In October 2017, the Company, its following subsidiaries, Myovant Sciences, Inc., or MSI, Myovant Holdings Limited, or MHL, a private limited company incorporated under the laws of England and Wales, Myovant Sciences GmbH, or MSG, a company with limited liability formed under the laws of Switzerland, and Myovant Sciences Ireland Limited, or MSIL, a company with limited liability formed under the laws of Ireland, 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 has 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 is 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 will be 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 has committed that it will issue at least $30.0 million aggregate principal amount of notes through December 31, 2018, subject to certain terms and conditions, of which $6.0 million aggregate principal amount was issued in October 2017. With this issuance of $6.0 million aggregate principal amount of notes in October 2017, NovaQuest also purchased 138,361 common shares for $2.0 million in accordance with the terms of the NovaQuest Securities Purchase Agreement.

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 option of the Company to November 1, 2021, or the Amortization Date, provided certain terms and conditions are met as set forth in the NovaQuest Securities Purchase Agreement. 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 has 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 as set forth in the NovaQuest Equity Purchase Agreement. The Company has committed that it will 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. The purchase price for the common shares issued pursuant to the NovaQuest Equity Purchase Agreement will be 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 expensescosts related to the NovaQuest Securities Purchase Agreement of $1.0 million which are recorded as an offset to long-term debt on the Company'sCompany’s unaudited condensed consolidated balance sheets. These deferred financing costs are being amortized over the term of the debt using the effective interest method, and are included in interest expense in the Company’s unaudited condensed consolidated statements of operations. During the three and six months ended December 31, 2017,September 30, 2018, interest expense included $0.1 million and $0.2 million of amortized deferred financing costs related to the NovaQuest notes.

In October 2017, the Company, its following subsidiaries, MSI, MHL, MSG and MSIL as guarantors, and Hercules Capital, Inc., or Hercules, entered into a Loan Agreement, or the Hercules Loan Agreement, which provides 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 is available at the Company’s discretion throughwas funded in March 31, 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 current interest rate on the Term Loans was 8.50%9.25% at December 31, 2017. TheSeptember 30, 2018. Pursuant to the terms of the Hercules Loan Agreement, the Term Loans mature onLoan Maturity Date has been extended from May 1, 2021 subject to extension to November 1, 2021 if certain milestones are met.as a result of the achievement of a financing milestone in July 2018. The Company is obligated to make monthly payments of accrued interest until June 1, 2019, or 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 has been extended to December 1, 2019 as a result of the achievement of a financing milestone during July 2018. The Interest-only Period may be further extended until June 1, 2020 if a certain milestones areclinical milestone is met, as definedspecified in the Hercules Loan Agreement. Prepayment of the Term LoansLoan 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 at maturity.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, including a minimum cash covenant that ceases to apply if the Company achieves certain clinical development and financing milestones as set forth in the Hercules Loan Agreement. The Hercules Loan Agreement also includes customary events of default. Upon the occurrence of an event of default, a default interest rate of an additional 5.00% may be applied to the outstanding principal balance, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Hercules Loan Agreement.

Concurrent with each funding of the Term Loans, the Company is 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 will beis 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 WarrantWarrants as an equity instrumentinstruments since it wasthey were indexed to the Company’s common shares and met the criteria for classification in shareholders’ equity.equity (deficit). The relative fair value of the Warrant onWarrants related to the date of issuance wasfirst and second tranche funding were approximately $0.5 million and was$0.3 million, respectively, and were treated as a discount to the Term Loans. This amount will beis 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 WarrantWarrants using the Black-Scholes model based on the following key assumptions:

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 expensescosts of $1.3 million relating to the Hercules Loan Agreement which are recorded as an offset to long-term debt on the Company'sCompany’s unaudited condensed consolidated balance sheets. 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. The debt discount and deferred financing costs are being amortized over the term of the debt using the effective interest method, and are included in interest expense in the Company’s unaudited condensed consolidated statements of operations. During the three and six months ended December 31, 2017,September 30, 2018, interest expense included $0.3 million and $0.7 million of amortized debt discount and issuance costs related to the Term Loans.

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

In July 2016, the Company entered into a formal 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 the employee compensation expense plus a pre-determined mark-up. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters by the respective employee.employee, which the Company believes is reasonable. All other third-party pass thru costs are billed to the Company at cost. The accompanying interim unaudited condensed consolidated financial statements include third-party expenses incurred on behalf of the Company that have been incurredpaid 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 December 31,September 30, 2018 and 2017, and 2016, the Company incurred expenses (inclusive of $2.9third party pass thru costs billed to the Company) of $1.0 million and $2.7$1.0 million, respectively, inclusive of the pre-determined mark-up. ForUnder the nineServices Agreements, for the six months ended December 31,September 30, 2018 and 2017, and 2016, the Company incurred expenses (inclusive of $5.0third party pass thru costs billed to the Company) of $4.2 million and $6.8$2.1 million, respectively, inclusive of the pre-determined mark-up. These amounts are included in R&D expenses and G&A expenses based upon the nature of the service performed under the Services Agreements.

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 provision for income taxes is primarily based on income taxes in the United StatesU.S. for federal, state and local taxes. The Company’s effective income tax rate for the three months ended December 31,September 30, 2018 and 2017 was (0.13)% and 2016 was 0.51% and (0.36)%0.88%, respectively. The Company’s effective income tax rate for the ninesix months ended December 31,September 30, 2018 and 2017 and 2016 was (0.64)(0.18)% and (0.06)(1.56)%, respectively. The Company's effective income tax rate for all periods presented differs fromis driven by the Bermuda federal statutory rate of 0% primarily due to the U.S. permanent unfavorable tax differences,Company’s jurisdictional earnings by location and a valuation allowance that effectively eliminates the Company'sCompany’s global net deferred tax assets.

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

Share-based compensation expense related to unvested restricted share awards and restricted stock units was $10.3 million, which is expected to be recognized over the remaining weighted-average service period of 3.87 years.as follows (in thousands):

Share-based compensation expense is included in R&D and G&A expenses in the accompanying interim 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 below in Note 8(E).

In relation to the RSL common share awards and RSL options issued by RSL to RSL, RSI and RSIRSG employees, the Company recorded share-based compensation expense of $0.2$0.1 million and $0.6$0.3 million, respectively, for the three months ended December 31,September 30, 2018 and 2017, and 2016 and $0.7$0.3 million and $4.6$0.5 million, respectively, for the ninesix months ended December 31, 2017September 30, 2018 and 2016.2017.

The RSL common share awards and RSL options granted by RSL to RSL, RSI and RSG employees are valued by RSL at fair value on the date of grant and that fair value is recognized as share-based compensation expense over the requisite service period. As RSL is a non-public entity, the RSL common share awards and RSL options are classified as a levelLevel 3 financial instrument within the fair value hierarchyby RSL due to their unobservable nature. Significant judgment and estimates were used by RSL to estimate the fair value of these awards and options, as they are not publicly traded. RSL common share awards and RSL options are subject to specified vesting schedules and requirements (a mix of time-based and performance-based andevents). The fair value is based on various corporate event-based considerations, including targets for RSL’s post-IPO market capitalization and future financing events). RSL estimated theThe fair value of each RSL option is estimated on the date of grant using the Black-Scholes closed-form option-pricing model.

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”“would,” or the negative or plural of these words, or similar expressions or variations, although not all forward-looking statements contain these identifying 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 projected in theexpressed 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:

We were incorporated in February 2016 andSince our operations to dateinception, we have been limiteddevoted substantially all of our efforts to organizing and staffing our company, raising capital, identifying and in-licensing our product candidates, including acquiring theworldwide rights (excluding Japan and certain other Asian countries) to relugolix and worldwide rights to MVT-602, and preparing for and advancing the clinical development of our product candidates.candidates and preparing for the potential commercialization of relugolix.

We have incurred, and expect to continue to incur, significant operating losses and negative cash flows for at least the next several years 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. We have never been profitable, have incurred net losses in each period since inceptionrevenue, and we do not anticipate thatexpect to generate revenue unless and until we will achieve profitability in the near term. We expect our net lossessuccessfully complete development and negative cash flows to increase as we continue the clinical development of, and seekobtain regulatory approval for one of our product candidatescandidates.

We have funded our operations primarily from the issuance and growsale of our company.common shares and from the financing commitments available to us from NovaQuest Capital Management, or NovaQuest, and Hercules Capital, Inc., or Hercules. Through September 30, 2018, our sources of funding have primarily consisted of:

As of September 30, 2018, and March 31, 2017,2018, we had an accumulated deficit of $180.2$356.4 million and $85.1$228.5 million, respectively. We recorded net losses of $41.8$65.8 million and $8.1$29.9 million for the three months ended December 31,September 30, 2018 and 2017, and 2016, respectively, and net losses of $95.0$127.9 million and $61.8$53.2 million for the ninesix months ended December 31,September 30, 2018 and 2017, respectively. As of September 30, 2018, we had $154.3 million of cash and 2016, respectively. We have determined that we have one operating and reporting segment.

Our Product Candidates

The HERO trial has completed enrollment after randomizing 934 men with advanced prostate cancer who require androgen deprivation therapy and randomizes menin a 2:1 ratio to treatment with either oral relugolix 120 mg once daily (after a single oral loading dose of 360 mg) or a depot injection of leuprolide (per national or regional product label) for a period of at least 48 weeks. We expect to enroll approximately 915 men into this trial, with approximately 610 men enrolled into the active treatment arm and 305 men into the leuprolide arm. The decrease in enrollment from 1,125 to 915 reflects a change in the strategy in China. The decrease in enrollment does not affect the statistical powering of the primary endpoint analysis, which has always been based on the first 915 patients enrolled in the HERO trial. We are in discussions with Takeda regarding the strategy for registration of relugolix for prostate cancer in China. Based on FDA discussions, we are onlybelieve that we will be required to conduct only one Phase 3 trial with a single relugolix arm to gain approval for relugolix in men with advanced prostate cancer in the United States; however,U.S. Nonetheless, we have designed the trial to include a second arm with leuprolide to demonstrate that treatment with relugolix is noninferior to leuprolide in achieving sustained suppression of testosterone to castrate levels over 48 weeks, an outcome expected to be required for approval in other major markets.markets such as Europe and Japan. We expect to complete enrollment during calendar year 2018 and anticipatepresent top-line results from this Phase 3the HERO study during calendar year 2019.in the fourth quarter of 2019 and to submit the U.S. NDA filing in early 2020.

WeTo date, we have not generated any revenue, and we do not expect to generate any revenue from the sale of any products unless or until we obtain regulatory approval of and commercialize relugolix in combination with estradiol and a progestin, relugolix monotherapy, MVT-602 or a potential future product candidate.

Since our inception, our operations have primarily been limited to the licensein-licensing of the rights to relugolix and MVT-602, the expansion of our team, and the initiation and ongoing activities of our Phase 3clinical programs. Our research and development, or R&D, expenses include program-specific costs, as well as unallocated costs.

Unallocated costs include:

General and administrative, or G&A, expenses consist primarily of personnel relatedemployee-related expenses, such as salaries, share-based compensation, benefits and travel, professional fees for legal, consulting, auditing and accounting fees,tax services, information technology costs, general overhead, expenses and costs billed to us under ourthe Services Agreements, and consulting services relatingshare-based compensation expense allocated to our formation and corporate matters.us from RSL.

For the ninesix months ended December 31,September 30, 2018, we used $108.9 million in operating activities primarily due to our ongoing development and clinical trials for relugolix and MVT-602. This was primarily attributable to a net loss for the period of $127.9 million, along with an increase of $3.2 million in prepaid expenses and other current assets and a decrease of $1.4 million in amounts due to RSL, RSI and RSG. These amounts were partially offset by an increase in accrued expenses of $8.2 million and an increase in accounts payable of $3.8 million which were primarily due to the progress of our ongoing Phase 3 clinical trials of relugolix, $9.0 million of non-cash share-based compensation expense as a result of an increase in headcount, and $1.1 million of total depreciation and amortization expense.

For the ninesix months ended December 31, 2017 and 2016,September 30, 2018, $0.4 million was used in investing activities, all for the purchase of furniture and equipment.

For the ninesix months ended December 31, 2017, $30.7 million was provided by financing activities. This was primarily due to the net proceeds from debt financings of $28.8 million and net proceeds from the issuance of common shares of $1.9 million.

During the nine months ended December 31, 2017,In May 2018, we entered into a Commercial Manufacturing and Supply Agreement with Takeda, or the NovaQuest Securities Purchase Agreement, the NovaQuest Equity Purchase Agreement and the Hercules LoanTakeda Commercial Supply Agreement. See “Note 4—Long-term Debt”Note 9, “Commitments and Contingencies” to our interim unaudited condensed consolidated financial statements contained herein for a further discussion of these agreements.this agreement.

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

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with United StatesU.S. generally accepted accounting principles, or U.S GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities costs, and disclosures of contingent assets and liabilities as of the dates of the unaudited condensed consolidated financial statements and the reported amounts of expenses incurred during the reporting periods. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of some of our costs incurred under the Services Agreements, which costs are charged to R&D and G&A expense,expenses, as well as assumptions used to estimate the fair value of our common sharesshare and stockoption awards. We base our estimates on historical experience and on various other factorsinformation available to us at the time we make the estimates and judgments that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d)13a-15(f) and 15d-15(d)15d-15(f) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Qfiscal quarter ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may become involved in legal proceedings relatingrelated to claims arising from the ordinary course of business. On October 2, 2017,We are not currently a Consent Orderparty to any material legal proceedings, and we are not aware of Dismissal resolving all claims and dismissing with prejudice the previously disclosed litigation involving AbbVie Inc. was signed by all parties and entered by the presiding judge in the Circuit Court of the Nineteenth Judicial Circuit, Lake County, Illinois. The resolution of this matter does notany pending or threatened legal proceedings against us that we believe could have anya material adverse effect on our business, operating results, or financial condition. See Part II, Item 1 “Legal Proceedings” of our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed with the SEC on August 10, 2017, for a prior discussion of this proceeding.

We are a clinical-stage biopharmaceutical company with a limited operating history. We were formed in February 2016, and our operations to date have been limited to organizing and staffing our company, raising capital, identifying and in-licensing our product candidates, including acquiring worldwide rights (excluding Japan and certain other Asian countries) to relugolix and worldwide rights to MVT-602, preparing for and advancing our product candidates into clinical development, and conducting global clinical trials.trials, and preparing for the potential commercialization of relugolix. We have not yet demonstrated an ability to successfully complete a large-scale, pivotal clinical trial, obtain marketing approval, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, we have no meaningful operations upon which to evaluateWe may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown difficulties in achieving our business objectives. If our product candidates are approved by the U.S. Food and Drug Administration, or the FDA, we will need to expand our capabilities to support commercial activities and we may not be successful in adding such capabilities. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.

Investment in pharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or fail to become commercially viable. WeSince inception, we have never generated any product revenue,focused our efforts on research and we cannot estimatedevelopment with precision the extentgoal of our futureachieving regulatory approval and have incurred significant operating losses. We do not currently have any products that are available for commercial sale and we may never generate product revenue or achieve profitability. Our net loss was $95.0$127.9 million and $143.3 million for the ninesix months ended DecemberSeptember 30, 2018 and year ended March 31, 20172018, respectively, and, as of December 31, 2017,September 30, 2018, we had an accumulated deficit of $180.2$356.4 million.

We expect to continue to incur substantialsignificant operating losses and increasing losses throughnegative cash flows for at least the projectednext several years as we continue to develop our product candidates and prepare for the potential future regulatory approvals and commercialization of relugolix. Past operating losses, combined with expected future operating losses, have had and will continue to have an adverse effect on our results of operations, financial position and working capital. If we obtain regulatory approval for relugolix or MVT-602, we expect to incur increased sales, marketing and MVT-602. manufacturing expenses. As a result, we expect to continue to incur significant operating losses and negative cash flows for at least the next several years.

Neither relugolix nor MVT-602 has been approved for marketing anywhere in the world, and they may never receive such approval. As a result, we have never generated any product revenue. We are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. Our ability to generate product revenue and achieve profitability is dependent on our ability to complete the development of relugolix and MVT-602, obtain necessary regulatory approvals, and have relugolix and MVT-602 manufactured and successfully marketed. We cannot assure you that we will be profitable even if we successfully commercialize relugolix or MVT-602. IfEven if we do successfully obtain regulatory approvalapprovals to market relugolix or

MVT-602, our revenue will be dependent upon, in part and among other things, the size of the markets in the territories for which we gain regulatory approval, the number of competitors in such markets, the accepted price for relugolix and MVT-602 and whether we own the commercial rights for those territories. For example, ORILISSA™, an oral GnRH receptor antagonist for the management of moderate to severe pain associated with endometriosis, was recently approved by the FDA. The launch and commercialization of such competing drug may limit the revenue from relugolix. If the indication approved by regulatory authorities is narrower than we expect, or the treatment population is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of relugolix or MVT-602, even if approved. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Failure to become and remain profitable may adversely affect the market price of our common shares and our ability to raise capital and continue operations.

We currently haveare a clinical-stage biopharmaceutical company with no products that are approved for commercial salesale. We have invested and may never be ableexpect to develop marketable products. We expect thatcontinue to invest a substantial portion of our efforts and expenditures overin the next few years will be devoted to thedevelopment and advancement of our product candidates, relugolix in combination with low-dose estradiol and MVT-602 through clinical trials. Accordingly,a progestin, relugolix monotherapy, and MVT-602. Our business and our business currentlyability to generate revenue depends heavily on the successful clinical development, regulatory approval and commercialization of these product candidates.candidates, which may never occur. We cannot be certain that relugolix for eithercurrently generate no revenues from sales of our targeted women's health indications or for advanced prostate cancer or MVT-602 willany product. We may never receive regulatory approval for any indication for relugolix or MVT-602 and may never be successfully commercialized even if we receive regulatory approval.able to develop or commercialize a marketable product. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of products are and will remain subject to extensive regulation by the FDA and other regulatory authorities in the United StatesU.S. and other countries that each have differing regulations.countries. We are not permitted to market relugolix or MVT-602 in the United StatesU.S. until we receive approval of New Drug Applications, or NDAs, or in any foreign country until we receive the requisite approvals from the appropriate regulatory authorities in such countries for marketing authorization. We have not submitted an NDA to the FDA, or any comparable application to any other regulatory authority and do not expect to be in a position to do so for the foreseeable future.countries.

Obtaining approval of an NDA or similar regulatory approval is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or other foreign regulatory authority may delay, limit or deny approval of either formulation of relugolix or MVT-602. See the Risk Factor titled “The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, and inherently unpredictable, and even if we obtain approval for a product candidate in one country or jurisdiction, we may never obtain approval for or commercialize it in any other jurisdiction which would limit our ability to realize our full market potential.” We have not submitted an NDA to the FDA, or any comparable application to any other regulatory authority.

Even if we receive regulatory approval for one or both formulations of relugolix or MVT-602, for many reasons, including:

If we cannot successfully execute any one of the FDA or other relevant regulatory authorities;

GnRH antagonists, like relugolix, may be delayed and/or its commercial opportunity could be limited.

limit duration of use. This risk, and a related risk of hot flush, aremay be mitigated by the co-administration of low-dose estradiol and progestin as hormonal add-back therapy.a progestin. A key part of our relugolix clinical development strategy is to formulate a fixed-dose combination of relugolix with low-dose estradiol and a progestin add-back therapy to facilitate patient convenience and compliance. If we are unsuccessful in our attempts to formulate a fixed-dose combination in time for the initial application for market authorization in the U.S., we expect to instead seek approval for relugolix as monotherapy to be co-administeredtablets co-packaged with co-packaged commercially available low-dose estradiol and a progestin. This would potentially decrease our advantages relative to our competition by requiring patients to take two pills once daily instead of just one pill once daily.daily until the fixed-dose combination could be developed. If our competitors develop a fixed-dose combination with hormonal add-back therapy before we do, or if we are unable to do so, then we would be at a competitive disadvantage and this could limit our commercial opportunity. We are not aware of any barriers preventing competitors from developing or achieving regulatory approval of a fixed-dose combination.

We are conducting our Phase 3 clinical trials of relugolix in our target women’s health indications with co-administration of relugolix and commercially available low-dose estradiol and a progestin products.product co-packaged. We intend to conduct bridging studies to support the submission of NDAs or comparable applications for the proposed fixed-dose combination for each of our target women’s health indications. Any such bridging study may be unsuccessful or insufficient to support approval of the fixed-dose combination formulation, which would delay and increase the expenses associated with our development program and could limit our commercial opportunity.

In October 2017, we and our subsidiaries entered into the NovaQuest Securities Purchase Agreement and the Hercules Loan Agreement. Our obligations under the notes issued pursuant to the NovaQuest Securities Purchase Agreement are secured by a second lien security interest in substantially all of our (andand our subsidiaries’) assets, other than intellectual property, and our obligations under the Hercules Loan Agreement are secured by a first lien security interest in substantially all of our and our subsidiaries’ respective assets, other than intellectual property.

Each of these agreements includes customary affirmative and restrictive covenants and representations and warranties, including a minimum cash covenant. Under the NovaQuest Securities Purchase Agreement, a minimum cash covenant applies commencing on November 1, 2020 (or November 1, 2021 if extended pursuant to the terms of the NovaQuest Securities Purchase Agreement) and under the Hercules Loan Agreement, a minimum cash covenant applies until such time as the CompanyMyovant achieves certainboth the clinical development and financing milestones as set forth in the Hercules Loan Agreement. Other restrictive covenants include limitations on additional indebtedness, liens (including a negative pledge on intellectual property and other assets), investments, distributions (including dividends), transfers, mergers or acquisitions, taxes, corporate changes and deposit accounts. Compliance with these covenants may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

Additionally, the NovaQuest Securities Purchase Agreement and the Hercules Loan Agreement each also includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, cross acceleration to certain debt, certain events relating to bankruptcy or insolvency and certain events relating to United Kingdom or Irish pension plans. Upon the occurrence of an event of default under the NovaQuest Securities Purchase Agreement, a default interest rate of an additional 5.0% will apply to the “Secured Obligations” as defined inoutstanding obligations under the NovaQuest Securities Purchase Agreement, and NovaQuest, as the agent for the holders of the notes, may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the NovaQuest Securities Purchase Agreement. Upon the occurrence of an event of default under the Hercules Loan Agreement, a default interest rate of an additional 5.0% may be applied to the outstanding principal balance,obligations under the Hercules Loan Agreement, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Hercules Loan Agreement. In addition, upon the occurrence of certain bankruptcy and insolvency events, our obligations under the notes issued pursuant to the NovaQuest Securities Purchase Agreement and our obligations under the Hercules Loan Agreement would automatically become due and payable. We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay these outstanding obligations at the time any event of default occurs. In that case, we may be required to delay, limit, reduce or terminate our clinical development efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. NovaQuest and Hercules could also exercise their rights to take possession and dispose of the collateral securing our obligations, which collateral includes all of our and our subsidiaries’ respective assets other than intellectual property. Our business, financial condition and results of operations could be substantially harmed as a result of any of these events.

We expect to spend substantial amounts to complete the development of, seek regulatory approvals for and commercialize relugolix and MVT-602. These expenditures will include costs associated with our license agreement withthe Takeda License Agreement, pursuant to which we are obligated to cover substantial development costs of relugolix and MVT-602 and make royalty payments in connection with the salenet sales of resulting products, if any.

We will require additional capital to complete the development and potential commercialization of relugolix and MVT-602. Because the length of time and activities associated with successful development of relugolix and MVT-602 are highly uncertain, we are unable to estimate with certainty the actual fundscapital we will require for development and any approved marketing and commercialization activities. Under the terms of our financing agreements withthe NovaQuest Securities Purchase Agreement and Hercules,the NovaQuest Equity Purchase Agreement, failure of relugolix clinical trials would negatively impact our ability to obtain the remaining financing currently available under the financing agreements.to us. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

harm our product candidate development efforts. Because of the numerous risks and uncertainties associated with the development and potential commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays, operating expenditures and capital requirements associated with our current and anticipated product development programs.

We expect that significant additional capital will be needed in the future to continue our planned operations. Until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, strategic alliances, and license and development agreements or other collaborations. To the extent that we raise additional capital by issuing equity securities, our existing shareholders’ ownership may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common shareholder. Our existing agreements with NovaQuest require that we issue to NovaQuest additional notes and additional common shares. Further, our existing agreements with NovaQuest and Hercules involve, and any agreements for future debt or preferred equity financings, if available, may involve, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

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

We have licensed our core intellectual property relating to relugolix and MVT-602 from Takeda. If, for any reason, our license agreement withthe Takeda License Agreement is terminated or we otherwise lose thosethe rights thereunder, it would adversely affect our business. Our license agreement withThe Takeda License Agreement imposes on us obligations relating to exclusivity, territorial rights,restrictions, development, commercialization, funding, payment, diligence, sublicensing, insurance, intellectual property protection, and other matters. If we breach any material obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages to Takeda and Takeda may have the right to terminate our license, which would result in us being unable to develop, manufacture, and sell relugolix and MVT-602.

Pursuant to our license agreement with Takeda,In June 2016, we and aone of Takeda’s affiliates, Takeda affiliate havePharmaceutical Company Limited, or Takeda Limited, entered into an agreement for the manufacture and clinical supply of clinical trial material.relugolix. Under this agreement, Takeda Limited will supply us, and we are required towill obtain from Takeda’s affiliateTakeda Limited, all of our requirements for relugolix drug substance and drug product to be used under our development plan. The agreementplans for all indications. Takeda Limited is also provides for Takeda’s affiliate to reasonably assistassisting us with a technical transfer of the manufacturing process for relugolix to us orand our designee forand we are paying the expenses related to such transfer. On May 30, 2018, we entered into a Commercial Manufacturing and Supply Agreement with Takeda, or the Takeda Commercial Supply Agreement, pursuant to which Takeda will manufacture and supply us with relugolix drug substance to support the commercial production.launch of relugolix, if marketing authorization is granted. Takeda has also agreed to assist with the transfer of technology and manufacturing know-how to a second contract manufacturing organization. We will pay the expenses related to such transfer. If Takeda’s affiliateTakeda fails to fulfill its obligations under this agreement to manufacture and supply clinical and/or commercial quantities of relugolix to us or fails to enable the transfer of the manufacturing process for relugolix to us or our designee, our development plans and commercialization of relugolix, if approved, could be significantly delayed or otherwise adversely affected.

As of December 31, 2017, we had 71 employees. We currently rely in part on administrative support, business development, and other services provided by Roivant Sciences, Inc., or RSI, and Roivant Sciences GmbH, or RSG, wholly owned subsidiaries of Roivant Sciences Ltd., or RSL, pursuant to ourthe Services Agreements we have with RSI and RSG, as described above and in our Annual Report on Form 10K for the fiscal year ended March 31, 2017, filed with the SEC on June 14, 2017 under Item 1. Business “Our Key Agreements—Services Agreements with Roivant Sciences, Inc. and Roivant Sciences GmbH.”these entities. Personnel and support staff who provide services to us under these services agreementsServices Agreements are not required to do so, and we do not expect that they will have as their primary responsibility thetreat management and administration of our business as their primary responsibility or act exclusively for us.us, and we do not expect them to do so. Under the Services Agreements, RSI and RSG have the discretion to determine which ofwho, among their employees, will perform services for us.

In addition, the level of support we receive from RSI and RSG has decreased and we expect that it will continue to decrease in the near term. As a result, we will be required to replace many of these services with our own internally developed teams or engage external professional service providers. We primarily intend to develop these capabilities internally, and may incur increased costs as we hire and train additional personnel. If we are unable to contract with substitute service providers on similar terms,develop these capabilities or we fail to do so in a timely fashion or at all, and effective manner, the costs of substituting service providers may be substantial. In addition, a substitute service provider may not be able to provide the same level of services due to lack of pre-existing knowledge or synergies. Any terminationoperations of our relationship with RSI or RSG and any delay in appointing or finding a suitable replacement provider, if one exists, could make it difficult for us to operatebusiness would be adversely affected.

We expect to hire additional employees for our managerial team and other teams supporting G&A, commercial, medical affairs, operations and many other functions. Many of the other pharmaceutical companies we currently compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles and a longer operating history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these opportunities may be more appealing to high-quality candidates and consultants than what we have to offer. Due to these reasons, we may not be able to attract or retain qualified management and commercial, scientific and clinical personnel due to the intense competition for qualified personnel among biotechnology, pharmaceutical, and other businesses. If we are not able to attract and retain necessary personnel to accomplishpersonnel.

In addition, our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital, and our ability to implement our business strategies.

We expect to expand our organization and hire either directly, through MSI, MSG or through any other current or future subsidiaries of ours, additional employees for our managerial, finance and accounting, clinical, scientific and engineering, regulatory, operational, manufacturing, medical affairs, and sales and marketing teams. We mayemployees. Our management is expected to have difficulties with identifying, hiring, and integrating new personnel. Future growth would impose significant additionalincreasing responsibilities on our management, including the need to identify, recruit, maintain, motivate, and integrate additional employees, consultants and contractors. Also, our managementcontractors which may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations across our entities, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. OurThe expected growth couldmay also require significant capital expenditures and may divert financial resources from other projects, such as the development of our product candidates.projects. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate or grow revenue could be reduced,adversely affected, and we may not be able to implement our business strategy. OurAs a result, our future financial performance and our ability to commercialize relugolix, MVT-602 or any potential future product candidate and compete effectively will depend, in part, on our ability to effectively manage any future growth.

We are exposed to the risk that our employees, and contractors, advisers, including principal investigators, consultants, commercial collaborators, service providers, and other vendors, or those of our affiliates, may engage in fraudulent, illegal activity, or other illegal activity.misconduct. Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA or other similar regulatory bodies, including those laws that require the reporting of true, complete, and accurate information to such regulatory bodies; manufacturing and current Good Manufacturing Practice, or cGMP, standards; federal, state and foreign healthcare fraud and abuse laws and data privacy; or laws and regulations that require the true, complete, and accurate reporting of financial information or data. In particular, sales, marketing and other business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing, bribery, corruption, antitrust violations, and other abusive practices. See the Risk Factors titled “Our current and future relationships with investigators, healthcare professionals, consultants, third-party payors, and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties,” “International expansion of our business exposes us to business, legal, regulatory, political, operational, financial, economic, and other risks associated with conducting business outside of the U.S.,” and “If we obtain approval to market any products outside of the U.S., a variety of risks associated with international operations could materially adversely affect our business.” These laws may restrict or prohibit a wide range of business activities, including research, manufacturing, distribution, pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, creating fraudulent data in our nonclinical studies or clinical trials or illegal misappropriation of drug product, which could result in regulatory sanctions and serious harm to our reputation. ItWe have a Code of Business Conduct and Ethics and other corporate compliance

policies, but it is not always possible to identify and deter employee or third-party misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. Additionally, we are subject to the risk that a person or government agency could allege such fraud or other misconduct, even if none occurred. If our employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers or other vendors, or those of our affiliates, are found to be in violation of any such regulatory standards or requirements, it could have a significant impact on our business and financial results, including the imposition of significant civil, criminal, and administrative penalties, damages, monetary fines, suspension or delay in our clinical trials, possible exclusion from participation in Medicare, Medicaid, and other federal healthcare programs, FDA debarment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements, and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Part of our business strategy involves international expansion, including establishing and maintaining operations outside of the United StatesU.S. and establishing and maintaining relationships with health care providers, payors, government officials, distributors and manufacturers globally. Conducting business internationally involves a number of risks, including: