Document
false--03-31Q220200001679082P5D0.66660.3333P1YP1Y211000051100007900092290001000000.0000177270.00001772756411124256411124272057490896235647205749089623564000P5YP1Y010 0001679082 2019-04-01 2019-09-30 0001679082 2019-11-01 0001679082 2019-09-30 0001679082 2019-03-31 0001679082 us-gaap:GeneralAndAdministrativeExpenseMember 2019-07-01 2019-09-30 0001679082 us-gaap:GeneralAndAdministrativeExpenseMember 2018-07-01 2018-09-30 0001679082 us-gaap:ResearchAndDevelopmentExpenseMember 2018-04-01 2018-09-30 0001679082 us-gaap:ResearchAndDevelopmentExpenseMember 2019-04-01 2019-09-30 0001679082 us-gaap:ResearchAndDevelopmentExpenseMember 2019-07-01 2019-09-30 0001679082 us-gaap:GeneralAndAdministrativeExpenseMember 2019-04-01 2019-09-30 0001679082 us-gaap:GeneralAndAdministrativeExpenseMember 2018-04-01 2018-09-30 0001679082 us-gaap:ResearchAndDevelopmentExpenseMember 2018-07-01 2018-09-30 0001679082 2018-04-01 2018-09-30 0001679082 2018-07-01 2018-09-30 0001679082 2019-07-01 2019-09-30 0001679082 2019-04-01 2019-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001679082 us-gaap:CommonStockMember 2019-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001679082 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2019-04-01 2019-06-30 0001679082 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001679082 us-gaap:RetainedEarningsMember 2019-03-31 0001679082 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001679082 us-gaap:RetainedEarningsMember 2019-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:AdditionalPaidInCapitalMember us-gaap:PrivatePlacementMember 2019-04-01 2019-06-30 0001679082 us-gaap:CommonStockMember myov:PublicStockOfferingMember 2019-04-01 2019-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001679082 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:CommonStockMember us-gaap:PrivatePlacementMember 2019-04-01 2019-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001679082 us-gaap:CommonStockMember 2019-03-31 0001679082 us-gaap:AdditionalPaidInCapitalMember myov:PublicStockOfferingMember 2019-04-01 2019-06-30 0001679082 myov:PublicStockOfferingMember 2019-04-01 2019-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001679082 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001679082 us-gaap:RetainedEarningsMember 2019-06-30 0001679082 us-gaap:CommonStockMember 2019-09-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001679082 2019-06-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:CommonStockMember us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 2018-04-01 2018-06-30 0001679082 2018-06-30 0001679082 us-gaap:CommonStockMember 2018-03-31 0001679082 us-gaap:CommonStockMember 2018-09-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001679082 us-gaap:AdditionalPaidInCapitalMember myov:PublicStockOfferingMember 2018-07-01 2018-09-30 0001679082 us-gaap:RetainedEarningsMember 2018-06-30 0001679082 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:AdditionalPaidInCapitalMember us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:CommonStockMember us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001679082 us-gaap:RetainedEarningsMember 2018-03-31 0001679082 myov:RoivantSciencesLtd.Member us-gaap:AdditionalPaidInCapitalMember us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001679082 us-gaap:CommonStockMember 2018-06-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001679082 2018-09-30 0001679082 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001679082 us-gaap:CommonStockMember myov:PublicStockOfferingMember 2018-07-01 2018-09-30 0001679082 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0001679082 us-gaap:RetainedEarningsMember 2018-09-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0001679082 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:PrivatePlacementMember 2018-04-01 2018-06-30 0001679082 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0001679082 myov:PublicStockOfferingMember 2018-07-01 2018-09-30 0001679082 2018-03-31 0001679082 myov:PublicStockOfferingMember 2019-04-01 2019-09-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:PrivatePlacementMember 2019-04-01 2019-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2019-04-01 2019-09-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:PrivatePlacementMember 2018-04-01 2018-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2018-04-01 2018-09-30 0001679082 myov:PublicStockOfferingMember 2018-04-01 2018-09-30 0001679082 us-gaap:PerformanceSharesMember 2019-04-01 2019-09-30 0001679082 us-gaap:RestrictedStockUnitsRSUMember 2018-04-01 2018-09-30 0001679082 myov:EmployeeandNonemployeeStockOptionMember 2018-04-01 2018-09-30 0001679082 us-gaap:RestrictedStockMember 2018-04-01 2018-09-30 0001679082 us-gaap:WarrantMember 2018-04-01 2018-09-30 0001679082 us-gaap:RestrictedStockUnitsRSUMember 2019-04-01 2019-09-30 0001679082 us-gaap:RestrictedStockMember 2019-04-01 2019-09-30 0001679082 us-gaap:WarrantMember 2019-04-01 2019-09-30 0001679082 myov:EmployeeandNonemployeeStockOptionMember 2019-04-01 2019-09-30 0001679082 us-gaap:PerformanceSharesMember 2018-04-01 2018-09-30 0001679082 2019-04-01 0001679082 us-gaap:AccountingStandardsUpdate201602Member 2019-04-01 0001679082 us-gaap:CorporateBondSecuritiesMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001679082 us-gaap:MoneyMarketFundsMember 2019-09-30 0001679082 us-gaap:FairValueInputsLevel3Member 2019-09-30 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001679082 us-gaap:CorporateBondSecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001679082 us-gaap:FairValueInputsLevel1Member 2019-09-30 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001679082 us-gaap:CorporateBondSecuritiesMember 2019-09-30 0001679082 us-gaap:CorporateBondSecuritiesMember us-gaap:FairValueInputsLevel3Member 2019-09-30 0001679082 us-gaap:CommercialPaperMember 2019-09-30 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel3Member 2019-09-30 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member 2019-09-30 0001679082 us-gaap:FairValueInputsLevel2Member 2019-09-30 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel1Member 2019-03-31 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel2Member 2019-03-31 0001679082 us-gaap:FairValueInputsLevel3Member 2019-03-31 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2019-03-31 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member 2019-03-31 0001679082 us-gaap:FairValueInputsLevel2Member 2019-03-31 0001679082 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member 2019-03-31 0001679082 us-gaap:FairValueInputsLevel1Member 2019-03-31 0001679082 us-gaap:MoneyMarketFundsMember 2019-03-31 0001679082 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel3Member 2019-03-31 0001679082 us-gaap:CommercialPaperMember 2019-03-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember 2018-03-31 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2017-10-01 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2019-07-01 2019-09-30 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:SecuredDebtMember 2017-10-31 0001679082 us-gaap:CommonStockMember 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2018-03-31 0001679082 us-gaap:PrivatePlacementMember 2017-10-01 2017-10-31 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2018-12-01 2018-12-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodOneMember 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2019-09-30 0001679082 myov:NovaQuestCapitalManagementMember myov:PrivatePlacementTwoMember 2018-12-01 2018-12-31 0001679082 2017-10-31 0001679082 myov:NovaQuestCapitalManagementMember myov:PrivatePlacementOneMember 2018-12-01 2018-12-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:SecuredDebtMember 2018-03-31 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2018-04-01 2018-09-30 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember us-gaap:PrimeRateMember 2017-10-01 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:SecuredDebtMember 2017-10-01 2017-10-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2019-04-01 2019-09-30 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2019-07-01 2019-09-30 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2018-07-01 2018-09-30 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2018-04-01 2018-09-30 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2019-03-31 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2019-09-30 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:MeasurementInputExpectedTermMember 2018-03-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2018-03-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:MeasurementInputOptionVolatilityMember 2017-10-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:MeasurementInputExpectedDividendRateMember 2017-10-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2017-10-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:MeasurementInputExpectedDividendRateMember 2018-03-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:MeasurementInputExpectedTermMember 2017-10-31 0001679082 us-gaap:CommonStockMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:MeasurementInputOptionVolatilityMember 2018-03-31 0001679082 myov:HerculesLoanAgreementMember us-gaap:SecuredDebtMember 2019-03-31 0001679082 myov:NovaQuestSecuritiesPurchaseAgreementMember us-gaap:LineOfCreditMember 2018-07-01 2018-09-30 0001679082 2017-10-01 2017-10-31 0001679082 us-gaap:MajorityShareholderMember myov:PublicStockOfferingMember 2019-06-04 2019-06-04 0001679082 myov:RoivantSciencesLtd.andRoivantSciencesInc.Member myov:ServiceAgreementMember srt:AffiliatedEntityMember 2018-04-01 2018-09-30 0001679082 srt:MinimumMember us-gaap:MajorityShareholderMember 2019-05-23 0001679082 myov:RoivantSciencesLtd.Member myov:SharebasedCompensationExpenseAllocatedtoCompanyMember us-gaap:MajorityShareholderMember 2019-04-01 2019-09-30 0001679082 myov:PublicStockOfferingMember 2019-06-04 0001679082 myov:RoivantSciencesLtd.andRoivantSciencesInc.Member myov:ServiceAgreementMember srt:AffiliatedEntityMember 2018-07-01 2018-09-30 0001679082 myov:RoivantSciencesLtd.Member myov:SharebasedCompensationExpenseAllocatedtoCompanyMember us-gaap:MajorityShareholderMember 2018-04-01 2018-09-30 0001679082 myov:RoivantSciencesLtd.Member myov:SharebasedCompensationExpenseAllocatedtoCompanyMember us-gaap:MajorityShareholderMember 2019-07-01 2019-09-30 0001679082 myov:RoivantSciencesLtd.andRoivantSciencesInc.Member myov:ServiceAgreementMember srt:AffiliatedEntityMember 2019-07-01 2019-09-30 0001679082 srt:MaximumMember us-gaap:MajorityShareholderMember 2019-05-23 0001679082 us-gaap:BeneficialOwnerMember 2019-05-23 0001679082 myov:RoivantSciencesLtd.andRoivantSciencesInc.Member myov:ServiceAgreementMember srt:AffiliatedEntityMember 2019-04-01 2019-09-30 0001679082 myov:RoivantSciencesLtd.Member myov:SharebasedCompensationExpenseAllocatedtoCompanyMember us-gaap:MajorityShareholderMember 2018-07-01 2018-09-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:PrivatePlacementMember 2018-04-01 2018-04-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2019-09-30 0001679082 myov:RoivantSciencesLtd.Member us-gaap:PrivatePlacementMember 2018-04-30 0001679082 myov:PublicStockOfferingMember 2019-06-04 2019-06-04 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2018-04-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2018-09-30 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2019-07-01 2019-09-30 0001679082 us-gaap:OverAllotmentOptionMember 2019-06-04 2019-06-04 0001679082 myov:CowenandCompanyLLCMember us-gaap:PrivatePlacementMember 2018-07-01 2018-09-30 0001679082 myov:RestrictedStockandRestrictedStockUnitsMember 2019-04-01 2019-09-30 0001679082 myov:RestrictedStockandRestrictedStockUnitsMember 2019-09-30 0001679082 myov:RestrictedStockandRestrictedStockUnitsMember 2019-03-31 0001679082 myov:ExecutivesSubjecttoExerciseRestrictionPeriodMember myov:EmployeeStockOptionsRepricedMember 2019-08-26 0001679082 myov:A2016EquityIncentivePlanMember 2019-09-30 0001679082 myov:EmployeeStockOptionsRepricedMember 2019-08-26 2019-08-26 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2019-07-01 2019-09-30 0001679082 myov:A2016EquityIncentivePlanMember 2016-06-30 0001679082 myov:PerformanceSharesVestingBasedUponClinicalTrialandRegulatoryMilestonesMember 2019-08-26 2019-08-26 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2016-04-01 2017-03-31 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2019-09-30 0001679082 myov:EmployeesOtherThanExecutivesSubjecttoExerciseRestrictionPeriodMember myov:EmployeeStockOptionsRepricedMember 2019-08-26 2019-08-26 0001679082 myov:PerformanceSharesTimeBasedVestingMember 2019-08-26 2019-08-26 0001679082 myov:A2016EquityIncentivePlanMember 2019-04-01 2019-04-01 0001679082 srt:MaximumMember myov:EmployeeStockOptionsRepricedMember 2019-08-25 0001679082 srt:MedianMember myov:EmployeeStockOptionsRepricedMember 2019-08-25 0001679082 us-gaap:PerformanceSharesMember 2019-08-26 2019-08-26 0001679082 myov:EmployeeStockOptionsRepricedMember 2019-08-26 0001679082 srt:MinimumMember myov:EmployeeStockOptionsRepricedMember 2019-08-25 0001679082 myov:PerformanceSharesTimeBasedVestingMember 2019-04-01 2019-09-30 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2018-07-01 2018-09-30 0001679082 myov:PerformanceSharesVestingBasedUponClinicalTrialandRegulatoryMilestonesMember 2019-04-01 2019-09-30 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2018-04-01 2018-09-30 0001679082 myov:ExecutivesSubjecttoExerciseRestrictionPeriodMember myov:EmployeeStockOptionsRepricedMember 2019-08-26 2019-08-26 0001679082 srt:ChiefExecutiveOfficerMember us-gaap:RestrictedStockUnitsRSUMember myov:RoivantLifeSciencesLtd.RestrictedStockUnitsGrantMember us-gaap:MajorityShareholderMember 2019-04-01 2019-09-30 0001679082 myov:BrisbaneCaliforniaOfficeSpaceMember 2019-09-30 0001679082 myov:CommercialManufacturingandSupplyAgreementMember 2018-05-30 2018-05-30 0001679082 myov:BrisbaneCaliforniaOfficeSpaceMember us-gaap:SubsequentEventMember 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member srt:MinimumMember us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member myov:LetterAgreementwithSumitomoDainipponPharmaCo.Ltd.Member us-gaap:SecuredDebtMember us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member srt:MaximumMember us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 0001679082 myov:SumitomoDainipponPharmaCo.Ltd.Member myov:LetterAgreementwithSumitomoDainipponPharmaCo.Ltd.Member us-gaap:SecuredDebtMember us-gaap:MajorityShareholderMember us-gaap:SubsequentEventMember 2019-10-31 2019-10-31 utreg:sqft myov:year iso4217:USD xbrli:shares myov:director iso4217:USD myov:segment xbrli:shares xbrli:pure
Table of Contents


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 September 30, 2019
 or
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                
For the transition period from _______ to _______           
Commission file number 001-37929
 
Myovant Sciences Ltd.
(Exact name of registrant as specified in its charter)
 
Bermuda
 
98-1343578
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
Suite 1, 3rd Floor
 
 
11-12 St. James’s Square
 
 
London
 
 
SW1Y 4LB
 
 
United Kingdom
 
Not Applicable
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: +44 207 400 3347
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
 
Trading Symbol
 
Name of each exchange on which registered
Common Shares, $0.000017727 par value per share
 
MYOV
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ý  No  o 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ý   No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act
Large accelerated filer
ý
Accelerated filer
Non-accelerated filer
o 
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  ý
The number of shares outstanding of the Registrant’s common shares, $0.000017727 par value per share, on November 1, 2019, was 89,623,564.


1

Table of Contents

MYOVANT SCIENCES LTD.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2019
 
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 


2

Table of Contents

PART I.                                                  FINANCIAL INFORMATION
Item 1.                                                         Financial Statements
MYOVANT SCIENCES LTD.
Condensed Consolidated Balance Sheets
(unaudited; in thousands, except share and per share data)
 
September 30, 2019
 
March 31, 2019
Assets
 


 

Current assets:
 


 

Cash and cash equivalents
$
130,373


$
156,074

Marketable securities
27,220

 

Prepaid expenses and other current assets
9,969


10,194

Income tax receivable
17


524

Total current assets
167,579


166,792

Property and equipment, net
2,288


2,071

Operating lease right-of-use asset
8,973

 

Other assets
5,162


4,114

Total assets
$
184,002


$
172,977

Liabilities and shareholders’ equity
 


 

Current liabilities:
 


 

Accounts payable
$
5,819


$
11,019

Interest payable
305

 
1,077

Accrued expenses
44,380


53,614

Operating lease liability
853

 

Due to Roivant Sciences Ltd. (RSL), Roivant Sciences, Inc. (RSI) and Roivant Sciences GmbH (RSG)
271


121

Current maturities of long-term debt
8,402

 
6,142

Total current liabilities
60,030


71,973

Deferred rent


1,157

Deferred interest payable
5,323


2,273

Long-term operating lease liability
9,320

 

Long-term debt, less current maturities
92,075

 
93,240

Total liabilities
166,748


168,643

Commitments and contingencies (Note 12)


 


Shareholders’ equity:
 

 
 

Common shares, par value $0.000017727 per share, 564,111,242 shares authorized, 89,623,564 and 72,057,490 issued and outstanding at September 30, 2019 and March 31, 2019, respectively
2

 
1

Additional paid-in capital
657,780

 
505,851

Accumulated other comprehensive (loss) income
(31
)
 
507

Accumulated deficit
(640,497
)
 
(502,025
)
Total shareholders’ equity
17,254


4,334

Total liabilities and shareholders’ equity
$
184,002


$
172,977


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

3

Table of Contents

MYOVANT SCIENCES LTD.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except share and per share data)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Operating expenses:



 

 
 
 
 
Research and development (1)
$
50,803


$
53,813

 
$
101,920

 
$
105,154

General and administrative (2)
16,603


10,310

 
30,755

 
19,052

Total operating expenses
67,406


64,123

 
132,675

 
124,206

Interest expense
3,788

 
1,580

 
7,581

 
3,197

Interest income
(942
)
 

 
(1,708
)
 

Other expense (income), net
121


(21
)
 
(584
)
 
268

Loss before income taxes
(70,373
)

(65,682
)
 
(137,964
)
 
(127,671
)
Income tax expense
195


88

 
508

 
233

Net loss
$
(70,568
)

$
(65,770
)
 
$
(138,472
)
 
$
(127,904
)
Net loss per common share — basic and diluted
$
(0.79
)

$
(0.99
)
 
$
(1.68
)
 
$
(1.97
)
Weighted average common shares outstanding — basic and diluted
88,798,398


66,666,876

 
82,667,061

 
64,997,698

(1) Includes $26 and $246 of costs allocated from RSL, RSI, and RSG during the three months ended September 30, 2019 and 2018, respectively, and $51 and $2,434 of costs allocated from RSL, RSI, and RSG during the six months ended September 30, 2019 and 2018, respectively. Also includes share-based compensation expense (see Note 10).
(2) Includes $224 and $949 of costs allocated from RSL, RSI, and RSG during the three months ended September 30, 2019 and 2018, respectively, and $422 and $2,174 of costs allocated from RSL, RSI, and RSG during the six months ended September 30, 2019 and 2018, respectively. Also includes share-based compensation expense (see Note 10).

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

4

Table of Contents

MYOVANT SCIENCES LTD.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited; in thousands)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net loss
$
(70,568
)
 
$
(65,770
)
 
$
(138,472
)
 
$
(127,904
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustment
281

 
(72
)
 
(538
)
 
353

Total other comprehensive income (loss)
281

 
(72
)
 
(538
)
 
353

Comprehensive loss
$
(70,287
)
 
$
(65,842
)
 
$
(139,010
)
 
$
(127,551
)


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

5

Table of Contents

MYOVANT SCIENCES LTD.
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited; in thousands, except share data)
 
Common Shares
 
Additional Paid
in Capital
 
Accumulated
Other Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Shareholders’
Equity
 
Shares
 
Amount
 
 
 
 
Balance at March 31, 2019
72,057,490

 
$
1

 
$
505,851

 
$
507

 
$
(502,025
)
 
$
4,334

Issuance of shares in connection with “at-the-market” equity offering, net of commissions of $79
106,494

 

 
2,546

 

 

 
2,546

Issuance of shares in connection with public equity offering, net of commissions and offering costs of $9,229
17,424,243

 
1

 
134,537

 

 

 
134,538

Share-based compensation expense

 

 
6,410

 

 

 
6,410

Capital contribution — share-based compensation

 

 
42

 

 

 
42

Capital contribution from RSI and RSG

 

 
106

 

 

 
106

Foreign currency translation adjustment

 

 

 
(819
)
 

 
(819
)
Issuance of shares upon exercise of stock options and vesting of RSUs
34,399

 

 
314

 

 

 
314

Net loss

 

 

 

 
(67,904
)
 
(67,904
)
Balance at June 30, 2019
89,622,626

 
2

 
649,806

 
(312
)
 
(569,929
)
 
79,567

Public equity offering, additional offering costs

 

 
(80
)
 

 

 
(80
)
Share-based compensation expense

 

 
7,879

 

 

 
7,879

Capital contribution — share-based compensation

 

 
52

 

 

 
52

Capital contribution from RSI and RSG

 

 
123

 

 

 
123

Foreign currency translation adjustment

 

 

 
281

 

 
281

Issuance of shares upon vesting of RSUs
938

 

 

 

 

 

Net loss

 

 

 

 
(70,568
)
 
(70,568
)
Balance at September 30, 2019
89,623,564

 
$
2

 
$
657,780

 
$
(31
)
 
$
(640,497
)
 
$
17,254

 


6

Table of Contents

 
Common Shares
 
Additional Paid
in Capital
 
Accumulated
Other Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Shareholders’
Equity
 
Shares
 
Amount
 
 
 
 
Balance at March 31, 2018
60,997,856

 
$
1

 
$
266,178

 
$
24

 
$
(228,474
)
 
$
37,729

Issuance of shares in connection with “at-the-market” equity offering, net of commissions and offering costs of $2,110
2,767,129

 

 
57,315

 

 

 
57,315

Issuance of shares in connection with Private Placement with RSL
1,110,015

 

 
22,500

 

 

 
22,500

Share-based compensation expense

 

 
4,053

 

 

 
4,053

Capital contribution — share-based compensation

 

 
191

 

 

 
191

Foreign currency translation adjustment

 

 

 
425

 

 
425

Issuance of shares upon exercise of stock options
16,218

 

 
76

 

 

 
76

Net loss

 

 

 

 
(62,134
)
 
(62,134
)
Balance at June 30, 2018
64,891,218

 
1

 
350,313

 
449

 
(290,608
)
 
60,155

Share-based compensation expense

 

 
4,529

 

 

 
4,529

Capital contribution — share-based compensation

 

 
196

 

 

 
196

Capital contribution from RSI and RSG
 
 
 
 
212

 
 
 
 
 
212

Foreign currency translation adjustment

 

 

 
(72
)
 

 
(72
)
Issuance of shares in connection with public equity offering, net of commissions and offering costs of $5,110
3,533,399

 

 
74,391

 

 

 
74,391

Issuance of shares upon exercise of stock options and vesting of RSUs
60,271

 

 
460

 

 

 
460

Net loss

 

 

 

 
(65,770
)
 
(65,770
)
Balance at September 30, 2018
68,484,888

 
$
1

 
$
430,101

 
$
377

 
$
(356,378
)
 
$
74,101


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

7

Table of Contents

MYOVANT SCIENCES LTD.
Condensed Consolidated Statements of Cash Flows
(unaudited; in thousands)
 
Six Months Ended September 30,
 
2019
 
2018
Cash flows from operating activities:
 

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

 
 
Share-based compensation
14,383

 
8,969

Depreciation and amortization (1)
726

 
191

Amortization of debt discount and issuance costs
1,095

 
936

Other items
(369
)
 
565

Changes in operating assets and liabilities:
 

 
 
Prepaid expenses and other current assets
225

 
(3,240
)
Income tax receivable
507

 
233

Other assets
(799
)
 
(96
)
Accounts payable
(5,200
)
 
3,781

Interest payable
(772
)
 
18

Accrued expenses
(9,304
)
 
8,176

Operating lease liabilities
(368
)
 

Due to RSL, RSI and RSG
150

 
(1,382
)
Deferred rent

 
567

Deferred interest payable
3,050

 
305

Net cash used in operating activities
(135,148
)
 
(108,881
)
Cash flows from investing activities:
 

 
 
Purchases of marketable securities
(27,160
)
 

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

 
 
Proceeds from issuance of common shares in “at-the-market” equity offering, net of issuance costs paid
2,546

 
57,315

Proceeds from issuance of common shares in public equity offering, net of issuance costs paid
134,528

 
74,683

Proceeds from issuance of common shares in Private Placement with RSL

 
22,500

Proceeds from stock option exercises
314

 
466

Net cash provided by financing activities
137,388

 
154,964

Net change in cash, cash equivalents and restricted cash
(25,452
)
 
45,693

Cash, cash equivalents and restricted cash, beginning of period
157,199

 
108,624

Cash, cash equivalents and restricted cash, end of period
$
131,747

 
$
154,317

Non-cash financing activities:
 

 
 
Unpaid offering costs included in accounts payable and accrued expenses
$
70

 
$
292

Stock options exercised receivables, included in prepaid expenses and other current assets
$

 
$
(70
)
(1) Includes amortization of operating lease right-of-use asset.

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

8

Table of Contents

MYOVANT SCIENCES LTD.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1—Description of Business
Myovant Sciences Ltd. (or together with its wholly-owned subsidiaries, the Company) is a healthcare company focused on developing innovative treatments for women’s health and prostate cancer. The Company is developing a relugolix combination tablet (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) for the treatment of heavy menstrual bleeding associated with uterine fibroids and for pain associated with endometriosis, relugolix 120 mg as a monotherapy for advanced prostate cancer, and an additional product candidate, MVT-602, an oligopeptide kisspeptin-1 receptor agonist, for the treatment of female infertility as part of assisted reproduction. Both relugolix and MVT-602 were licensed to the Company by Takeda Pharmaceuticals International AG, or Takeda, on April 29, 2016.
The Company is an exempted company limited by shares incorporated under the laws of Bermuda in February 2016 under the name Roivant Endocrinology Ltd. The Company changed its name to Myovant Sciences Ltd. in May 2016. Since its inception, the Company has devoted substantially all of its efforts to identifying and in-licensing its product candidates, organizing and staffing the Company, raising capital, preparing for and advancing the clinical development of its product candidates, and preparing for potential future regulatory approvals and commercialization of relugolix.
The Company has incurred, and expects to continue to incur, significant operating losses and negative operating cash flows as it continues to develop its product candidates and prepares for potential future regulatory approvals and commercialization of relugolix. To date, the Company has not generated any revenue, and it does not expect to generate revenue unless and until it successfully completes development and obtains regulatory approval for at least one of its product candidates. See Note 2(C), Summary of Significant Accounting Policies—Going Concern and Management’s Plans.
Note 2—Summary of Significant Accounting Policies
(A) Basis of Presentation
The Company’s fiscal year ends on March 31, and its first three fiscal quarters end on June 30, September 30 and December 31. The Company has determined that it has one operating and reporting segment as it allocates resources and assesses financial performance on a consolidated basis.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States, or U.S., generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed with the U.S. Securities and Exchange Commission, or the SEC, on May 24, 2019. The unaudited consolidated balance sheet at March 31, 2019 has been derived from the audited consolidated financial statements at that date. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented have been included. Operating results for the three and six months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2020, for any other interim period or for any other future year.
Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, issued by the Financial Accounting Standards Board, or FASB. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed with the SEC on May 24, 2019, except for the adoption of ASU 2016-02, Leases (Topic 842), on April 1, 2019. See Note 2(H).

9

Table of Contents

(B) Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, costs, and expenses, including the evaluation of the Company’s ability to continue as a going concern, share-based compensation expenses, research and development, or R&D, expenses and accruals, and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses incurred during the reporting period, that are not readily apparent from other sources. Estimates and assumptions are periodically reviewed in light of changes in circumstances, facts, or experience. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.
(C) Going Concern and Management’s Plans
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements are issued. During the six months ended September 30, 2019, the Company incurred net losses of $138.5 million and used $135.1 million of cash and cash equivalents in operations. The Company expects to continue to incur significant and increasing operating losses and negative operating cash flows as it continues to develop its product candidates and prepares for potential future regulatory approvals and commercialization of relugolix. The Company has not generated any revenue to date and does not expect to generate product revenue unless and until it successfully completes development and obtains regulatory approval for at least one of its product candidates. Based on its current operating plan, the Company expects that its existing cash, cash equivalents, and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements at least through the end of the Company’s fiscal year ending March 31, 2020. This estimate is based on the Company’s current assumptions, including assumptions relating to its ability to manage its spend, that might prove to be wrong, and it could use its available capital resources sooner than it currently expects. Current cash, cash equivalents and marketable securities will not be sufficient to enable the Company to complete all necessary development activities and commercially launch relugolix. The Company anticipates that it will continue to incur net losses for the foreseeable future.
To continue as a going concern, the Company will need, among other things, additional capital resources. The Company continually assesses multiple options to obtain additional funding to support its operations, including through financing activities in public or private capital markets. Management can provide no assurances that any sources of a sufficient amount of financing will be available to the Company on favorable terms, if at all. Although the Company expects to negotiate and enter into a new term loan facility that the Company and Sumitomo Dainippon Pharma, Co. Ltd. (“Sumitomo”) agreed to negotiate and enter into, and the Company expects to draw down on this term loan facility on a quarterly basis, after it becomes effective upon the close of the transaction between Roivant Sciences Ltd. and Sumitomo, ASC 240-40, Going Concern, does not allow the Company to consider future financing activities that are uncertain in its assessment of the Company’s future cash burn for the purpose of its liquidity assessment. For more information on the Company’s arrangements with Sumitomo, see Note 13(B), “Subsequent Events—Letter Agreement with Sumitomo Dainippon Pharma, Co. Ltd.”
Due to these uncertainties, there is substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements and footnotes have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

10

Table of Contents

(D) Net Loss per Common Share
Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period, reduced, where applicable, for outstanding yet unvested shares of restricted common stock. The computation of diluted net loss per common share is based on the weighted-average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, restricted stock units, restricted stock awards, performance stock units, and warrants. In periods in which the Company reports a net loss, all common share equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equal. Potentially dilutive common shares have been excluded from the diluted net loss per common share computations in all periods presented because such securities have an anti-dilutive effect on net loss per common share due to the Company’s net loss. There are no reconciling items used to calculate the weighted-average number of total common shares outstanding for basic and diluted net loss per common share.
As of September 30, 2019 and 2018, potentially dilutive securities were as follows:
 
September 30,
 
2019
 
2018
Stock options
7,676,460

 
5,115,494

Restricted stock awards (unvested)
775,651

 
1,057,707

Restricted stock units (unvested)
753,720

 
12,500

Performance stock units (unvested)
408,510

 

Warrants
73,710

 
73,710

Total
9,688,051

 
6,259,411


(E) Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash deposits in banks and all highly liquid investments that are readily convertible to cash. The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. As of September 30, 2019, cash and cash equivalent balances are diversified between three financial institutions. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and the issuers of its money market funds and commercial paper. The Company maintains its cash deposits and cash equivalents in highly rated, federally insured financial institutions in excess of federally insured limits. The Company has established guidelines relative to diversification and maturities to maintain safety and liquidity. The Company has not experienced any credit losses related to these financial instruments and does not believe that it is exposed to any significant credit risk related to these instruments. Interest income consists of interest earned on money market funds and the accretion of discounts to maturity for commercial paper and corporate bonds.
Restricted cash consists of non-interest bearing legally restricted deposits held as compensating balances against the Company’s corporate credit card program and an irrevocable standby letter of credit provided as security for the Company’s office lease.
Cash as reported on the unaudited condensed consolidated statements of cash flows includes the aggregate amounts of cash, cash equivalents, and restricted cash and consists of the following (in thousands):
 
September 30,
 
2019
 
2018
Cash and cash equivalents
$
130,373

 
$
153,717

Restricted cash (1)
1,374

 
600

Total cash, cash equivalents and restricted cash
$
131,747

 
$
154,317

(1) Included in other assets on the unaudited condensed consolidated balance sheets.

11

Table of Contents

(F) Marketable Securities
Investments in marketable securities are held in a custodial account at a financial institution and managed by the Company’s investment advisor based on the Company’s investment guidelines. The Company considers all highly liquid investments in securities with a maturity of greater than three months at the time of purchase to be marketable securities. As of September 30, 2019, the Company’s marketable securities consisted of commercial paper and highly rated corporate bonds with maturities of greater than three months but less than twelve months at the time of purchase. These short-term commercial paper and corporate debt securities are classified as current assets on the Company’s unaudited condensed consolidated balance sheets under the caption marketable securities.
The Company classifies its marketable securities as available-for-sale at the time of purchase and reevaluates such designation at each balance sheet date. Unrealized gains and losses on available-for-sale commercial paper and short-term corporate debt securities are excluded from earnings and are recorded in accumulated other comprehensive (loss) income until realized. Any unrealized losses are evaluated for other-than temporary impairment at each balance sheet date. Realized gains and losses are determined based on the specific identification method and are recorded in other (income) expense, net. See Note 3 for additional information.
(G) Fair Value Measurements
The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy for financial instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following:
Level 1-Valuations 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.
To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The Company’s financial instruments include cash, cash equivalents consisting of commercial paper, corporate bonds, and money market funds, marketable securities consisting of commercial paper and corporate bonds, accounts payable and the Company’s debt obligations. Cash, cash equivalents, and accounts payable are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature. Marketable securities are recorded at their estimated fair value and are included in Level 2 of the fair value hierarchy. The carrying value of the Company’s debt approximates fair value based on current interest rates for similar types of borrowings and is included in Level 2 of the fair value hierarchy.

12

Table of Contents

(H) Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is a comprehensive new lease standard that amends various aspects of existing accounting guidance for leases. The core principle of Topic 842 requires lessees to recognize on the consolidated balance sheets a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases with lease terms greater than twelve months. The lease liability is measured at the present value of the unpaid lease payments and the right-of-use asset is derived from the calculation of the lease liability. Topic 842 also requires lessees to disclose key information about leasing arrangements. Topic 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.
A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application (“Transition Date”). An entity may choose to use either (i) its effective date or (ii) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on April 1, 2019 and used the effective date as its date of initial application.
The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients,” which permitted it to not reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. As a result, the Company has continued to account for existing leases - i.e. leases for which the commencement date is before April 1, 2019 - in accordance with Topic 840 throughout the entire lease term, including periods after the effective date, with the exception that the Company applied the new balance sheet recognition guidance for operating leases and applied Topic 842 for remeasurements and modifications after the Transition Date.
The most significant impact of the adoption of Topic 842 on the Company’s unaudited condensed consolidated financial statements was the recognition of a $9.4 million operating lease right-of-use asset, a $0.8 million current operating lease liability, and a $9.8 million long-term operating lease liability on the Company’s unaudited condensed consolidated balance sheet related to its existing facility operating lease. In addition, the Company reclassified the $1.2 million deferred rent liability for its existing facility lease to the related operating lease right-of-use asset. There was no material impact to the Company’s unaudited condensed consolidated statement of operations, and no cumulative-effect adjustment to accumulated deficit. See Note 11 for additional information.
In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, or ASU 2018-02. ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the newly enacted federal corporate income tax rate under the Tax Cuts and Jobs Act, from accumulated other comprehensive (loss) income to retained earnings. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and early adoption is permitted. The Company adopted the new standard on April 1, 2019. The adoption of ASU 2018-02 did not have an impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, or ASU 2018-07. ASU 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 is effective for interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company adopted the new standard on April 1, 2019. The adoption of ASU 2018-07 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
In July 2018, the FASB issued ASU 2018-09, Codification Improvements, to make changes to a variety of topics to clarify, correct errors in, or make minor improvements to the ASC. Certain items in the amendments in ASU 2018-09 will be effective for the Company in annual periods beginning after December 15, 2018. The adoption of ASU 2018-09 on April 1, 2019 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
Other recent accounting pronouncements issued by the FASB, (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by the Company to, have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

13

Table of Contents

(I) Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact the adoption of this new standard will have on its unaudited condensed consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13. ASU 2018-13 amends the disclosure requirements in Topic 820 to promote the exercise of discretion by entities when considering fair value measurement disclosures and clarifies that materiality is an appropriate consideration when evaluating fair value measurement disclosure requirements. Certain required disclosures were added, modified, or removed, including removing the required disclosure of the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2018-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company does not currently expect that the adoption of this new standard will have a material impact on its unaudited condensed consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, or ASU 2018-15, which amends ASC 350-40, Internal-Use Software, to include in its scope implementation costs of a cloud computing arrangement that is a service contract. Consequently, the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement is aligned with the guidance on capitalizing costs associated with developing or obtaining internal-use software. ASU 2018-15 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact the adoption of this standard will have on its unaudited condensed consolidated financial statements and related disclosures.
Note 3—Marketable Securities
As of September 30, 2019, the Company’s $27.2 million marketable securities balance consisted of available-for-sale commercial paper and short-term corporate bonds. Unrealized gains on marketable securities as of September 30, 2019 were not material. There were no unrealized losses on marketable securities as of September 30, 2019.
There were no marketable securities as of March 31, 2019.

14

Table of Contents

Note 4—Fair Value Measurements
As of September 30, 2019, and March 31, 2019, assets measured at fair value on a recurring basis consisted of money market funds and commercial paper, which are included in cash and cash equivalents on the unaudited condensed consolidated balance sheets, and short-term corporate bonds and commercial paper, which are included in marketable securities on the unaudited condensed consolidated balance sheets.
The following table summarizes the Company’s assets measured at fair value on a recurring basis and their assigned levels within the fair value hierarchy as of September 30, 2019 (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Total Fair Value
Assets:
 
 
 

 
 
 
 
Money market funds
$
53

 
$

 
$

 
$
53

Commercial paper

 
130,953

 

 
130,953

Corporate bonds

 
12,608

 

 
12,608

Total assets
$
53

 
$
143,561

 
$

 
$
143,614


The following table summarizes the Company’s assets measured at fair value on a recurring basis and their assigned levels within the fair value hierarchy as of March 31, 2019 (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Total Fair Value
Assets:
 
 
 

 
 
 
 
Money market funds
$
83

 
$

 
$

 
$
83

Commercial paper

 
126,050

 

 
126,050

Total assets
$
83

 
$
126,050

 
$

 
$
126,133


Money market funds are included in Level 1 of the fair value hierarchy and are valued at the closing price reported by an actively traded exchange. Commercial paper and short-term corporate bonds are included in Level 2 of the fair value hierarchy and are valued using third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.
There were no liabilities measured at fair value on a recurring basis as of September 30, 2019 or March 31, 2019. There were no transfers of assets or liabilities between the fair value hierarchy levels that occurred during the six months ended September 30, 2019.
Note 5—Accrued Expenses
As of September 30, 2019, and March 31, 2019, accrued expenses consisted of the following (in thousands):
 
September 30, 2019
 
March 31, 2019
Accrued R&D expenses
$
36,620

 
$
46,947

Accrued compensation-related expenses
3,800

 
5,024

Accrued professional service fees
1,053

 
370

Accrued other expenses
2,907

 
1,273

Total accrued expenses
$
44,380

 
$
53,614



15

Table of Contents

Note 6—Financing Arrangements
(A) NovaQuest
In October 2017, the Company, its subsidiaries, as guarantors, and NovaQuest Capital Management, or NovaQuest, entered into (i) a Securities Purchase Agreement, or the NovaQuest Securities Purchase Agreement, and (ii) an Equity Purchase Agreement, or the NovaQuest Equity Purchase Agreement. Pursuant to the NovaQuest Securities Purchase Agreement, the Company had the option, at its discretion, to issue up to $60.0 million aggregate principal amount of notes to NovaQuest and concurrent with each purchase of notes, NovaQuest was obligated to purchase up to $20.0 million of the Company’s common shares on a pro rata basis, subject to certain terms and conditions, through December 31, 2018. The equity purchase price for each such purchase was equal to 105% of the average of the volume-weighted average price for the five consecutive trading days immediately prior to the relevant purchase date.
The Company committed that it would issue at least $30.0 million aggregate principal amount of notes through December 31, 2018, subject to certain terms and conditions. The Company issued $6.0 million aggregate principal amount in October 2017 and $54.0 million aggregate principal amount in December 2018. With the issuance of $6.0 million aggregate principal amount of notes in October 2017, NovaQuest purchased 138,361 common shares for $2.0 million, and with the issuance of $54.0 million aggregate principal amount of notes in December 2018, NovaQuest purchased 1,082,977 common shares for $18.0 million.
The notes bear interest at a rate of 15% per annum, of which 5% is payable quarterly, and 10% is payable on a deferred basis on the earlier of the Amortization Date (as defined below) and the repayment in full of the notes. The notes mature on October 16, 2023. The Company will be required to amortize the principal amount of the notes in equal quarterly installments commencing on November 1, 2020, subject to extension at the Company’s option to November 1, 2021, or the Amortization Date, provided certain terms and conditions are met. Early redemption of the notes is subject to a redemption charge. The Company’s obligations under the NovaQuest Securities Purchase Agreement are secured by a second-lien security interest in substantially all of the Company’s and its subsidiaries’ respective assets (other than intellectual property). The NovaQuest Securities Purchase Agreement includes customary affirmative and restrictive covenants and representations and warranties, including a minimum cash covenant that applies commencing on the Amortization Date, and also includes customary events of default. Upon the occurrence of an event of default, a default interest rate of an additional 5% may be applied to the outstanding note balance and NovaQuest may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the NovaQuest Securities Purchase Agreement.
Pursuant to the NovaQuest Equity Purchase Agreement, NovaQuest committed to purchase up to an additional $20.0 million of the Company’s common shares from time to time at the Company’s discretion through December 31, 2018, with an option to extend the commitment through December 31, 2019, subject to certain terms and conditions. The Company committed that it would exercise its option to sell and issue a minimum of $10.0 million of its common shares under the NovaQuest Equity Purchase Agreement through December 31, 2018, subject to certain terms and conditions. In December 2018, the Company exercised this option and issued and sold 1,203,307 common shares for $20.0 million. The purchase price for the common shares issued was equal to 105% of the average of the volume-weighted average price for the five consecutive trading days immediately prior to the relevant purchase date.
The Company incurred financing costs related to the NovaQuest Securities Purchase Agreement of $1.0 million. During each of the three and six-month periods ended September 30, 2019 and 2018, interest expense included $0.1 million and $0.2 million, respectively, of amortized deferred financing costs related to the NovaQuest notes.
Outstanding debt obligations to NovaQuest are as follows (in thousands):
 
September 30, 2019
 
March 31, 2019
Principal amount
$
60,000

 
$
60,000

Less: unamortized debt issuance costs
(523
)
 
(756
)
Loan payables less unamortized debt issuance costs
59,477

 
59,244

Less: current maturities

 

Long-term debt, net of current maturities and unamortized debt issuance costs
$
59,477

 
$
59,244



16

Table of Contents

(B) Hercules
In October 2017, the Company, its subsidiaries, as guarantors, and Hercules Capital, Inc., or Hercules, entered into a Loan Agreement, or the Hercules Loan Agreement, which provided up to $40.0 million principal amount of term loans, or the Term Loans. A first tranche of $25.0 million principal amount was funded upon execution of the Hercules Loan Agreement in October 2017 and the remaining $15.0 million principal amount was funded in March 2018. The Term Loans bear interest at a variable per annum rate at the greater of (i) the prime rate plus 4.00% and (ii) 8.25%. The interest rate on the Term Loans was 9.00% as of September 30, 2019.
Pursuant to the terms of the Hercules Loan Agreement, the Term Loan Maturity Date has been extended from May 1, 2021 to November 1, 2021 as a result of the achievement of a financing milestone in July 2018. The Company is obligated to make monthly interest payments during the Interest-only Period, subject to certain terms and conditions, followed by monthly installments of principal and interest through the maturity date. The Interest-only Period was extended from June 1, 2019 to December 1, 2019 as a result of the achievement of a financing milestone during July 2018 and was further extended to June 1, 2020 as a result of the achievement of a certain clinical milestone in July 2019. Prepayment of the Term Loans is subject to a prepayment charge. The Company is also obligated to pay an end of term charge of 6.55% of the principal amount of the Term Loans funded under the Hercules Loan Agreement, on the earlier of the maturity date or the date that the Term Loans otherwise become due and payable.
The Company’s obligations under the Hercules Loan Agreement are secured by a first lien security interest in substantially all of the Company’s and its subsidiaries’ respective assets (other than intellectual property). The Hercules Loan Agreement includes customary affirmative and restrictive covenants and representations and warranties. The Hercules Loan Agreement also includes a minimum cash covenant which ceased to apply as a result of the achievement of a certain clinical milestone in July 2019.
Concurrent with each funding of the Term Loans, the Company was required to issue to Hercules a warrant, or the Warrants, to purchase a number of its common shares equal to 3.00% of the principal amount of the relevant Term Loan funded divided by the exercise price, which is based on the lowest three-day volume-weighted average price for the three consecutive trading days prior to the funding date for such Term Loan. The Warrants may be exercised on a cashless basis and are immediately exercisable through the seventh anniversary of the applicable funding date. In connection with the first tranche funded under the Hercules Loan Agreement, the Company issued a Warrant to Hercules exercisable for an aggregate of 49,800 of its common shares at an exercise price of $15.06 per common share. Concurrent with the funding of the second tranche, the Company issued a Warrant to Hercules exercisable for an aggregate of 23,910 of its common shares at an exercise price of $18.82 per common share. The Company accounted for the Warrants as equity instruments since they were indexed to the Company’s common shares and met the criteria for classification in shareholders’ equity (deficit). The relative fair value of the Warrants related to the first and second tranche funding were approximately $0.5 million and $0.3 million, respectively, and were treated as a discount to the Term Loans. This amount is being amortized to interest expense using the effective interest method over the life of the Term Loans.
The Company estimated the fair value of the Warrants using the Black-Scholes model based on the following key assumptions:
 
Tranche 1
 
Tranche 2
Exercise price
$15.06
 
$18.82
Common share price on date of issuance
$14.39
 
$18.96
Volatility
73.2%
 
72.3%
Risk-free interest rate
2.15%
 
2.78%
Expected dividend yield
%
 
%
Contractual term (in years)
7.00
 
7.00


17

Table of Contents

The Company issued the first tranche of the Term Loans at a discount of $2.1 million, including the relative fair value of the related Warrant, and incurred financing costs of $1.3 million. The second tranche of the Term Loans was issued at a discount of $1.3 million, including the relative fair value of the related Warrant. During the three and six-months ended September 30, 2019, interest expense included $0.4 million and $0.9 million, respectively, of amortized debt discount and issuance costs related to the Term Loans. During the three and six months ended September 30, 2018, interest expense included $0.3 million and $0.7 million, respectively, of amortized debt discount and issuance costs related to the Term Loans.
Outstanding debt obligations to Hercules are as follows (in thousands):
 
September 30, 2019
 
March 31, 2019
Principal amount
$
40,000

 
$
40,000

End of term charge
2,620

 
2,620

Less: unamortized debt discount and issuance costs
(1,620
)
 
(2,482
)
Loan payables less unamortized debt discount and issuance costs
41,000

 
40,138

Less: current maturities
(8,402
)
 
(6,142
)
Long-term debt, net of current maturities and unamortized debt discount and issuance costs
$
32,598

 
$
33,996


Note 7—Related Party Transactions
(A) Services Agreements
In July 2016, the Company entered into a services agreement with RSI, effective April 29, 2016, under which RSI agreed to provide certain administrative and R&D services to the Company. Under this services agreement, the Company pays or reimburses RSI for expenses it, or third parties acting on its behalf, incurs for the Company. For any general and administrative, or G&A, and R&D activities performed by RSI employees, RSI charges the Company based upon the relative percentage of time utilized on Company matters by the respective employee. All other third-party pass-through costs are billed to the Company at cost. The unaudited condensed consolidated financial statements include third-party expenses incurred on behalf of the Company that have been paid by RSI and RSL.
In February 2017, the Company and MSI amended and restated the services agreement, effective as of November 11, 2016, to include Myovant Sciences GmbH, or MSG, as a services recipient. In addition, in February 2017, MSG entered into a separate services agreement with RSG, effective as of November 11, 2016, for the provisioning of services by RSG to MSG in relation to services related to clinical development, administrative and finance and accounting activities. The Company refers to the amended and restated services agreement with RSI and the services agreement with RSG, collectively, as the Services Agreements.
Under the Services Agreements, for the three months ended September 30, 2019 and 2018, the Company incurred expenses (inclusive of third-party pass-through costs billed to the Company) of $0.2 million and $1.0 million, respectively, inclusive of the mark-up. Under the Services Agreements, for the six months ended September 30, 2019 and 2018, the Company incurred expenses (inclusive of third-party pass-through costs billed to the Company) of $0.4 million and $4.2 million, respectively, inclusive of the mark-up. The Company has replaced substantially all of the services previously provided by RSI and RSG with its own internally developed capabilities or external professional service providers.
(B) Share-Based Compensation Expense Allocated to the Company by RSL
Share-based compensation expense has been and will continue to be allocated to the Company by RSL over the requisite service period over which RSL common share awards and RSL options are expected to vest and based upon the relative percentage of time utilized by RSL, RSI and RSG employees on Company matters.
In relation to the RSL common share awards and options issued by RSL to RSL, RSI, RSG, and the Company’s employees, the Company recorded share-based compensation expense of less than $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.1 million and $0.4 million for the six months ended September 30, 2019 and 2018, respectively.
(C) Private Placement with RSL
See Note 9(B) for information regarding the Private Placement with RSL.
(D) Underwritten Public Equity Offering of Common Shares
As discussed in Note 9(A), the Company completed an underwritten public equity offering of its common shares on June 4, 2019. RSL purchased 2,424,242 common shares in this offering at the same price offered to the public of $8.25 per common share, for a total purchase price of $20.0 million.

18

Table of Contents

(E) Information Sharing and Cooperation Agreement with RSL
In July 2016, the Company entered into an information sharing and cooperation agreement, or the Cooperation Agreement, with RSL. The Cooperation Agreement, among other things: (1) obligates the Company to deliver periodic financial statements and other financial information to RSL and to comply with other specified financial reporting requirements; and (2) requires the Company to supply certain material information to RSL to assist it in preparing any future SEC filings. On May 24, 2019, the Company entered into Amendment No. 1 to the Cooperation Agreement, pursuant to which RSL has agreed, in connection with each of the Company’s next three public offerings of its common shares, that RSL will (1) provide to the Company and the underwriter(s) engaged by the Company in connection with such public offering an indication of interest for RSL to participate as a purchaser in such public offerings, and (2) enter into a customary lock-up agreement with the underwriters in connection with such public offerings.
Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of the mutual written consent of the parties or when RSL is no longer required by U.S. GAAP to consolidate the Company’s results of operations and financial position, account for its investment in the Company under the equity method of accounting or, by any rule of the SEC, include the Company’s separate financial statements in any filings it may make with the SEC.
(F) Fourth Amended and Restated Bye-Laws
On May 23, 2019, the Company’s board of directors approved, and the holder of a majority of the Company’s issued and outstanding common shares approved by written consent, an amendment and restatement of the Company’s bye-laws, to be the Company’s Fourth Amended and Restated Bye-Laws, which amends the Company’s bye-laws (1) to establish procedures for the appointment of a majority of the directors on the Company’s board by RSL at any time that RSL holds less than 50.0% but more than or equal to 35.0% of the aggregate voting rights attached to the Company’s issued and outstanding common shares, and (2) to remove the procedures and requirements of voting rights of such shares that are treated as controlled shares of a U.S. Person whose controlled shares constitute nine and one-half percent (9.5%) or more of the voting power of all of the Company’s issued common shares. The Fourth Amended and Restated Bye-Laws became effective on June 26, 2019.
Note 8—Income Taxes
The Company is not subject to taxation under the laws of Bermuda since it was organized as a Bermuda Exempted Limited Company, for which there is no current tax regime. The Company’s income tax expense is primarily based on income taxes in the U.S. for federal, state and local taxes. The Company’s effective tax rate for the three months ended September 30, 2019 and 2018 was (0.28)% and (0.13)%, respectively. The Company’s effective tax rate for the six months ended September 30, 2019 and 2018 was (0.37)% and (0.18)%, respectively. The Company’s effective tax rate is driven by the Company’s jurisdictional earnings by location and a valuation allowance that eliminates the Company’s global net deferred tax assets.
The Company assesses the realizability of the deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary.

19

Table of Contents

Note 9—Shareholders’ Equity
(A) Underwritten Public Equity Offering of Common Shares
On June 4, 2019, the Company completed an underwritten public equity offering of 17,424,243 of its common shares (including 2,272,727 common shares sold pursuant to the underwriters’ exercise in full of their option to purchase additional common shares) at a public offering price of $8.25 per common share. After deducting the underwriting discounts and commissions and offering costs payable by the Company, the net proceeds to the Company in connection with the underwritten public equity offering, including from the exercise of the over-allotment option, were approximately $134.5 million.
(B) Private Placement with RSL
In April 2018, the Company entered into a share purchase agreement, or the Purchase Agreement, with RSL, its controlling shareholder, pursuant to which the Company sold to RSL 1,110,015 of its common shares at a purchase price of $20.27 per common share, for gross proceeds of $22.5 million, in a private placement, or the Private Placement.
(C) At-the-Market Equity Offering Program
In April 2018, the Company entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, to sell its common shares having an aggregate offering price of up to $100.0 million from time to time through an “at-the-market” equity offering program under which Cowen acts as the Company’s agent. During the six months ended September 30, 2019 and 2018, the Company issued and sold 106,494 and 2,767,129, respectively, of its common shares under the Sales Agreement. The common shares were sold at a weighted-average price of $24.65 and $21.47 per common share, respectively, for aggregate net proceeds to the Company of approximately $2.5 million and $57.3 million, respectively, after deducting underwriting commissions and offering costs paid by the Company. During the three months ended September 30, 2019 and 2018, no shares were issued and sold under the Sales Agreement. As of September 30, 2019, the Company had approximately $10.4 million of capacity available to it under its “at-the-market” equity offering program.
Note 10—Share-Based Compensation
(A) Myovant 2016 Equity Incentive Plan
In June 2016, the Company adopted its 2016 Equity Incentive Plan, or as amended, the 2016 Plan, under which 4.5 million common shares were originally reserved for issuance. Pursuant to the “evergreen” provision contained in the 2016 Plan, the number of common shares reserved for issuance under the 2016 Plan automatically increases on April 1 of each year, commencing on (and including) April 1, 2017 and ending on (and including) April 1, 2026, in an amount equal to 4% of the total number of shares of capital stock outstanding on March 31 of the preceding fiscal year, or a lesser number of shares as determined by the Company’s board of directors. On April 1, 2019, the number of common shares authorized for issuance increased automatically by 2.9 million shares in accordance with the evergreen provision of the 2016 Plan. As of September 30, 2019, a total of 1.5 million common shares were available for future issuance under the 2016 Plan.
The Company’s employees, directors, officers and consultants are eligible to receive non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other share awards under the 2016 Plan.
(B) Stock Option Repricing
On August 26, 2019 (the “repricing date”), the Company’s Board of Directors approved a stock option award repricing program (the “repricing”) whereby certain previously granted and still outstanding vested and unvested stock option awards held by current employees and certain executives were repriced on a one-for-one basis to $7.78 per share, which represented the closing market price of the Company’s common shares on the repricing date. To be eligible to participate in the stock option repricing program, 735,428 vested stock option awards to certain executives as of the repricing date are subject to a one-year exercise restriction period beginning from the repricing date. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 5,095,013 vested and unvested stock options outstanding with original exercise prices ranging from $8.82 to $24.44, and a median exercise price of $17.28 per share, were repriced under this program.
The repricing resulted in incremental stock-based compensation expense of $9.2 million, of which $0.8 million related to vested employee stock option awards and was expensed on the repricing date, $1.1 million related to vested executive stock option awards and is being amortized over a one-year exercise restriction period beginning from the repricing date, and $7.3 million related to unvested stock option awards and is being amortized on a straight-line basis over the approximately 3.2 year remaining weighted average vesting period of those awards.

20

Table of Contents

(C) Stock Options
A summary of stock option activity under the Company’s 2016 Plan is as follows:
 
Number of Options
Options outstanding at March 31, 2019
5,396,465

Granted
2,470,900

Exercised
(33,461
)
Forfeited
(187,444
)
Options outstanding at September 30, 2019
7,646,460

Options vested and expected to vest at September 30, 2019
7,646,460

Vested options subject to one-year exercise restriction period beginning on August 26, 2019
735,428

Options exercisable at September 30, 2019
1,684,887


(D) Restricted Stock Awards and Restricted Stock Units
A summary of restricted stock award and restricted stock unit activity under the Company’s 2016 Plan is as follows:
 
Number of Shares
Unvested balance at March 31, 2019
956,066

Granted
724,554

Vested
(142,904
)
Forfeited
(8,345
)
Unvested balance at September 30, 2019
1,529,371


(E) Performance Stock Units
On August 26, 2019, the Company’s Board of Directors granted performance stock units covering a total of 408,510 common shares, of which two-thirds of the shares (272,338 shares) subject to each performance stock unit vests based upon the passage of time, and the remaining one-third of the shares (136,172 shares) subject to each performance stock unit vests only if the Company achieves certain clinical trial and regulatory milestones. Total share-based compensation expense associated with the performance stock units is based on the fair value of the Company’s common shares on the grant date, which equals the closing market price of the Company’s common shares on the grant date. The Company recognizes the share-based compensation expense related to the performance stock unit awards subject to time-based vesting on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. The Company will recognize the share-based compensation expense related to the performance stock unit awards subject to vesting based upon the achievement of certain clinical trial and regulatory milestones only if such milestones are achieved. As of September 30, 2019, the performance conditions had not been met and were deemed not probable of being met.

21

Table of Contents

(F) Share-Based Compensation Expense
Share-based compensation expense was as follows (in thousands):
 
Three Months Ended September 30,
 
2019
 
2018
Share-based compensation expense recognized as:
 
 
 
R&D expenses
$
3,618

 
$
1,846

G&A expenses
4,313

 
2,879

Total
$
7,931

 
$
4,725


 
Six Months Ended September 30,
 
2019
 
2018
Share-based compensation expense recognized as:
 
 
 
R&D expenses
$
6,166

 
$
3,407

G&A expenses
8,217

 
5,562

Total
$
14,383

 
$
8,969


Share-based compensation expense is included in R&D and G&A expenses in the accompanying unaudited condensed consolidated statements of operations consistent with the grantee’s salary. Share-based compensation expense presented in the table above includes share-based compensation expense allocated to the Company by RSL as described in Note 7(B). Total unrecognized share-based compensation expense was approximately $78.2 million as of September 30, 2019 and is expected to be recognized over a weighted-average period of approximately 2.9 years.
(G) RSL RSUs
The Company’s Principal Executive Officer was granted 66,845 RSL RSUs during the fiscal year ended March 31, 2017. These RSUs will vest to the extent certain RSL performance criteria are achieved and certain RSL liquidity conditions are satisfied within specified years of the grant date, provided that the Company’s Principal Executive Officer has provided continued service to RSL or its subsidiaries through such date. As of September 30, 2019, the performance conditions had not been met and were deemed not probable of being met. For the three and six months ended September 30, 2019 and 2018, the Company recorded no share-based compensation expense related to these RSL RSUs. As of September 30, 2019, there was $0.9 million of unrecognized compensation expense related to unvested RSL RSUs. The Company will recognize this share-based compensation expense upon achievement of the performance and market conditions through the requisite service period.

22

Table of Contents

Note 11—Leases
The Company leases 40,232 square feet of office space located in Brisbane, California pursuant to an operating lease agreement, as amended, that expires in May of 2026. The Company has the option to extend the lease term for an additional seven years but is not reasonably certain that it will exercise the option and has therefore excluded it from the lease term. The lease agreement, as amended, required the Company to deliver an irrevocable standby letter of credit for the duration of the lease in the amount of $0.5 million to the landlord, the amount of which is subject to reduction of approximately $0.2 million if certain conditions are met. The Company currently has no other significant operating, financing, or short-term leases.
The components of operating lease expense for the Company’s Brisbane, California office space were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
September 30, 2019
 
September 30, 2019
Operating lease cost
$
519

 
$
1,038

Variable lease cost (1)
46

 
55

Total operating lease cost
$
565

 
$
1,093

(1) Variable lease cost includes common area maintenance and utilities costs which are not included in operating lease liabilities and which are expensed as incurred.
Supplemental cash flow information related to the Company’s operating lease right-of-use asset and operating lease liabilities for its Brisbane, California office space was as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
September 30, 2019
 
September 30, 2019
Cash paid for operating lease liabilities
$
501

 
$
997


As of September 30, 2019, the Company’s operating lease for its Brisbane, California office space had a weighted average remaining lease term of 6.7 years and a weighted average discount rate of 12.3%. There were no new leases added during the three and six months ended September 30, 2019.
As of September 30, 2019, maturities of operating lease liabilities for the Company’s Brisbane, California office space were as follows (in thousands):
Years Ended March 31,
 
2020 (remainder of year)
$
1,009

2021
2,065

2022
2,128

2023
2,200

2024
2,339

Thereafter
5,307

Total lease payments
15,048

Less imputed interest (1)
(4,875
)
Present value of future minimum lease payments
10,173

Less operating lease liability, current portion
(853
)
Operating lease liability, long-term portion
$
9,320


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

23

Table of Contents

Note 12—Commitments and Contingencies
(A) Legal Contingencies
The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company accrues for loss contingencies when available information indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the loss contingency, including an estimable range, if possible. The Company is currently not involved in any material legal proceedings.
(B) Contract Service Providers
In the normal course of business, the Company enters into agreements with contract service provides to assist in the performance of its R&D activities. Expenditures to contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, represent significant costs in the Company’s clinical development of its product candidates. Subject to required notice periods and the Company’s obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. The Company expects to enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of capital resources.
(C) Indemnification Agreements
The Company has agreed to indemnify its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification liability is unlimited; however, the Company holds directors’ and officers’ liability insurance which limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. In the normal course of business, the Company also enters into contracts and agreements with service providers and other parties with which it conducts business that contain indemnification provisions pursuant to which the Company has agreed to indemnify the party against certain types of third-party claims. The Company has not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
(D) Takeda Agreements
Under the Takeda License Agreement, the Company will pay Takeda a fixed, high single-digit royalty on net sales of relugolix and MVT-602 products in the Company’s territory, subject to certain agreed reductions. Takeda will pay the Company a royalty at the same rate on net sales of relugolix products for prostate cancer in the Takeda Territory, subject to certain agreed reductions. Royalties are required to be paid, on a product-by-product and country-by-country basis, until the latest to occur of the expiration of the last to expire valid claim of a licensed patent covering such product in such country, the expiration of regulatory exclusivity for such product in such country, or 10 years after the first commercial sale of such product in such country. Under the Takeda License Agreement, there was no upfront payment and there are no payments upon the achievement of clinical development or marketing approval milestones. As the amount and timing of any potential future payments under the Takeda License Agreement are not probable and estimable, no such potential commitments have been included in the unaudited condensed consolidated balance sheet.
In May 2018, the Company entered into a Commercial Manufacturing and Supply Agreement with Takeda, or the Takeda Commercial Supply Agreement. Pursuant to the Takeda Commercial Supply Agreement, Takeda has agreed to supply the Company and the Company has agreed to obtain from Takeda certain quantities of relugolix drug substance according to agreed-upon quality specifications and in order to commercialize relugolix in accordance with the Takeda Agreement. Under the Takeda Commercial Supply Agreement, the Company will pay Takeda a fixed price per kilogram of relugolix drug substance through December 31, 2019. The Company has made, and Takeda has accepted an initial firm order to supply relugolix drug substance to the Company through December 31, 2019. For relugolix drug substance manufactured or delivered on or after such date, the Company will pay Takeda a price per kilogram of relugolix drug substance to be agreed upon between the parties at the beginning of each fiscal year.
The initial term of the Takeda Commercial Supply Agreement began on May 30, 2018 and will continue for five years. At the end of the initial term, the Takeda Commercial Supply Agreement will automatically renew for successive one-year terms, unless either party gives notice of termination to the other at least 12 months prior to the end of the then-current term. The Takeda Commercial Supply Agreement may be terminated by either party upon 90 days’ notice of an uncured material breach of its terms by the other party, or immediately upon notice to the other party of a party’s bankruptcy. Each party will also have the right to terminate the Takeda Commercial Supply Agreement, in whole or in part, for any reason upon 180 days’ prior written notice to the other party, provided that any then-open purchase orders, including the initial firm order for relugolix drug substance through December 31, 2019, will remain in effect and be binding on both parties. The Takeda Commercial Supply Agreement, including any then-open purchase order thereunder, will terminate immediately upon the termination of the Takeda Agreement in accordance with its terms.

24

Table of Contents

The Takeda Commercial Supply Agreement also includes customary provisions relating to, among others, delivery, inspection procedures, warranties, quality management, storage, handling and transport, intellectual property, confidentiality and indemnification.
(E) Financing Arrangements
The Company has entered into financing arrangements with NovaQuest and Hercules. See Note 6 for additional information.
Note 13—Subsequent Events
(A) Leases
During October 2019, the Company entered into a Sublease Agreement, or sublease, for 20,116 square feet of office space within the same building as its current corporate office space located in Brisbane, California. The sublease term expires on February 29, 2024, with total expected minimum payments over the sublease term of approximately $3.9 million, of which approximately $0.4 million relates to the fiscal year ended March 31, 2020 and approximately $3.5 million relate to each of the fiscal years ended March 31, 2021 through 2024. The sublease required the Company to deliver an irrevocable standby letter of credit to the sublessor for the duration of the lease in the amount of $0.2 million.
(B) Letter Agreement with Sumitomo Dainippon Pharma, Co. Ltd.
On October 31, 2019, the Company’s largest shareholder, Roivant Sciences Ltd. (“RSL”) and certain of its affiliates (not including the Company) entered into an agreement with Sumitomo Dainippon Pharma, Co. Ltd. (“Sumitomo”) (such agreement, the “Sumitomo-Roivant Agreement”) which provides that upon the closing of the transactions contemplated thereby (the “Sumitomo Transactions”), a subsidiary of Sumitomo (such entity, the “Acquiring Entity”), will acquire RSL’s ownership interest in the Company and become a significant shareholder of the Company. The Company expects that, at or prior to the closing of the Sumitomo Transactions, RSL will ensure that the Acquiring Entity will obtain not less than a majority of the Company’s outstanding common shares by purchasing additional common shares at prices not below market trading prices and delivering such shares, or voting rights with respect thereto, to the Acquiring Entity.
On October 31, 2019, in connection with RSL’s entry into the Sumitomo-Roivant Agreement, the Company entered into a Letter Agreement with Sumitomo, pursuant to which Sumitomo has committed to enter into an agreement to provide the Company a $350.0 million low-interest, five-year term loan facility (the “Loan Facility”), with no repayments due until the end of the term to fund the Company’s operating expenditures. The Company expects to be able to access the Loan Facility on a quarterly basis, subject to certain terms and conditions. The Loan Facility is expected to be entered into and become effective upon or promptly following the closing of the Sumitomo Transactions.
Pursuant to the Letter Agreement, the Company will take certain actions with respect to the composition of its Board of Directors and the committees of the Board of Directors, as well as amending certain provisions of its bye-laws, and in connection with the closing of the Sumitomo Transactions, the Company and Sumitomo will also enter into an Investors Rights Agreement, which will provide, among other things, that for so long as Sumitomo and its affiliates continue to hold at least 50% of the outstanding common shares of the Company, the Company’s Board of Directors will continue to include a minimum of three independent directors who, until Sumitomo and its affiliates cease to hold at least 35% of the outstanding common shares of the Company, will have approval rights over certain corporate actions, including related-party transactions between the Company and Sumitomo. The Investors Rights Agreement will further include a standstill provision effective until Sumitomo or its affiliates cease to hold at least 35% of the outstanding common shares of the Company, which provides, among other things, (a) a non-waivable condition requiring approval by a majority of the Company’s minority shareholders for any transaction that would cause Sumitomo or its subsidiaries to hold beneficial ownership of the Company of greater than 60% of the outstanding voting power of the Company. Additionally, for a standstill period of three years, any such transaction must also be made on a confidential basis to the Company’s independent directors and is subject to approval by a majority of the Company’s independent directors, or (b) that such transaction be effected under the circumstances set forth in a specified section of the Company’s Bye-Laws having to do with third-party acquisition proposals.
Sumitomo has also agreed that upon the Company’s request, the parties will discuss terms upon which Sumitomo will provide the Company access to its U.S. commercial infrastructure and operational support as the Company moves forward with the commercialization of relugolix.
The Company has further agreed, until the closing of the Sumitomo Transactions, to reasonably assist and reasonably cooperate with RSL in complying with the interim operating covenants contained in the Sumitomo-Roivant Agreement that relate to the Company, in which RSL has agreed, among other things, to cause the Company to conduct its business in the ordinary course, including refraining from taking a list of actions without Sumitomo’s consent, including (subject to certain limitations) but not limited to incurring additional indebtedness, issuance of equity securities, granting of liens, and sales of assets.

25

Table of Contents

Item 2.                                                         Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended March 31, 2019 included in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission, or the SEC, on May 24, 2019. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Myovant,” the “Company,” “we,” “us,” and “our” refer to Myovant Sciences Ltd. and its wholly-owned subsidiaries.
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “to be,” “will,” “would,” or the negative or plural of these words, or similar expressions or variations, although not all forward-looking statements contain these words. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those expressed or implied by these forward-looking statements.
The forward-looking statements appearing in a number of places throughout this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things:
the success and anticipated timing of our clinical trials for relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg), relugolix 120 mg as a monotherapy, and MVT-602;
the anticipated start dates, durations and completion dates of our ongoing and future nonclinical studies and clinical trials;
the anticipated designs of our future clinical trials;
the anticipated future regulatory submissions and the timing of, and our ability to, obtain and maintain regulatory approvals for relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg), including in a single tablet, relugolix 120 mg as a monotherapy, MVT-602 and any future product candidates;
our plans to commercialize relugolix, if approved;
our ability to achieve commercial sales of any approved products, whether alone or in collaboration with others;
our ability to obtain coverage and adequate reimbursement for our products if commercialized;
the rate and degree of market acceptance and clinical utility of any approved products;
our ability to initiate and continue relationships with third-party clinical research organizations and manufacturers;
our ability to quickly and efficiently identify and develop product candidates;
our ability to hire and retain our key scientific or management personnel;
our ability to obtain, maintain and enforce intellectual property rights for our product candidates;
our estimates regarding our results of operations, financial condition, liquidity, capital requirements, access to capital, prospects, growth and strategies;
our ability to continue to fund our operations with the cash, cash equivalents, and marketable securities currently on hand, including our expectations as to for how long these capital resources will enable us to fund our operations;
the anticipated transfer of all of our common shares held by Roivant Sciences Ltd. (“RSL”) to Sumitomo Dainippon Pharma, Co. Ltd. (“Sumitomo”), which is expected to result in Sumitomo obtaining voting rights over a majority of our common shares;
our anticipated transactions contemplated by the Letter Agreement by and between Sumitomo and us;
the potential for us to obtain a priority review voucher from RSL and Sumitomo and the likelihood and timing of when such priority review voucher is expected to be available and transferred to us;
our ability to raise additional capital;
industry trends;
developments and projections relating to our competitors or our industry; and
the success of competing drugs that are or may become available.

26

Table of Contents

Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors known and unknown that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, particularly in the section titled “Risk Factors” set forth in Part II. Item 1A. of this Quarterly Report on Form 10-Q, and in our other filings with the United States, or U.S., Securities and Exchange Commission, or SEC. These risks are not exhaustive. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
All brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Myovant,” the “Company,” “we,” “us,” and “our” refer to Myovant Sciences Ltd. and its wholly-owned subsidiaries.
Business Overview
We are a healthcare company focused on developing innovative treatments for women’s health and prostate cancer. Our lead product candidate is relugolix, an oral once-daily small molecule that acts as a gonadotropin-releasing hormone, or GnRH, receptor antagonist that is currently being evaluated in multiple Phase 3 clinical trials across three distinct indications. We are developing a relugolix combination tablet (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) for the treatment of heavy menstrual bleeding associated with uterine fibroids and for pain associated with endometriosis, and relugolix 120 mg as a monotherapy for advanced prostate cancer. In addition, we are developing MVT-602, an oligopeptide kisspeptin-1 receptor agonist, for the treatment of female infertility as a part of assisted reproduction. Both relugolix and MVT-602 were licensed to us by Takeda Pharmaceuticals International AG, or Takeda, on April 29, 2016.
Since our inception, we have devoted substantially all of our efforts to identifying and in-licensing our product candidates, organizing and staffing our company, raising capital, preparing for and advancing the clinical development of our product candidates and preparing for potential future regulatory approvals and commercialization of relugolix.
On May 14, 2019, we announced that LIBERTY 1, the first of two Phase 3 studies evaluating once-daily relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and six key secondary endpoints, and on July 23, 2019, we announced that LIBERTY 2, the second of two Phase 3 studies evaluating relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and the same six key secondary endpoints. On July 23, 2019, we also announced that a separate clinical study of single-tablet relugolix combination therapy met all required and pre-specified U.S. Food and Drug Administration, or FDA, criteria for bioequivalence. The single-tablet regimen is the formulation intended to be offered to women should relugolix combination therapy receive FDA approval.

On November 12, 2019, we announced that RSL and Sumitomo have committed to us a priority review voucher (“PRV”) expected to become available in early December 2019. We plan to use the PRV in conjunction with our New Drug Application (“NDA”) submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids, potentially decreasing the standard FDA review time.  We have decided to defer our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids until April 2020, which would allow inclusion of the complete 12-month safety data from the LIBERTY open-label extension study, key data that may positively impact the labeled duration of use of the combination tablet. The terms regarding how the PRV will be transferred to us will be determined in connection with the closing of the Roivant-Sumitomo Dainippon Pharma transaction. The transfer is expected to be a related-party transaction and will not involve the issuance of Myovant shares. We also plan to submit a Marketing Authorisation Application (MAA) to the European Medicines Agency in the first quarter of calendar year 2020.

27

Table of Contents

Second Fiscal Quarter Ended September 30, 2019 and Recent Business Highlights
The following summarizes our second fiscal quarter ended September 30, 2019 and recent business highlights:
Relugolix Phase 3 Clinical Programs
On July 23, 2019, we announced that LIBERTY 2, the second of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and the same six key secondary endpoints as LIBERTY 1. In the primary endpoint analysis, 71.2% of women receiving once-daily relugolix combination therapy achieved the responder criteria compared with 14.7% of women receiving placebo (p < 0.0001). 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.
On July 23, 2019, we also announced that a separate clinical study of single-tablet relugolix combination therapy met all required and pre-specified FDA criteria for bioequivalence, providing data necessary to include the one tablet, once-daily dosing regimen of relugolix combination therapy in the NDA submission for approval of the treatment for uterine fibroids.
In October 2019, results from the LIBERTY 1 and LIBERTY 2 studies were presented in a late-breaking oral presentation at the 2019 American Society for Reproductive Medicines Scientific Congress.
We expect top-line data from the Phase 3 HERO trial evaluating the safety and efficacy of relugolix 120 mg in 934 men with advanced prostate cancer in the fourth quarter of calendar year 2019, and assuming positive data, we currently plan to submit an NDA to the FDA for our once-daily, oral relugolix monotherapy tablet for men with advanced prostate cancer in the second quarter of calendar year 2020. Enrollment of 139 additional men with metastatic prostate cancer in the HERO study was completed in July 2019. The objective of enrolling these men was to assess the secondary objective of demonstrating that relugolix can delay the time to progression of the lethal state of the disease, castration-resistant prostate cancer, as compared to leuprolide. We currently expect to present top-line results from this additional cohort, including the castration resistance-free survival endpoint, in the third quarter of calendar year 2020.
In August and October 2019, we completed patient recruitment for the Phase 3 SPIRIT 2 and SPIRIT 1 trials, respectively, evaluating the safety and efficacy of relugolix combination therapy in women with pain associated with endometriosis. We expect to report top-line results from SPIRIT 2 and SPIRIT 1 in the first and second quarters of calendar year 2020, respectively.
Corporate
On October 31, 2019, we entered into a Letter Agreement with Sumitomo in connection with the Sumitomo-Roivant Agreement pursuant to which Sumitomo will acquire all of our common shares held by RSL. The Letter Agreement provides, among other things, that we will enter into a loan agreement with Sumitomo that will provide us with a $350.0 million term loan, that we will enter into an Investors Rights Agreement that is intended to provide certain protections for minority shareholders, that we will take certain corporate actions, and that until the transactions contemplated by the Sumitomo-Roivant Agreement close we reasonably assist RSL in complying with the interim operating covenants contained in the Sumitomo-Roivant Agreement that relate to us, in which RSL has agreed, among other things, to cause us to conduct our business in the ordinary course, including refraining from taking a list of actions without Sumitomo’s consent, including (subject to certain limitations) but not limited to incurring additional indebtedness, issuance of equity securities, granting of liens, and sales of assets. Additional information is included in Note 13(B) to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
On November 12, 2019, we announced that Roivant Sciences and Sumitomo have committed to us a priority review voucher (“PRV”) expected to become available in early December 2019. We plan to use the PRV in conjunction with our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids, potentially decreasing the standard FDA review time.  We have decided to defer our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids until April 2020, which would allow inclusion of the complete 12-month safety data from the LIBERTY open-label extension study, key data that may positively impact the labeled duration of use of the combination tablet. The terms regarding how the PRV will be transferred to us will be determined in connection with the closing of the Roivant-Sumitomo Dainippon Pharma transaction. The transfer is expected to be a related-party transaction and will not involve the issuance of Myovant shares.

28

Table of Contents

Financial History
We have incurred, and expect to continue to incur, significant operating losses and negative operating cash flows as we continue to develop our product candidates and prepare for the potential future regulatory approvals and commercialization of relugolix. To date, we have not generated any revenue, and we do not expect to generate revenue unless and until we successfully complete development and obtain regulatory approval for one of our product candidates.
We have funded our operations primarily from the issuance and sale of our common shares, from the issuance of notes to NovaQuest Capital Management, or NovaQuest, and from the Term Loans we have with Hercules Capital, Inc., or Hercules.
As of September 30, 2019, and March 31, 2019, we had an accumulated deficit of $640.5 million and $502.0 million, respectively. We had net losses of $70.6 million and $65.8 million for the three months ended September 30, 2019 and 2018, respectively, and $138.5 million and $127.9 million for the six months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, we had $157.6 million of cash, cash equivalents, and marketable securities available to us, as compared to $156.1 million of cash and cash equivalents available to us as of March 31, 2019.
Our Product Candidates
Relugolix
We are currently developing relugolix in three target indications: heavy menstrual bleeding associated with uterine fibroids; pain associated with endometriosis; and advanced prostate cancer. Relugolix is an oral, once-daily, small molecule that acts as a GnRH receptor antagonist that binds to and inhibits GnRH receptors in the anterior pituitary gland. Inhibition of GnRH receptors decreases the release of gonadotropins (luteinizing hormone and follicle-stimulating hormone), thereby decreasing the downstream production of estrogen and progesterone by the ovaries in women and testosterone by the testes in men.
As a GnRH receptor antagonist, relugolix has a clinically validated mechanism of action in each of our three target indications. Lowering estrogen and progesterone levels has previously been demonstrated to effectively decrease heavy menstrual bleeding in women with uterine fibroids and to reduce the pelvic pain associated with endometriosis. We are developing relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) administered orally once-daily, with the goal of optimizing estradiol levels to achieve the long-term benefit of relugolix on symptoms of uterine fibroids and endometriosis, while maintaining bone health and mitigating side effects from a low-estrogen state such as vasomotor symptoms. We expect to launch in our women’s health indications with a single-tablet regimen of relugolix combination therapy administered orally once-daily. We have recently conducted a bioequivalence study to demonstrate the bioequivalence of the single-tablet relugolix combination therapy with the co-administered regimen used in the LIBERTY clinical program (one relugolix 40 mg tablet and one tablet containing estradiol 1.0 mg and norethindrone acetate 0.5 mg). The single tablet met FDA bioequivalence criteria. Twelve-month stability studies are required for FDA approval and we expect results from these studies by the end of calendar year 2019. We believe our combination approach with relugolix has the potential to have a better safety and tolerability profile than the currently approved GnRH agonist therapies and has the potential to be used longer-term. The goal of this longer-term treatment is to provide women with uterine fibroids and endometriosis a medical alternative to hysterectomy and other invasive procedures often recommended to treat these conditions.
Decreasing testosterone slows the growth and progression of advanced prostate cancer, such as when the disease recurs or the prostate-specific antigen, or PSA, is rising following prostatectomy or radiation therapy. Relugolix monotherapy is in Phase 3 clinical evaluation as a once-daily oral treatment to lower testosterone. It is being evaluated at a three-times higher dose in men with advanced prostate cancer than the women’s health indications (120 mg orally once-daily following a single 360 mg loading dose compared to 40 mg once daily). We are developing our women’s health relugolix combination and our advanced prostate cancer relugolix monotherapy treatments with the potential of bringing to market two distinct branded products.
Myovant Sciences GmbH, our wholly-owned subsidiary, holds global commercial rights to relugolix, excluding Japan, China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam, including the territories and possessions of each of the foregoing. In May 2018, Takeda announced that it had entered into a licensing agreement granting ASKA Pharmaceutical Co., Ltd. exclusive commercialization rights to relugolix for uterine fibroids and exclusive development and commercialization rights to relugolix for endometriosis, in each indication in Japan, and in January 2019 Takeda and ASKA Pharmaceutical Co., Ltd. announced that Takeda obtained marketing authorization in Japan for Relumina® Tablets 40 mg (generic name: relugolix) for the improvement of symptoms of uterine fibroids including heavy menstrual bleeding, lower abdominal pain, lower back pain, and anemia.

29

Table of Contents

Our Phase 3 Program for the Treatment of Heavy Menstrual Bleeding Associated with Uterine Fibroids
We initiated a Phase 3 clinical program in January 2017, evaluating relugolix combination therapy in women with heavy menstrual bleeding associated with uterine fibroids. The program consisted of two multinational, replicate pivotal clinical studies (LIBERTY 1 and LIBERTY 2) of relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) in women with uterine fibroids and heavy menstrual bleeding. Women in the LIBERTY 1 and LIBERTY 2 studies underwent a screening period requiring up to two menstrual cycles to document heavy menstrual bleeding and were randomized in a 1:1:1 ratio to one of three groups. Women received treatment either with relugolix combination therapy for 24 weeks, relugolix 40 mg once-daily monotherapy for 12 weeks followed by relugolix combination therapy once-daily for an additional 12 weeks, or placebo once-daily for 24 weeks.
We enrolled 388 women in LIBERTY 1 and 382 women in LIBERTY 2. To be enrolled, women must have had a monthly menstrual blood loss volume of at least 80 mL in two consecutive cycles or 160 mL in one cycle, measured by the alkaline hematin method, a quantitative measure of menstrual blood loss from an assessment of collected menstrual products.
Eligible women who completed the LIBERTY 1 or LIBERTY 2 studies were offered the opportunity to enroll in an active treatment extension study in which all women receive relugolix combination therapy for an additional 28-week period for a total treatment period of 52 weeks, designed to evaluate the safety and sustained efficacy of longer-term treatment. We expect the 12-month safety results from the open-label extension study in the first quarter of calendar year 2020. Upon completion of this 52-week total treatment period, eligible women can elect to participate in a second 52-week randomized withdrawal study designed to provide two-year safety and efficacy data on relugolix combination therapy, to evaluate the need for maintenance therapy. We are also conducting a one-year observational study of bone mineral density in women with uterine fibroids or endometriosis to provide additional context for our phase 3 clinical programs.
The primary efficacy endpoint for LIBERTY 1 and LIBERTY 2 was the proportion of all women enrolled who achieved a menstrual blood loss volume of less than 80 mL and at least a 50% reduction in menstrual blood loss volume from baseline during the last 35 days of the 24-week treatment period as measured by the alkaline hematin method. The secondary endpoints included the proportion of women who achieved amenorrhea during the last 35 days of treatment, reduction in pelvic pain, reduction in fibroid volume, reduction in uterine volume, percent change from baseline to week 24 in menstrual blood loss, increase in hemoglobin, and an assessment of the impact of therapy on quality-of-life. Safety, including bone mineral density changes as measured by dual-energy x-ray absorptiometry (DXA), was also assessed.
On May 14, 2019 and July 23, 2019, we announced top-line results for the LIBERTY 1 and LIBERTY 2 studies, respectively. In addition, on July 23, 2019, we announced that a separate clinical study of single-tablet relugolix combination therapy met all required and pre-specified FDA criteria for bioequivalence, providing data necessary to include the one tablet, once-daily dosing regimen of relugolix combination therapy in the NDA submission for approval of the treatment for uterine fibroids.
On November 12, 2019, we announced that Roivant Sciences and Sumitomo have committed to us a priority review voucher (“PRV”) expected to become available in early December 2019. We plan to use the PRV in conjunction with our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids, potentially decreasing the standard FDA review time.  We have decided to defer our NDA submission for a once-daily, relugolix combination tablet for the treatment of heavy menstrual bleeding and uterine fibroids until April 2020, which would allow inclusion of the complete 12-month safety data from the LIBERTY open-label extension study, key data that may positively impact the labeled duration of use of the combination tablet. The terms regarding how the PRV will be transferred to us will be determined in connection with the closing of the Roivant-Sumitomo Dainippon Pharma transaction. The transfer is expected to be a related-party transaction and will not involve the issuance of Myovant shares. We also also plan to submit a Marketing Authorisation Application (MAA) to the European Medicines Agency in the first quarter of calendar year 2020.

30

Table of Contents

LIBERTY 1
On May 14, 2019, we announced that LIBERTY 1, the first of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and six key secondary endpoints. Relugolix combination therapy maintained bone mineral density at levels comparable to placebo over 24 weeks and was generally well tolerated.
In the primary endpoint analysis, 73.4% of women receiving once-daily oral relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) achieved the responder criteria compared with 18.9% of women receiving placebo (p < 0.0001). A response was defined as a menstrual blood loss volume of less than 80 mL and a 50 percent or greater reduction from baseline in menstrual blood loss volume during the last 35 days of the 24-week treatment period measured using the alkaline hematin method. On average, women receiving relugolix combination therapy experienced an 84.3% reduction in menstrual blood loss from baseline, a clinically relevant secondary endpoint.
Bone mineral density was comparable between the relugolix combination therapy and placebo groups. The distribution of the change in bone mineral density, including outliers, was similar for the relugolix combination therapy and placebo groups at 24 weeks, as assessed by DXA.
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 in pain in women with pain at baseline, improvement in quality of life, amenorrhea (defined as no or negligible blood loss), improvement in anemia in those women with anemia at baseline, and reduction in uterine volume. The seventh key secondary endpoint, reduction in uterine fibroid volume, did not achieve statistical significance.
The overall incidence of adverse events in the relugolix combination therapy and placebo groups was comparable (62% vs. 66%). In the relugolix combination therapy group 5% of women discontinued treatment early due to adverse events compared with 4% in the placebo group. The only adverse event in the relugolix combination therapy arm occurring in at least 10% of women and more frequently than in the placebo arm was hot flush (11% versus 8%). There were no pregnancies in the relugolix combination therapy group and one in the placebo group. There were two serious adverse events related to study drug: one fibroid expulsion and one for pelvic pain.
LIBERTY 2
On July 23, 2019, we announced that LIBERTY 2, the second of two Phase 3 studies evaluating once-daily relugolix combination therapy in women with uterine fibroids and heavy menstrual bleeding, met its primary efficacy endpoint and the same six key secondary endpoints as were achieved in LIBERTY 1. In addition, relugolix combination therapy maintained bone mineral density at levels comparable to placebo over 24 weeks and was generally well tolerated.
In the primary endpoint analysis, 71.2% of women receiving once-daily relugolix combination therapy achieved the responder criteria compared with 14.7% of women receiving placebo (p < 0.0001). A response was defined as a menstrual blood loss volume of less than 80 mL and a 50% or greater reduction from baseline in menstrual blood loss volume during the last 35 days of treatment measured using the alkaline hematin method. On average, women receiving relugolix combination therapy experienced a highly significant 84.3% reduction in menstrual blood loss from baseline to Week 24 (p < 0.0001). In addition, a significantly greater proportion of women suffering from moderate-to-severe pain from uterine fibroids at baseline experienced no pain or minimal pain during the last 35 days of treatment