For those looking to find strong Medical stocks, it is prudent to search for companies in the group that are outperforming their peers. Armata Pharmaceuticals, Inc. (ARMP) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Medical sector should help us answer this question.Armata Pharmaceuticals, Inc. is a member of the Medical secto ...

Group 1 - Armata Pharmaceuticals, Inc. (ARMP) has shown strong performance in the Medical sector, returning about 60% year-to-date, significantly outperforming the sector average of -2.3% [4] - The Zacks Rank for Armata Pharmaceuticals is 2 (Buy), indicating positive analyst sentiment and a stronger earnings outlook, with a 24.7% increase in the consensus estimate for full-year earnings over the past 90 days [3] - Armata Pharmaceuticals belongs to the Medical - Biomedical and Genetics industry, which has an average gain of 3.3% this year, positioning ARMP as a better performer within this specific industry [5] Group 2 - The Medical sector includes 973 individual stocks and currently holds a Zacks Sector Rank of 6, reflecting the average strength of the sector [2] - Another stock in the Medical sector, Actinium Pharmaceuticals (ATNM), has also outperformed the sector with a year-to-date return of 27.8% and a Zacks Rank of 2 (Buy) [4][5] - The Medical - Drugs industry, where Actinium Pharmaceuticals is categorized, has 155 stocks and has moved up by 10.1% since the beginning of the year, indicating a relatively strong performance compared to the broader Medical sector [6]

Core Insights - Armata Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on developing high-purity, pathogen-specific bacteriophage therapeutics for antibiotic-resistant bacterial infections [4] - The company announced a publication in the Journal of Molecular Biology detailing the structure of phage Pa223, which is part of its clinical candidate AP-PA02 [2][3] - AP-PA02 is being developed as a treatment for chronic respiratory infections in patients with cystic fibrosis and non-cystic fibrosis bronchiectasis, showing promising results in two Phase 2 clinical trials [2] Company Overview - Armata Pharmaceuticals specializes in bacteriophage-based technology and is advancing a pipeline of natural and synthetic phage candidates targeting pathogens like Pseudomonas aeruginosa and Staphylococcus aureus [4] - The company emphasizes its commitment to phage therapy, leveraging in-house manufacturing capabilities to support commercialization [4] Scientific Advancements - The publication provides a high-resolution structural analysis of phage Pa223, enhancing understanding of phage biology and its clinical applications [3] - Advances in cryogenic electron microscopy and bioinformatics have enabled near-atomic resolution studies of phage structure, which may inform future therapeutic developments [3]

Company Overview - Armata Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on developing high-purity, pathogen-specific bacteriophage therapeutics aimed at treating antibiotic-resistant and difficult-to-treat bacterial infections [3] - The company utilizes proprietary bacteriophage-based technology and is advancing a broad pipeline of natural and synthetic phage candidates targeting pathogens such as Pseudomonas aeruginosa and Staphylococcus aureus [3] Upcoming Events - The CEO of Armata, Dr. Deborah Birx, will participate in a corporate presentation at the H.C. Wainwright 27th Annual Global Investment Conference in New York from September 8-10, 2025 [1] - Armata's presentation is scheduled for September 10, from 1:30-2:00 PM ET [2]

Core Viewpoint - Armata Pharmaceuticals, Inc. (ARMP) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Revisions - The Zacks rating system is based on the Zacks Consensus Estimate, which aggregates EPS estimates from sell-side analysts for the current and following years [2]. - The recent upgrade reflects a 24.7% increase in the Zacks Consensus Estimate for Armata Pharmaceuticals over the past three months, with expected earnings of -$1.46 per share for the fiscal year ending December 2025, showing no year-over-year change [9]. Impact of Institutional Investors - Changes in earnings estimates are strongly correlated with stock price movements, largely due to institutional investors who adjust their valuations based on these estimates [5]. - An increase in earnings estimates typically leads to higher fair value calculations, prompting institutional investors to buy or sell stocks, which in turn affects stock prices [5]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [8]. - The upgrade of Armata Pharmaceuticals to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [11].

Company Overview - Armata Pharmaceuticals, Inc. (ARMP) is part of the Medical sector, which includes 978 individual stocks and currently holds a Zacks Sector Rank of 7 [2] - The company has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] Performance Metrics - Over the past 90 days, the Zacks Consensus Estimate for ARMP's full-year earnings has increased by 24.7%, reflecting improved analyst sentiment [4] - Year-to-date, ARMP has returned approximately 36.8%, significantly outperforming the average return of -4.5% for Medical companies [4] Industry Context - Armata Pharmaceuticals operates within the Medical - Biomedical and Genetics industry, which consists of 488 stocks and currently ranks 97 in the Zacks Industry Rank [6] - The average return for stocks in this industry is 3% year-to-date, indicating that ARMP is performing better than its peers [6] Comparative Analysis - Another notable stock in the Medical sector is Avadel (AVDL), which has returned 28.5% year-to-date and has a Zacks Rank of 1 (Strong Buy) [5] - Avadel belongs to the Medical - Drugs industry, which has a current rank of 80 and has moved up by 8.3% year-to-date [6] Investment Outlook - Both Armata Pharmaceuticals and Avadel are highlighted as stocks that could continue their strong performance, making them of interest to investors in the Medical sector [7]

Group 1 - Armata Pharmaceuticals reported a quarterly loss of $0.32 per share, better than the Zacks Consensus Estimate of a loss of $0.39, and improved from a loss of $0.65 per share a year ago, resulting in an earnings surprise of +17.95% [1] - The company achieved revenues of $2.17 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 57.17%, compared to zero revenues a year ago [2] - Armata Pharmaceuticals shares have increased approximately 27.6% since the beginning of the year, outperforming the S&P 500's gain of 8.4% [3] Group 2 - The earnings outlook for Armata Pharmaceuticals is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The estimate revisions trend for Armata Pharmaceuticals was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is -$0.50 on $1.38 million in revenues, and -$1.94 on $5.5 million in revenues for the current fiscal year [7] Group 3 - The outlook for the Medical - Biomedical and Genetics industry, to which Armata Pharmaceuticals belongs, is currently in the bottom 43% of over 250 Zacks industries, which may impact stock performance [8] - Another company in the same industry, Invivyd, Inc., is expected to report a quarterly loss of $0.04 per share, reflecting a year-over-year change of +90%, with revenues projected at $15.5 million, up 585.8% from the previous year [9]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=10&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements for H1 2025 report a $22.8 million net loss, a $69.5 million stockholders' deficit, and $4.3 million cash, raising going concern doubts Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,328 | $9,291 | | Total current assets | $7,520 | $11,308 | | Total assets | $80,790 | $86,437 | | Total current liabilities | $120,085 | $48,249 | | Total liabilities | $150,293 | $134,456 | | Total stockholders' deficit | $(69,503) | $(48,019) | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Grant and award revenue | $2,169 | $— | $2,660 | $966 | | Research and development | $6,394 | $8,475 | $11,823 | $16,491 | | General and administrative | $2,619 | $3,439 | $5,872 | $6,617 | | Operating loss | $(6,844) | $(11,914) | $(15,035) | $(22,142) | | Net income (loss) | $(16,295) | $8,986 | $(22,826) | $(16,035) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Account | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,791) | $(20,761) | | Net cash used in investing activities | $(248) | $(1,616) | | Net cash provided by financing activities | $9,986 | $35,019 | | Net (decrease) increase in cash | $(5,053) | $12,642 | [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail significant operating losses, a $350.6 million accumulated deficit, $4.3 million cash, and reliance on Innoviva loans and MTEC grants - The company is a clinical-stage biotechnology firm focused on bacteriophage therapeutics for antibiotic-resistant infections[32](index=32&type=chunk) - As of June 30, 2025, the company had an accumulated deficit of **$350.6 million** and cash of **$4.3 million**, which is **insufficient** to fund operations for the next 12 months, raising **substantial doubt** about its ability to continue as a **going concern**[33](index=33&type=chunk) - The company secured a **$10.0 million** loan in March 2025 and a **$15.0 million** loan in August 2025 from its principal stockholder, **Innoviva**, to fund operations. The maturity dates for existing loans were also extended to March 12, 2026[35](index=35&type=chunk)[36](index=36&type=chunk)[39](index=39&type=chunk) - The **MTEC** award for the **AP-SA02** program was increased to **$26.2 million** in April 2025, with the term extended to March 31, 2026, providing continued non-dilutive funding[94](index=94&type=chunk)[109](index=109&type=chunk) - Subsequent to the quarter end, on August 11, 2025, the company entered into a new credit agreement with **Innoviva** for a loan of **$15.0 million**[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses positive Phase 2 trial results for bacteriophage therapeutics, ongoing financial challenges, a going concern warning, and a narrowed operating loss due to reduced R&D [Overview and Clinical Development](index=38&type=section&id=Overview%20and%20Clinical%20Development) Armata, a clinical-stage biotech, completed three Phase 2 trials for phage therapeutics, showing positive results for AP-PA02 and AP-SA02, with future development contingent on funding - **AP-PA02** (P. aeruginosa): Completed two **Phase 2** trials (**SWARM-P.a.** in CF and **Tailwind** in NCFB). Data showed a favorable safety profile and a durable reduction of P. aeruginosa in the lung. Future development, including a potential **Phase 3** trial, depends on securing additional funding or partnerships[118](index=118&type=chunk)[119](index=119&type=chunk)[123](index=123&type=chunk) - **AP-SA02** (S. aureus): The **Phase 1b/2a diSArm** study in bacteremia met its primary endpoint, showing a statistically significant **increase** in investigator-assessed responder rate at day 12 (**88%** for **AP-SA02** vs. **58%** for placebo; **p=0.047**)[129](index=129&type=chunk)[131](index=131&type=chunk) - Following the positive **AP-SA02** results, the company plans to hold an end-of-**Phase 2** meeting with the **FDA** in the second half of 2025 to discuss the design of a pivotal efficacy study[135](index=135&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) H1 2025 saw increased grant revenue, a 23.4% decrease in operating expenses, a narrowed operating loss, but an increased net loss due to fair value adjustments Comparison of Operating Results (in thousands) | Account | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Grant and award revenue | $2,660 | $966 | 175.4% | | Research and development | $11,823 | $16,491 | (28.3%) | | General and administrative | $5,872 | $6,617 | (11.3%) | | Loss from operations | $(15,035) | $(22,142) | (32.1%) | | Net loss | $(22,826) | $(16,035) | 42.4% | - The **decrease** in R&D expenses for the six-month period was primarily due to a **$3.1 million reduction** in clinical trial costs, mainly from the completion of the **AP-PA02** NCFB trial[149](index=149&type=chunk)[151](index=151&type=chunk) - The net **loss** was significantly impacted by a non-cash **loss** of **$0.5 million** on the change in fair value of the Convertible Loan in H1 2025, compared to a non-cash **gain** of **$10.4 million** in H1 2024[165](index=165&type=chunk) [Liquidity, Capital Resources and Financial Condition](index=53&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Financial%20Condition) Critical financial condition with $4.3 million cash, insufficient for 12 months, raising going concern doubts, reliant on Innoviva debt and MTEC grants - The company's cash and cash equivalents of **$4.3 million** as of June 30, 2025, are not **sufficient** to fund operations for the next 12 months, raising **substantial doubt** about its ability to continue as a **going concern**[167](index=167&type=chunk) - The company secured a **$10.0 million** loan from **Innoviva** in March 2025 and extended the maturity of its existing convertible and term loans to March 2026[168](index=168&type=chunk) - The **MTEC** award was **increased** to a total of **$26.2 million**, providing a key source of non-dilutive funding for the **AP-SA02** program[170](index=170&type=chunk)[171](index=171&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,791) | $(20,761) | | Net cash used in investing activities | $(248) | $(1,616) | | Net cash provided by financing activities | $9,986 | $35,019 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Armata Pharmaceuticals, Inc. is not required to provide this information - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and PFO concluded that the company's disclosure controls and procedures were **effective**[184](index=184&type=chunk) - There were no changes in internal control over financial reporting during the six months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[186](index=186&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any legal proceedings that would materially adversely affect its financial position - The company is not currently party to any legal proceedings that would have a material adverse effect on its financial position[187](index=187&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors described in the company's 2024 Form 10-K - There have been no material changes to the risk factors described in the company's 2024 Form 10-K[188](index=188&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[189](index=189&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[192](index=192&type=chunk)

[Credit and Security Agreement Overview](index=1&type=section&id=Credit%20and%20Security%20Agreement) This agreement is between Armata Pharmaceuticals (Borrower), its subsidiaries (Guarantors), and Innoviva Strategic Opportunities (Lender) [Parties to the Agreement](index=1&type=section&id=Parties%20to%20the%20Agreement) This section identifies Armata Pharmaceuticals, Inc. as the Borrower, its subsidiaries as Guarantors, and Innoviva Strategic Opportunities LLC as the Lender - **Borrower**: Armata Pharmaceuticals, Inc., a Washington corporation[1](index=1&type=chunk)[7](index=7&type=chunk) - **Guarantors**: Each subsidiary of the Borrower party to the agreement[1](index=1&type=chunk)[7](index=7&type=chunk) - **Lender**: Innoviva Strategic Opportunities LLC, a Delaware limited liability company[1](index=1&type=chunk)[7](index=7&type=chunk) [ARTICLE I: DEFINITIONS; CERTAIN TERMS](index=5&type=section&id=ARTICLE%20I%20DEFINITIONS%3B%20CERTAIN%20TERMS) This article defines key financial, legal, and operational terms, and establishes general rules for interpretation and accounting principles [Definitions](index=5&type=section&id=Section%201.01.%20Definitions) This section provides comprehensive definitions for key financial, legal, and operational terms used throughout the credit agreement Key Defined Terms | Term | Definition Summary | | :--- | :--- | | **Commitment** | The Lender's commitment to make a Closing Date Term Loan of $15,000,000. | | **Collateral** | All assets of the Borrower and Guarantors, including real, personal, tangible, and intangible property, securing the obligations. | | **Maturity Date** | The date the loan is due and payable, which is January 11, 2029. | | **Permitted Indebtedness** | Specifies the types of debt the Borrower is allowed to incur, including purchase money debt, intercompany investments, and up to $100,000 under the FNBO credit card program. | | **Event of Default** | An event that, if it occurs, would constitute a default under the loan agreement. | [Terms Generally](index=39&type=section&id=Section%201.02.%20Terms%20Generally) This section outlines general rules for interpreting agreement terms, including singular/plural forms and the meaning of 'include' - The agreement specifies rules for interpretation, such as definitions applying to both singular and plural forms and pronouns including all genders[116](index=116&type=chunk) [Accounting and Other Terms](index=39&type=section&id=Section%201.03.%20Accounting%20and%20Other%20Terms) This section specifies GAAP as the accounting standard, with exceptions for lease accounting, and references the New York UCC for undefined terms - Accounting terms are to be interpreted under GAAP as of the Effective Date, particularly for lease accounting (FASB ASC 840)[118](index=118&type=chunk) - Terms not defined in the agreement but defined in Article 8 or 9 of the New York Uniform Commercial Code (UCC) will adopt the UCC's meaning[119](index=119&type=chunk) [Time References](index=39&type=section&id=Section%201.04.%20Time%20References) This section clarifies that all time references within the agreement are based on Eastern Time in New York City - All time references in the agreement are based on the time in New York City (Eastern Time)[120](index=120&type=chunk) [ARTICLE II: THE LOAN](index=41&type=section&id=ARTICLE%20II%20THE%20LOAN) This article details the loan commitment, repayment terms, interest rates, prepayment conditions, and tax obligations [Commitment](index=41&type=section&id=Section%202.01.%20Commitment) The Lender commits to a Closing Date Term Loan up to a specified amount, which cannot be reborrowed once repaid Loan Commitment | Item | Details | | :--- | :--- | | **Loan Type** | Closing Date Term Loan | | **Commitment Amount** | Up to $15,000,000 | | **Reborrowing** | Not permitted | [Repayment of Loan; Evidence of Debt](index=41&type=section&id=Section%202.04.%20Repayment%20of%20Loan%3B%20Evidence%20of%20Debt) The outstanding principal is due on the Maturity Date of January 11, 2029, with Lender records serving as prima facie evidence of debt - The entire outstanding principal amount of the loan is due on the **Maturity Date, January 11, 2029**[70](index=70&type=chunk)[126](index=126&type=chunk) [Interest](index=43&type=section&id=Section%202.05.%20Interest) The loan bears a fixed interest rate of 14.00% per annum, with a higher Post-Default Rate applying upon an event of default Interest Rates | Rate Type | Rate (per annum) | | :--- | :--- | | **Standard Interest Rate** | 14.00% | | **Default Interest Rate** | Post-Default Rate (Standard Rate + 3.0%) | [Reduction of Commitment; Prepayment of Loan](index=43&type=section&id=Section%202.06.%20Reduction%20of%20Commitment%3B%20Prepayment%20of%20Loan) The Borrower may voluntarily prepay the loan with notice, while mandatory prepayment is required from 100% of Net Proceeds from certain events - The Borrower may voluntarily prepay the loan with **10 business days' prior written notice**[136](index=136&type=chunk) - **Mandatory prepayment of 100% of Net Proceeds** is required upon certain 'Prepayment Events,' including asset dispositions generating **over $250,000** or incurrence of unpermitted debt[96](index=96&type=chunk)[139](index=139&type=chunk) - The Borrower may reinvest Net Proceeds from asset sales or casualty events **within 270 days** to avoid mandatory prepayment, provided no Event of Default has occurred[139](index=139&type=chunk) [Taxes](index=47&type=section&id=Section%202.07.%20Taxes) Loan Parties must make tax-free payments, or pay additional amounts to cover deducted Indemnified Taxes, and indemnify the Lender for such taxes - Loan Parties must make payments **without deducting for Taxes**, except as required by law[142](index=142&type=chunk) - If Indemnified Taxes are deducted, the Loan Party must pay an **'Additional Amount'** to gross-up the payment, ensuring the Lender receives the full intended amount[142](index=142&type=chunk) [ARTICLE III: APPLICATION OF PAYMENTS](index=49&type=section&id=ARTICLE%20III%20APPLICATION%20OF%20PAYMENTS) This article specifies the order in which payments are applied to outstanding obligations, particularly after an Event of Default [Apportionment of Payments](index=49&type=section&id=Section%3B%203.02.%20Apportionment%20of%20Payments) Following an Event of Default, payments are applied first to fees and expenses, then interest, then principal, and finally other obligations - Following an Event of Default, payments and collateral proceeds are applied in a **specific order: 1) fees and expenses, 2) interest, 3) principal, and 4) all other obligations**[149](index=149&type=chunk) [ARTICLE IV: CONDITIONS TO THE LOAN](index=50&type=section&id=ARTICLE%20IV%20CONDITIONS%20TO%20THE%20LOAN) This article details the conditions that must be met for the credit agreement to become effective and for the loan to be disbursed [Conditions Precedent to Effectiveness](index=50&type=section&id=Section%204.01.%20Conditions%20Precedent%20to%20Effectiveness) The agreement's effectiveness is contingent upon payment of fees, delivery of legal documents, and the absence of a Material Adverse Effect - The agreement's effectiveness is conditional upon the Borrower paying **all initial fees and expenses**[153](index=153&type=chunk) - The Borrower must deliver numerous documents, including **UCC-1 financing statements, certificates of good standing, corporate resolutions** authorizing the debt, and a legal opinion from its counsel[154](index=154&type=chunk)[156](index=156&type=chunk) - No event that could reasonably be expected to have a **Material Adverse Effect must have occurred since December 31, 2024**[157](index=157&type=chunk) [Conditions Precedent to the Loan](index=52&type=section&id=Section%204.02.%20Conditions%20Precedent%20to%20the%20Loan) Loan disbursement requires all representations and warranties to be true, no existing Default, and compliance with the Operating Budget - Before the loan is made, **all representations and warranties must be true and correct**[157](index=157&type=chunk) - **No Default or Event of Default can have occurred or be continuing**[157](index=157&type=chunk) [ARTICLE V: REPRESENTATIONS AND WARRANTIES](index=52&type=section&id=ARTICLE%20V%20REPRESENTATIONS%20AND%20WARRANTIES) This article outlines the Loan Parties' affirmations regarding their legal and financial standing, compliance with laws, and accuracy of information [Representations and Warranties](index=52&type=section&id=Section%205.01.%20Representations%20and%20Warranties) Loan Parties affirm their organization, authority, legal compliance, financial statement accuracy, intellectual property ownership, and absence of material litigation - The Loan Parties confirm they are **duly organized, in good standing, and have the authority** to enter into the loan agreement[159](index=159&type=chunk) - The agreement is affirmed as a **legal, valid, and binding obligation**[162](index=162&type=chunk) - The Loan Parties represent that they are in **compliance with all applicable laws, including Anti-Corruption Laws and Sanctions**, and that loan proceeds will not be used in violation of these laws[165](index=165&type=chunk)[175](index=175&type=chunk) - The Borrower confirms that the proceeds of the loan will be used in accordance with Section 6.01(i), which specifies **Permitted Borrower Expenses**[169](index=169&type=chunk) [ARTICLE VI: COVENANTS OF THE LOAN PARTIES](index=59&type=section&id=ARTICLE%20VI%20COVENANTS%20OF%20THE%20LOAN%20PARTIES) This article details the ongoing affirmative and negative obligations of the Loan Parties, including reporting, compliance, and restrictions on financial actions [Affirmative Covenants](index=59&type=section&id=Section%206.01.%20Affirmative%20Covenants) Loan Parties must report defaults, add new subsidiaries as guarantors, comply with laws, maintain corporate existence, and submit annual operating budgets - Loan Parties must **promptly report any Event of Default or Material Adverse Effect**[179](index=179&type=chunk) - **New subsidiaries (that are not Excluded Subsidiaries) must join the agreement as Guarantors within 30 days** of formation or acquisition[180](index=180&type=chunk) - The Borrower must use the loan proceeds to pay for **Permitted Borrower Expenses** in accordance with the approved Operating Budget[191](index=191&type=chunk) - The Borrower is required to deliver an **annual Operating Budget to the Lender for written approval no later than 60 days** after the end of each Fiscal Year[192](index=192&type=chunk) [Negative Covenants](index=71&type=section&id=Section%206.02.%20Negative%20Covenants) Loan Parties are prohibited from creating unpermitted liens or debt, undergoing fundamental changes, making unpermitted dispositions, or exceeding capital expenditure limits - **Prohibits creating, incurring, or assuming any Lien on properties, other than Permitted Liens**[203](index=203&type=chunk) - **Restricts incurring any Indebtedness other than Permitted Indebtedness**[204](index=204&type=chunk) - **Forbids fundamental changes such as mergers, liquidations, or dissolutions**, with specific exceptions for transactions between Loan Parties[205](index=205&type=chunk) - **Limits capital expenditures to a maximum of $3,000,000** in any Fiscal Year, unless provided for in the Operating Budget[208](index=208&type=chunk) [ARTICLE VII: EVENTS OF DEFAULT](index=79&type=section&id=ARTICLE%20VII%20EVENTS%20OF%20DEFAULT) This article defines circumstances constituting an 'Event of Default', triggering the Lender's right to accelerate the loan [Events of Default](index=79&type=section&id=Section%207.01.%20Events%20of%20Default) Defaults include failure to pay, incorrect representations, covenant breaches, cross-defaults on debt over $500,000, and bankruptcy proceedings - **Failure to pay any principal when due, or interest/fees within three Business Days** of the due date, constitutes an Event of Default[220](index=220&type=chunk) - A **breach of any representation or warranty in any material respect** is an Event of Default[221](index=221&type=chunk) - A default on other Indebtedness with a **principal amount over $500,000** that permits acceleration is considered a cross-default[221](index=221&type=chunk) - Initiating bankruptcy or insolvency proceedings results in an **immediate and automatic acceleration of the loan without notice**[221](index=221&type=chunk)[223](index=223&type=chunk) [ARTICLE VIII: GUARANTY](index=85&type=section&id=ARTICLE%20VIII%20GUARANTY) This article establishes the unconditional and irrevocable joint and several guarantee provided by the Guarantors for the Borrower's obligations [Guaranty](index=85&type=section&id=Section%208.01.%20Guaranty) Each Guarantor provides an unconditional, irrevocable, joint, and several guarantee for all of the Borrower's obligations under the loan documents - **Guarantors jointly and severally guarantee all obligations of the Borrower**, ensuring payment of principal, interest, and fees[225](index=225&type=chunk) [Guaranty Absolute](index=85&type=section&id=Section%208.02.%20Guaranty%20Absolute) The guaranty is one of payment, not collection, making Guarantors' obligations absolute and unconditional, with waivers of various defenses - The guaranty is a **'guaranty of payment when due and not of collection,'** allowing the Lender to demand payment directly from Guarantors[226](index=226&type=chunk) - **Guarantors waive defenses related to the invalidity of loan documents, changes in payment terms, or the release of collateral**[226](index=226&type=chunk)[227](index=227&type=chunk) [ARTICLE IX: SECURITY](index=89&type=section&id=ARTICLE%20IX%20SECURITY) This article details the grant of security interest by Loan Parties to the Lender over all Collateral and the Lender's remedies upon default [Grant of Security Interest](index=89&type=section&id=Section%209.01.%20Grant%20of%20Security%20Interest) Each Loan Party grants the Lender a security interest and continuing lien on all its right, title, and interest in the Collateral - **Each Loan Party grants the Lender a security interest in all of its assets**, defined as the Collateral, to secure all Obligations[234](index=234&type=chunk) [Authorization to File UCC Statements](index=91&type=section&id=Section%209.04.%20Authorization%20to%20File%20UCC%20Statements) Loan Parties authorize the Lender to file UCC financing statements and other documents to perfect its security interest in the Collateral - The **Lender is authorized to file financing statements describing the Collateral as 'all assets' or 'all personal property'** to perfect its security interest[238](index=238&type=chunk) [Remedies](index=95&type=section&id=Section%209.10.%20Remedies) Upon default, the Lender gains UCC secured party rights, including immediate possession and sale of Collateral, and a license to use intellectual property - **Upon default, the Lender may take immediate possession of and sell the Collateral**[243](index=243&type=chunk) - A **10-day prior notification is deemed reasonable** for any public or private sale of the Collateral[243](index=243&type=chunk) - Loan Parties grant the Lender an **irrevocable, nonexclusive license to use their Intellectual Property** to liquidate assets upon default[244](index=244&type=chunk) [ARTICLE X: [RESERVED]](index=99&type=section&id=ARTICLE%20X%20%5BRESERVED%5D) This article is intentionally reserved for future use or content, indicating no provisions are currently defined within this section [ARTICLE XI: MISCELLANEOUS](index=99&type=section&id=ARTICLE%20XI%20MISCELLANEOUS) This article covers general provisions including expenses, governing law, jurisdiction, waiver of jury trial, and indemnification [Expenses; Taxes; Attorneys' Fees](index=102&type=section&id=Section%2011.04.%20Expenses%3B%20Taxes%3B%20Attorneys%27%20Fees) The Borrower agrees to pay all reasonable, documented out-of-pocket costs incurred by the Lender for the agreement's administration and enforcement - The **Borrower is responsible for reimbursing the Lender for all reasonable out-of-pocket costs, including legal fees**, related to the agreement[259](index=259&type=chunk) [Governing Law](index=106&type=section&id=Section%2011.09.%20GOVERNING%20LAW) The agreement and all loan documents are governed by and construed in accordance with the laws of the State of New York - The **governing law for the agreement is the law of the State of New York**[268](index=268&type=chunk) [Consent to Jurisdiction and Venue](index=106&type=section&id=Section%2011.10.%20CONSENT%20TO%20JURISDICTION%3B%20SERVICE%20OF%20PROCESS%20AND%20VENUE) Loan Parties irrevocably consent to the jurisdiction of New York state and federal courts for any legal actions related to the agreement - **All parties consent to the jurisdiction of the courts of the State of New York in the County of New York** or the U.S. District Court for the Southern District of New York[269](index=269&type=chunk) [Waiver of Jury Trial](index=108&type=section&id=Section%2011.11.%20WAIVER%20OF%20JURY%20TRIAL%2C%20ETC.) All parties to the agreement explicitly waive their right to a trial by jury in any action or proceeding related to the loan documents - **Both the Loan Parties and the Lender waive any right to a jury trial** in disputes arising from the agreement[272](index=272&type=chunk) [Indemnification and Limitation of Liability](index=110&type=section&id=Section%2011.15.%20Indemnification%3B%20Limitation%20of%20Liability%20for%20Certain%20Damages) Loan Parties indemnify the Lender against losses and waive claims for special, indirect, consequential, or punitive damages - **Loan Parties must indemnify the Lender against a wide range of potential losses and liabilities** related to the financing, except those caused by the Lender's own gross negligence or willful misconduct[276](index=276&type=chunk) - **Loan Parties waive the right to sue for punitive, special, indirect, or consequential damages**[279](index=279&type=chunk) [Schedules](index=4&type=section&id=SCHEDULES) This section lists various schedules providing detailed supporting information for the agreement's representations and covenants [List of Schedules](index=4&type=section&id=List%20of%20Schedules) The agreement includes schedules detailing existing indebtedness, intellectual property, material contracts, and post-closing requirements - **The schedules provide detailed lists supporting the representations and covenants in the agreement, including**: - Schedule 1.01(a): Existing Indebtedness - Schedule 5.01(m): Intellectual Property - Schedule 5.01(n): Material Contracts - Schedule 6.01(j): Post-Closing Requirements[6](index=6&type=chunk) [Signatories](index=115&type=section&id=Signatories) This section confirms the execution of the agreement by the authorized officers of the Borrower, Guarantors, and the Lender's managing member [Execution of Agreement](index=115&type=section&id=Execution%20of%20Agreement) The agreement is formally executed by the Chief Executive Officers of Armata Pharmaceuticals, its subsidiaries, and Innoviva Strategic Opportunities LLC - The agreement is **signed and made effective by the Chief Executive Officers of the Borrower, Guarantors, and the Lender's managing member**[289](index=289&type=chunk)[290](index=290&type=chunk)

Core Insights - Armata Pharmaceuticals announced positive topline results from the Phase 1b/2a diSArm trial for its therapeutic candidate AP-SA02, demonstrating efficacy in treating complicated S. aureus bacteremia [3][4] - The company entered into a secured credit agreement with Innoviva for $15 million, maturing in 2029, to support the development of AP-SA02 [4] - Financial results for Q2 2025 showed a loss from operations of approximately $6.8 million, a significant reduction from a loss of approximately $11.9 million in Q2 2024 [8][16] Financial Overview - Grant and award revenue for Q2 2025 was $2.2 million, compared to no grant revenue in Q2 2024 [6] - Research and development expenses decreased to approximately $6.4 million in Q2 2025 from approximately $8.5 million in Q2 2024 [7] - General and administrative expenses also decreased to approximately $2.6 million in Q2 2025 from approximately $3.4 million in Q2 2024 [8] Development Updates - The diSArm study met all primary endpoints for safety, tolerability, and clinical response, with AP-SA02 showing improved clinical outcomes compared to the best available antibiotic therapy [4] - Armata plans to hold an End of Phase 2 meeting with the FDA later this year to discuss the design of a pivotal trial for AP-SA02 [4] - The company received an additional $4.65 million in non-dilutive funding from the U.S. Department of Defense to support the diSArm study and FDA meeting preparations [4] Cash Position - As of June 30, 2025, Armata had approximately $4.3 million in unrestricted cash and cash equivalents, down from $9.3 million as of December 31, 2024 [9] - The company reported a net loss of $16.3 million for the six months ended June 30, 2025, compared to a net income of $9 million for the same period in 2024 [16]