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Item 8. Financial Statements and Supplementary Data

2026-03-25 compared with 2025-03-21 · 154 added, 157 removed, 629 unchanged (33% of the section changed)

14 unchanged sentences

We have audited the accompanying consolidated balance sheets of Armata Pharmaceuticals, Inc.

(the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

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(in thousands, except share and per share data)

Grant revenue

Year Ended December 31,

Grant and award revenue

Operating expenses

1 unchanged sentence

General and administrative

Impairment expense

Total operating expenses

4 unchanged sentences

Change in fair value of the Convertible Loan

Gain (loss) on debt and the Convertible Loan extinguishments

Gain on debt and the Convertible Loan extinguishments

Total other income (expense), net

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Balances, December 31, 2023

Forfeiture of restricted stock awards

Withholdings for taxes related to net share settlement of equity awards

Exercise of stock options

Issuance of Common Stock upon vesting of restricted stock units

Withholdings for taxes related to net share settlement of equity awards

Issuance of Common Stock upon release of restricted stock units, net of tax withholdings

Stock-based compensation expense

4 unchanged sentences

Exercise of stock options

Withholdings for taxes related to net share settlement of equity awards

Issuance of Common Stock upon release of restricted stock units, net of tax withholdings

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Adjustments required to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

Depreciation expense

Stock-based compensation expense

1 unchanged sentence

Non-cash interest expense

Non-cash interest income

Gain (loss) on debt and Convertible Loan extinguishments

Gain on debt and Convertible Loan extinguishments

Impairment expense

Change in right-of-use asset

Loss from disposal of property and equipment

Changes in operating assets and liabilities:

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Purchases of property and equipment

Proceeds from sale of property and equipment

Net cash used in investing activities

Financing activities:

Proceeds from issuance of the Convertible Loan, net of issuance costs

Proceeds from issuance of term debt, net of issuance costs

2 unchanged sentences

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

1 unchanged sentence

Supplemental disclosure of cash flow information:

Right-of-use asset obtained in exchange for operating lease liability

Property and equipment included in accounts payable and accrued liabilities

Right-of-use asset obtained by assuming operating lease liabilities

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:

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(“Armata”) together with its subsidiaries (the “Company”), 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’s common stock, par value $ 0.01 per share (the “Common Stock”) is traded on the NYSE American exchange under the ticker symbol “ARMP”.

Armata’s common stock, par value $ 0.01 per share (the “Common Stock”) is traded on the New York Stock Exchange (the “NYSE”) American exchange under the ticker symbol “ARMP”.

The Company’s principal stockholder, Innoviva Strategic Opportunities LLC (“Innoviva SO”), a wholly owned subsidiary of Innoviva Inc.

(“Innoviva”), owns 68.8 % of the Company’s outstanding equity as of December 31, 2025.

The Company also received $ 90.0 million in total debt financing from Innoviva SO during 2023 and in March 2024.

The Company also received $ 115.0 million in total debt financing from Innoviva SO during 2023, March 2024, and March and August 2025.

Innoviva designees represent three out of eight seats of the Company’s Board of Directors (“Board of Directors”) during the year ended December 31, 2025, and cannot vote or take any action by written consent with respect to any shares of Common Stock held by Innoviva SO that represent, in the aggregate, more than 49.5 % of the total number of shares of the Company’s Common Stock for voting on the matters related to election or removal of the Company’s board members or amending the bylaws of the Company to reduce the maximum number of directors or setting the number of directors who may serve on the Company’s Board of Directors in accordance with the voting agreement.

The voting agreement expires on the earlier of the fifth anniversary of the agreement’s effective date, January 26, 2021, or the approval by the Food and Drug Administration (the “FDA”) of any of the Company’s product candidates for marketing and commercial distribution.

The voting agreement expires on the earlier of January 26, 2031, or the approval by the Food and Drug Administration (the “FDA”) of any of the Company’s product candidates for marketing and commercial distribution.

Innoviva SO and Innoviva are related parties of the Company.

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Recent Financing:

2025 Credit Agreement

On March 12, 2025, the Company entered into a credit and security agreement (the “2025 Credit Agreement”) for a loan in an aggregate amount of $ 10.0 million (the “2025 Loan”) with Innoviva Strategic Opportunities LLC, a wholly owned subsidiary of Innoviva, Inc.

INVA), our principal stockholder and a related party (collectively, “Innoviva”).

The 2025 Loan bears interest at an annual rate of 14.0 % and matures on March 12, 2026.

December 2025 Sales Agreement

On December 1, 2025, the Company entered into a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC (“Jones”), relating to the offer and sale of shares of its common stock.

In accordance with the terms of the Sales Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 100,000,000 from time to time subject to certain conditions, through or to Jones, acting as agent or principal.

August 2025 Credit Agreement

On August 11, 2025, the Company entered into a credit and security agreement (the “August 2025 Credit Agreement”) for a loan in the aggregate amount of $ 15.0 million (the “August 2025 Loan”) with Innoviva SO, a wholly owned subsidiary of Innoviva, the Company’s principal stockholder and a related party.

The August 2025 Loan bears interest at an annual rate of 14.0 % and matures on January 11, 2029 .

Principal and accrued interest are payable at maturity.

Repayment of the 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

Concurrently with the execution of the 2025 Credit Agreement, the Company entered into amendments to (i) its existing convertible loan (the “Convertible Loan”) and secured credit and security agreement, dated January 10, 2023, with Innoviva (the “Convertible Credit Agreement”), (ii) its existing secured term loan facility (the “2023 Loan”) and credit and security agreement, dated July 10, 2023, with Innoviva (the “2023 Credit Agreement”) and (iii) its existing secured term loan facility (the “2024 Loan”) and credit and security agreement, dated March 4, 2024, with Innoviva (the “2024 Credit Agreement”), which, among other things, extended the maturity date of each loan to March 12, 2026.

Repayment of the August 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

March 2025 Credit Agreement

On March 12, 2025, the Company entered into a credit and security agreement (the “March 2025 Credit Agreement”) for a loan in an aggregate amount of $ 10.0 million (the “March 2025 Loan”) with Innoviva SO.

The March 2025 Loan bears interest at an annual rate of 14.0 % and matures on June 1, 2027.

Principal and accrued interest are payable at maturity.

Repayment of the March 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

2024 Credit Agreement

On March 4, 2024, the Company entered into 2024 Credit Agreement for the 2024 Loan in an aggregate amount of $ 35.0 million.

The 2024 Loan bears interest at an annual rate of 14.0 % and was scheduled to mature on June 4, 2025.

On March 12, 2025, the Company executed an amendment to the 2024 Credit Agreement which, among other things, extended the 2024 Loan maturity date to March 12, 2026.

On March 4, 2024, the Company entered into the credit and security agreement, dated March 4, 2024 (the “2024 Credit Agreement”) for the secured term loan facility in an aggregate amount of $ 35.0 million (the “2024 Loan”) with Innoviva SO.

The 2024 Loan bears interest at an annual rate of 14.0 % and matures on June 1, 2027.

Principal and accrued interest are payable at maturity.

Repayment of the 2024 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

Concurrently with the execution of the 2024 Credit Agreement, the Company amended certain provisions of the Convertible Loan and Convertible Credit Agreement and the 2023 Loan and 2023 Credit Agreement to, among other things, conform certain terms relating to permitted indebtedness and permitted liens.

Concurrently with the execution of the 2024 Credit Agreement, the Company amended certain provisions of the convertible loan in the aggregate amount of $ 30.0 million from Innoviva SO (the “Convertible Loan”) and the secured convertible credit and security agreement with Innoviva SO, dated January 10, 2023 (the “Convertible Credit Agreement”) and the secured term loan facility in the aggregate amount of $ 25.0 million from Innoviva SO (the “2023 Loan”) and the credit and security agreement, dated July 10, 2023 with Innoviva SO (the “2023 Credit Agreement”) to, among other things, conform certain terms relating to permitted indebtedness and permitted liens.

The Company plans to raise additional capital through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements.

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All intercompany accounts and transactions have been eliminated upon consolidation.

Any reference in the condensed consolidated financial statements to applicable guidance is meant to refer to authoritative U.S.

Any reference in the consolidated financial statements to applicable guidance is meant to refer to authoritative U.S.

GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

1 unchanged sentence

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the

reporting period.

On an ongoing basis, the Company evaluates estimates and assumptions, including but not limited to those related to the fair value of the Convertible Loan, stock-based compensation expense, accruals for research and development costs, the valuation of deferred tax assets, impairment of goodwill and intangible assets and impairment of long-lived assets.

5 unchanged sentences

treasury securities through highly rated financial institutions in accordance with the Company’s investment policy, to a concentration limit per issuer or sector.

Other receivables represent amounts due from the Medical Technology Enterprise Consortium (“MTEC”) (Note 13, “ Grants and Awards” ) and reimbursement for tenant improvements (Note 12, “ Commitments and Contingencies ”).

Other receivables represent amounts due from the Medical Technology Enterprise Consortium (“MTEC”) (Note 13, “ Grants and Awards” ).

Cash and Cash Equivalents

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The carrying amounts of the above assets and liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

The Convertible Loan is accounted at fair value.

The Convertible Loan is accounted for at fair value at each period end.

Long-term debt was accounted at fair value at inception and its subsequent fair value is not significantly different from its amortized basis, as effective interest rate is considered at market.

1 unchanged sentence

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.

Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred.

Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to

operations as incurred.

Upon disposal, retirement, or sale of an asset, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in the results of operations.

2 unchanged sentences

Laboratory equipment

Office and computer equipment

Office furniture and fixtures

Computer hardware

Leasehold improvements

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An impairment loss is recognized when estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount of the asset.

No impairment losses on long-lived assets have been recorded for the years ended December 31, 2024 or 2023.

During the year ended December 31, 2025, the Company recorded an impairment expense related to certain operating lease ROU assets.

Refer to Note 12, Commitments and Contingencies, for further details about the impairment charge.

No impairment losses on long-lived assets were recorded for the year ended December 31, 2024.

In-Process Research and Development (“IPR&D”)

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aureus development program and noted no qualitative factors that would indicate potential impairment of its IPR&D asset.

As of December 31, 2024, the Company performed the annual evaluation of its IPR&D assets for impairment.

The Company considered the development timelines for its S.

aureus development program and noted no qualitative factors that would indicate potential impairment of its IPR&D asset.

The Company also performed a quantitative analysis for impairment analysis and based on this analysis, the fair value of this bacteriophage program was greater than its carrying value as of December 31, 2024.

Consequently, no impairment was noted for the IPR&D asset.

As of December 31, 2023, the Company performed the annual evaluation of its IPR&D assets for impairment.

The Company used multi-period excess earnings method, a variation of the discounted cash flow approach.

Management assumptions included expected revenue forecast, estimated expenses, rate of success, and a discount rate.

The fair value of the bacteriophage development programs for S.

aureus infections was greater than its carrying value as a result of the quantitative analysis.

No impairment loss was recognized as of December 31, 2025 and 2024.

Goodwill, which has an indefinite useful life, represents the excess of purchase consideration over the fair value of net assets acquired in an acquisition.

Goodwill is not subject to amortization and is required to be tested for impairment

at least on an annual basis.

Goodwill is not subject to amortization and is required to be tested for impairment at least on an annual basis.

The Company tests goodwill for impairment as of December 31 of each year.

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In addition, the calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations.

The Company recognizes liabilities for uncertain tax

positions based on a two-step process.

The Company recognizes liabilities for uncertain tax positions based on a two-step process.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

Comprehensive Income (Loss)

Comprehensive income (loss) is composed of net loss and other comprehensive income (loss).

The Company did not have other comprehensive income (loss) for the years ended December 31, 2024 and 2023, as such, the comprehensive income (loss) for these periods was equal to the net loss.

Comprehensive Loss

Comprehensive loss is composed of net loss and other comprehensive loss.

The Company did not have other comprehensive loss for the years ended December 31, 2025 and 2024, as such, the comprehensive loss for these periods was equal to the net loss.

Basic and Diluted Net Loss per Share

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Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities.

Under the two-class method, warrants issued to Innoviva are assumed to participate in undistributed earnings on an as-exercised basis, in accordance with the warrant agreements.

Under the two-class method, warrants issued to Innoviva SO are assumed to participate in undistributed earnings on an as-exercised basis, in accordance with the warrant agreements.

The Company’s participating securities do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to common stockholders.

Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This ASU requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-07 standard in the fourth quarter of 2024 for annual and retrospective reporting periods with all interim disclosures to begin in the first quarter of fiscal year 2025.

Refer to Note 15.

“ Segment Reporting” .

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”).

ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings (loss) per share (“EPS”) computation.

The Company adopted this ASU as of January 1, 2024, which did not have an impact on its consolidated financial statements or related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

On October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

This ASU aligns the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC.

The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has

not removed the requirements by that date.

Early adoption is prohibited.

The Company is currently evaluating the impact of adopting ASU 2023-06 on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

The Company adopted ASU 2023-09 prospectively as of January 1, 2025, and the impact is included in the financial statement disclosures within Note 11, Income Taxes.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory;

The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial

statements, among other things, specific information about certain costs and expenses including purchases of inventory;

employee compensation;

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December 31, 2024

Investments in money market fund – financial assets, included in cash and cash equivalents

Convertible Loan– financial liabilities

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Level 3 fair value inputs include probability and timing of various settlement scenarios and selection of comparable companies.

The Company estimated the fair value of its Convertible Loan using the following inputs for the years ended December 31, 2024 and 2023:

The Company estimated the fair value of its Convertible Loan using the following inputs during the years ended December 31, 2025 and 2024, respectively:

December 31, 2025

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The following table presents a summary of the changes in the fair value of its Convertible Loan for the years ended December 31, 2025 and 2024 (in thousands):

December 31, 2024

December 31, 2023

Year Ended December 31,

Convertible Loan at the beginning of the period

Net issuance of the Convertible Loan (1)

Initial recognition of modified Convertible Loan (1)

Change in fair value

Amount exchanged (2)

Loss on the Convertible Loan extinguishment

Convertible Loan at the end of the period

(1) The Convertible Loan is carried at fair value in the consolidated balance sheets.

As such, the principal and accrued interest are included in the detemination of fair value.

(2) The Company concluded that the amendment to the Convertible Loan was an extinguishment for accounting purposes and the amount exchanged was the relative fair value allocated to the Convertible Loan at the extinguishment date (Note 7 , “ Convertible Loan” ).

Net Loss per Share

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Property and equipment, net

Depreciation and amortization expense totaled $ 1.3 million and $ 1.0 million for the years ended December 31, 2024 and 2023, respectively.

Depreciation expense totaled $ 1.5 million and $ 1.3 million for the years ended December 31, 2025 and 2024, respectively.

Property and equipment not in use was $ 7.8 million and $ 8.3 million as of December 31, 2025 and 2024, respectively, and is included in the laboratory equipment in the table above.

These assets are not depreciated until they are placed in service.

Other Receivables

Other receivables as of December 31, 2024 and 2023 consisted of the following (in thousands):

December 31, 2024

December 31, 2023

Tenant improvement allowance receivable (Note 12)

Grant and award receivable (Note 13)

Accounts Payable and Accrued Liabilities

6 unchanged sentences

Convertible Loan

On January 10, 2023, the Company received the Convertible Loan in the aggregate amount of $ 30.0 million from Innoviva pursuant to the Convertible Credit Agreement.

On January 10, 2023, the Company received the Convertible Loan in the aggregate amount of $ 30.0 million from Innoviva SO pursuant to the Convertible Credit Agreement.

The Convertible Loan bears interest at a rate of 8.0 % per annum and was scheduled to mature on January 10, 2024.

The Convertible Credit Agreement was amended on July 10, 2023, in connection with the Company’s entry into the 2023 Credit Agreement to, among other changes, extend the maturity of the Convertible Loan to January 10, 2025.

Then, on March 12, 2025, the Company executed a subsequent amendment to the Convertible Credit Agreement which, among other things, extended the Convertible Loan maturity date to March 12, 2026.

On March 12, 2025, the Company executed a subsequent amendment to the Convertible Credit Agreement which, among other things, extended the Convertible Loan maturity

date to March 12, 2026.

On January 23, 2026, the Company executed another subsequent amendment to the Convertible Credit Agreement which, among other things, extended the Convertible Loan maturity date to June 1, 2027.

The Convertible Loan principal and accrued interest are payable at maturity.

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Consequently, the Company recorded the Convertible Loan in its entirety at fair value on its consolidated balance sheet, with changes in fair value recorded as other income (expenses) in the consolidated statements of operations during each reporting period.

On July 10, 2023, in connection with the 2023 Credit Agreement with Innoviva, as discussed below, the Company amended the terms of the Convertible Credit Agreement, to, among other changes, extend the maturity of the

Convertible Loan to January 10, 2025.

The Company concluded that the amendment was an extinguishment for accounting purposes.

The Company recognized a $ 1.8 million gain as the change in fair value of the Convertible Loan before the extinguishment date, July 10, 2023.

The Company estimated fair value of the combined transaction, the Loan and the Convertible Loan, before and after modification and calculated an extinguishment loss of $ 3.9 million, which was recognized as other income (expense) in the consolidated statement of operations for the year ended December 31, 2023.

The Company recognized losses of $ 23.6 million from July 10, 2023 to December 31, 2023 as the change in fair value of the Convertible Loan post modification.

On November 12, 2024, the Company amended the terms of the Convertible Credit Agreement and 2023 Credit Agreement, to, among other changes, extend the maturity of both loans to January 10, 2026.

2 unchanged sentences

After this amendment, the Company continued to account for the Convertible Loan at fair value on its consolidated balance sheet, with changes in fair value recorded as other income (expense) in the consolidated statements of operations during each reporting period.

The Company recognized $ 31.4 million as the change in fair value of the Convertible Loan for the year ended December 31, 2024.

On March 12, 2025, the Company executed an amendment to the Convertible Credit Agreement which, among other things, extended the Convertible Loan maturity date to March 12, 2026.

On March 12, 2025, the Company amended the terms of the Convertible Credit Agreement, the 2023 Credit Agreement and the 2024 Credit Agreement, to, among other changes, extend the maturity of the loans to March 12, 2026.

The Company concluded that the amendments were a combined transaction and a modification for accounting purposes.

The Company recognized a loss of $ 121.0 million and a gain of $ 31.4 million as the change in fair value of the Convertible Loan for the years ended December 31, 2025 and 2024, respectively,

The 2023 Credit Agreement, 2024 Credit Agreement, March 2025 Credit Agreement, and August 2025 Credit Agreement each contains customary affirmative and negative covenants and representations and warranties, including financial reporting obligations and certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, investments, mergers or acquisitions and fundamental corporate changes.

Each of the 2023 Credit Agreement, the 2024 Credit Agreement, March 2025 Credit Agreement, and August 2025 Credit Agreement also includes customary events of default, including payment defaults, breaches of provisions under the loan documents,

certain losses or impairment of collateral and related security interests, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth therein, certain bankruptcy or insolvency events, and a material deviation from the Company’s operating budget.

In addition, each of the credit agreements include customary mandatory prepayment provisions that require the Company to apply specified proceeds received by the Company to prepay outstanding borrowings under the respective credit facilities.

Mandatory prepayment events are triggered upon the receipt of proceeds from asset sales or other dispositions, casualty or condemnation events, the incurrence of indebtedness not otherwise permitted under the agreements, or the issuance of certain equity interests.

On July 10, 2023, the Company entered into the 2023 Credit Agreement.

The 2023 Credit Agreement provides for the 2023 Loan, a secured term loan facility in an aggregate amount of $ 25.0 million at an interest rate of 14.0 % per annum, and was scheduled to mature on January 10, 2025.

The 2023 Credit Agreement provides for the 2023 Loan, a secured term loan facility in an aggregate amount of $ 25.0 million at an interest rate of 14.0 % per annum, and was originally scheduled to mature on January 10, 2025.

Principal and accrued interest are payable at maturity.

Repayment of the 2023 Loan is guaranteed by the Company’s domestic subsidiaries, and the 2023 Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

On November 12, 2024, the Company executed an amendment to the 2023 Credit Agreement, which, among other things, extended the 2023 Loan maturity date to January 10, 2026.

On March 12, 2025, the Company executed a subsequent amendment to the 2023 Credit Agreement which, among other things, extended the 2023 Loan maturity date to March 12, 2026.

The 2023 Credit Agreement contains customary affirmative and negative covenants and representations and warranties, including financial reporting obligations and certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, investments, mergers or acquisitions and fundamental corporate changes.

The 2023 Credit Agreement also includes customary events of default, including payment defaults, breaches of provisions under the loan documents, certain losses or impairment of collateral and related security interests, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the 2023 Credit Agreement, certain bankruptcy or insolvency events, and a material deviation from the Company’s operating budget.

The 2023 Loan was initially recognized at fair value of $ 21.2 million and subsequently recognized at the amortized cost net of debt issuance costs and debt discount of $ 3.8 million.

The Company recognized $ 2.4 million and $ 0.9 million debt issuance costs and debt discount for the years ended December 31, 2024 and 2023, respectively, using the effective interest method.

The Company recognized $ 6.7 million and $ 2.6 million of accrued interest expense for the years ended December 31, 2024 and 2023, respectively.

The 2023 Loan’s annual effective interest rate was 48.76 % and 27.31 % as of December 31, 2024 and 2023, respectively.

On March 4, 2024, the Company entered into the 2024 Credit Agreement for the 2024 Loan in an aggregate amount of $ 35.0 million.

The 2024 Loan bears interest at an annual rate of 14.0 % and was scheduled to mature on June 4, 2025.

On March 12, 2025, the Company executed an amendment to the 2024 Credit Agreement which, among other

things, extended the 2024 Loan maturity date to March 12, 2026.

The 2024 Loan bears interest at an annual rate of 14.0 % and was originally scheduled to mature on June 4, 2025.

On March 12, 2025, the Company executed an amendment to the 2024 Credit Agreement which, among other things, extended the 2024 Loan maturity date to March 12, 2026.

Principal and accrued interest are payable at maturity.

2 unchanged sentences

Debt issuance costs are amortized using the effective interest method to interest expense over the term of the 2024 Loan.

The Company recognized $ 4.1 million of accrued interest expense for the year ended December 31, 2024.

The 2024 Loan’s annual effective interest rate was 14.25 % as of December 31, 2024.

The 2023 Credit Agreement and the 2024 Credit Agreement contain customary affirmative and negative covenants and representations and warranties, including financial reporting obligations and certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, investments, mergers or acquisitions and fundamental corporate changes.

The 2023 Credit Agreement and the 2024 Credit Agreement also include customary events of default, including payment defaults, breaches of provisions under the loan documents, certain losses or impairment of collateral and related security interests, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the 2023 Credit Agreement and the 2024 Credit Agreement, certain bankruptcy or insolvency events, and a material deviation from the Company’s operating budget.

The 2024 Loan’s annual effective interest rate was 12.68 % and 14.25 % as of December 31, 2025 and 2024, respectively.

On November 12, 2024, the Company executed an amendment to the 2023 Credit Agreement, which, among other things, extended the 2023 Loan maturity date to January 10, 2026.

On March 12, 2025, the Company executed a subsequent amendment to the 2023 Credit Agreement which, among other things, extended the 2023 Loan maturity date to March 12, 2026.

The 2023 Loan was initially recognized at fair value of $ 21.2 million and subsequently recognized at the amortized cost net of debt issuance costs and debt discount of $ 3.8 million.

Debt issuance costs are amortized using the effective interest method to interest expense over the term of the 2023 Loan.

The 2023 Loan’s annual effective interest rate was 41.64 % and 48.76 % as of December 31, 2025 and 2024, respectively.

On March 12, 2025, the Company entered into the March 2025 Credit Agreement for the March 2025 Loan in an aggregate amount of $ 10.0 million.

The March 2025 Loan bears interest at an annual rate of 14.0 % and had an original maturity on March 12, 2026.

Principal and accrued interest are payable at maturity.

Repayment of the March 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

The March 2025 Loan was initially recognized at cash proceeds of $ 10.0 million and subsequently is recognized at the amortized cost.

The March 2025 Loan’s annual effective interest rate was 14.19 % as of December 31, 2025.

On March 12, 2025, concurrently with the execution of the March 2025 Credit Agreement, the Company entered into amendments to (i) the Convertible Loan and Convertible Credit Agreement, (ii) the 2023 Loan and 2023 Credit Agreement, and (iii) the 2024 Loan and 2024 Credit Agreement, which, among other things, extended the maturity date of the Convertible Loan, 2023 Loan and 2024 Loan, respectively, to March 12, 2026.

On August 11, 2025, the Company entered into the August 2025 Credit Agreement for the August 2025 Loan in an aggregate amount of $ 15.0 million.

The August 2025 Loan bears interest at an annual rate of 14.0 % and matures on January 11, 2029.

Principal and accrued interest are payable at maturity.

Repayment of the August 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

The August 2025 Loan was initially recognized at cash proceeds of

$ 15.0 million and subsequently is recognized at the amortized cost.

The August 2025 Loan’s annual effective interest rate was 12.27 % as of December 31, 2025.

On January 23, 2026, the Company entered into amendments to the March 2025 Credit Agreement, the 2024 Credit Agreement, and the 2023 Credit Agreement with Innoviva SO, extending the maturity dates to June 1, 2027.

Stockholders’ Deficit

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Expiration Date

February 11, 2025

March 27, 2025

January 26, 2026

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March 30, 2027

1) On January 23, 2026, the Company entered into amendments to certain outstanding Innoviva SO warrants to extend their expiration dates to January 26, 2031, and amended the related voting agreement to align with the revised warrant expiration date or FDA approval, as applicable.

Shares Reserved for Future Issuance

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As of December 31, 2025, there were 3,986,228 shares available for issuance under the 2016 Plan.

The Company has issued restricted stock awards RSAs under certain legacy option plans that generally vested two to four years based on service conditions.

As of December 31, 2024, all RSAs were fully vested.

Pursuant to its 2016 Employee Stock Purchase Plan (“ESPP”), the Company may grant or provide for the grant of rights to purchase shares of its Common Stock.

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As of December 31, 2025, the Company had reserved 14,032 shares for future grants under the ESPP.

Stock option activities during the year ended December 31, 2024 are presented below:

Stock option transactions during the year ended December 31, 2025 are presented below:

Options Outstanding

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Forfeited/Cancelled/Expired

( 1,231,023 )

Outstanding at December 31, 2025

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The fair value of vested options during the year ended December 31, 2025 and 2024 was $ 2.4 million and $ 2.8 million, respectively.

Restricted stock awards and restricted stock unit award activities during the year ended December 31, 2024 are presented below:

Restricted stock unit award transactions during the year ended December 31, 2025 are presented below:

Outstanding at December 31, 2024

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Expected dividend yield

The tables below summarize the total stock-based compensation expense (reversal) included in the Company’s consolidated statements of operations for the periods presented (in thousands):

The table below summarizes the total stock-based compensation expense included in the Company’s consolidated statements of operations for the periods presented (in thousands):

Year Ended December 31,

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United States

The Company has not recognized any current or deferred tax expense on its US and foreign pre-tax losses for the years ended December 31, 2025 and 2024.

Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

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Stock-based compensation

Depreciation and amortization

Lease accounting

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Net deferred tax liability

The Company’s net operating loss carryforwards at December 31, 2024 are $ 195.3 million, $ 139.2 million and $ 12.0 for federal, state and foreign income tax purposes, respectively.

The Company’s net operating loss carryforwards at December 31, 2025 are $ 248.7 million, $ 163.9 million and $ 13.4 million for federal, state and foreign income tax purposes, respectively.

Federal and state net operating loss carryforwards are available to offset future taxable income, if any, and will begin to expire in 2026 and 2029, respectively.

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In general, an 'ownership change' as defined by the tax code results from a transaction or series of transactions over a three-year period resulting in an ‘ownership change’ of more than 50 percent of the outstanding stock of a company by certain stockholders or public groups.

The Company has not undergone an ownership change analysis pursuant to Internal Revenue Code Section 382 as of December 31, 2024.

The Company has not completed an ownership change analysis pursuant to Internal Revenue Code Section 382 as of December 31, 2025.

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.

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The Company increased its valuation allowance by approximately $ 13.6 million during the year ending December 31, 2025.

The differences between the Company’s effective tax rate and the U.S.

federal statutory tax rate were as follows (in thousands, except percentages):

December 31, 2025

Income taxes (benefit) at statutory federal rate

State and local taxes, net of federal income tax effect

Foreign tax effects

Other foreign

Change in valuation allowance

Non-taxable or nondeductible items

Stock compensation

Non-deductible debt items

Effective income tax rate

The Company did not pay federal, state, or foreign cash income taxes or have cash income taxes refunded in the years ended December 31, 2025.

The Company’s domestic operations are principally in the state of California.

As previously disclosed for the year ended December 31, 2024 and prior to the adoption of ASU 2023-09, the reconciliation of income tax benefit at the U.S.

federal statutory rate to the provision for income taxes is as follows:

federal statutory income tax rate

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The FASB Staff Q&A, Topic 740 No.

Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election either to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

Accounting for Global Intangible Low-Taxed Income, states that an entity can

make an accounting policy election either to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

The Company has elected to account for GILTI in the year the tax is incurred.

On July 4, 2025, the U.S.

President signed into law H.R.1, the legislation commonly known as the One Big Beautiful Bill Act (OBBBA).

This legislation extended, modified, or made permanent many of the tax provisions which were initially enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017.

The OBBBA contains a number of tax provisions including, but not limited to, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest, bonus depreciation modifications, as well as international tax provision modifications.

These tax provisions apply to either tax years beginning after December 31, 2024 or December 31, 2025.

The Company has reflected the effect of OBBBA within the provision for income taxes and the deferred taxes as of December 31, 2025.

Commitments and Contingencies

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The Company also maintains an irrevocable letter of credit in connection with this lease, which had a balance of $ 0.2 million as of December 31, 2025 and is reducing 20 % annually through the end of the lease term .

On October 28, 2021, the Company entered into a lease for office and research and development space under a non-cancellable lease in Los Angeles, CA (the “2021 Lease”).

On October 28, 2021, the Company entered into a lease for office and research and development space under a non-cancellable lease in Los Angeles, California (the “2021 Lease”).

The 2021 Lease payment start date was May 1, 2022 and the total lease term is for 16 years and runs through 2038.

Monthly rent for 2022 and 2023 was fully or partially abated while the lessor and the Company completed planned tenant improvements to the facility.

Base monthly rent is approximately $ 0.3 million in 2024.

The Company was responsible for construction costs over the tenant improvements allowance of $ 7.2 million.

The construction was completed as of December 31, 2024, and the Company received the

full allowance.

Out-of-pocket expenses to be incurred by the Company were considered noncash lease payments, and included in the lease liability and right-of-use asset.

The Company was responsible for construction costs over the tenant improvement allowance of $ 7.2 million.

The construction was completed as of December 31, 2024, and the Company received the full allowance.

Out-of-pocket expenses to be incurred by the Company are considered noncash lease payments, and included in the lease liability and right-of-use asset.

In connection with the execution of the 2021 Lease, the Company delivered an irrevocable standby letter of credit in the amount of $ 5.0 million to the landlord in 2022.

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Operating lease expenses were $ 8.0 million and $ 8.4 million for the years ended December 31, 2025 and 2024, respectively.

Variable costs related to operating expenses and taxes, which are recognized as incurred, were $ 1.7 million and $ 1.0 million for the years ended December 31, 2024 and 2023, respectively.

Variable costs related to operating lease expenses and taxes, which are recognized as incurred, were $ 1.5 million and $ 1.7 million for the years ended December 31, 2025 and 2024, respectively.

The following table summarizes supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2025 and 2024 (in thousands):

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Weighted-average discount rate, %

Impairment of ROU Asset

During the year ended December 31, 2025, an impairment charge of $ 5.4 million was recognized related to the Company’s office and research and development space under a non-cancelable operating lease in Marina del Rey, California.

The impairment resulted from changes in the anticipated timeline in the Company’s plan to sublease the vacated space.

The ROU asset was determined to be not fully recoverable as the estimated undiscounted cash flows expected from sublease income were insufficient to recover the ROU asset’s carrying amount.

The impairment charge was determined using level 3 inputs measured based on an income approach, with unobservable inputs including the estimates and assumptions for sublease income and a discount rate commensurate with the remaining lease term of 21.6 %.

There was no impairment of long-lived assets during the year ended December 31, 2024.

Legal Proceedings

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Additionally, any such claims, whether or not successful, could damage the Company’s reputation and business.

The Company is currently not a party to any legal proceedings,

the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on its consolidated results of operations or financial position.

The Company is currently not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on its consolidated results of operations or financial position.

Grants and Awards

1 unchanged sentence

On September 29, 2022, the MTEC Agreement was modified to increase the total award by $ 1.3 million to $ 16.3 million and extend the term into the third quarter of 2024.

In July 2024, the MTEC Agreement was modified to increase the total award by $ 5.3 million to $ 21.6 million and extend the term into the third quarter of 2025.

The Company is using the award to partially fund a Phase 1b/2a, randomized, double-blind, placebo-controlled, dose escalation clinical study of the Company’s therapeutic phage-based candidate, AP-SA02, for the treatment of complicated S.

aureus bacteremia infections.

On July 29, 2024, the MTEC Agreement was modified to increase the total award by $ 5.3 million to $ 21.6 million and extend the term into the third quarter of

On April 29, 2025, the Company received $ 4.65 million of additional non-dilutive award funding through MTEC, thereby increasing the total MTEC award to $ 26.2 million, and the MTEC Agreement was modified to extend the term to September 30, 2025.

On July 2, 2025, the MTEC Agreement was modified to extend the term to March 31, 2026.

This award has been used to partially fund the Phase 1b/2a, randomized, double-blind, placebo-controlled, dose escalation clinical study to assess the safety, tolerability and efficacy of the Company’s therapeutic phage-based candidate, AP-SA02, for the treatment of complicated S.

aureus bacteremia (“SAB”) infections and to support activities required for an end-of-Phase 2 meeting with the FDA.

The MTEC Agreement specifies that the award will be paid to the Company over the term of the award through a cost reimbursable model, based on agreed upon cost share percentages, and the money received is not refundable to MTEC.

1 unchanged sentence

The Company will elect whether to (a) pay a fixed royalty amount, which is subject to a cap based upon total funding received, or (b) pay an additional assessment fee, which would also be subject to a cap based upon a percentage of total funding received.

The MTEC Agreement is effective through August 15, 2025.

The MTEC Agreement may be terminated in whole or in part, 30 calendar days following written notice from the Company to MTEC.

The MTEC Agreement is effective through March 31, 2026 and may be terminated, in whole or in part, upon 30 calendar days’ prior written notice from the Company to MTEC.

In addition, MTEC has the right to terminate the MTEC Agreement upon material breach by the Company.

The Company determined that the MTEC Agreement is not in the scope of ASC 808 or ASC 606.

Applying ASC 606 by analogy the Company recognizes proceeds received under the MTEC Agreement as grant revenue in the statement of operations when related costs are incurred.

The Company recognized $ 5.2 million and $ 4.5 million in grant revenue from the MTEC Agreement during the years ended December 31, 2024 and 2023, respectively.

Applying ASC 606 by analogy the Company recognizes proceeds received under the MTEC Agreement as grant and award revenue in the statement of operations when related costs are incurred.

The Company recognized $ 4.9 million and $ 5.2 million in grant and award revenue from the MTEC Agreement during the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company had $ 0.5 million and $ 0.7 million as awards receivable from MTEC, respectively.

6 unchanged sentences

The total amount of the CFF award was recognized through December 2023 and no additional payments are expected.

the Company), worldwide, perpetual, sublicensable license under technology developed under the Award Agreement that covers the Product for use in treating infections in CF patients (the “CF Field”), and (2) a non-exclusive, worldwide, perpetual, sublicensable license under certain background intellectual property covering the Product, to the extent necessary to commercialize the Product in the CF Field.

If the Company ceases to use commercially reasonable efforts directed to the development of AP-PA02, or any other Product (as defined in the Award Agreement), for a period of 360 days (an “Interruption”) and fails to resume the development of the Product after receiving from CFF notice of an Interruption, then the Company must either repay the amount of the CFF Award actually received by the Company, plus interest, or grant to CFF (1) an exclusive (even as to the Company), worldwide, perpetual, sublicensable license under technology developed under the Award Agreement that covers the Product for use in treating infections in CF patients (the “CF Field”), and (2) a non-exclusive, worldwide, perpetual, sublicensable license under certain background intellectual property covering the Product, to the extent necessary to commercialize the Product in the CF Field.

Upon commercialization by the Company of any Product, the Company will owe a fixed royalty amount to CFF, which is to be paid in installments determined, in part, based on commercial sales volumes of the Product.

6 unchanged sentences

Accordingly, as discussed in Note 3, “ Significant Accounting Policies” , the Company recognizes the award upon achievement of certain milestones as credits to research and development expenses.

During year ended December 31, 2024 and 2023, the Company recognized zero and $ 0.3 million as credits to research and development expenses related to the CFF Award, respectively.

No credits to research and development expenses were recognized during the year ended December 31, 2025 and 2024, related to the CFF Award.

In addition, the Company concluded under the guidance in ASC 730 that it does not have an obligation to repay funds received once related research and development expenses are incurred.

2 unchanged sentences

All of the Company’s employees who meet minimum eligibility requirements are eligible to participate in the plan.

The Company did match contributions of $ 0.2 million to the 401(k) plan for the years ended December 31, 2024 and 2023.

The Company matched contributions of $ 0.2 million to the 401(k) plan for the years ended December 31, 2025 and 2024, respectively.

Segment Reporting

2 unchanged sentences

The Company’s CODM is its Chief Executive Officer, who reviews financial information on an aggregate basis for purposes of assessing performance, making operating decisions, allocating resources and evaluating financial performance.

The long-lived assets of $ 14.0 million, which represents 99.3 % of the Company’s total long-lived assets, are maintained in the United States.

The Company maintains 99.5 % of its $ 12.2 million property and equipment, net, within the United States.

The following table includes certain segment information for the years ended December 31, 2025 and 2024.

Year Ended December 31,

Grant revenue

Grant and award revenue

Operating expenses

2 unchanged sentences

Cystic Fibrosis

AP-SA02Prosthetic Joint Infection

Prosthetic Joint Infection

Expenses not allocated by projects

7 unchanged sentences

Total general and administrative expenses

Impairment expense

Total operating expenses

1 unchanged sentence

Other income (expense), net

Subsequent Events

On March 12, 2025, the Company entered into the 2025 Credit Agreement for the 2025 Loan in an aggregate amount of $ 10.0 million.The 2025 Loan bears interest at an annual rate of 14.0 % and matures on March 12, 2026.

Principal and accrued interest are payable at maturity.

Repayment of the 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

Concurrently with the execution of the 2025 Credit Agreement, the Company entered into amendments to (i) the Convertible Loan and Convertible Credit Agreement, (ii) the 2023 Loan and 2023 Credit Agreement, and (iii) the 2024 Loan and 2024 Credit Agreement, which, among other things, extended the maturity date of the Convertible Loan, 2023 Loan and 2024 Loan, respectively, to March 12, 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data