ACHN 2017 Annual Report

hospital or infusion center visits. We believe that oral dosing could provide a more convenient regimen for patients and their care-givers. We have also designed a number of small molecule compounds to be optimized for ophthalmic administration. These small molecule compounds may have dosing advantages in ophthalmological complement-mediated diseases such as GA, with the potential for dosing intervals of every three months or longer. 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 our HCV product candidates that we licensed to Janssen under the Janssen Agreement. Following the termination, all licenses granted by either party to the other under the Janssen Agreement terminated, except to the extent necessary to allow either party to perform any obligations or exercise rights that survive the termination. As a result of the termination of the Janssen Agreement, we will not receive any future milestone-based or royalty payments under that agreement, and Janssen will not bear the future costs of developing and commercializing our HCV portfolio. We currently have no plans to advance the HCV program on our own. Competition The development and commercialization of new drug products is highly competitive. We expect that we, and future collaborators, if any, will face significant competition from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to any of our drug candidates that we, or they, may seek to develop or commercialize. There are a number of pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of drug candidates for the treatment of complement-mediated disease such as those from Alexion Pharmaceuticals, Inc., and other potential therapies in development by Akari Therapeutics PLC, Amgen Inc., Amyndas Pharmaceuticals S.A., Apellis Pharmaceuticals, Inc., ChemoCentryx, Inc., Genentech, Inc., Novartis AG, Omeros Corporation, Ra Pharmaceuticals, Inc. and Regeneron Pharmaceuticals, Inc. Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective, have fewer or more tolerable side effects or are less costly than any drug candidates that we are currently developing or that we may develop, which could render our drug candidates obsolete and noncompetitive. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we, or any future collaborators, may develop. In addition to currently approved products, our competitors also may obtain additional FDA or other marketing approvals for their products before 8