ACHN 2017 Annual Report

had an accumulated deficit of $602.7 million as of December 31, 2017, which includes preferred stock dividends recognized until our initial public offering in 2006. Our net losses were $85.2 million, $61.7 million, and $5.0 million for the years ended December 31, 2017, 2016, and 2015, respectively. We have funded our operations primarily through proceeds from the sale of equity securities. Through December 31, 2017, we have received approximately $932.4 million in aggregate gross proceeds from stock issuances, including convertible preferred stock, our initial public offering, private placements of our common stock, registered offerings of our common stock and an equity investment by a former collaboration partner. We expect to incur substantial losses for at least the next several years as we seek to continue preclinical and clinical development of certain complement inhibitors drug candidates. We will need substantial additional financing to obtain regulatory approvals, fund operating losses, and, if deemed appropriate, establish manufacturing and sales and marketing capabilities for our complement inhibitor program, which we will seek to raise through public or private equity or debt financings, collaborative or other arrangements with third parties or through other sources of financing. There can be no assurance that such funds will be available on terms favorable to us, if at all. In addition to the risks associated with being an early-stage drug development company, there can be no assurance that we or any future collaborators will successfully advance or complete our research and development programs, obtain adequate patent protection for our technology, obtain necessary government regulatory approval for drug candidates we develop, find and maintain appropriate collaboration partners or that any approved drug candidates will be commercially viable. In addition, we may not be profitable even if we or any future collaborators succeed in commercializing any of our drug candidates. Recent Development—Restructuring In February 2018, we implemented a restructuring plan that will reduce employee headcount by approximately 20% to approximately 70 employees in March 2018. The restructuring plan was implemented following a strategic assessment of our portfolio. During the assessment, our management team and board of directors concluded that our strategic focus would be on the development of our existing clinical candidates, ACH-4471 and ACH-5228, and late-stage preclinical compound, ACH-5548. We assessed the staffing levels required to accomplish our revised strategic goals and determined to reduce our staff across several functional areas, while retaining the biology and chemistry core strengths necessary to advance our complement factor D portfolio. Collaboration with Janssen Pharmaceuticals, Inc. On September 9, 2017, we received notice from Janssen Pharmaceuticals, Inc., or Janssen, of Janssen’s termination, effective as of November 8, 2017, of our exclusive collaboration and license agreement with them, which we refer to as the Janssen Agreement. Under the terms of the Janssen Agreement, we had granted Janssen exclusive worldwide rights to develop and commercialize products that contained one or more of our drug candidates for the treatment of chronic hepatitis C virus, or HCV, namely odalasvir, a second-generation NS5A inhibitor, ACH-3422, a NS5B HCV nucleoside polymerase inhibitor, and sovaprevir, a NS3/4A HCV protease inhibitor. Janssen terminated the Janssen Agreement under section 14.6 of the Janssen Agreement, which allows for unilateral termination at Janssen’s discretion upon 60 days’ written notice to us at any time prior to the submission of the first application for marketing approval for a licensed product in any of the major market countries specified in the Janssen Agreement. Pursuant to its notice of termination, Janssen informed us that with an increasing number of effective therapies addressing medical need in hepatitis C, Janssen had made a strategic decision to discontinue the development of JNJ-4178, a three-drug combination regimen that contained one of 78