Armata Pharmaceuticals(ARMP) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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 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] - 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] - 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][36][39] - 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][109] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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][119][123] - 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][131] - 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] Results of Operations 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][151] - 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] Liquidity, Capital Resources and Financial Condition 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] - 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] - 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][171] 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 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[189] Item 5. Other Information 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]