On March 19, 2020 Armata Pharmaceuticals, Inc. (NYSE American: ARMP) ("Armata" or the "Company"), a clinical-stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections, reported results for the fourth quarter and full year 2019 and provided a corporate and clinical update (Press release, AmpliPhi Biosciences, MAR 19, 2020, View Source [SID1234555703]).
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Key Fourth Quarter and Subsequent Period Highlights:
·Entered into a $25 million securities purchase agreement pursuant to which Innoviva, Inc. ("Innoviva") will purchase approximately 8.7 million shares of Armata common stock at $2.87 per share and warrants to purchase an additional approximately 8.7 million shares with an exercise price of $2.87 per share.
·Announced the closing of the first tranche of the Innoviva securities purchase agreement, issuing 993,139 common shares and warrants to purchase 993,139 common shares in exchange for gross proceeds of approximately $2.8 million. The Company obtained voting agreements from shareholders representing approximately 55% of its outstanding shares that have agreed to vote in favor of the financing at the special shareholder meeting now scheduled for March 26, 2020. Following approval at the meeting, the second tranche of $22.2 million will be received by Armata.
·In connection with the financing transaction, appointed Sarah Schlesinger, M.D. and Odysseas Kostas, M.D. to its Board of Directors, both of whom also serve on the Board of Innoviva.
·Continued to advance development of its lead program, a Pseudomonas aeruginosa phage product candidate AP-PA02, toward submission of an Investigational New Drug application (IND) seeking regulatory approval to initiate a first-in-human clinical trial this year. GMP production of the product candidate has been completed at the Company’s Marina del Rey facility.
·Announced that the Company has been awarded up to $5 million in a development award grant from the Cystic Fibrosis Foundation to help fund the Pseudomonas aeruginosa phage development.
·Expanded the Board of Directors with the appointment of research and development veteran Todd C. Peterson, Ph.D., and strengthened its clinical team with the appointment of Heather Dale Jones, M.D., as Vice President, Clinical Development.
"During the fourth quarter, we continued to efficiently advance development of our lead phage candidate programs, most notably AP-PA02 for Pseudomonas aeruginosa," said Todd R. Patrick, Chief Executive Officer of Armata. "Pseudomonas aeruginosa is an increasingly multi-drug resistant bacteria that causes severe acute and chronic infections and is particularly problematic for cystic fibrosis patients. This promising therapeutic is just one example of the potent and highly targeted phage candidates that are emerging from our proprietary manufacturing and screening capabilities, and we are eager to initiate formal clinical development with our first-in-human study in 2020."
"The securities purchase agreement that we recently entered into with Innoviva significantly strengthened our financial position and, upon closing of the second and final tranche, will provide us with the resources necessary to achieve significant and potentially value-creating development milestones this year and next. We look forward to a successful year." Mr. Patrick concluded.
Anticipated 2020 Milestones:
·Close the second tranche of the previously announced securities purchase agreement with Innoviva
·File an IND and initiate a clinical trial evaluating the safety and tolerability of AP-PA02 in cystic fibrosis patients chronically infected with Pseudomonas aeruginosa
·Obtain third party, non-dilutive funding to advance its Staphylococcus aureus phage candidate, AP-SA02, into clinical trials
·Continue to screen pathogens against the Company’s proprietary phage library to identify additional high-quality bacteriophage product candidates and expand the pipeline
Fourth Quarter Financial Results
Research and Development. Research and development expenses for the three months ended December 31, 2019 were $1.7 million as compared to $2.0 million for the comparable period in 2018.
General and Administrative. General and administrative expenses for the three months ended December 31, 2019 were $2.1 million as compared to approximately $0.8 million for the comparable period in 2018. The increase was due to expenses resulting from the merger of C3J Therapeutics, Inc. and AmpliPhi Biosciences Corp. (the "Merger").
Loss from Operations. Loss from operations for the three months ended December 31, 2019 was $4.4 million as compared to $2.8 million for the comparable period in 2018.
Full Year 2019 Financial Results
Research and Development. Research and development expenses for the year ended December 31, 2019 were $9.8 million as compared to $8.4 million for the comparable period in 2018. The net increase of $1.4 million was primarily related to a $0.9 million increase in non-cash stock-based compensation expense, a $0.7 million increase in personnel expenses resulting from the Merger, a $0.5 million increase in laboratory supplies, a $0.4 million increase for outside services, a $0.2 million increase of rent and utilities expenses, offset by a $1.3 million of tax rebate from the Australian tax authorities.
General and Administrative. General and administrative expenses for the year ended December 31, 2019 were $9.3 million as compared to $2.5 million in the comparable period in 2018. The increase of $6.8 million was primarily due to a $3.3 million increase in non-cash stock-based compensation expense, a $2.1 million increase in professional fees (legal, audit and investment banking) primarily associated with the Merger, a $0.4 million increase in personnel-related expenses, and $0.5 million increase in insurance costs.
Loss from Operations. Loss from operations for the year ended December 31, 2019 was $19.8 million as compared to $17.7 million for the comparable period in 2018. The increase was due to an increase in non-cash stock-based compensation and additional operating costs in connection with the Merger.
Cash and Equivalents. As of December 31, 2019, Armata held $6.0 million of unrestricted cash and cash equivalents as compared to $9.7 million as of December 31, 2018. Subsequent to the end of the fourth quarter, the Company announced that it had entered into a $25 million private placement securities agreement with Innoviva. The first tranche, in which Armata issued 993,139 common shares and warrants to purchase an additional 993,139 common shares in exchange for gross proceeds of approximately $2.8 million, closed in February.
The audit opinion included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 contains a going concern explanatory paragraph.
As of March 17, 2020, there were approximately 10.9 million shares of common stock outstanding.