ARMATA PHARMACEUTICALS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on
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Form 10-Q, our audited financial statements and notes thereto as of and for the
year ended
Our predecessor,
Immediately prior to the Merger, AmpliPhi completed a 1-for-14 reverse stock
split and changed its name to
Statements contained in this Quarterly Report on Form 10-Q that are not
statements of historical fact are forward-looking statements within the meaning
of the
Overview
We are a clinical-stage biotechnology company focused on the development of pathogen-specific bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat bacterial infections using our proprietary bacteriophage-based technology. Bacteriophages or "phages" have a powerful and highly differentiated mechanism of action that enables binding to and killing specific bacteria, in contrast to traditional broad-spectrum antibiotics. We believe that phages represent a promising means to treat bacterial infections, especially those that have developed resistance to current standard of care therapies, including the so-called multidrug-resistant or "superbug" strains of bacteria. We are a leading developer of phage therapeutics which are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections.
We are combining our proprietary approach and expertise in identifying, characterizing and developing both naturally-occurring and engineered (synthetic) bacteriophages with our proprietary phage-specific current good manufacturing practice regulation ("cGMP") manufacturing capabilities to advance a broad pipeline of high-quality bacteriophage product candidates. We believe that synthetic phage, engineered using advances in sequencing and synthetic biology techniques, represent a promising means to advance phage therapy, including phage-based diagnostics and improving upon the ability of natural phage to treat bacterial infections, especially those that have developed resistance to current antibiotic therapies, including the multidrug-resistant or "superbug" bacterial pathogens.
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We are developing and advancing our lead clinical phage candidate
for Pseudomonas aeruginosa. On
We are also developing a phage product candidate for Staphylococcus aureus for
the treatment of S. aureus bacteremia. On
In partnership with Merck & Co., known as
Our proprietary phage engineering platform serves to enhance the clinical and commercial prospects of phage therapy.
Attributes of engineered phages can include expanded host range, improved potency which is a fundamental drug property that can translate into improved clinical efficacy, and importantly, biofilm disruption, which is a critical aspect of serious infections that needs to be addressed.
In addition to our more advanced pipeline programs, we have phage discovery efforts underway to target other major pathogens of infectious disease (including ESKAPE pathogens) and preventable infectious disease of the microbiome.
We are committed to conducting randomized controlled clinical trials required for FDA approval in order to move toward commercialization of alternatives to traditional antibiotics and provide a potential method of treating patients suffering from drug-resistant and difficult-to-treat bacterial infections.
The following chart summarizes the status of our phage product candidate development programs and partners.
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We have generally incurred net losses since our inception and our operations to
date have been primarily limited to research and development and raising
capital. As of
We currently expect to use our existing cash and cash equivalents for the continued research and development of our product candidates, including through our targeted phage therapies strategy, and for working capital and other general corporate purposes. We expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate product revenue unless and until we successfully complete development and obtain marketing approval for at least one of our product candidates.
We may also use a portion of our existing cash and cash equivalents for the
potential acquisition of, or investment in, product candidates, technologies,
formulations or companies that complement our business, although we have no
current understandings, commitments or agreements to do so. Our existing cash
and cash equivalents will not be sufficient to enable us to complete all
necessary development of any potential product candidates. Accordingly, we will
be required to obtain further funding through one or more other public or
private equity offerings, debt financings, collaboration, strategic financing,
grants or government contract awards, licensing arrangements or other sources.
Our ability to raise additional capital may be adversely impacted by potential
worsening global economic conditions and the recent disruptions to, and
volatility in, financial markets in
Business Update Regarding COVID-19
On
The COVID-19 pandemic has directly and indirectly impacted our business, results of operations and financial condition and is expected to continue to impact our business. For example, the COVID-19 pandemic has resulted in
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delays in our clinical trials due to the implementation of COVID-19 protocols at investigator sites, which resulted in longer than anticipated site identification and initiation activities. In addition, while we currently do not anticipate any interruptions in our supply chain, it is possible that the COVID-19 pandemic and response efforts may have a future impact on our third-party suppliers and partners. It is possible that due to the increasing emphasis on the development of vaccines for COVID-19, certain basic supply chain materials such as resins, vessels, vials and stoppers may be in high demand by the pharmaceutical companies developing vaccines and our ability to obtain these materials for our development activities could be negatively impacted. We have experienced some delays of this nature in the first half of 2021.
The full extent of the COVID-19 pandemic impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact, the development and distribution of vaccines and the economic impact on local, regional, national and international markets. Management continues to actively monitor the developments regarding the pandemic and the impact that the pandemic could have on our financial condition, liquidity, ability to enroll patients in our contemplated clinical trials, manufacturing and research and development operations, suppliers to our operations and suppliers to our outside clinical trial organizations, biotech industry overall, and importantly the health and safety of our workforce. Given the continuing evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the remainder of fiscal year 2021 or 2022. Any recovery from negative impacts to our business and related economic impact due to the COVID-19 outbreak may also be slowed or reversed by a number of factors, including the current widespread resurgence in COVID-19 infections, combined with the seasonal flu.
Recent Events
On
On
On
Results of Operations
Comparison of three and six months ended
Grant revenue
The Company recognized
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Research and Development
Research and development expenses for the three months ended
Research and development expenses for the six months ended
General and Administrative
General and administrative expenses were
General and administrative expenses were
Other Income (Expense)
For the three and six months ended
Income Taxes
There was no income tax expense or benefit for the three or six months ended
Operating activities
Net cash used in operating activities for the six months ended
Investing activities
Net cash used in investing activities was
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Financing activities
Net cash provided by financing activities was
Net cash provided by financing activities was
Liquidity, Capital Resources and Financial Condition
We have prepared our consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. However, we have incurred net losses since our inception and have negative operating cash flows. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern. While management believes this plan to raise additional funds will alleviate the conditions that raise substantial doubt, these plans are not entirely within its control and cannot be assessed as being probable of occurring. The Company may not be able to secure additional financing in a timely manner or on favorable terms, if at all.
As of
Future Capital Requirements
We will need to raise additional capital in the future to continue to fund our operations. Our future funding requirements will depend on many factors, including:
the effects of the continuing COVID-19 pandemic on our clinical programs and
? business, including delays or difficulties in enrolling patients in our
clinical trials, shortage in supply chain materials, and changes in local,
state or federal regulations as part of a response to the COVID-19 pandemic;
? the costs and timing of our research and development activities;
? the progress and cost of our clinical trials and other research and development
activities;
? manufacturing costs associated with our targeted phage therapies strategy and
other research and development activities;
? the terms and timing of any collaborative, licensing, acquisition or other
arrangements that we may establish;
? manufacturing costs associated with our targeted phage therapies strategy and
other research and development activities;
? the terms and timing of any collaborative, licensing, acquisition or other
arrangements that we may establish;
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? whether and when we receive future Australian tax rebates, if any;
? the costs and timing of seeking regulatory approvals;
? the costs of filing, prosecuting and enforcing any patent applications, claims,
patents and other intellectual property rights; and
? the costs of lawsuits involving us or our product candidates.
We may seek to raise capital through a variety of sources, including:
? the public equity market;
? private equity financings;
? collaborative arrangements, government grants or strategic financings;
? licensing arrangements; and
? public or private debt.
Any additional fundraising efforts may divert our management team from their
day-to-day activities, which may adversely affect our ability to develop and
commercialize our product candidates. Our ability to raise additional funds will
depend, in part, on the success of our product development activities, including
our targeted phage therapies strategy and any clinical trials we initiate,
regulatory events, our ability to identify and enter into in-licensing or other
strategic arrangements, and other events or conditions that may affect our value
or prospects, as well as factors related to financial, economic and market
conditions, many of which are beyond our control. We cannot be certain that
sufficient funds will be available to us when required or on acceptable terms.
If we are unable to secure additional funds on a timely basis or on acceptable
terms, we may be required to defer, reduce or eliminate significant planned
expenditures, restructure, curtail or eliminate some or all of our development
programs or other operations, dispose of technology or assets, pursue an
acquisition of our company by a third party at a price that may result in a loss
on investment for our stockholders, enter into arrangements that may require us
to relinquish rights to certain of our product candidates, technologies or
potential markets, file for bankruptcy or cease operations altogether. Any of
these events could have a material adverse effect on our business, financial
condition and results of operations. Moreover, if we are unable to obtain
additional funds on a timely basis, there will be substantial doubt about our
ability to continue as a going concern and increased risk of insolvency and loss
of investment by our stockholders. To the extent that additional capital is
raised through the sale of equity or convertible debt securities, the issuance
of such securities could result in dilution to our existing stockholders. Our
ability to raise additional capital may be adversely impacted by potential
worsening global economic conditions and the recent disruptions to, and
volatility in, financial markets in
Off-Balance Sheet Arrangements
As of
Recent Accounting Pronouncements
Refer to Note 3 of the condensed consolidated notes to the consolidated financial statements contained elsewhere in this report.
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