AKAO 2017 Annual Report

109 Achaogen, Inc. Notes to Consolidated Financial Statements 1. Organization and Basis of Presentation and Consolidation Achaogen, Inc. (together with its consolidated subsidiary, the “Company”) is a late-stage biopharmaceutical company passionately committed to the discovery, development, and commercialization of innovative antibacterial treatments against multi-drug resistant (“MDR”) gram-negative infections. The Company is developing plazomicin, its lead product candidate, for the treatment of bacterial infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (“CRE”). On October 26, 2017, the Company announced the submission of a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for plazomicin, seeking approval to treat complicated urinary tract infections (“cUTI”), including acute pyelonephritis (“AP”) and bloodstream infections (“BSI”) due to certain Enterobacteriaceae in patients who have limited or no alternative treatment options. The NDA is supported by data from two Phase 3 clinical trials, EPIC (Evaluating Plazomicin In cUTI) and CARE (Combating Antibiotic Resistant Enterobacteriaceae), which evaluated the safety and efficacy of plazomicin in patients with serious infections caused by gram-negative pathogens, including ESBL producing Enterobacteriaceae and CRE. The EPIC study was a Phase 3 trial of plazomicin for the treatment of patients with cUTI and acute pyelonephritis (“AP”). The CARE study was a Phase 3 resistant pathogen trial designed to evaluate the efficacy and safety of plazomicin in patients with serious bacterial infections due to CRE. The Company is also developing an orally available antibacterial candidate, C-Scape, a combination of ceftibuten, an approved third generation cephalosporin, and clavulanate, an approved -lactamase inhibitor to address a serious unmet need for effective oral treatment for patients with cUTI, including AP, caused by ESBL- producing Enterobacteriaceae. On January 2, 2018, the Company announced positive Phase 1 top-line results and the Company intends to initiate a single pivotal Phase 3 study in patients with cUTI, including AP, who are suitable for treatment with oral antibiotics, in 2018. The Company was incorporated in Delaware in 2002 and commenced operations in 2004. Since commencing operations in 2004, the Company has devoted substantially all its resources to identifying and developing its product candidates, including conducting preclinical studies and clinical trials and providing general and administrative support for these operations. Reclassifications The change in derivative liability on the consolidated statements of operations for the year ended December 31, 2015 has been reclassified to be included in the change in warrant and derivative liabilities to conform to the current year’s presentation. Such reclassifications did not impact the Company’s net loss or financial position. The cash and cash equivalents on the condensed consolidated statements of cash flows for the year ended December 31, 2015 has been reclassified to include restricted cash to conform to the current period’s presentation. Such reclassification did not impact the Company’s net loss or financial position. Basis of Presentation and Consolidation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the consolidated accounts of the Company and its subsidiary. Intercompany accounts and transactions have been eliminated in consolidation. During 2012, the Company established a wholly owned foreign subsidiary in the United Kingdom. There have been no significant activities for this entity during the fiscal years ended December 31, 2017, 2016 and 2015. Liquidity and Going Concern On April 7, 2015, the Company filed a Registration Statement on Form S-3, declared effective by the SEC on April 21, 2015, covering the offering of up to $150.0 million of common stock, preferred stock, debt securities, warrants, purchase contracts and/or units. This Registration Statement included a prospectus covering the offering, issuance and sale of up to $30.0 million of shares of the Company’s common stock from time to time in an “at-the-