Armata Pharmaceuticals Announces First Quarter 2024 Results and Provides Corporate Update

Rhea-AI Summary

Armata Pharmaceuticals, Inc. released its First Quarter 2024 financial results and corporate update. The company secured a $35 million credit agreement, continued clinical trials for phage therapeutics, and advanced its biologics manufacturing facility. Dr. Deborah Birx, CEO, highlighted progress in developing treatments for bacterial infections, with positive enrollment in clinical studies. The financials showed a grant revenue of $1.0 million, reduced research and development expenses, increased general and administrative expenses, resulting in a loss of $10.2 million from operations. Armata held $37.9 million in cash as of March 31, 2024.

Positive

• The company secured a $35 million credit agreement with Innoviva Strategic Opportunities , strengthening its balance sheet.

• Armata continued to advance clinical trials for phage therapeutics, with progress in Phase 2 studies for Staphylococcus aureus bacteremia and non-cystic fibrosis bronchiectasis.

• The build-out of the advanced biologics manufacturing facility is expected to be completed in the second quarter of 2024, positioning the company for late-stage clinical trials and commercial production.

• Dr. Deborah Birx, CEO, expressed confidence in achieving value-creating milestones through planned pivotal studies in 2025, highlighting positive enrollment in clinical studies for potential treatments.

• Armata recognized grant revenue of $1.0 million for the AP-SA02 program, indicating support for the development of treatments for Staphylococcus aureus bacteremia.

Negative

• The company reported a loss of $10.2 million from operations for the first quarter of 2024, compared to a loss of $11.3 million for the same period in 2023.

• Research and development expenses decreased slightly to $8.0 million, while general and administrative expenses increased to $3.2 million, impacting the overall financial performance.

Insights

Financial Analyst

Armata Pharmaceuticals' financial report for the first quarter of 2024 indicates a loss from operations, which has decreased to $10.2 million from $11.3 million in the previous year. This narrowing loss could be interpreted as a positive sign of financial management and streamlining of operations, potentially reflecting more efficient use of resources. Research and Development (R&D) expenses have decreased to $8.0 million from $9.6 million, possibly suggesting a more focused R&D strategy or completion of costly phases in their clinical programs.

The increase in General and Administrative expenses from $2.5 million to $3.2 million signals a scaling of operations, likely due to professional services and facility expansions as the company prepares for commercial production. The secured $35.0 million credit agreement at a 14% interest rate is a substantial infusion of capital. However, the high-interest rate and the short-term maturity of the loan could place considerable financial pressure on the company if revenue-generating milestones are not met.

The unrestricted cash balance of $37.9 million is a significant increase from the end of 2023, largely attributable to the credit agreement with Innoviva. This cash reserve provides Armata with a runway to execute its clinical trials but must be weighed against the company's ability to service its debt and eventually reach profitability.

Medical Research Analyst

Armata's advancement in clinical programs with AP-SA02 and AP-PA02 reflects a progressive movement towards addressing antibiotic-resistant bacterial infections. With the completion of build-out of the cGMP manufacturing facility, Armata is positioning itself to support not just late-stage clinical trials but also future commercial production. This could be a strategic asset considering the stringent requirements for drug manufacturing in the biotech industry.

While the potential for these therapeutic programs is promising, especially with the backing of the U.S. Department of Defense for AP-SA02, the actual impact on the company's stock value would largely depend on the outcomes of the upcoming pivotal studies planned for 2025. Positive results could act as a catalyst for stock appreciation, while any setbacks could pose significant risks. Furthermore, the emphasis on randomized, placebo-controlled clinical studies adheres to the gold standard in clinical trial design, which may instill confidence in stakeholders regarding the validity of the trial outcomes.

LOS ANGELES, May 7, 2024 /PRNewswire/ -- Armata Pharmaceuticals, Inc. (NYSE American: ARMP) ("Armata" or the "Company"), a biotechnology company focused on high-purity, pathogen-specific bacteriophage therapeutics for antibiotic-resistant and difficult-to-treat bacterial infections, today announced financial results for its first quarter ended March 31, 2024, and provided a corporate update. 

First Quarter 2024 and Recent Developments:

• Entered into a $35.0 million secured credit agreement with Innoviva Strategic Opportunities LLC, a wholly-owned subsidiary of Innoviva, Armata's principal shareholder.
• Continued to advance the Phase 2a portion of the diSArm study of intravenous AP-SA02 as a potential treatment for Staphylococcus aureus bacteremia with continued ability to dose escalate due to phage purity, as well as the Phase 2 Tailwind study of inhaled AP-PA02 in patients with non-cystic fibrosis bronchiectasis (NCFB) and chronic pulmonary Pseudomonas aeruginosa infection ("P.aeruginosa").
• Further advanced bacteriophage science through presentations and publications:
  • Delivered a presentation on the Company's phage development programs at the 6th Annual Bacteriophage Therapy Summit in February 2024.
  • Manuscript of results from SWARM-P.a., the completed Phase 1b/2a clinical trial of inhaled AP-PA02 in patients with cystic fibrosis and chronic pulmonary P. aeruginosa infection, expected to be submitted to a peer-reviewed journal in the second quarter of 2024.
• In the second quarter of 2024, Armata expects to complete the build-out of its advanced biologics manufacturing facility with five current good manufacturing practice ("cGMP") clean rooms, including a state-of-the-art automated fill and finish suite; R&D labs and administrative space were fully operational in the first quarter of 2024.

"During the first quarter of 2024, we continued to advance our two distinct clinical programs that we believe will support the initiation of rigorously designed pivotal studies, which we are planning for 2025," stated Dr. Deborah Birx, Chief Executive Officer of Armata. "Regarding AP-PA02, which we are developing as a potential inhaled treatment for chronic Pseudomonas aeruginosa lung infections, I am pleased to report that enrollment of our Phase 2 Tailwind study in subjects with NCFB continues to progress in line with projected timelines."   

"For AP-SA02, developed with support from the U.S. Department of Defense as a potential treatment for Staphylococcus aureus bacteremia, we expect to complete our Phase 2a diSArm study this year, at which time we expect to have identified the optimal dose to be tested in a larger definitive study."

"The Company strengthened its balance sheet during the quarter with a $35.0 million investment from our principal shareholder, Innoviva, the proceeds of which are being used to further advance our phage clinical programs in preparation for pivotal studies."

"We entered the final stages of the build-out of our state-of-the-art cGMP manufacturing facility, which is expected to be completed mid-year, at which time we expect to be well-positioned to support our late-stage clinical trials and commercial production."    

"Having committed to the execution of randomized, placebo-controlled clinical studies that, if successful, will support eventual registration of our multi-phage products, I am very pleased with our progress to date, and believe that we are within line-of-sight to achieve value creating milestones this year and the next," Dr. Birx concluded.

First Quarter 2024 Financial Results

Grant Revenue. The Company recognized grant revenue of approximately $1.0 million for the three months ended March 31, 2024, which represents Medical Technology Enterprise Consortium's share of the costs incurred for the Company's AP-SA02 program for the treatment of Staphylococcus aureus bacteremia. The Company recognized approximately $0.8 million of revenue in the comparable period in 2023.

Research and Development. Research and development expenses for the three months ended March 31, 2024 were approximately $8.0 million as compared to approximately $9.6 million for the comparable period in 2023. The Company continues to invest in clinical related expenses associated with its primary development programs.

General and Administrative. General and administrative expenses for the three months ended March 31, 2024 were approximately $3.2 million as compared to approximately $2.5 million for the comparable period in 2023. The increase was mainly related to expenses related to the increased professional service expenses and other facility and overhead expenses.

Loss from Operations. Loss from operations for the three months ended March 31, 2024 was $10.2 million as compared to a loss from operations of approximately $11.3 million for the comparable period in 2023.

Cash. As of March 31, 2024, Armata held approximately $37.9 million of unrestricted cash, as compared to $13.5 million as of December 31, 2023.

On March 4, 2024, the Company entered into a credit and security agreement for a loan in an aggregate amount of $35.0 million with Innoviva Strategic Opportunities LLC. The loan bears interest at an annual rate of 14% and matures on June 4, 2025. Principal and accrued interest are payable at maturity.

As of May 7, 2024, there were approximately 36.1 million common shares outstanding.  

About Armata Pharmaceuticals, Inc.

Armata is 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 its proprietary bacteriophage-based technology. Armata is developing and advancing a broad pipeline of natural and synthetic phage candidates, including clinical candidates for Pseudomonas aeruginosa, Staphylococcus aureus, and other pathogens. Armata is committed to advancing phage with drug development expertise that spans bench to clinic including in-house phage specific cGMP manufacturing.

Forward Looking Statements

This communication contains "forward-looking" statements as defined by the Private Securities Litigation Reform Act of 1995. These statements relate to future events, results or to Armata's future financial performance and involve known and unknown risks, uncertainties and other factors which may cause Armata's actual results, performance or events to be materially different from any future results, performance or events expressed or implied by the forward-looking statements. In some cases, you can identify these statements by terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or the negative of those terms, and similar expressions. These forward-looking statements reflect management's beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this communication and are subject to risks and uncertainties including risks related to Armata's development of bacteriophage-based therapies; ability to staff and maintain its production facilities under fully compliant current Good Manufacturing Practices; ability to meet anticipated milestones in the development and testing of the relevant product; ability to be a leader in the development of phage-based therapeutics; ability to achieve its vision, including improvements through engineering and success of clinical trials; ability to successfully complete preclinical and clinical development of, and obtain regulatory approval of its product candidates and commercialize any approved products on its expected timeframes or at all; and Armata's estimates regarding anticipated operating losses, capital requirements and needs for additional funds. Additional risks and uncertainties relating to Armata and its business can be found under the caption "Risk Factors" and elsewhere in Armata's filings and reports with the SEC, including in Armata's Annual Report on Form 10-K, filed with the SEC on March 21, 2024, and in its subsequent filings with the SEC.

Armata expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Armata's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. 

Media Contacts:

At Armata:
Pierre Kyme
ir@armatapharma.com
310-665-2928

Investor Relations:
Joyce Allaire
LifeSci Advisors, LLC
jallaire@lifesciadvisors.com
212-915-2569

 

Armata Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
		March 31, 2024			December 31, 2023
Assets
Current assets
Cash		$	37,860		$	13,523
Prepaid expenses and other current assets			2,143			2,265
Other receivables			1,714			3,363
Total current assets			41,717			19,151
Property and equipment, net			12,700			12,559
Operating lease right-of-use asset			44,243			44,717
Intangible assets, net			13,746			13,746
Other long term assets			7,950			8,190
Total assets		$	120,356		$	98,363
Liabilities and stockholders' deficit
Total current liabilities		$	110,045		$	16,461
Long-term debt			35,368			82,307
Operating lease liabilities, net of current portion			28,376			28,583
Deferred tax liability			3,077			3,077
Total liabilities			176,866			130,428
Stockholders' deficit			(56,510)			(32,065)
Total liabilities and stockholders' deficit		$	120,356		$	98,363

 

Armata Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
		Three Months Ended
		March 31,
		2024			2023
Grant revenue		$	966		$	796
Operating expenses:
Research and development			8,016			9,604
General and administrative			3,178			2,538
Total operating expenses			11,194			12,142
Loss from operations			(10,228)			(11,346)
Interest income			52			18
Interest expense			(1,820)			—
Change in fair value of convertible debt			(13,025)			(3,162)
Net loss		$	(25,021)		$	(14,490)
Net loss per share, basic and diluted		$	(0.69)		$	(0.40)
Weighted average shares outstanding, basic and diluted			36,124,980			36,045,040

 

Armata Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
		Three Months Ended March 31,
		2024			2023
Operating activities:
Net loss		$	(25,021)		$	(14,490)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense			317			230
Stock-based compensation expense			534			857
Change in fair value of convertible debt			13,025			3,162
Non-cash interest expense			1,815			—
Non-cash interest income			(26)			—
Change in right-of-use asset			464			—
Changes in operating assets and liabilities:			(1,692)			(7,329)
Net cash used in operating activities			(10,584)			(17,570)
Investing activities:
Purchases of property and equipment			(250)			(2,010)
Net cash used in investing activities			(250)			(2,010)
Financing activities:
Proceeds from issuance of convertible debt, net of issuance costs			—			29,594
Proceeds from issuance of long-term debt, net of issuance costs			34,889			—
Proceeds from exercise of stock options			42			—
Net cash provided by financing activities			34,931			29,594
Net increase in cash and restricted cash			24,097			10,014
Cash and restricted cash, beginning of period			19,243			20,812
Cash and restricted cash, end of period		$	43,340		$	30,826
		Three Months Ended March 31,
		2024			2023
Cash		$	37,860		$	25,106
Restricted cash			5,480			5,720
Cash and restricted cash		$	43,340		$	30,826

 

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SOURCE Armata Pharmaceuticals, Inc.

FAQ

What were Armata Pharmaceuticals' financial results for the first quarter of 2024?

Armata recognized grant revenue of $1.0 million, incurred research and development expenses of $8.0 million, and general and administrative expenses of $3.2 million. The company reported a loss of $10.2 million from operations and held $37.9 million in unrestricted cash as of March 31, 2024.

What clinical trials did Armata Pharmaceuticals advance in the first quarter of 2024?

Armata continued the Phase 2a diSArm study of AP-SA02 for Staphylococcus aureus bacteremia and the Phase 2 Tailwind study of AP-PA02 for non-cystic fibrosis bronchiectasis. The company also presented phage development programs at the 6th Annual Bacteriophage Therapy Summit.

What was the impact of the $35 million investment from Innoviva on Armata Pharmaceuticals?

The $35 million investment from Innoviva strengthened Armata's balance sheet, supporting the advancement of phage clinical programs in preparation for pivotal studies.

How much cash did Armata Pharmaceuticals hold as of March 31, 2024?

Armata held approximately $37.9 million in unrestricted cash as of March 31, 2024, compared to $13.5 million as of December 31, 2023.

What is the total number of common shares outstanding for Armata Pharmaceuticals as of May 7, 2024?

As of May 7, 2024, Armata Pharmaceuticals had approximately 36.1 million common shares outstanding.