STEALTH BIOTHERAPEUTICS CORP FORM 20-F (Annual and Transition Report (foreign private issuer)) Filed 04/04/19 for the Period Ending 12/31/18 Telephone 617-600-6888 CIK 0001696396 Symbol MITO SIC Code 2834 - Pharmaceutical Preparations Industry Biotechnology & Medical Research Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2020, EDGAR Online, a division of Donnelley Financial Solutions. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number: 001-38810 STEALTH BIOTHERAPEUTICS CORP (Exact name of Registrant as specified in its charter) N/A (Translation of Registrant’s name into English) Cayman Islands (Jurisdiction of incorporation) Stealth BioTherapeutics Corp c/o Intertrust Corporate Services (Cayman) Limited 190 Elgin Avenue, George Town Grand Cayman KY1-9005 Cayman Islands (address of principal executive offices) Irene McCarthy, Chief Executive Officer Stealth BioTherapeutics Inc. 275 Grove Street, Suite 3-107 Newton, MA 02466 (617) 600-6888 E-mail: [email protected] (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered, pursuant to Section 12(b) of the Act Title of each class Name of each exchange on which registered American Depositary Shares, each representing 12 ordinary shares, par value The Nasdaq Global Market LLC U.S.$0.0003 per share Securities registered or to be registered pursuant to Section 12(g) of the Act. None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act None Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the annual report. 68,487,948 ordinary shares, $0.0003 par value per share. 91,600,398 Series A preferred shares, $0.0003 par value per share. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒ 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 ☐ No ☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. ☐ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issued Other ☐ by the International Accounting Standards Board ☐ If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Table of Contents TABLE OF CONTENTS PART I 3 Item 1. Identity of Directors, Senior Management and Advisors 3 Item 2. Offer Statistics and Expected Timetable 3 Item 3. Key Information 3 A. Selected financial data 3 B. Capitalization and indebtedness 4 C. Reasons for the offer and use of proceeds 4 D. Risk factors 4 Item 4. Information on the Company 56 A. History and development of the company 56 B. Business overview 56 C. Organizational structure 122 D. Property, plants and equipment 122 Item 4A. Unresolved Staff Comments 122 Item 5. Operating and Financial Review and Prospects 122 A. Operating results 122 B. Liquidity and capital resources 133 C. Research and development, patents and licenses, etc 137 D. Trend information 137 E. Off-balance sheet arrangements 137 F. Tabular disclosure of contractual obligations 137 G. Safe harbor 137 Item 6. Directors, Senior Management and Employees 138 A. Directors and senior management 138 B. Compensation 141 C. Board practices 148 D. Employees 151 E. Share ownership 151 Item 7. Major Shareholders and Related Party Transactions 151 A. Major shareholders 151 B. Related party transactions 153 C. Interests of experts and counsel 154 Item 8. Financial Information 154 A. Consolidated Statements and Other Financial Information 154 B. Significant Changes 155 Item 9. The Offer and Listing 155 A. Offer and listing details 155 B. Plan of distribution 155 C. Markets 155 D. Selling shareholders 155 E. Dilution 155 F. Expenses of the issue 155 Item 10. Additional Information 155 A. Share capital 155 B. Memorandum and articles of association 155 C. Material contracts 155 D. Exchange controls 156 E. Taxation 156 F. Dividends and paying agents 161 G. Statement by experts 161 - i - Table of Contents H. Documents on display 161 I. Subsidiary Information 162 Item 11. Quantitative and Qualitative Disclosures About Market Risk 162 Item 12. Description of Securities Other than Equity Securities 162 A. Debt Securities 162 B. Warrants and Rights 162 C. Other Securities 162 D. American Depositary Shares 162 PART II 165 Item 13. Defaults, Dividend Arrearages and Delinquencies 165 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 165 Item 15. Controls and Procedures 165 Item 16. [Reserved] 166 Item 16A. Audit committee financial expert 166 Item 16B. Code of Ethics 166 Item 16C. Principal Accountant Fees and Services 166 Item 16D. Exemptions from the Listing Standards for Audit Committees 166 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 166 Item 16F. Change in Registrant’s Certifying Accountant 166 Item 16G. Corporate Governance 167 Item 16H. Mine Safety Disclosure 167 PART III 168 Item 17. Financial Statements 168 Item 18. Financial Statements 168 Item 19. Exhibits 168 - ii - Table of Contents PRESENTATION OF FINANCIAL AND OTHER INFORMATION Accounting Principles The consolidated financial statements presented at the end of this annual report have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in the notes to the consolidated financial statements to applicable guidance is meant to refer to authoritative GAAP, as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the company’s management evaluates its estimates related to, but not limited to, estimates related to fair value of ordinary share, share-based compensation expense, recoverability of the company’s net deferred tax asset-related valuation allowances, and certain prepaid expenses and accrued expenses. The company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ materially from those estimates or assumptions. General Information Except where the context otherwise requires and for purposes of this annual report on Form 20-F only: • the “company,” “we,” “us,” “our company” and “our” refer to Stealth BioTherapeutics Corp., or Stealth, and its consolidated subsidiaries, including Stealth BioTherapeutics, Inc., or Stealth US, Stealth BioTherapeutics (HK) Limited, or Stealth HK, and Stealth BioTherapeutics (Shanghai) Limited, or Stealth Shanghai. • “ordinary shares” refers to our ordinary shares, par value $0.0003 per share; • “ADSs” refers to our American depositary shares, each of which represents 12 ordinary shares; • “ADRs” refers to American depositary receipts, which, if issued, evidence our ADSs; • unless otherwise indicated, all historical share and per-share data contained in this annual report on Form 20-F have been restated to give retroactive effect to a three-for-one reverse share split that became effective on December 28, 2018.