Armata Pharmaceuticals(ARMP) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Armata Pharmaceuticals reported a net loss of $6.5 million for Q1 2025, an improvement from Q1 2024, but faces going concern doubts Condensed Consolidated Balance Sheets Stockholders' deficit reached $53.8 million as of March 31, 2025, driven by significant debt reclassification to current liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $11,688 | $9,291 | | Total current assets | $13,166 | $11,308 | | Total assets | $87,250 | $86,437 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $110,540 | $48,249 | | Total liabilities | $141,033 | $134,456 | | Total stockholders' deficit | $(53,783) | $(48,019) | Condensed Consolidated Statements of Operations Net loss improved to $6.5 million in Q1 2025 from $25.0 million in Q1 2024, primarily due to a fair value gain on the convertible loan Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Grant and award revenue | $491 | $966 | | Research and development | $5,429 | $8,016 | | General and administrative | $3,253 | $3,178 | | Operating loss | $(8,191) | $(10,228) | | Change in fair value of the Convertible Loan | $5,203 | $(13,025) | | Net loss | $(6,531) | $(25,021) | | Net loss per share, basic | $(0.18) | $(0.69) | Condensed Consolidated Statements of Cash Flows Operating cash outflow decreased to $7.6 million in Q1 2025, offset by $10.0 million from financing, leading to a $2.3 million cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,580) | $(10,584) | | Net cash used in investing activities | $(99) | $(250) | | Net cash provided by financing activities | $9,986 | $34,931 | | Net increase in cash, cash equivalents and restricted cash | $2,307 | $24,097 | Notes to Condensed Consolidated Financial Statements Notes detail a going concern warning, reliance on Innoviva debt, and fair value accounting for the convertible loan, plus subsequent MTEC funding - The company has incurred significant operating losses, with an accumulated deficit of $334.3 million as of March 31, 2025. Existing cash of $11.7 million is not sufficient to fund operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[31] - On March 12, 2025, the company entered into a new $10.0 million credit agreement with its principal stockholder, Innoviva. Concurrently, the maturity dates for its existing convertible loan, 2023 term loan, and 2024 term loan were all extended to March 12, 2026[33][34][71] - The MTEC award, which partially funds the AP-SA02 clinical study, was increased by $4.65 million to a total of $26.2 million on April 29, 2025, and the agreement term was extended to September 30, 2025. This event occurred after the quarter's end[88][103] - The company recognized a $5.2 million gain for the three months ended March 31, 2025, from the change in fair value of its convertible loan, which is remeasured each period. This non-cash gain was a primary driver of the reduced net loss compared to the prior year[63][52] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A covers bacteriophage therapy development, clinical progress, reduced operating loss from lower R&D, and reiterates going concern doubts Overview Armata develops bacteriophage therapies, with lead candidates AP-PA02 and AP-SA02 progressing in clinical trials, expecting diSArm data in H1 2025 - The company's lead candidate, AP-PA02, has completed two Phase 2 trials (SWARM-P.a. in cystic fibrosis and Tailwind in NCFB), showing a favorable safety profile and reduction in P. aeruginosa bacterial load[111][112][114] - The Phase 1b/2a 'diSArm' study of AP-SA02 for S. aureus bacteremia has completed enrollment, with topline data anticipated in the first half of 2025. This study is partially funded by a DoD award through MTEC, which was increased to $26.2 million[116][117] Results of Operations Q1 2025 saw decreased revenue and R&D expenses, increased interest expense, and a significant non-cash gain from convertible loan fair value changes Comparison of Operations (in thousands) | Item | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Grant and award revenue | $491 | $966 | $(475) | (49.2%) | | Research and development | $5,429 | $8,016 | $(2,587) | (32.3%) | | General and administrative | $3,253 | $3,178 | $75 | 2.4% | | Loss from operations | $(8,191) | $(10,228) | $2,037 | (19.9%) | | Net loss | $(6,531) | $(25,021) | $18,490 | (73.9%) | - The decrease in R&D expenses was mainly driven by a $1.6 million reduction in clinical trial costs, primarily related to the AP-PA02 NCFB trial[135][136] - Interest expense nearly doubled to $3.6 million from $1.8 million year-over-year, reflecting increased borrowing under the 2023, 2024, and new 2025 loan agreements[142] Liquidity, Capital Resources and Financial Condition Cash of $11.7 million is insufficient for 12 months, raising going concern doubts, despite a new $10.0 million loan and debt maturity extensions - The company explicitly states that its cash of $11.7 million as of March 31, 2025, is not sufficient to fund operations for the next 12 months, which raises substantial doubt about its ability to continue as a going concern[145] - To address liquidity, the company entered into a new $10.0 million credit agreement in March 2025 and extended the maturity of its convertible loan, 2023 loan, and 2024 loan to March 12, 2026[146] Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,580) | $(10,584) | | Net cash provided by financing activities | $9,986 | $34,931 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Armata is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, Armata is exempt from providing quantitative and qualitative disclosures about market risk[163] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and PFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, March 31, 2025[164] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[166] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings that would adversely affect its operations - The company reports that it is not involved in any material legal proceedings[167] Risk Factors No material changes occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K have occurred[168] Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No directors or officers adopted or terminated any insider trading arrangements during the three months ended March 31, 2025[172]