Myovant Sciences Ltd. - Annual Report: 2020 (Form 10-K)

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

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

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

•	the anticipated designs of our future clinical studies;

•	the anticipated future regulatory submissions and the timing of, and our ability to, obtain and maintain regulatory approvals for relugolix combination tablet, relugolix monotherapy tablet, MVT-602 and any future product candidates;

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

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

•	our ability to obtain coverage for our products if commercialized;

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

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

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

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

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

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

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

•	our ability to draw under the Loan Agreement with Sumitomo Dainippon Pharma Co., Ltd. (“Sumitomo Dainippon Pharma”);

•	our ability to raise additional capital;

•	industry trends;

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

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

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•	rapidly advance clinical development and submit regulatory filings and prepare for potential commercialization of relugolix monotherapy tablet for advanced prostate cancer;

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•	rapidly advance clinical development and submit regulatory filings and prepare for potential commercialization of relugolix combination tablet for the treatment of heavy menstrual bleeding associated with uterine fibroids and for pain associated with endometriosis;

•	expand the clinical development of relugolix for additional potential indications;

•	maximize the commercial potential of our product candidates;

•	advance clinical development of MVT-602; and

•	acquire or in-license additional clinical- or commercial-stage product candidates for the treatment of women’s health diseases or prostate cancer in a capital-efficient manner.

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•	completion of extensive nonclinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations;

•	submission to the FDA of an Investigational New Drug application (“IND”) for human clinical testing, which must become effective before human clinical studies may begin;

•	performance of adequate and well-controlled human clinical studies in accordance with Good Clinical Practice (“GCP”) requirements to establish the safety and efficacy of the drug for each proposed indication;

•	submission of an NDA to the FDA for commercial marketing, or of a supplemental New Drug Application (“sNDA”) for approval of a new indication if the product is already approved for another indication;

•	satisfactory completion of an FDA pre-approval inspection of manufacturing facilities at which the active pharmaceutical ingredient (“API”) and finished drug product are produced and tested to assess compliance with current Good Manufacturing Practice (“cGMP”) requirements and selected clinical investigators or contract research organizations for their compliance with GCP;

•	if the FDA convenes an advisory committee, satisfactory completion of the advisory committee review; and

•	FDA review and approval of the NDA or sNDA.

•	Phase 1- Studies, which involve the initial introduction of the new drug product candidate into humans, are initially conducted in a limited number of subjects to assess pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence on effectiveness.

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Phase 2- Studies are conducted with groups of patients afflicted with a specified disease in order to provide enough data to evaluate the preliminary efficacy, metabolism, pharmacokinetics, dosage tolerance, and optimum dosage, and to identify common adverse effects and safety risks. Multiple Phase 2 clinical studies may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase 3 clinical studies.

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Phase 3- Phase 3 studies, also called pivotal or registration studies, are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical study sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical studies to demonstrate the efficacy of the drug. A single Phase 3 clinical study with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter study demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with a potentially serious outcome and where confirmation of the result in a second study would be practically or ethically impossible.

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•	restrictions on the marketing or manufacture of the product, complete withdrawal of the product from the market, or product recalls;

•	fines, warning letters, or holds on post-approval clinical studies;

•	refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals;

•	product seizure or detention, or refusal to permit the import or export of products; or

•	injunctions or the imposition of civil or criminal penalties.

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•	the initiation, progress, timing, costs and results of our planned and ongoing clinical studies for our product candidates;

•	the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration (the “FDA”) and comparable foreign regulatory authorities;

•	the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

•	the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or our products or any future product candidates;

•	the effect of competing technological and market developments;

•	the cost and timing of completion of commercial-scale manufacturing activities, including securing regulatory approval for commercial production;

•	the cost of establishing sales, marketing and distribution capabilities for our products in regions where we choose to commercialize our products on our own; and

•	the initiation, progress, timing and results of our commercialization of our product candidates, if approved for commercial sale.

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•	set an acceptable price for our product candidates and obtain coverage and adequate reimbursement from third-party payors;

•	establish effective sales, marketing, and distribution systems in jurisdictions around the world for our product candidates;

•	initiate and continue relationships with third-party manufacturers and have adequate commercial quantities of our product candidates manufactured at acceptable cost and quality levels, including maintaining current good manufacturing practice (“cGMP”) and Quality Systems Regulation standards required by various regulatory agencies;

•	attract and retain experienced management, employees and consultants;

•	achieve broad market acceptance of our products in the medical community and with third-party payors and consumers;

•	launch commercial sales of our products, whether alone or in collaboration with others;

•	establish the safety and efficacy of our product candidates in comparison to competing products, including through differentiated approved labeling; and

•	maintain, expand, and protect our intellectual property rights.

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•	the process by which we identify and decide to acquire product candidates may not be successful;

•	the competition to acquire or in-license promising product candidates is fierce and many of our competitors are large, multinational pharmaceutical, biotechnology and medical device companies with considerably more financial, development and commercialization resources and experience than we have;

•	potential product candidates may, upon further study during the acquisition process, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval or achieve market acceptance; and

•	potential product candidates may not be effective in treating their targeted diseases.

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•	multiple conflicting and changing laws and regulations such as tax laws, export and import restrictions, employment, immigration and labor laws, privacy and cybersecurity laws, anti-bribery and anti-corruption laws, regulatory requirements and other governmental approvals, permits and licenses;

•	different regulatory requirements for drug approvals and rules governing drug commercialization in foreign countries;

•	possible failure by us or our distributors to obtain appropriate licenses or regulatory approvals for the sale or use of our product candidates, if approved, in various countries;

•	difficulties in managing foreign operations;

•	complexities associated with managing multiple payor-reimbursement, pricing and insurance regimes or self-pay systems;

•	financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable, and exposure to foreign currency exchange rate fluctuations;

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•	reduced or no protection over intellectual property rights;

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business interruptions resulting from geopolitical actions, economic instability, or natural disasters, including, but not limited to, wars and terrorism, economic weakness, inflation, political instability in particular foreign economies and markets, boycotts, curtailment of trade, labor disputes, unexpected changes in tariffs, and other business restrictions, outbreak of disease (such as the COVID-19 pandemic), fires, earthquakes, hurricane, tornado, severe storm, power outage, system failure, typhoons or floods;

•	failure to comply with foreign laws, regulations, standards and regulatory guidance governing the collection, use, disclosure, retention, security and transfer of personal data, including the European Union General Data Protection Regulation (the “GDPR”) which introduced strict requirements for processing personal data of individuals within the European Union (the “EU”);

•	failure to comply with the Foreign Corrupt Practices Act, including its books and records provisions and its anti-bribery provisions, the United Kingdom Bribery Act 2010, and similar antibribery and anticorruption laws in other jurisdictions, for example by failing to maintain accurate information and control over sales or distributors’ activities;

•	workforce uncertainty in countries where labor unrest is more common than in the U.S.; and

•	production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad.

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•	impairment of our business reputation and significant negative media attention;

•	withdrawal of participants from our clinical studies;

•	significant costs to defend related litigation;

•	distraction of management’s attention from our primary business;

•	substantial monetary awards to patients or other claimants;

•	inability to commercialize our products or any future product candidates;

•	product recalls, withdrawals or labeling, marketing or promotional restrictions;

•	decreased demand for our products or any future product candidate, if approved for commercial sale; and

•	loss of revenue.

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•	failure to obtain regulatory approval to commence a study;

•	unforeseen safety issues;

•	lack of effectiveness during clinical studies;

•	identification of dosing issues;

•	inability to reach agreement on acceptable terms with prospective CROs and/or clinical study sites, the terms of which can be subject to extensive negotiations and may vary significantly among different CROs and clinical study sites;

•	slower than expected rates of patient recruitment and enrollment or failure to recruit suitable patients to participate in a study;

•	failure to open a sufficient number of clinical study sites;

•	unanticipated impact from changes in or modifications to clinical study design;

•	inability or unwillingness of clinical investigators or study participants to follow our clinical and other applicable protocols, including missed assessments or impeded access to study sites due to government or institutional stay-at-home or shelter-in-place measures during the COVID-19 pandemic;

•	premature discontinuation of study participants from clinical studies or missing data, including from patients unable to come to study visits during the COVID-19 pandemic;

•	failure to manufacture or release sufficient quantities of relugolix, MVT-602, estradiol, progestin or placebo or failure to obtain sufficient quantities of concomitant medication, that in each case meet our quality standards, for use in clinical studies;

•	inability to monitor patients adequately during or after treatment; or

•	inappropriate unblinding of study patients or study results.

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•	regulatory authorities may withdraw their approval of the product or require a Risk Evaluation and Mitigation Strategy (a “REMS”) (or equivalent outside the U.S.) to impose restrictions on its distribution or other risk management measures;

•	we may be required to recall a product;

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

•	we may be required to conduct post-marketing studies or clinical studies;

•	regulatory authorities may require the addition of labeling statements, such as warnings or contraindications or limit the duration of use;

•	we may be required to change the way the product is administered or to conduct additional clinical studies;

•	we may be required to repeat a nonclinical or clinical study or terminate a program, even if other studies or studies related to the program are ongoing or have been successfully completed;

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

•	we could elect to discontinue the sale of our product;

•	the product may become less competitive; and

•	our reputation may suffer.

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•	the efficacy and potential advantages compared to alternative treatments, including the convenience and ease or duration of administration;

•	the prevalence and severity of any side effects;

•	the content of the approved product label and our ability to make compelling product claims;

•	the effectiveness and adequacy of our marketing efforts, including direct-to-consumer advertising;

•	the effectiveness of sales efforts;

•	the patient out-of-pocket costs in relation to alternative treatments, including any similar generic treatments;

•	our ability to offer our products for sale at competitive prices;

•	the willingness of the potential patient population to try new therapies and of physicians to prescribe these therapies;

•	the breadth and cost of distribution support;

•	the availability of third-party payor coverage;

•	whether diagnosis and treatment rates increase for the diseases our products treat; and

•	any restrictions on the use of our product together with other medications.

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•	delay or inability to manufacture relugolix combination tablet;

•	failure of the drug substance transferred from Takeda or our other CMOs to meet our product specifications and quality requirements;

•	delay or inability to procure or expand sufficient manufacturing capacity;

•	manufacturing and product quality issues related to scale-up of manufacturing;

•	costs and validation of new equipment and facilities required for scale-up;

•	failure to comply with applicable laws, regulations, and standards, including cGMP and similar foreign standards;

•	deficient or improper record-keeping;

•	inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;

•	termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;

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reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell relugolix combination tablet, relugolix monotherapy tablet, or MVT-602, if approved, or any future product candidate in a timely fashion, in sufficient quantities or under acceptable terms;

•	lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier;

•	adverse inspection findings by the FDA or other regulatory authorities at third-party manufacturing facilities and/or failure to remediate such findings;

•	cGMP regulatory or enforcement action at our third-party manufacturing facilities that limit their ability to manufacture drug substance or drug product for commercial use;

•	operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or other regulatory sanctions related to the manufacture of another company’s products;

•	carrier disruptions or increased costs that are beyond our control; and

•	failure to deliver our products under specified storage conditions and in a timely manner.

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•	inability to obtain additional funding, or investor perception that we may be unable to obtain additional funding or funding on desirable terms;

•	any delay in the commencement, enrollment, and ultimate completion of our clinical studies;

•	actual or anticipated results of clinical studies of any of our product candidates or those of our competitors;

•	any delay in submitting an NDA or similar application for any of our product candidates and any adverse development or perceived adverse development with respect to the FDA or other regulatory authority’s review of that NDA or similar application, as the case may be;

•	failure to successfully develop and commercialize any of our current or future product candidates;

•	regulatory or legal developments in the U.S. or other countries or jurisdictions applicable to any of our current or future product candidates;

•	adverse regulatory decisions or findings;

•	changes in the structure of healthcare payment systems;

•	inability to obtain adequate product supply for any of our current or future product candidates, or the inability to do so at acceptable prices;

•	inability to hire a qualified sales force in a timely fashion;

•	inability to establish commercial capabilities and expertise including product marketing, sales, trade and distribution, pricing, market access, data analytics and insights, and other commercial operations functions;

•	adverse developments or perceived adverse developments with respect to our third-party vendors on which we rely, including contract manufacturing organizations and contract research organizations;

•	introduction of new products, services or technologies by our competitors;

•	failure to meet or exceed financial projections we provide to the public;

•	failure to maintain effective internal control over financial reporting;

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•	failure to meet or exceed the estimates and projections of the investor community;

•	changes in the market valuations of similar companies;

•	market conditions in the pharmaceutical and biotechnology sectors, and the issuance of new or changed securities analysts’ reports or recommendations;

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

•	adverse developments or perceived adverse developments with respect to our alliance partners and affiliates including Takeda, Sumitovant, Sumitomo Dainippon Pharma and/or Richter;

•	variations in our financial results or the financial results of companies that are perceived to be similar to us;

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

•	significant lawsuits, including patent or shareholder litigation, and disputes or other developments relating to our proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;

•	additions or departures of management or other key personnel;

•	short sales of our common shares;

•	sales or purchases of a substantial number of our common shares in the public market, by any of our larger shareholders, or the perception in the market that the holders of a large number of our common shares intend to sell or purchase common shares;

•	sales or purchases of our common shares by our executive officers;

•	issuance of additional shares of our common shares, or the perception that such issuances may occur, including through our “at-the-market” equity offering program;

•	negative coverage in the media or analyst reports, whether accurate or not;

•	any changes in our relationship with Sumitovant and/or Sumitomo Dainippon Pharma, or actions taken or omission of actions with respect to the Sumitomo Dainippon Pharma Loan Agreement or the Investor Rights Agreement;

•	issuance of subpoenas or investigative demands, or the public fact of an investigation by a government agency, whether meritorious or not;

•	trading liquidity of our common shares;

•	investors’ general perception of our company, our business, and our majority shareholder;

•	general political, economic, industry, and market conditions;

•	effects of natural or man-made catastrophic events, including the COVID-19 pandemic; and

•	the other factors described in this “Risk Factors” section.

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•	Phase 3 Program for the Treatment of Advanced Prostate Cancer (HERO)

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On April 21, 2020, we announced the submission of an NDA to the FDA for once-daily, oral relugolix monotherapy tablet (120 mg) for the treatment of men with advanced prostate cancer. The NDA submission was supported by efficacy and safety data from the Phase 3 HERO study, a randomized pivotal study comparing relugolix monotherapy versus leuprolide acetate. In the HERO study, relugolix monotherapy met the primary efficacy endpoint with 96.7% of men achieving sustained testosterone suppression to castrate levels (< 50 ng/dL) through 48 weeks, and all tested key secondary endpoints, while demonstrating 54% fewer major adverse cardiovascular events as compared with leuprolide injections administered every 3 months.

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We enrolled 434 men with metastatic prostate cancer in the HERO study, comprising 295 men from the original HERO study and an additional cohort of 139 men that completed enrollment in July 2019. We filed an amendment to the HERO study protocol to enroll 139 additional men with metastatic prostate cancer and to add the secondary objective of demonstrating that relugolix can delay the time to progression to the lethal state of the disease, castration-resistant prostate cancer, as compared to leuprolide. We currently expect to report additional data from the HERO study measuring castration resistance-free survival in approximately 430 men with metastatic prostate cancer in the third quarter of calendar year 2020.

◦	New efficacy and cardiovascular safety data from our HERO study will be presented in an oral presentation at the American Society of Clinical Oncology Virtual Scientific Program on May 29, 2020.

•	Phase 3 Program for the Treatment of Heavy Menstrual Bleeding Associated with Uterine Fibroids (LIBERTY)

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On May 14, 2019, we announced that LIBERTY 1, the first of two replicate Phase 3 studies evaluating once-daily relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids, met its primary efficacy endpoint and six key secondary endpoints. In the primary endpoint analysis, 73.4% of women receiving once-daily oral relugolix combination therapy achieved the responder criteria compared with 18.9% of women receiving placebo (p < 0.0001). The 24-week study achieved six key secondary endpoints with statistical significance compared to placebo, including mean change in menstrual blood loss from baseline to week 24, reduction

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On July 23, 2019, we announced that LIBERTY 2, the second of two replicate Phase 3 studies evaluating once-daily relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids, met its primary efficacy endpoint and six key secondary endpoints. In the primary endpoint analysis, 71.2% of women receiving once-daily oral relugolix combination therapy achieved the responder criteria compared with 14.7% of women receiving placebo (p < 0.0001). The 24-week study achieved the same six key secondary endpoints with statistical significance compared to placebo as those in LIBERTY 1 including mean change in menstrual blood loss from baseline to week 24, reduction in pain in women with pain at baseline, improvement in quality of life, amenorrhea (defined as no or negligible blood loss), improvement in anemia in those women with anemia at baseline, and reduction in uterine volume. The seventh key secondary endpoint, reduction in uterine fibroid volume, did not achieve statistical significance.

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In February 2020, we announced positive safety and efficacy data from the Phase 3 LIBERTY long-term extension study of relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids with an 87.7% response rate and, on average, an 89.9% reduction in menstrual blood loss from baseline, while demonstrating maintenance of bone mineral density through one year consistent with LIBERTY 1 and 2.

◦	On March 9, 2020, we announced the submission of a MAA to the EMA for relugolix combination tablet for the treatment of women with moderate to severe symptoms associated with uterine fibroids. The MAA submission has completed validation and is now under evaluation by the EMA.

◦	We currently expect to submit an NDA to the FDA for relugolix combination tablet for the treatment of women with heavy menstrual bleeding associated with uterine fibroids in May 2020.

•	Phase 3 Program for the Treatment of Pain Associated with Endometriosis (SPIRIT)

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On April 22, 2020, we announced that SPIRIT 2, the first of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with pain associated with endometriosis, met its co-primary efficacy endpoints and six key secondary endpoints. In the co-primary endpoint analysis of SPIRIT 2, 75.2% of women receiving once-daily oral relugolix combination therapy achieved a clinically meaningful reduction in dysmenorrhea versus 30.4% of women in the placebo group (p < 0.0001). For nonmenstrual pelvic pain, relugolix combination therapy achieved a clinically meaningful reduction in 66.0% of women versus 42.6% of women in the placebo group (p < 0.0001). On average, women receiving relugolix combination therapy had a 75.1% reduction on the 11-point (0 to 10) Numerical Rating Scale for dysmenorrhea from 7.2 (severe pain) to 1.7 (mild pain). Six key secondary endpoints measured at Week 24 and compared to placebo achieved statistical significance, including changes in mean dysmenorrhea and overall pelvic pain, impact of pain on daily activities as measured by the Endometriosis Health Profile-30 (EHP-30) pain domain, a greater proportion of women not using opioids (all p-values < 0.0001), changes in nonmenstrual pelvic pain (p = 0.0012), and dyspareunia (painful intercourse) (p = 0.0489). An endpoint evaluating change in analgesic use did not achieve statistical significance.

◦	We completed enrollment of 638 patients in the SPIRIT 1 study and currently expect to report top-line results from the SPIRIT 1 study in the second quarter of calendar year 2020.

•	Ovulation Inhibition Study

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

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•	Bioequivalence Study of Relugolix Combination Therapy and Relugolix Combination Tablet

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

•	On June 4, 2019, we completed an underwritten public equity offering of 17,424,243 of our common shares at a public offering price of $8.25 per common share. After deducting the underwriting discounts and commissions and offering costs paid by us, the net proceeds to us in connection with the underwritten public equity offering were approximately $134.5 million.

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On December 27, 2019, Sumitovant became our majority shareholder and a related party after acquiring 45,008,604 of our outstanding common shares, representing approximately 50.2% of our common shares outstanding on December 27, 2019. These common shares were acquired from our former majority shareholder, Roivant, at the closing of a transaction between Roivant and Sumitomo Dainippon Pharma. As of May 14, 2020, Sumitovant directly, and Sumitomo Dainippon Pharma indirectly, own 48,468,472 of our outstanding common shares, representing approximately 53.9% of our common shares outstanding on May 14, 2020.

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On December 27, 2019, we entered into an Investor Rights Agreement with Sumitomo Dainippon Pharma and Sumitovant that provides certain protections for our minority shareholders for so long as Sumitomo Dainippon Pharma or certain of its affiliates beneficially own more than 50% of our common shares. Pursuant to the Investor Rights Agreement, among other things, we agreed, at the request of Sumitovant, to register for sale, under the Securities Act of 1933, common shares beneficially owned by Sumitovant, subject to specified conditions and limitations. In addition, we agreed to periodically provide Sumitovant (i) certain financial statements, projections, capitalization summaries and other information and (ii) access to our books, records, facilities, and employees.

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On December 27, 2019, we, and our subsidiary, Myovant Sciences GmbH (“MSG”), entered into a loan agreement with Sumitomo Dainippon Pharma (the “Sumitomo Dainippon Pharma Loan Agreement”) under which Sumitomo Dainippon Pharma agreed to make revolving loans to us in an aggregate principal amount of up to $400.0 million, subject to the terms of the Sumitomo Dainippon Pharma Loan Agreement. Through March 31, 2020, we have borrowed $113.7 million under the Sumitomo Dainippon Pharma Loan Agreement, which was used to repay all outstanding obligations of us and our subsidiaries to Hercules Capital, Inc. (“Hercules”) and NovaQuest Capital Management (“NovaQuest”) and to satisfy certain other fees and expenses. As of March 31, 2020, approximately $286.3 million of borrowing capacity remained available to us under the Sumitomo Dainippon Pharma Loan Agreement. In April 2020, we borrowed an additional $80.0 million under the Sumitomo Dainippon Pharma Loan Agreement. The interest rate for any draws under the Sumitomo Dainippon Pharma Loan Agreement is the 3-month London Interbank Offered Rate (“LIBOR”) plus a margin of 3%.

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On March 30, 2020, we entered into an exclusive license agreement with Richter for Richter to commercialize relugolix combination tablet for uterine fibroids and endometriosis in certain territories outside of the U.S. We have retained all of our rights to relugolix combination tablet in the U.S. and Canada, as well as rights to relugolix in other therapeutic areas outside of women’s health. On March 31, 2020, we received an upfront payment of $40.0 million, which is included in current deferred revenue on our audited consolidated balance sheet, and are eligible to receive up to $40.0 million in regulatory milestones (of which $10.0 million was received in April 2020) and up to $107.5 million in sales-related milestones, and tiered royalties on net sales following regulatory approval. We have also agreed to assist Richter in transferring manufacturing technology from our contract manufacturing organizations to enable Richter to manufacture relugolix combination tablet. If requested by Richter, we have agreed to supply Richter with quantities of relugolix combination tablet for its territories pursuant to our agreements with our contract manufacturing organizations.

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•	submit NDAs and other regulatory filings for our product candidates;

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

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

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

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

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

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

•	seek regulatory approvals for any product candidates that successfully complete clinical studies;

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

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

•	service our debt obligations and associated interest payments; and

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•	operate as a public company.

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

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Milestone payments: At the inception of each arrangement that includes research, development or regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price on a cumulative catch-up basis in earnings in the period of the adjustment.

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

•	Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding and is determined using the simplified method in accordance with the Securities and Exchange Commission (“SEC”), Staff Accounting Bulletin (“SAB”), No. 107 and No. 110 (based on the mid-point between the vesting date and the end of the contractual term).

•	Expected Volatility. The expected volatility considers our historical volatility and weighted average measures of volatility of a peer group of companies for a period equal to the expected term of the stock options. Our peer group of publicly traded biopharmaceutical companies was chosen based on their similar size, stage in the life cycle, or area of specialty.

•	Risk-Free Interest Rate. The risk-free interest rate is based on the interest rates paid on securities issued by the U.S. Treasury with a term approximating the expected term of the stock options.

•	Expected Dividend. We have never paid, and do not anticipate paying, cash dividends on our common shares. Therefore, the expected dividend yield was assumed to be zero.

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

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

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

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

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

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

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•	Expected Term. The expected term represents the period that the Company’s share-based awards are expected to be outstanding and is determined using the simplified method in accordance with the Securities and Exchange Commission (“SEC”), Staff Accounting Bulletin (“SAB”) No. 107 and No. 110 (based on the mid-point between the vesting date and the end of the contractual term).

•	Expected Volatility. The expected volatility considers the Company’s historical volatility and weighted average measures of volatility of a peer group of companies for a period equal to the expected term of the stock options. The Company’s peer group of publicly traded biopharmaceutical companies was chosen based on their similar size, stage in the life cycle or area of specialty.

•	Risk-Free Interest Rate. The risk-free interest rate is based on the interest rates paid on securities issued by the U.S. Treasury with a term approximating the expected term of the stock options.

•	Expected Dividend. The Company has never paid, and does not anticipate paying, cash dividends on its common shares. Therefore, the expected dividend yield was assumed to be zero.

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•	pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company;

•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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