Armata Pharmaceuticals, Inc. — 2018 Q2 filing summary
Entity caution: The supplied filing is for AmpliPhi Biosciences Corporation, not Armata Pharmaceuticals, Inc. It covers the quarter ended June 30, 2018 and was filed August 9, 2018. Verify the issuer before attributing these results to Armata.
Business context and reporting period
AmpliPhi was a development-stage biotechnology company focused on bacteriophage therapies for serious antibiotic-resistant infections. Its candidates included AB-SA01 for Staphylococcus aureus and AB-PA01 for Pseudomonas aeruginosa. It reported no product revenue and stated it did not expect product revenue until a candidate is developed and approved.
Financial results and liquidity
| Metric | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 |
|---|---|---|---|---|
| Revenue | $0 | $28,000 | $0 | $57,000 |
| Research and development | $1.692 million | $1.130 million | $3.156 million | $2.620 million |
| General and administrative | $1.360 million | $2.784 million | $2.951 million | $4.682 million |
| Operating loss | $3.052 million | $9.686 million | $6.107 million | $13.045 million |
| Net loss | $3.050 million | $6.461 million | $6.184 million | $9.707 million |
| Basic and diluted loss per share | $(0.19) | Basic $(1.21); diluted $(1.46) | $(0.42) | Basic $(2.76); diluted $(3.09) |
- At June 30, cash and cash equivalents were $5.798 million, up from $5.132 million at December 31, 2017. Total current assets were $6.120 million and current liabilities were $2.049 million.
- For the first half, operating cash use was $5.709 million, investing cash use was $31,000, and financing provided $6.406 million. Financing included $6.203 million net from two stock offerings and $198,000 from warrant exercises.
- Total liabilities were $3.381 million; the filing does not separately identify a debt balance. The company reported $8.339 million of stockholders’ equity and an accumulated deficit of $400.390 million.
- Margins are not meaningfully informative given zero reported revenue. The filing states the company has incurred recurring losses and negative operating cash flows.
Changes versus the prior comparable period
- First-half net loss narrowed by $3.523 million, and operating loss narrowed by $6.938 million. Prior-year results included a $5.8 million impairment charge and a $1.3 million related income tax benefit; neither was recorded in the first half of 2018.
- R&D expense increased $536,000 in the first half, primarily due to higher clinical costs. G&A expense decreased $1.731 million, reflecting lower payroll, professional fees and stock-based compensation, as well as a prior-year noncash charge related to shares issuable under an agreement.
- The prior-year period included a $2.034 million gain from changes in derivative fair value; the 2018 first half recorded a $77,000 net expense. These noncash fair-value movements affected the year-over-year net-loss comparison.
- Cash at June 30, 2018 was below the $8.962 million reported at June 30, 2017, despite first-half 2018 equity financing. Common shares outstanding increased from 9,498,928 at December 31, 2017 to 16,468,308 at June 30, 2018.
Outlook, risks and unusual items
- Management said cash on hand, together with a $1.2 million Australian tax incentive payment received in July 2018, was expected to fund planned operations into the fourth quarter of 2018. Management also stated that additional capital would be needed and that its ability to continue operations depended on raising funds.
- The filing states that recurring losses and negative operating cash flows raise substantial doubt about the company’s ability to continue as a going concern. Additional financing may be unavailable or may be dilutive; failure to obtain it could require cuts to or cessation of operations.
- Management planned further FDA discussions in the third quarter of 2018, seeking to use targeted expanded-access experience to inform a Phase 2 development plan. Expanded-access cases were not assured to establish clinical benefit or to be accepted by regulators as adequate validation.
- Key development risks include clinical or regulatory setbacks, manufacturing scale-up and cGMP compliance, patient recruitment, and the uncertain regulatory pathway for phage therapies. Management expected significant operating losses for several years.
- The January and March 2018 stock offerings generated approximately $6.2 million in net proceeds combined. The March offering included shares purchased by an entity affiliated with two directors. Outstanding warrants and options may create further dilution.
- Derivative warrant liabilities were measured using Level 3 inputs. The company changed its valuation method for certain warrants in March 2018 from Monte Carlo to Black-Scholes, which management said approximates the prior method.
- The company reported no material legal proceedings and no off-balance-sheet arrangements. Disclosure controls were concluded effective at the reasonable-assurance level as of June 30, 2018.
Important facts for investors to verify
- Confirm the filing’s issuer: AmpliPhi Biosciences Corporation, rather than Armata Pharmaceuticals, Inc.
- Confirm whether subsequent financing or other cash receipts extended the stated runway beyond the fourth quarter of 2018.
- Check updates on FDA discussions, clinical-development plans and the evidence generated through expanded access.
- Review clinical, manufacturing and regulatory progress for AB-SA01 and AB-PA01, including formulation, scale-up and cGMP readiness.
- Assess dilution from the 2018 offerings and the 8.3 million outstanding warrants and 1.15 million options reported at June 30, 2018.