaceuticals and biological products. The law contains provisions that will affect companies in the pharmaceutical industry and other healthcare-related industries by imposing additional costs and changes to business practices. Provisions affecting pharmaceutical companies include an increase to the mandatory rebates for pharmaceutical products sold into the Medicaid program, an extension of the rebate requirement to pharmaceutical products used in risk-based Medicaid managed care plans, an extension of mandatory discounts for pharmaceutical products sold to certain critical access hospitals, cancer hospitals and other covered entities, and discounts and fees applicable to brand-name pharmaceutical products. Although many of these provisions may not apply directly to us, they may change business practices in our industry and, assuming our products are approved for commercial sale, such changes could adversely impact our profitability.

In 2017, members of Congress and the President sought to repeal and replace the Affordable Care Act, and, while those efforts did not succeed, it is possible that similar efforts will be made in the future. Recently, the Tax Cuts and Jobs Act, or Tax Act, was enacted, which, among other things, removes penalties for not complying with the Affordable Care Act’s individual mandate to carry health insurance. It is uncertain whether regulatory changes to the implementation of the Affordable Care Act will restrict patient access to affordable insurance and impact their access to novel, biosimilar and complex generic products. The full effects of any repeal and replacement of the Affordable Care Act, or regulatory changes to its implementation cannot be known until a new law is implemented through regulations or guidance is issued by the Centers for Medicare & Medicaid Services, or CMS, and other federal and state health care agencies. Any legislative or regulatory changes could have a material adverse effect on our business, financial condition and potential profitability. In addition, litigation may prevent some or all of the legislation from taking effect. For example, on December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well. While the Trump Administration and the CMS have both stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent appeals, if any, will impact the law. In 2019 and beyond, we may face additional uncertainties as a result of likely federal and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the Affordable Care Act. There is no assurance that the Affordable Care Act, as amended in the future, will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.

Moreover, increasing efforts by governmental and third-party payers, in the United States and abroad, to cap or reduce healthcare costs or introduce price controls or price negotiation may cause the government or other organizations to limit both coverage and level of reimbursement for approved products and, as a result, they may not cover or provide adequate payment for our products and product candidates. Regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. We expect to experience pricing pressures in connection with the sale of any of our products and product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

Lastly, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for medical products. Individual states in the United States have also become increasingly aggressive active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

All of such measures may reduce demand for our products or put pressure on our product pricing, which could negatively affect our business, results of operations and financial condition.

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Our ability to use net operating losses and research and development credits to offset future taxable income may be subject to certain limitations.

As of December 31, 2019, we had federal and state net operating loss carryforwards of approximately $785.0 million and $766.0 million, respectively. Our net operating loss carryforwards generated before January 1, 2018 are subject to expiration and will expire at various dates through 2038. As of December 31, 2019, we also had federal and state research and development and other tax credit carryforwards, including the orphan drug credit, of approximately $31.6 million and $8.1 million, respectively, available to reduce future tax liabilities. The federal and state research and development and other tax credit carryforwards expire at various dates through 2039, while the orphan drug credit does not expire. These net operating loss and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities. In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses or tax credits, or NOLs or credits, to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs or credits could be further limited by Sections 382 and 383 of the Code. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. The reduction of the corporate tax rate under the Tax Act may cause a reduction in the economic benefit of our net operating loss carryforwards and other deferred tax assets available to us. Furthermore, under the Tax Act, although the treatment of tax losses generated before December 31, 2017 has generally not changed, tax losses generated in calendar year 2018 and beyond will only be able to offset 80% of taxable income. This change may require us to pay federal income taxes in future years despite generating a loss for federal income tax purposes in prior years.

Foreign governments tend to impose strict price or reimbursement controls, which may adversely affect our revenue, if any.

In some foreign countries, particularly the countries of the European Union, the pricing and/or reimbursement of prescription pharmaceuticals are subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.

Our research and development involves, and may in the future involve, the use of hazardous materials and chemicals and certain radioactive materials and related equipment. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. Insurance may not provide adequate coverage against potential liabilities, and we do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

Risks Relating to Competition

Competition in the biotechnology and pharmaceutical industries is intense, and if we are unable to compete effectively, our financial results will suffer.

The markets in which we intend to compete are undergoing, and are expected to continue to undergo, rapid and significant technological change. We expect competition to intensify as technological advances are made or new biotechnology products are introduced. New developments by competitors may render our current or future product candidates and/or technologies non-competitive, obsolete or not economical. Our competitors’ products may be more efficacious or marketed and sold more effectively than any of our products.

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Many of our competitors have:

•significantly greater financial, technical and human resources than we have at every stage of the discovery, development, manufacturing and commercialization process;

•more extensive experience in commercializing generic drugs, biosimilars and novel therapeutics, conducting nonclinical studies, conducting clinical trials, obtaining regulatory approvals, challenging patents and manufacturing and marketing pharmaceutical products;

•products that have been approved or are in late stages of development; and

•collaborative arrangements in our target markets with leading companies and/or research institutions.

We face, and will continue to face, competition with regard to our products and, if approved, our product candidates, based on many different factors, including:

•the safety and effectiveness of our products;

•with regard to our generic products and our generic and biosimilar product candidates, the differential availability of clinical data and experience and willingness of physicians, payers and formularies to rely on biosimilarity data;

the timing and scope of regulatory approvals for these products and regulatory opposition to any product approvals;

•the availability and cost of manufacturing, marketing, distribution and sales capabilities;

•the effectiveness of our marketing, distribution and sales capabilities;

•the price of our products;

•the availability and amount of discounts, rebates and third-party reimbursement for our products; and

•the strength of our patent positions.

Our competitors may develop or commercialize products with significant advantages in regard to any of these factors. Our competitors may therefore be more successful in commercializing their products than we are, which could adversely affect our competitive position and business.

If other generic versions of the brand name drugs, or other biosimilars of the reference products, for which we have products or product candidates, including GLATOPA 20 mg/mL, GLATOPA 40 mg/mL and M710, are approved and successfully commercialized, our business would suffer.

Pricing and market share of generic and biosimilar products may decline, often dramatically, as other generics or biosimilars of the same brand name drug or reference product, respectively, enter the market. Competing generics include brand name manufacturers’ “authorized generics” of their own brand name products. Generally, earlier-to-market generics and biosimilars are better able to gain significantly greater market share than later-to-market competing generics and biosimilars, respectively. Accordingly, revenue and profits from our generic products and, if approved, our generic and biosimilar product candidates, may be significantly reduced based on the timing and number of competing generics and biosimilars, respectively. We expect our generic products and, if approved, certain of our generic and biosimilar product candidates may face intense and increasing competition from other generics and biosimilars. For example, in October 2017, Mylan N.V. announced the launch of its generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL. Following Mylan N.V.’s entry into the market, Sandoz has defended GLATOPA’s share of the 20 mg/mL glatiramer acetate injection market by using one or more contracting strategies, including but not limited to, lowering its GLATOPA 20 mg/mL price or increasing the discounts or rebates it offers for GLATOPA 20 mg/mL, which has decreased contractual profit share revenue. Since Sandoz’ launch of GLATOPA 40mg/mL in February 2018, Sandoz has encountered aggressive pricing and contracting tactics from competitors and as a result we expect modest sales for the product in the future. In addition, several other companies have submitted ANDAs to the FDA for generic versions of COPAXONE. A launch of one or more additional generic versions of COPAXONE could further reduce anticipated revenue from GLATOPA 20 mg/mL and GLATOPA 40 mg/mL.

In addition, the first biosimilar determined to be interchangeable with a particular reference product for any condition of use is eligible for a period of market exclusivity that delays an FDA determination that a second or subsequent biosimilar product is interchangeable with that reference product for any condition of use until the earlier of: (1) one year after the first

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commercial marketing of the first interchangeable product; (2) 18 months after resolution of a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product, based on a final court decision regarding all of the patents in the litigation or dismissal of the litigation with or without prejudice; (3) 42 months after approval of the first interchangeable product, if a patent infringement suit instituted under 42 U.S.C. § 262(l)(6) against the applicant that submitted the application for the first interchangeable product is still ongoing; or (4) 18 months after approval of the first interchangeable product if the applicant that submitted the application for the first interchangeable product has not been sued under 42 U.S.C. § 262(l)(6). A determination that another company’s product is interchangeable with EYLEA prior to approval of M710 may therefore delay any determination that our product is interchangeable with the reference product, which may materially adversely affect our results of operations and delay, prevent or limit our ability to generate revenue.

If an alternative version of a reference product, such as COPAXONE or EYLEA , is developed that has a new product profile and labeling, the alternative version of the product could significantly reduce the market share of the original reference product, and may cause a significant decline in sales or potential sales of our corresponding generic or biosimilar product.

Brand companies may develop alternative versions of a reference product as part of a life cycle extension strategy, and may obtain approval of the alternative version under a supplemental new drug application, for a drug, or supplemental biologics license application, for a biologic. The alternative version may offer patients added benefits such as a more convenient form of administration or dosing regimen. Should the brand company succeed in obtaining an approval of an alternative product, it may capture a significant share of the collective reference product market and significantly reduce the market for the original reference product and thereby the potential size of the market for our generic or biosimilar products. For example, as of June 30, 2020, Teva’s three-times-weekly COPAXONE 40 mg/mL and Mylan N.V.’s three-times-weekly generic equivalent product accounted for approximately 85% of the overall U.S. glatiramer acetate injection market (20 mg/mL and 40 mg/mL) based on volume prescribed. As a result, the market potential for GLATOPA 20 mg/mL has decreased, and may decrease further as additional patients are converted from once-daily COPAXONE or any generic equivalent to three-times-weekly COPAXONE or generic equivalent. In addition, the alternative product may be protected by additional patent rights as well as have the benefit, in the case of drugs, of an additional three years of FDA marketing approval exclusivity, which would prohibit a generic version of the alternative product for some period of time. As a result, our business, including our financial results and our ability to fund future discovery and development programs, would suffer.

If efforts by manufacturers of reference products to delay or limit the use of generics or biosimilars are successful, our sales of generic and biosimilar products may suffer.

Many manufacturers of branded products have increasingly used legislative, regulatory and other means to delay regulatory approval and to seek to restrict competition from manufacturers of generic drugs and biosimilars. These efforts have included:

•settling patent lawsuits with generic or biosimilar companies, resulting in such patents remaining an obstacle for generic or biosimilar approval by others;

•seeking to restrict biosimilar commercialization options by seeking to delay the right to adjudicate patent rights under Section 351(l) of the Biologics Price, Competition and Innovation Act or restricting access by biosimilar and generic applicants by litigation or legislative action to the use of inter partes patent review proceedings at the U.S. Patent Office to challenge invalid biologic patent rights;

•settling paragraph IV patent litigation with generic companies to prevent the expiration of the 180-day generic marketing exclusivity period or to delay the triggering of such exclusivity period;

•submitting Citizen Petitions to request the FDA Commissioner to take administrative action with respect to prospective and submitted generic drug or biosimilar applications or to influence the adoption of policy with regard to the submission of biosimilar applications;

•appealing denials of Citizen Petitions in United States federal district courts and seeking injunctive relief to reverse approval of generic drug or biosimilar applications;

•restricting access to reference products for equivalence and biosimilarity testing that interfere with timely generic and biosimilar development plans, respectively;

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•conducting medical education with physicians, payers and regulators that claim that generic or biosimilar products are too complex for generic or biosimilar approval and influence potential market share;

•seeking state law restrictions on the substitution of generic and biosimilar products at the pharmacy without the intervention of a physician or through other restrictive means such as excessive recordkeeping requirements or patient and physician notification;

•seeking federal or state regulatory restrictions on the use of the same non-proprietary name as the reference brand product for a biosimilar or interchangeable biologic;

•seeking federal reimbursement policies that do not promote adoption of biosimilars and interchangeable biologics;

•seeking changes to the United States Pharmacopeia, an industry recognized compilation of drug and biologic standards;

•pursuing new patents for existing products or processes which could extend patent protection for a number of years or otherwise delay the launch of generic drugs or biosimilars; and

•influencing legislatures so that they attach special regulatory exclusivity or patent extension amendments to unrelated federal legislation.

If these efforts to delay or block competition are successful, we may be unable to sell our generic and biosimilar products, if approved, which could have a material adverse effect on our sales and profitability.

If the market for a reference product, such as COPAXONE or EYLEA, significantly declines, sales or potential sales of our corresponding generic and biosimilars product and product candidates may suffer and our business would be materially impacted.

Competition in the biotechnology industry is intense. Reference products face competition on numerous fronts as technological advances are made or new products are introduced that may offer patients a more convenient form of administration, increased efficacy or improved safety profile. As new products are approved that compete with the reference product to our generic products and product candidates and our biosimilar product candidates, respectively, sales of reference products and biosimilar and generics may be significantly and adversely impacted and may render the reference products obsolete.

Current injectable treatments commonly used to treat multiple sclerosis, including COPAXONE, are competing with novel therapeutic products, including oral therapies. These oral therapies may offer patients a more convenient form of administration than COPAXONE and may provide increased efficacies. If the market for the reference product is impacted, we in turn may lose significant market share or market potential for our generic or biosimilar products and product candidates, and the value for our generic or biosimilar pipeline could be negatively impacted. As a result, our business, including our financial results and our ability to fund future discovery and development programs, would suffer.

Risks Relating to Intellectual Property

If we are not able to obtain and enforce patent protection for our discoveries, our ability to successfully commercialize our product candidates will be harmed, and we may not be able to operate our business profitably.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under the patent and other intellectual property laws of the United States and other countries, so that we can prevent others from using our inventions and proprietary information. Because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, and because publications of discoveries in scientific literature lag behind actual discoveries, we cannot be certain that we were the first to make the inventions claimed in issued patents or pending patent applications, or that we were the first to file for protection of the inventions set forth in our patent applications. As a result, we may be required to obtain licenses under third-party patents to market our proposed products. If licenses are not available to us on acceptable terms, or at all, we will not be able to market the affected products.

Assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to the patent. We may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark Office, or U.S. PTO, or become involved in opposition, derivation, reexamination, IPR, or interference proceedings challenging our patent

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rights or the patent rights of others. For example, several of our European patents are being challenged in opposition proceedings before the European Patent Office. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. This process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. The issuance of a patent does not guarantee that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties.

Our pending patent applications may not result in issued patents. The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factual considerations. The standards which the U.S. PTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical or biotechnology patents. The laws of some foreign countries do not protect proprietary information to the same extent as the laws of the United States, and many companies have encountered significant problems and costs in protecting their proprietary information in these foreign countries.

The breadth of patent claims allowed in any patents issued to us or to others may be unclear. The allowance of broader claims may increase the incidence and cost of patent interference proceedings and/or opposition proceedings, and the risk of infringement litigation. On the other hand, the allowance of narrower claims may limit the value of our proprietary rights. Our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage. Moreover, once they have issued, our patents and any patent for which we have licensed or may license rights may be challenged, narrowed, invalidated or circumvented. If our patents are invalidated or otherwise limited, other companies will be better able to develop products that compete with ours, which could adversely affect our competitive business position, business prospects and financial condition.

We also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. If any trade secret, know-how or other technology not protected by a patent were to be disclosed to or independently developed by a competitor, our business and financial condition could be materially adversely affected.

Third parties may allege that we are infringing their intellectual property rights, forcing us to expend substantial resources in resulting litigation, the outcome of which would be uncertain. Any unfavorable outcome of such litigation could have a material adverse effect on our business, financial position and results of operations.

The issuance of our own patents does not guarantee that we have the right to practice the patented inventions. Third parties may have blocking patents that could be used to prevent us from marketing our own patented product and practicing our own patented technology.

If any party asserts that we are infringing its intellectual property rights or that our creation or use of proprietary technology infringes upon its intellectual property rights, we might be forced to incur expenses to respond to and litigate the claims. Furthermore, we may be ordered to pay damages, potentially including treble damages, if we are found to have willfully infringed a party’s patent rights. In addition, if we are unsuccessful in litigation, or pending the outcome of litigation, a court could issue a temporary injunction or a permanent injunction preventing us from marketing and selling the patented drug or other technology for the life of the patent that we have been alleged or deemed to have infringed. Litigation concerning intellectual property and proprietary technologies is widespread and can be protracted and expensive, and can distract management and other key personnel from performing their duties for us.

Any legal action against us or our collaborators claiming damages and seeking to enjoin any activities, including commercial activities relating to the affected products, and processes could, in addition to subjecting us to potential liability for damages, require us or our collaborators to obtain a license in order to continue to manufacture or market the affected products and processes. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, some licenses may be non-exclusive, and therefore, our competitors may have access to the same technology licensed to us.

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If we fail to obtain a required license or are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations.

If we remain involved in patent litigation or other proceedings to determine or enforce our intellectual property rights, we could incur substantial costs or experience delays that could adversely affect our business.

We may need to continue to resort to litigation to enforce a patent issued to us or to determine the scope and validity of a third-party patent or other proprietary rights such as trade secrets in jurisdictions where we intend to market our products, including the United States, the European Union, and many other foreign jurisdictions. The cost to us of any litigation or other proceeding relating to determining the validity of intellectual property rights, or any delays to the development of our product candidates resulting from such litigation or other proceeding, even if resolved in our favor, could be substantial and could divert our management’s efforts. Some of our competitors may be able to sustain the costs and resulting development delays associated with complex patent litigation more effectively than we can because they may have substantially greater resources. Moreover, the failure to obtain a favorable outcome in any litigation in a jurisdiction where there is a claim of patent infringement could significantly delay the marketing of our products in that particular jurisdiction and could ultimately lead to a decision to discontinue a program. Counterclaims for damages and other relief may be triggered by such enforcement actions. The costs, uncertainties and counterclaims resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

We in-license a portion of our proprietary technologies, and if we fail to comply with our obligations under any of the related agreements, we could lose license rights that are necessary to develop our product candidates.

We are a party to and rely on a number of in-license agreements with third parties, such as those with the Massachusetts Institute of Technology and Rockefeller University, which give us rights to intellectual property that may be necessary for certain parts of our business. In addition, we expect to enter into additional licenses in the future. Our current in-license arrangements impose various diligence, development, royalty and other obligations on us. If we breach our obligations with regard to our exclusive in-licenses, they could be converted to non-exclusive licenses or the agreements could be terminated, which would result in our being unable to develop, manufacture and sell products that are covered by the licensed technology.

Risks Relating to Our Dependence on Third Parties

The 2006 Sandoz Collaboration Agreement is important to our business. If Sandoz AG fails to adequately perform under this collaboration, or if we or Sandoz AG terminate all or a portion of this collaboration, the commercialization of some of our products and product candidates, including GLATOPA 20 mg/mL and GLATOPA 40 mg/mL, would be impacted, delayed or terminated and our business would be adversely affected.

Either we or Sandoz AG may terminate the 2006 Sandoz Collaboration Agreement for material uncured breaches or certain events of bankruptcy or insolvency by the other party. For some of the products, for any termination of the 2006 Sandoz Collaboration Agreement other than a termination by Sandoz AG due to our uncured breach or bankruptcy, or a termination by us alone due to the need for clinical trials, we will be granted an exclusive license under certain intellectual property of Sandoz AG to develop and commercialize the particular product. In that event, we would need to expand our internal capabilities or enter into another collaboration, which could cause significant delays that could prevent us from completing the development and commercialization of such product. For some products, if Sandoz AG terminates the 2006 Sandoz Collaboration Agreement due to our uncured breach or bankruptcy, or if there is a termination by us alone due to the need for clinical trials, Sandoz AG would retain the exclusive right to develop and commercialize the applicable product. In that event, we would no longer have any influence over the development or commercialization strategy of such product. In addition, for other products, if Sandoz AG terminates due to our uncured breach or bankruptcy, Sandoz AG retains a right to license certain of our intellectual property without the obligation to make any additional payments for such licenses. For certain products, if the 2006 Sandoz Collaboration Agreement is terminated other than due to our uncured breach or bankruptcy, neither party will have a license to the other party’s intellectual property. In that event, we would need to expand our internal capabilities or enter into another collaboration, which, if we were able to do so, could cause significant delays that could prevent us from completing the development and commercialization of such product. Any alternative collaboration could also be on less favorable terms to us. Accordingly, if the 2006 Sandoz Collaboration Agreement is terminated, our introduction of certain products may be significantly delayed, or our revenue may be significantly reduced, either of which could have a material adverse effect on our business.

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Under our collaboration agreement, we are dependent upon Sandoz AG to successfully continue to commercialize GLATOPA 20 mg/mL and GLATOPA 40 mg/mL. We do not fully control Sandoz AG’s commercialization activities or the resources it allocates to our products. While the 2006 Sandoz Collaboration Agreement contemplates joint decision making and alignment, our interests and Sandoz AG’s interests may differ or conflict from time-to-time or we may disagree with Sandoz AG’s level of effort or resource allocation. Sandoz AG may internally prioritize our products and product candidates differently than we do or it may fail to allocate sufficient resources to effectively or optimally commercialize our products and alignment may only be achieved through dispute resolution. In the future, we and Sandoz may compete on other products outside of our collaboration, which could negatively impact our ability to work effectively with one another. If these events were to occur, our business would be adversely affected.

The Mylan Collaboration Agreement is important to our business. If we or Mylan fail to adequately perform under the Agreement, or if we or Mylan terminate the Mylan Collaboration Agreement, the development and commercialization of our biosimilar candidate, M710, could be delayed or terminated and our business would be adversely affected.

The Mylan Collaboration Agreement may be terminated by either party for breach by, or bankruptcy of, the other party; for its convenience; or for certain activities involving competing products or the challenge of certain patents. Other than in the case of a termination for convenience, the terminating party shall have the right to continue the development, manufacture and commercialization of the terminated products in the terminated countries. In the case of a termination for convenience, the other party shall have the right to continue. If a termination occurs, the licenses granted to the non-continuing party for the applicable product will terminate for the terminated country. Subject to certain terms and conditions, the party that has the right to continue the development or commercialization of a given product candidate may retain royalty-bearing licenses to certain intellectual property rights, and rights to certain data, for the continued development and sale of the applicable product in the country or countries for which termination applies. In October 2018, we announced that we would notify Mylan of our intention to discontinue participation in five of our collaboration programs and will only continue to advance our late-stage biosimilar candidate M710, our proposed biosimilar to EYLEA. We delivered a formal notice of this partial termination to Mylan in November 2018, which became effective as of January 31, 2019.

If the Mylan Collaboration Agreement were terminated and we had the right to continue the development and commercialization of M710, to fully exercise that right, we would need to expand our internal capabilities or enter into another collaboration, which, if we were able to do so, could cause significant delays that could prevent us from commercializing those products. Any alternative collaboration could be on less favorable terms to us. In addition, we may need to seek additional financing to support the development and commercialization of M710, or alternatively we may decide to discontinue M710, which could have a material adverse effect on our business. If the Mylan Collaboration Agreement were terminated with respect to M710 and Mylan had the right to continue the development and commercialization of such product, we would have no influence or input into those activities.

Under the Mylan Collaboration Agreement, we are dependent upon Mylan to successfully perform its responsibilities and activities, including conducting clinical trials for certain products and leading the commercialization of products. We do not control Mylan’s execution of its responsibilities, including commercialization activities, or the resources it allocates to our products. Our interests and Mylan’s interests may differ or conflict from time to time, or we may disagree with Mylan’s level of effort or resource allocation. Mylan may internally prioritize our products and product candidates differently than we do or it may not allocate sufficient resources to effectively or optimally execute its responsibilities or activities. Competition between us and Mylan on other products outside of our collaboration, such as our respective generic equivalents of COPAXONE, could negatively impact our ability to work effectively with one another. If these events were to occur, our business would be adversely affected.

The CSL License Agreement is important to our business. If we or CSL fail to adequately perform under the Agreement, or if we or CSL terminate the Agreement, the development and commercialization of our novel therapeutic, M230, could be delayed or terminated and our business would be adversely affected.

CSL may terminate the CSL License Agreement on a product-by-product basis subject to notice periods and certain circumstances related to clinical development. We may terminate the CSL License Agreement under certain circumstances related to the development of M230 and if no activities are being conducted under the CSL License Agreement. Either party may terminate the Agreement on a product-by-product basis if certain patent challenges are made, on a product-by-product for material breaches, or due to the other party’s bankruptcy. Upon termination of the CSL License Agreement, subject to certain exceptions, the licenses granted under the CSL License Agreement terminate. In addition, dependent upon the circumstances under which the CSL License Agreement is terminated, we or CSL have the right to continue the research, development, and commercialization of terminated products, including rights to certain data, for the continued development and sale of terminated products and, subject to certain limitations, obligations to make sales-based royalty payments to the other party.

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If the CSL License Agreement were terminated and we had the right to continue the research, development, and commercialization of one or more terminated products, to fully exercise that right, we would need to expand our internal capabilities or enter into another collaboration, which, if we were able to do so, could cause significant delays that could prevent us from commercializing those products. Any alternative collaboration could be on less favorable terms to us. In addition, we may need to seek additional financing to support the research, development and commercialization of any terminated products, or alternatively we may decide to discontinue one or more terminated products, which could have a material adverse effect on our business. If the CSL License Agreement were terminated and CSL had the right to continue the development and commercialization of one or more terminated products, we would have no influence or input into those activities.

Under the CSL License Agreement, we are dependent upon CSL to successfully perform its responsibilities and activities, including the research, development and commercialization of M230 and research on other Fc multimer proteins. We do not control CSL’s execution of its responsibilities or the resources it allocates to our products and product candidates. Our interests and CSL’s interests may differ or conflict from time to time, or we may disagree with CSL’s level of effort or resource allocation. CSL may internally prioritize our products and product candidates differently than we do or it may not allocate sufficient resources to effectively or optimally execute its responsibilities or activities. If these events were to occur, our business would be adversely affected.

We may need to enter into additional strategic alliances with other companies that can provide capabilities and funds for the development and commercialization of our product candidates. If we are unsuccessful in forming or maintaining these arrangements on favorable terms, we may have to alter our development and commercialization plans, and our business could be adversely affected.

Because we have limited internal capabilities for late-stage product development, manufacturing, sales, marketing and distribution, we may need to enter into strategic alliances with other companies in addition to our current alliances with Sandoz, Mylan and CSL. In such alliances, we would expect our collaboration partners to provide substantial capabilities in clinical development, manufacturing, regulatory affairs, sales and marketing. We may not be successful in entering into any such alliances as a result of many factors including the following:

•competition in seeking appropriate collaborators;

•restrictions on future strategic alliances in existing strategic alliance agreements;

•a reduced number of potential collaborators due to recent business combinations of large pharmaceutical companies;

•inability to negotiate strategic alliances on a timely basis; and

•inability to negotiate strategic alliances on acceptable terms.

Even if we do succeed in securing such alliances, we may not be able to maintain them or they may be unsuccessful. We may be unable to maintain a strategic alliance if the development or approval of a product candidate that is the subject of the alliance is delayed or sales of an approved product that is the subject of the alliance are disappointing. The success of our collaboration agreements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Any such alliance would entail numerous operational and financial risks, including significant integration and implementation challenges that could disrupt our business and divert our management's time and attention. If we are unable to secure or maintain such alliances or if such alliances are unsuccessful, we may not have the capabilities necessary to continue or complete development of our product candidates and bring them to market, which may have an adverse effect on our business.

In addition to product development and commercialization capabilities, we may depend on our alliances with other companies to provide substantial additional funding for development and potential commercialization of our product candidates. These arrangements may require us to relinquish rights to some of our technologies, product candidates or products which we would otherwise pursue on our own. These alliances may also involve the other company purchasing a significant number of shares of our common stock. Future alliances may involve similar or greater sales of equity, debt financing or other funding arrangements. We may not be able to obtain funding on favorable terms from these alliances, and if we are not successful in doing so, we may not have sufficient funds to develop a particular product candidate internally or to bring product candidates to market. Failure to bring our product candidates to market will prevent us from generating sales revenue, and this may substantially harm our business. Furthermore, any delay in entering into these alliances could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market. As a result, our business and operating results may be adversely affected.

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If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate product revenue.

We do not have a sales organization and have no experience as a company in the sale, marketing or distribution of pharmaceutical products. There are risks involved with establishing our own sales and marketing capabilities, as well as entering into arrangements with third parties to perform these services. For example, developing a sales force is expensive and time consuming and could delay any product launch. In addition, to the extent that we enter into arrangements with third parties to perform sales, marketing or distribution services, we will have less control over sales of our products and our future revenue would depend heavily on the success of the efforts of these third parties.

A significant change in the business operations of, a change in the financial condition of, a change in senior executive management within, or a change in control of our third-party collaborators, or any future collaboration partners or third party manufacturers could have a negative impact on our business operations.

Since many of our product candidates are developed under collaborations or licenses with third parties, we do not have sole decision making authority with respect to commercialization or development of those product candidates. We have built relationships and work collaboratively with our third-party collaborators and manufacturers to ensure the success of our development and commercialization efforts. A significant change in the senior management team, a change in the financial condition or a change in the business operations, including a change in control or internal corporate restructuring, of any of our collaboration partners or third-party manufacturers, could result in delayed timelines on our products. In addition, we may have to re-establish working relationships and familiarize new counterparts with our products and business. Any such change may result in the collaboration partner or third party manufacturer internally re-prioritizing our programs or decreasing resources or funding allocated to support our programs. Changes with respect to any of our collaborators may negatively impact our business operations.

General Company Related Risks

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation and our by-laws may delay or prevent an acquisition of us or a change in our management. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions include:

•a classified board of directors;

•a prohibition on actions by our stockholders by written consent; and

•limitations on the removal of directors.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibit a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Finally, these provisions establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even if the offer may be considered beneficial by some stockholders.

Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.

The stock market in general and the market prices for securities of biotechnology companies in particular have experienced extreme volatility that often has been unrelated or disproportionate to the operating performance of these companies. The trading price of our common stock has been, and is likely to continue to be, volatile. Furthermore, our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:

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•delays in achievement of, or failure to achieve, program milestones that are associated with the valuation of our company or significant milestone revenue;

•failure of GLATOPA 20 mg/mL to sustain or GLATOPA 40 mg/mL to achieve profitable sales or market share that meet expectations of securities analysts;

•litigation involving our company or our general industry or both;

•a settlement related to any case; or a decision in favor of third parties in antitrust litigation filed against us;

•announcements by other companies regarding the status of their ANDAs for generic versions of COPAXONE;

•marketing and/or launch of other companies’ generic versions of COPAXONE, such as Mylan N.V.'s October 2017 launch of its generic equivalents of COPAXONE 20 mg/mL and 40 mg/mL;

•adverse FDA decisions regarding the development requirements for one of our biosimilar product candidates or failure of our other product applications to meet the requirements for regulatory review and/or approval;

•results or delays in our or our competitors’ clinical trials or regulatory filings;

•enactment of legislation that repeals the law enacting the biosimilar regulatory approval pathway or amends the law in a manner that is adverse to our biosimilar development strategy;

•failure to demonstrate biosimilarity or interchangeability with respect to our biosimilar product candidates such as M710;

•demonstration of or failure to demonstrate the safety and efficacy for our novel product candidates;

•our inability to manufacture any products in conformance with cGMP or in sufficient quantities to meet the requirements for the commercial sale of the product or to meet market demand;

•failure of any of our product candidates, if approved, to achieve commercial success;

•the discovery of unexpected or increased incidence in patients’ adverse reactions to the use of our products or product candidates or indications of other safety concerns;

•developments or disputes concerning our patents or other proprietary rights;

•changes in estimates of our financial results or recommendations by securities analysts;

•termination of any of our product development and commercialization collaborations, or changes in our development or commercialization strategy for wholly-owned product candidates;

•significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

•investors’ general perception of our company, our products, the economy and general market conditions;

•rapid or disorderly sales of stock by holders of significant amounts of our stock; or

•significant fluctuations in the price of securities generally or biotechnology company securities specifically.

If any of these factors cause an adverse effect on our business, results of operations or financial condition, the price of our common stock could fall and investors may not be able to sell their common stock at or above their respective purchase prices.

We could be subject to class action litigation due to stock price volatility, which, if it occurs, will distract our management and could result in substantial costs or large judgments against us.

The stock market in general has recently experienced significant price and volume fluctuations. In addition, the market prices of securities of companies in the biotechnology industry have been extremely volatile and have experienced fluctuations that have often been unrelated or disproportionate to the operating performance of or other events at these companies. These fluctuations could adversely affect the market price of our common stock. In the past, securities class action litigation has often been brought against companies following periods of volatility in the market prices of their securities. We may be the target of

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similar litigation in the future. Securities litigation could result in substantial costs and divert our management’s attention and resources, which could cause serious harm to our business, operating results and financial condition.

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Item 6. EXHIBITS

Incorporated by Reference to

Exhibit
Number

Description

Form or
Schedule

Exhibit
No.

Filing
Date
with SEC

SEC File
Number

3.1

Third Amended and Restated Certificate of Incorporation.

S-3

3.1

4/30/2013

333-188227

3.2

Certificate of Amendment to Third Amended and Restated Certificate of Incorporation of Momenta Pharmaceuticals, Inc.

8-K

3.1

1/30/2019

000-50797

3.3

Fourth Amended and Restated By-Laws of the Registrant, adopted on March 14, 2017.

8-K

3.1

3/17/2017

000-50797

*#10.1

Momenta Pharmaceuticals, Inc. 2013 Incentive Award Plan , as a m ended and restated.

*10.2

Agreement dated July 10, 2020, by and between Momenta Pharmaceuticals, Inc. and Sandoz AG

*31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

**32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS

Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are not embedded within the Inline XBRL document.

*101.SCH

Inline XBRL Taxonomy Extension Schema Document.

*101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

*101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

*101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

*104

Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

# Management contract or compensatory plan or arrangement.

The following materials from the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at June 30, 2020 and December 31, 2019, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019, (iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019, (iv) the Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 30, 2020 and 2019, and (v) Notes to Unaudited, Condensed Consolidated Financial Statements.

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SIGNATURES

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


	Momenta Pharmaceuticals, Inc.

Date: August 10, 2020	By:	/s/ CRAIG A. WHEELER
		Craig A. Wheeler, President and Chief Executive Officer
		(Principal Executive Officer)


Date: August 10, 2020	By:	/s/ YOUNG KWON
		Young Kwon, Chief Financial and Business Officer
		(Principal Financial Officer)


Date: August 10, 2020	By:	/s/ AGNIESZKA CIEPLINSKA
		Agnieszka Cieplinska, Chief Accounting Officer
		(Principal Accounting Officer)

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Momenta Pharmaceuticals (MNTA) 10-Q2020 Q2 Quarterly report

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