Filing and reporting period
The supplied filing is AmpliPhi Biosciences Corporation’s unaudited Form 10-Q for the quarter ended March 31, 2016, filed May 12, 2016. This differs from the request metadata, which names Armata Pharmaceuticals, Inc.; verify the issuer before relying on this summary. AmpliPhi was developing bacteriophage therapies, led by AB-SA01 for S. aureus infections, with AB-PA01 in development and AB-CD01 in preclinical development.
Financial performance and liquidity
| Metric | Q1 2016 | Q1 2015 / comparison |
|---|---|---|
| Revenue | $106,000 | $102,000 |
| Research and development | $1.980 million | $0.972 million |
| General and administrative | $2.644 million | $1.397 million |
| Operating loss | $4.518 million | $2.267 million |
| Net loss | $3.112 million | $14.493 million |
| Net loss attributable to common stockholders | $4.837 million | $14.831 million |
| Basic and diluted loss per share | $0.82 | $3.49 |
| Operating cash used | $3.085 million | $2.305 million |
| Cash and cash equivalents | $6.173 million at March 31 | $9.370 million at December 31, 2015 |
Revenue was primarily from legacy gene-therapy sublicensing; the company reported no product revenue. Gross margin was not stated, and is not meaningful to assess from the limited revenue disclosure. The lower year-over-year net loss largely reflected non-cash fair-value movements: Q1 2016 included $1.406 million of other income, principally a $1.402 million gain on the Series B preferred-stock derivative, while Q1 2015 included $12.226 million of other expense, including derivative and warrant remeasurement losses. Common-stockholder loss also includes preferred-stock accretion.
Cash fell by $3.197 million during the quarter. Investing cash use was $112,000, primarily for property and equipment; there were no financing proceeds in Q1 2016. The balance sheet showed $2.651 million of current liabilities and $5.749 million of total liabilities; no borrowings are presented in the supplied balance-sheet data. Accumulated deficit was $365.634 million. Management said existing resources were expected to fund planned operations into the third quarter of 2016, but disclosed substantial doubt about the company’s ability to continue as a going concern.
Changes, outlook, and material matters
- Operating expenses rose $2.255 million year over year. R&D increased by $1.008 million, including $409,000 expensed for Novolytics assets acquired in January. G&A increased by $1.247 million, mainly due to new-executive compensation, including $816,000 of non-cash stock compensation, and higher professional fees.
- Management expected R&D spending and operating losses to increase as research, staffing, and clinical development advanced. The company did not expect product revenue in the near term and said additional capital would be required; financing might not be available on acceptable terms.
- After quarter-end, on April 8, all 7,527,853 Series B preferred shares converted into 1,505,560 common shares. In a related agreement, the company agreed to issue holders another 853,465 common shares and amended certain warrants, reducing their exercise price from $7.00 to $4.05 and extending expiration to 2021. Holders waived approximately $2.2 million of accrued-dividend cash payments. The agreement also provides potential additional shares or cash make-whole payments in qualifying future equity financings below $4.05 per share, subject to stated limits and shareholder approval. These terms may affect dilution, cash needs, and financing flexibility.
- On April 13, the company gave notice of voluntary termination of its Intrexon collaboration; termination was to take effect 90 days after notice, with no early termination penalty. On April 14, a principal shareholder filed a lawsuit alleging breach of the implied covenant of good faith and breach of fiduciary duty in connection with the preferred-stock conversion; damages sought were unspecified. The company said it would vigorously defend the claims, and management could not estimate a possible loss.
- Disclosure controls and procedures were concluded to be ineffective at the reasonable-assurance level. The filing describes a material weakness involving complex and non-routine transactions; remediation efforts were underway, including additional review procedures, training, and standardized processes.
Important facts for investors to verify
- Issuer identity: the filing is for AmpliPhi Biosciences Corporation, not the company named in the request metadata.
- Cash runway, financing plans, and whether subsequent financing was obtained; the stated runway extended only into Q3 2016.
- Post-conversion capitalization and potential dilution, including the additional shares, amended warrants, and financing-related share or cash obligations.
- Progress and regulatory status of AB-SA01, AB-PA01, and AB-CD01, as well as manufacturing readiness and clinical-trial timelines.
- Developments in the shareholder lawsuit and remediation of the disclosed control weakness.
- Share-count timing: 5,883,503 common shares were reported outstanding at March 31, while 8,242,528 were reported at May 6, 2016, after the subsequent conversion-related transactions.