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Item 1. Business

2021-03-18 compared with 2020-03-19 · 367 added, 347 removed, 640 unchanged (53% of the section changed)

We are a clinical-stage biotechnology company focused on the development of precisely targeted bacteriophage therapeutics for the treatment of antibiotic-resistant infections using our proprietary bacteriophage-based technology.

Bacteriophages or “phages”

have a powerful and highly differentiated mechanism of action that enables binding to and killing specific bacteria, in contrast to traditional broad-spectrum antibiotics.

We believe that phages represent a promising means to treat bacterial infections, especially those that have developed resistance to current standard of care therapies, including the so-called multidrug-resistant or “superbug”

strains of bacteria.

We are a leading developer of phage therapeutics, which are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections.

We are combining our proprietary approach and expertise in identifying, characterizing and developing both naturally-occurring and engineered (synthetic) bacteriophages with our proprietary phage-specific Good Manufacturing Practice compliance (“cGMP”) manufacturing capabilities to advance a broad pipeline of high-quality bacteriophage product candidates.

We believe that synthetic phage, engineered using advances in sequencing and synthetic biology techniques, represent a promising means to advance phage therapy, including phage-based diagnostics and improving upon the ability of natural phage to treat bacterial infections, especially those that have developed resistance to current antibiotic therapies, including the multidrug-resistant or “superbug”

bacterial pathogens.

Our phage product candidates aim to address areas of significant unmet clinical need, by targeting key antibiotic-resistant bacteria including those on the World Health Organization’s global priority pathogens list.

We are developing and advancing our second generation phage product candidate for Pseudomonas aeruginosa (“

aeruginosa ”), known as AP-PA02.

We anticipate initiating a Phase 1b/2, multi-center, double-blind, randomized, placebo-controlled, single and multiple ascending dose study to evaluate the safety, tolerability, and preliminary efficacy of AP-PA02 in subjects with cystic fibrosis (“CF”) and chronic pulmonary P.

aeruginosa infection in the first half of 2020.

We are also developing a second generation phage product candidate for Staphylococcus aureus (“

aureus ”), known as AP-SA02, for the treatment of S.

aureus bacteremia.

We intend to file an IND Application with the FDA to initiate a Phase 1/2, multi-center, randomized, double-blind, placebo- controlled dose escalation study that will assess the safety, tolerability, and efficacy of AP-SA02 in the second half of 2020.

In partnership with Merck & Co., known as Merck Sharp & Dohme outside of the United States and Canada (“Merck”), we are developing proprietary synthetic phage candidates to target undisclosed infectious disease agents.

We are 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 our proprietary bacteriophage-based technology.

Bacteriophages or “phages” have a powerful and highly differentiated mechanism of action that enables binding to and killing specific bacteria, in contrast to traditional broad-spectrum antibiotics.

believe that phages represent a promising means to treat bacterial infections, especially those that have developed resistance to current standard of care therapies, including the so-called multidrug-resistant or “superbug” strains of bacteria.

We are a leading developer of phage therapeutics that are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections.

We are combining our proprietary approach and expertise in identifying, characterizing and developing both naturally-occurring and engineered (synthetic) bacteriophages with our proprietary phage-specific current good manufacturing practice regulations (“cGMP”) compliant manufacturing capabilities to advance a broad pipeline of high-quality bacteriophage product candidates.

We are developing and advancing our lead clinical phage candidate for Pseudomonas aeruginosa (“ P.

aeruginosa ”), AP-PA02.

On October 14, 2020, we received the approval to proceed from the FDA for our Investigational New Drug application for AP-PA02.

We plan to continue to advance the “SWARM- P.a.

” study – a Phase 1b/2a, multicenter, double-blind, randomized, placebo-controlled, single ascending dose (SAD) and multiple ascending dose (MAD) clinical trial to evaluate the safety and tolerability of inhaled AP-PA02 in subjects with cystic fibrosis (“CF”) and chronic pulmonary P.

aeruginosa infection, provided that the impacts of COVID-19 do not impede our ability to enroll subjects in this clinical trial.

This study is supported by the Cystic Fibrosis Foundation (“CFF”), which granted us a Therapeutics Development Award of up to $5.0 million (“CFF Award”).

We are also developing a phage product candidate for Staphylococcus aureus (“ S.

aureus ”) for the treatment of S.

aureus bacteremia, AP-SA02.

On June 15, 2020, we entered into an agreement (the “MTEC Agreement”) with the Medical Technology Enterprise Consortium (“MTEC”), pursuant to which we will receive a $15.0 million grant and entered into a three-year program administered by the DoD through MTEC with funding from the Defense Health Agency and Joint Warfighter Medical Research Program.

We expect to use the grant to partially fund a Phase 1/2, multi-center, randomized, double-blind, placebo- controlled dose escalation study that will assess the safety, tolerability, and efficacy of AP-SA02 for the treatment of adults with complicated S.

aureus bacteremia in 2021.

However, the COVID-19 outbreak may delay or prohibit the enrollment of patients in our clinical trials.

Our proprietary phage engineering platform serves to enhance the clinical and commercial prospects of phage therapy.

These attributes include expanded host range, improved potency which is a fundamental drug property that can translate into improved clinical efficacy, and importantly, biofilm disruption, which is a critical aspect of serious infections that needs to be addressed.

In addition to our more advanced pipeline programs, we have phage discovery efforts underway to target other major pathogens of infectious disease (including the ESKAPE pathogens:

Enterococcus faecium , Staphylococcus aureus , Klebsiella pneumoniae , Acinetobacter baumannii , Pseudomonas aeruginosa , and Enterobacter species) and preventable infectious disease of the microbiome.

We are committed to conducting formal randomized clinical trials required for FDA approval in order to move toward commercialization of alternatives to traditional antibiotics and provide a potential method of treating patients suffering from drug-resistant bacterial infections.

In addition to our more advanced pipeline programs, we have phage discovery efforts underway to target other major pathogens of infectious disease (including Enterococcus faecium , S.

aureus , Klebsiella pneumoniae , Acinetobacter baumannii , P.

aeruginosa , and Enterobacter species , or “ESKAPE pathogens”) and preventable infectious disease of the microbiome.

We are committed to conducting randomized controlled clinical trials required for FDA approval in order to move toward commercialization of alternatives to traditional antibiotics and provide a potential method of treating patients suffering from drug-resistant bacterial infections.

Corporate History and Reorganization

Armata was created as a result of a business combination of AmpliPhi Biosciences Corporation, a bacteriophage development stage company (“AmpliPhi”) with C3J Therapeutics, Inc.

(“C3J”), where Ceres Merger Sub, Inc., a wholly-owned subsidiary of AmpliPhi, merged with and into C3J (the “Merger”) .

Armata was created as a result of a business combination of AmpliPhi Biosciences Corporation, a bacteriophage development stage company (“AmpliPhi”) with C3J Therapeutics, Inc.

(“C3J”), where Ceres Merger Sub, Inc., a wholly-owned subsidiary of AmpliPhi, merged with and into C3J (the “Merger”).

On May 9, 2019, immediately prior to the closing of the Merger, AmpliPhi changed its name to Armata Pharmaceuticals, Inc.

C3J’s predecessor, C3 Jian, Inc., was incorporated under the laws of the State of California on November 4, 2005.

On February 26, 2016, as part of a reorganization transaction, C3 Jian, Inc.

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In November 2012, AmpliPhi completed the acquisition of Special Phage Holdings Pty Ltd, a company based in Australia, with the goal of continuing research addressing the rapidly escalating problem of antibiotic resistance through the development of a series of bacteriophage-based treatments.

The following chart summarizes the status of our phage product candidate development programs:

Our strategy is to demonstrate safety, tolerability and efficacy of multiple phage products in randomized controlled clinical trials required for FDA approval and to support commercialization in multiple indications in areas of high unmet medical need.

Business Update Regarding COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin.

In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The COVID-19 pandemic has directly and indirectly impacted our business, results of operations and financial condition and is expected to continue to impact our business.

For example, the COVID-19 pandemic has resulted in delays in our clinical trials due to the implementation of COVID-19 protocols at investigator sites, which resulted in longer than anticipated site identification and initiation activities.

In addition, while we currently do not anticipate any interruptions in our supply chain, it is possible that the COVID-19 pandemic and response efforts may have a future impact on our third-party suppliers and partners.

It is possible that due to the increasing emphasis on the development of vaccines for COVID-19, certain basic supply chain materials such as resins, vessels, vials and stoppers may be in high demand by the pharmaceutical companies developing vaccines and our ability to obtain these materials for our development activities could be negatively impacted.

We have experienced some delays of this nature in the fourth quarter of 2020 and in early 2021.

The full extent of the COVID-19 pandemic impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact, the development and distribution of vaccines and the economic impact on local, regional, national and international markets.

Management continues to actively monitor the developments regarding the pandemic and the impact that the pandemic could have on our financial condition, liquidity, ability to enroll patients in our contemplated clinical trials, manufacturing and research and development operations, suppliers to our operations and suppliers to our outside clinical trial organizations, biotech industry overall, and importantly the health and safety of our workforce.

Given the continuing evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for fiscal year 2021 or 2022.

Any recovery from negative impacts to our business and related economic impact due to the COVID-19 outbreak may also be slowed or reversed by a number of factors, including but not limited to multiple variants of the COVID-19 virus, a resurgence in COVID-19 infections, and the seasonal flu.

Recent Developments

On January 26, 2021, we entered into a securities purchase agreement (the “2021 Securities Purchase Agreement”) with Innoviva Strategic Opportunities LLC, a wholly-owned subsidiary of Innoviva, Inc.

INVA) (collectively, “Innoviva”), pursuant to which we agreed to issue and sell to Innoviva, in a private placement, up to 6,153,847 newly issued shares (the “Shares”) of our common stock, par value $0.01 per share (“common stock”) and warrants (the “Common Warrants”) to purchase up to 6,153,847 shares of common stock, with an exercise price per share of $3.25 (the “2021 Private Placement”).

Each Share was sold together with one Common Warrant, and the per-unit purchase price is $3.25.

The 2021 Private Placement occurred in two tranches.

On January 26, 2021 and concurrently with entering into the 2021 Securities Purchase Agreement, we completed the first tranche (the “First Closing”) of the 2021 Private Placement.

At the First Closing, Innoviva purchased 1,867,912 Shares and Common Warrants to purchase 1,867,912 shares of common stock, in compliance with any and all applicable laws and without the requirement for the prior receipt of the stockholders’ approval under the listing requirements of the NYSE American, for an aggregate purchase price of approximately $6.1 million.

We received shareholder approval for the second closing (“Second Closing”) on March 16, 2021, and the Second Closing was completed on March 17, 2021, when Innoviva purchased 4,286,935 shares of Shares and Common Warrants for an aggregate purchase price of $13.9 million.

We received aggregate gross proceeds from the 2021 Private Placement of approximately $20.0 million, before deducting transaction expenses, and excluding proceeds (if any) received in connection with the exercise of any warrants.

As part of the First Closing, we entered into an amended and restated investor rights agreement (the “A&R IRA”), which amended and restated in its entirety that certain Investor Rights Agreement, dated February 12, 2020, with Innoviva, Inc.

Pursuant to the A&R IRA, for so long as Innoviva and its affiliates hold at least 12.5% of the outstanding shares of common stock on a fully-diluted basis, Innoviva shall have the right to designate two (2) directors to our board of directors and for so long as Innoviva and its affiliates hold at least 8%, but less than 12.5%, of the outstanding shares of common stock on a fully-diluted basis, Innoviva shall have the right to designate one (1) director, subject to certain conditions and qualifications set forth in the A&R IRA.

The A&R IRA also provides Innoviva with certain subscription rights in the event of any new issuances.

As part of the First Closing, we also entered into a registration rights agreement (the “Registration Rights Agreement”) with Innoviva.

Pursuant to the Registration Rights Agreement, we must file a registration statement on Form S-1 or Form S-3 (the “Shelf Registration Statement”) covering the resale of the securities issued and sold pursuant to the 2021 Securities Purchase Agreement with the U.S.

Securities and Exchange Commission (the “Commission”) on a continuous basis pursuant to Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), or if Rule 415 is not available for offers and sales of such securities, by such other means of distribution of such securities as Innoviva may reasonably specify.

We must use commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event (i) no later than the fifteenth (15th) day following the filing of the Shelf Registration Statement in the event of no “review” by the Commission, (ii) no later than the sixtieth (60th) day following the filing of the Shelf Registration Statement in the event of “limited review” by the Commission, or (iii) in the event of a “review” by the Commission, the one hundred and twentieth (120th) day following the filing of the Shelf Registration Statement, subject to certain exceptions.

We also entered into a Voting Agreement with Innoviva (the “Voting Agreement”), pursuant to which Innoviva agreed not to vote or take any action by written consent with respect to shares of common stock held by Innoviva or any of its subsidiaries which represent, in the aggregate, more than 49.5% of the total number of shares of common stock issued and outstanding as of any given record date for voting (such shares, the “Excess Shares”) on the matters related to the election of directors or removal of directors from our board of directors (“Board Matters”) presented at any meeting of the our stockholders (or any adjournment or postponement thereof) or for their action by written consent, in each case, unless the board of directors authorizes Innoviva to vote such Excess Shares with respect to Board Matters.

The following chart summarizes the status of our phage product candidate development programs and partners.

Our fully integrated product development capabilities from bench to clinic enables discovery of optimal product candidates, efficient process development and manufacturing, rigorous clinical trials.

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We intend to:

Initiate clinical trials of AP-PA02 in CF patients with Pseudomonas aeruginosa lung infections.

Develop AP-SA02 for the treatment of serious and life-threatening Staphylococcus aureus infections such as complicated bacteremia, respiratory infections, and periprosthetic joint infections.

● Advance clinical trials of AP-PA02 in patients with CF and chronic pulmonary P.

aeruginosa infections.

● Develop bacteriophage therapeutics, including AP-PA02 and AP-PA03, for the treatment of other antibiotic-resistant and difficult-to-treat P.

aeruginosa infections such as non-cystic fibrosis bronchiectasis (“NCFB”) and hospitalized pneumonia.

● Initiate and advance clinical trials of AP-SA02 in patients with complicated S.

aureus bacteremia.

● Develop AP-SA02 for the treatment of other antibiotic-resistant and difficult-to-treat S.

aureus infections such as periprosthetic joint infections.

Because a study in PJI may use a different route of administration from the bacteremia study, it is possible, pending FDA concurrence, that we could initiate a study in this indication prior to obtaining safety data from the AP-SA02 bacteremia study.

● Advance our partnership with Merck to develop synthetic phage utilizing our phage engineering platform to improve natural phage characteristics, such as host range, biofilm disruption and antimicrobial activity.

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The introduction of penicillin in the early 1940s marked the start of the antibiotic discovery era, during which more than 20 new classes of antibiotic were marketed over a period of three decades.

The first case of the “superbug”, Methicillin-resistant Staphylococcus aureus (“MRSA”), in the United States occurred in 1968.

A void in the discovery of new classes of antibiotics lasting approximately 30 years drove the emergence and spread of antibiotic-resistant bacteria, including vancomycin-resistant enterococci (VRE), and pandrug-resistant strains of Acinetobacter baumannii , Pseudomonas aeruginosa , Escherichia coli and Klebsiella pneumoniae .

and a “post-antibiotic era.”

A growing list of infections –

such as pneumonia, tuberculosis, bacteremia/septicemia, gonorrhea, and foodborne diseases –

are becoming harder, and sometimes impossible, to treat as antibiotics become less effective.

This conclusion was reinforced by The Antimicrobial Availability Task Force of the Infectious Diseases Society of America (the “IDSA”), and the European Centre for Disease Prevention and Control in conjunction with the EMA.

The first case of the “superbug”, Methicillin-resistant S.

aureus (“MRSA”), in the United States occurred in 1968.

aeruginosa , Escherichia coli and Klebsiella pneumoniae .

The dramatic and continuous emergence of antibiotic-resistant bacteria, and the lack of new antibiotics in the pipeline, has prompted calls to action from many of the world’s major health bodies such as The Centers for Disease Control and Prevention (the “CDC”), and the WHO, who warn of an “antibiotic cliff” and a “post-antibiotic era.” A growing list of infections – such as pneumonia, tuberculosis, bacteremia/septicemia, gonorrhea, and foodborne diseases – are becoming harder, and sometimes impossible, to treat as antibiotics become less effective.

In 2009, the European Antimicrobial Resistance Surveillance System concluded that “the loss of effective antimicrobial therapy increasingly threatens the delivery of crucial health services in hospitals and in the community.” This conclusion was reinforced by The Antimicrobial Availability Task Force of the Infectious Diseases Society of America (the “IDSA”), and the European Centre for Disease Prevention and Control in conjunction with the EMA.

The IDSA and WHO regard antimicrobial resistance as one of the greatest threats to human health worldwide.

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Anti-Infective Therapeutics Market

The market opportunity for antibiotics is large, with the market estimated to reach $44.7 billion in annual sales globally in 2020.

The market opportunity for antibiotics is large, with the market estimated to exceed $58 billion in annual sales globally by 2027.

Almost one in every five deaths worldwide occurs as a result of infection and, according to the WHO, many bacterial infections will become difficult or impossible to cure as the efficacy of current standard-of-care antibiotics wanes.

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The number of new antibiotics approved by the FDA, and other global regulatory authorities has declined consistently over the last two decades.

According to a September 2019 report from PEW Charitable Trusts, only 42 new antibiotics (all small molecules that act systemically) with the potential to treat serious or life-threatening bacterial infections are in global clinical development.

According to an April 2020 report from PEW Charitable Trusts, only 41 new antibiotics (all small molecules that act systemically) with the potential to treat serious or life-threatening bacterial infections are in global clinical development.

This is compared with more than 1,100 new product candidates in the drug pipeline for cancer.

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It is estimated there are more bacteriophages than every other organism on Earth combined.

Phages are natural predators of bacteria, and the name “bacteriophage”

translates as “eaters of bacteria”.

Phages are natural predators of bacteria, and the name “bacteriophage” translates as “eaters of bacteria”.

Phages infect and rapidly kill the bacterial host by multiplying inside and then bursting through the cell membrane in order to release the next generation of phages into the surrounding environment, ready to infect and kill additional nearby target bacterial cells until the bacteria have been eliminated.

When there are no target bacteria left for the phages to infect, the phages are removed through the body’s natural clearance processes.

Phages have the potential to provide both an alternative to, and a synergistic approach with, antibiotic therapy.

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Recently, Western medicine has seen a rise in the clinical evaluation of phages.

In the United Kingdom, two early-stage clinical trials of Pseudomonas aeruginosa phage cocktails showed no adverse effects in patients.

In the United Kingdom, two early-stage clinical trials of P.

aeruginosa phage cocktails showed no adverse effects in patients.

One study (Phase 1/2a) demonstrated efficacy in a small trial of 12 patients with chronic multidrug-resistant P.

aeruginosa otitis treated with a cocktail of six natural phages.

Since 2016, there have been a number of Compassionate Use cases in which patients suffering from various serious or life-threatening infections have been treated with phage therapy under physician-sponsored Emergency Investigational New Drug (“Emergency IND”) Applications with high rates of success and no adverse effects attributable to the therapy.

Most notable was the well-documented case in 2016 of Tom Patterson, whose disseminated multidrug-resistant Acinetobacter baumannii infection was successfully treated with phage-based therapeutic cocktails administered intravenously and intraperitoneally.

An 82-year-old male with an aortic graft (heart implant) infected with pandrug-resistant P.

aeruginosa was successfully treated with a single application of phage, marking Yale University’s first case using phage therapy under Emergency IND.

By early 2019, Yale University had treated more than half-a-dozen compassionate use cases, the majority individuals with CF with antibiotic-resistant lung infection.

In 2018, a 15-year-old CF patient with a disseminated Mycobacterium abscessus lung infection was treated intravenously with a three-phage cocktail following lung transplantation.

That patient’s case represents another milestone for phage therapy –

the first person to be treated with genetically modified phages.

That patient’s case represents another milestone for phage therapy – the first person to be treated with genetically modified phages.

A consistent takeaway from these early phage therapy uses, and from the more recent clinical trials and compassionate use cases, is that phage therapy is generally well tolerated, with generally no reports of serious adverse events.

Phage have previously received approvals for use in cleaning food facilities and as a food additive for human consumption by the FDA and the EMA, and as agricultural bacterial pest treatments by the United States Department of Agriculture (“USDA”).

Phages have met the criteria to be considered as “generally recognized as safe”, or “GRAS”, in the food and food contact surface categories.

With the growing threat of antimicrobial resistance, we believe it is essential that phage safety and efficacy is demonstrated by conducting rigorous well-powered clinical trials required for FDA approval, in order to move toward commercialization of alternatives to traditional antibiotics and bring a potential solution to all patients suffering from drug-resistant bacterial infections.

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Pulmonary Bacterial Infections

Pseudomonas aeruginosa is consistently recognized by the CDC, and other public health agencies, as among the most dangerous and difficult-to-treat pathogens associated with significant impacts on health, quality of life, and economic burden.

aeruginosa is consistently recognized by the CDC, and other public health agencies, as among the most dangerous and difficult-to-treat pathogens associated with significant impacts on health, quality of life, and economic burden.

Regular standard-of-care antibiotics treatments often fail to completely eradicate the pathogen, and the problem is further complicated by rising rates of antibiotic resistance due to a growing number of multidrug-resistant isolates emerging, particularly with long term use.

Pseudomonas is particularly problematic for CF patients given that their already compromised immune system leads to chronic infections.

aeruginosa is particularly problematic for CF patients given that their already compromised immune system leads to chronic infections.

In addition to CF lung infections, P.

aeruginosa is responsible for other respiratory infections with high unmet medical need, including hospitalized pneumonia.

Staphylococcus aureus is another major pathogen that drives both community-acquired and healthcare-associated pneumonias (“HCAPs”).

aeruginosa is responsible for other respiratory infections with high unmet medical need, including NCFB and hospitalized pneumonia.

aeruginosa Infection is a Major Cause of Morbidity and Mortality in Cystic Fibrosis

CF is a genetic disease caused by mutations in the CF transmembrane conductance regulator (“CFTR”) gene.

CF affects over 30,000 people in the United States (70,000 people worldwide) with approximately 1,000 new diagnoses per year.

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GlobalData projects that total antibiotic sales in the CF market will exceed $400 million in 2020.

aeruginosa pulmonary infections are treated aggressively with the goal of eradicating the infection because P.

aeruginosa infection in children is associated with increased mortality whereas sustained eradication of first P.

aeruginosa infections leads to a 74% decreased 5‑year risk of chronic P.

aeruginosa infection.

However, despite several acceptable antibiotic regimens, infection eradication is sustained in only 57‑69% of children and adolescents.

Given the significant health costs associated with treatment of infection in children and adolescents with CF after the failure to achieve sustained P.

aeruginosa eradication, a 30% treatment failure rate is unacceptable and demonstrates an urgent need for better eradication therapies for initial P.

aeruginosa infections.

Staphylococcus aureus Bacteremia

Bacteremia is a common diagnosis with up to 1.7 million cases reported annually in the United States.

Non-Cystic Fibrosis Bronchiectasis

NCFB is a chronic respiratory disease affecting more than 110,000 people in the United States and 200,000 people in Europe, characterized by recurrent respiratory infections that lead to a vicious cycle of impaired mucociliary clearance, chronic infection, bronchial inflammation, and progressive lung function loss.

aeruginosa is the most prevalent pathogen responsible for these recurrent infections.

It is found in approximately 30% of cases and is associated with enhanced disease progression, including poorer lung function and lower quality of life, more frequent exacerbations, 7-fold increase in hospitalizations, and 3-fold increase in death.

NCFB patients frequently become chronically colonized with multidrug-resistant strains of P.

aeruginosa because of the need for repeated courses of antibiotic treatment.

There are currently no approved antibiotics to manage chronic P.

aeruginosa infection in NCFB patients.

Hospitalized Pneumonia

Hospital-acquired pneumonia and ventilated-associated pneumonia is one of the most common causes of death among all hospital‐acquired infections, with approximately 300,000 hospitalization each year in the United States due to Pseudomonas .

Infection with Pseudomonas results in mortality rates ranging as high as 35‐50%, drives considerable healthcare costs (excess of $40,000 per patient), and accounts for around 50% of all intensive care unit antibiotics.

Staphylococcus aureus Infections

Bacteremia is a bacterial infection of the bloodstream.

A common diagnosis, the CDC estimates that up to 1.7 million people in the U.S.

develop bacteremia each year.

aureus is the most commonly identified pathogen in both hospital- and community-acquired blood stream infections.

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there are approximately 200,000 hospitalizations for S.

aureus bacteremia (“SAB”).

Despite conventional antibiotics, mortality in SAB results in death of up to 40% of all cases and 57% of patients over the age of 85.

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Age-adjusted mortality assessments show that SAB mortality is higher than that of AIDS, tuberculosis, or viral hepatitis, and comparable to mortality rates for breast or prostate cancer.

Outcomes are even poorer for SAB due to MRSA, classified as a serious threat to global health by the CDC and a high priority threat by the WHO, with higher rates of complications and increased mortality as compared to methicillin-susceptible S.

Outcomes are even poorer for SAB due to methicillin-resistant S.

aureus (MRSA), classified as a serious threat to global health by the CDC and a high priority threat by the WHO, with higher rates of complications and increased mortality as compared to methicillin-susceptible S.

aureus (MSSA).

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Daptomycin (approved in 2005;

based on clinical cure rates of <50%) and vancomycin are the only two antibiotics with label indications in the U.S.

based on clinical cure rates of less than 50%) and vancomycin are the only two antibiotics with label indications in the U.S.

for the treatment of SAB, and the emergence of drug-resistant S.

aureus isolates, including to these two standard of care drugs, represents a major threat in terms of increasing morbidity, mortality and health care utilization.

Prosthetic Joint Infection

The total number of prosthetic joint infection (“PJI”)-related revision surgeries is expected to more than double from 70,000 in 2020 to 144,000 in 2040 in the United States and European Union Five (France, Germany, Italy, Spain, United Kingdom), at an annual growth rate of 5.6% due to a growing elderly population.

The United States is the largest market for PJI, accounting for 61% of PJI-related revision surgery in 2020 (71% by 2040) each estimated to cost $150,000.

aureus PJI infections are among the most commonly observed, accounting for up to 47% of all infections.

PJI caused by biofilm-forming bacteria, such as S.

aureus , is challenging to treat and requires both surgery and long-term antibiotic use.

Lack of efficacy against biofilms is a common cause of re-infection or treatment failure in PJI.

Moreover, growing antibiotic resistance complicates treatment strategies and antibiotic choice for the treatment of PJI.

Phage therapy has been successful in patients who have failed conventional antibiotic treatment, including two 2020 case studies in which phage were administered by intravenous or intraarticular routes and shown to be generally well tolerated.

Platform Technologies

Proprietary Synthetic Phage Platform

Phages, natural predators of bacteria, have been in an uninterrupted battle for millions of years –

evolving to kill or evade.

Phages, natural predators of bacteria, have been in an uninterrupted battle for millions of years – evolving to kill or evade.

These powerful natural phages can be purposely engineered to be more efficient killers.

The use of synthetic biology tools enables us to precisely engineer natural phages in ways that further improve their pharmacological properties and antimicrobial activity, with the potential to create supercharged synthetic phages that, once marketing authorization is obtained, can be deployed in the clinic as highly effective weapons in the fight against multidrug-

resistant bacterial infections.

Engineering natural phages may broaden their host range, minimize resistance and improve efficacy through the expression of beneficial moieties such as biofilm-degrading enzymes and antimicrobial peptides.

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We have developed and acquired highly skilled process development and phage manufacturing expertise to manage our proprietary platforms with proven capabilities from the bench to clinic.

Our research and development facilities are equipped with cGMP manufacturing suites enabling the production, purification and testing and release of clinical trial material.

Proprietary STAMP Platform

Specifically Targeted Antimicrobial Peptides (STAMPs) are designed by first identifying targeting domains in bacterial genomes using genomic mining techniques.

An antimicrobial peptide is then linked to the targeting domain, directing the antimicrobial activity to a specific pathogen or group of pathogens of choice within a microbial community.

The platform technology allows the STAMP to effectively re-engineer the microbiota by selectively killing the targeted pathogen while sparing the remaining healthy microorganisms within the indigenous microflora.

In contrast to this targeted approach, broad-spectrum antibiotics indiscriminately kill both beneficial and pathogenic bacteria.

with STAMPs results in biofilm communities that remain intact and “healthier”

after treatment, serving as a barrier to prevent reinfection.

A STAMP platform proof-of-concept has been demonstrated with C16G2 advancing through several clinical trials, including Phase 2 clinical trials, conducted under an IND application.

Administered as a topical product, C16G2 targets S.

mutans , recognized as the major causative agent of dental caries (tooth decay/cavities).

These studies demonstrated an acceptable safety and tolerability profile of the drug while demonstrating a selective reduction of S.

mutans in the oral cavity.

Given the length and cost of pursuing a large Phase 2 trial or a pivotal Phase 3 trial, we elected not to proceed, and instead seek alternatives to lower STAMP cost of goods, which could include C16G2 expressed in a synthetic phage.

We plan to seek partners to continue the development of C16G2.

Our research and development facilities are equipped with cGMP compliant manufacturing suites enabling the production, purification and testing and release of clinical trial material.

Preclinical and Clinical Development Programs

Our phage product discovery platform in which we screen of hundreds of clinically-relevant isolates against our extensive phage library utilizing proprietary methods that identify optimal phage combinations with superior attributes, together with our phage-specific cGMP manufacturing facilities, uniquely enable us to efficiently identify new therapeutic candidates.

Our therapeutic phage candidates aim to address areas of significant unmet clinical need, by targeting key antibiotic-resistant bacteria including those on the WHO’s global priority pathogens list.

We are developing and advancing a broad pipeline of natural and synthetic phage candidates, including clinical candidates for Pseudomonas aeruginosa , Staphylococcus aureus , and other pathogens.

Proprietary synthetic phage candidates designed to target an undisclosed infectious disease agent are being developed in partnership with Merck.

We are committed to advancing phage with drug development expertise that spans bench to clinic including in-house phage-specific cGMP manufacturing.

We are committed to developing novel phage therapies, with drug development expertise and product development capabilities that span bench to clinic, including in-house phage-specific cGMP manufacturing.

Our phage discovery

platform in which we screen panels of clinically-relevant isolates against our extensive phage library utilizing proprietary methods that identify phage combinations with superior attributes, together with our phage-specific cGMP compliant manufacturing facilities, uniquely enables us to efficiently identify optimal product candidates.

Our microbiological surveillance and synthetic biology capabilities drive long-term product life cycle management.

Our therapeutic phage candidates aim to address areas of significant unmet medical need, by targeting key drug-resistant bacteria, including those on the World Health Organization’s global priority pathogens list, and the priority pathogens list issued by the Centers for Disease Control and Prevention.

The long-term potential for phage therapy is broad reaching, including potential use as front-line therapy.

However, first indications will be as adjunct therapy in indications with high unmet need, which demands careful patient population selection to assure that a treatment effect with the phage cocktail can be observed over and above the efficacy of standard-of-care antibiotics.

We are developing and advancing a broad pipeline of natural and synthetic phage candidates, including clinical candidates for P.

aeruginosa and S.

aureus , two bacterial pathogens known to have significant morbidity and mortality despite standard-of-care antibiotic usage.

aeruginosa and S.

aureus are causative agents for difficult-to-treat infections:

aeruginosa , with its mucoid and multidrug-resistant strains, is a dominant culprit in chronic respiratory infections in CF and NCFB patients as well as acute pneumonias in hospitalized patients;

aureus , with its heteroresistant and methicillin-resistant S.

aureus (MRSA) strains, has been implicated in systemic (e.g., bacteremia) as well as prosthetic-related infections.

By advancing randomized controlled clinical trials using P.

aeruginosa and S.

aureus natural phage cocktails, Armata will gain experience treating site-specific as well as systemic infections.

We believe our cGMP-facility has the capacity to produce our proprietary bacteriophage therapeutics for our clinical trials through a potential biologics license application filing and potential approval.

Pseudomonas aeruginosa Phage Product Candidate, AP-PA02

Background and Strategy

Historical Background

AP-PA02 is being developed as a replacement for its predecessor AP-PA01 (previously known as AB-PA01).

A total of 10 patients with serious or life-threatening P.

aeruginosa infections not responding to antibiotic therapy have been treated with AP-PA01, along with antibiotics, under single-patient expanded access programs in the United States (Emergency INDs, per the FDA) or Australia (Special Access Scheme, per the Australian Therapeutic Goods Administration).

The treated patients’

infections included bacteremia, native and prosthetic valve endocarditis, recurrent pneumonia (CF, post-transplant), VAP, prosthetic joint infection, ventricular assist device infection, and septicemia due

There were no treatment-related serious adverse events (SAEs) from treatment with AP-PA01 administered via nebulizer or intravenously.

One of these cases was recently featured in the peer-reviewed journal Infection after AP-PA01 was used to successfully treat a CF patient who had developed a multidrug-resistant P.

aeruginosa infections not responding to antibiotic therapy were treated with AP-PA01, along with antibiotics, under single-patient expanded access programs in the United States (authorized under Emergency INDs by the FDA) and in Australia (authorized under the Special Access Scheme by the Australian Therapeutic Goods Administration).

The treated patients’ infections included bacteremia, native and prosthetic valve endocarditis, recurrent pneumonia (CF, post-transplant), ventilated-associated pneumonia, prosthetic joint infection, ventricular assist device infection, and septicemia due to burns.

Investigators concluded that intravenous and nebulized administration of AP-PA01 was well-tolerated with no treatment-related serious adverse events.

One of these cases was published in August, 2019, in the peer-reviewed journal Infection, after AP-PA01 was used to successfully treat a CF patient who had developed a multidrug-resistant P.

aeruginosa infection.

Another recent success with AP-PA01 used to treat a 77‑year-old with VAP and empyema was described in the American Journal of Respiratory and Critical Care Medicine.

In August 2018, we held a Type B pre-IND meeting with the FDA regarding our proposed Phase 1/2 clinical study of AP-PA01 for the treatment of P.

aeruginosa respiratory infections (VAP).

Another success with AP-PA01, used to treat a 77-year-old with ventilated-associated pneumonia and empyema, was published in November, 2019, in the American Journal of Respiratory and Critical Care Medicine.

We no longer offer AP-SA01 through any expanded access program.

In August 2018, we held a Type B pre-IND meeting with the U.S.

FDA regarding a proposed Phase 1/2 clinical study of AP-PA01 for the treatment of P.

aeruginosa respiratory infections (ventilated-associated pneumonia).

Feedback from the FDA in September 2018 included:

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Human exposure through treatment of single patients with AP-PA01 under the expanded access program has been helpful in demonstrating the promise of phage therapy.

Feedback from the pre-IND meeting has been insightful for the regulatory path required for phage therapeutics in general, and specifically for phage product candidate intended for respiratory infection.

Feedback from the pre-IND meeting has been insightful for the regulatory path required for phage therapeutics in general, and specifically for a phage product candidate intended for respiratory infection.

We therefore have leveraged our experiences with AP-PA01 to derive a development plan for AP-PA02.

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aeruginosa phage product candidate, AP-PA01.

A series of selection criteria and different methods were deployed, including bioinformatics and comparative genomics, in order to identify such optimal attributes for a product candidate.

A series of selection criteria and different methods were deployed, including bioinformatics and comparative genomics, in order to identify optimal attributes for a product candidate.

We have engaged in preclinical studies to determine pharmacological and toxicological parameters to confirm therapeutic potential in the clinic.

In parallel, we initiated manufacturing feasibility and process optimization efforts with the goal of achieving high-quality phage product free of endotoxin and host cell proteins whilst maintaining adequate phage titers.

AP-PA02 is comprised of a cocktail of P.

aeruginosa phages originating from distinct families and subfamilies, targeting multiple receptor classes, functioning with compatibility (i.e., the phages don’t interfere with one another) and cooperativity (i.e., the phages work together for a better outcome), and further characterized by being highly potent and having a broad host range and overlap.

AP-PA02 is comprised of a cocktail of natural P.

AP-PA02 demonstrates broad coverage against approximately 90% of tested clinical isolates.

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● Components maintain activity in the presence of other CF therapies.

We have developed AP-PA02 as a liquid formulation, suitable for delivery by inhalation and intravenous administration.

Feasibility batches of AP-PA02 have been completed meeting all intended specifications.

Verification batches have also been completed with quality control data expected to support regulatory filings.

Potency of drug substance supports doses up to at least 1x10 11 PFU (plaque forming units) per mL, and endotoxin levels are well within specifications for an intravenous product.

We have initiated manufacturing of clinical trial material at our production facility in Marina del Rey, California, using cGMP, to support the required regulatory filing(s) for clinical entry in the United States and/or Europe.

Clinical Development Plans

We plan to file an IND Application with the FDA, and possibly a Clinical Trial Application (“CTA”) with the relevant competent authorities in Europe, in the first half of 2020, upon regulatory clearance, initiate a Phase 1b/2, multi-center, double-blind, randomized, placebo-controlled, single and multiple ascending dose study to evaluate the safety, tolerability, and preliminary efficacy of AP-PA02 in subjects with CF and chronic pulmonary P.

We have developed AP-PA02 as a sterile liquid formulation, suitable for delivery by inhalation and intravenous administration.

Clinical trial material of AP-PA02 is manufactured under cGMP at our production facility in Marina del Rey, California, to support the required regulatory filing(s) for clinical entry in the United States.

Potency of drug substance currently supports doses up to approximately 1x10 11 PFU (plaque forming units) per mL, and endotoxin levels are well within specifications for an intravenous product.

Clinical Development of AP-PA02 in Cystic Fibrosis

AP-PA02 product candidate is currently in clinical development.

On October 14, 2020, Armata received approval for the study to proceed from the FDA for its Investigational New Drug (“IND”) to initiate the “SWARM- P.a.

” study – a Phase 1b/2a, multi-center, double-blind, randomized, placebo-controlled, single ascending dose (“SAD”) and multiple ascending dose (“MAD”) clinical trial to evaluate the safety and tolerability of inhaled AP-PA02 in subjects with CF and chronic pulmonary P.

aeruginosa infection.

We plan to explore the pharmacokinetic (“PK”) profile, pharmacodynamic (“PD”) profile, and immunogenicity, of AP-PA02.

We anticipate conducting the study at sites in the United States and Europe.

We anticipate generating topline data from this study in 2020.

With positive outcomes from this first clinical study, we plan to initiate follow-on clinical studies that will investigate the efficacy of AP-PA02 to improve lung function and decrease exacerbations.

Our ultimate goal is to bring AP-PA02 to the CF community at large as a new FDA-approved therapy to treat airway P.

Primary Endpoints (SAD and MAD) will include incidence and severity of treatment-emergent, adverse events.

Secondary Endpoints (MAD) will include changes in P.

aeruginosa colony-forming units (CFU).

We will look at clinical parameters as a part of exploratory endpoints for the SAD and MAD cohorts.

The study is designed to include a total of approximately 48 subjects in multiple U.S.-based sites.

We anticipate generating topline data from the MAD portion of the study in 2022.

The SWARM- P.a.

study is supported by the CFF, which in March 2020 granted us a Therapeutics Development Award of up to $5.0 million.

With positive outcomes from this first study, SWARM- P.a.

, we plan to initiate follow-on studies that will investigate the efficacy of AP-PA02 in chronically-infected patients and patients with primary/early intermittent infections.

Our ultimate goal is to bring AP-PA02 to the CF community at large as a new FDA-approved novel therapy to treat airway P.

aeruginosa infections and improve the long-term health of people with CF.

In addition to CF lung infections, we have begun charting the appropriate clinical and regulatory paths for other respiratory infections with high unmet medical need, such as bacterial pneumonia.

For this purpose, we intend to also optimize a P.

aeruginosa phage product candidate for the treatment and/or prevention of hospitalized pneumonia utilizing a core set of phages derived from AP-PA02.

We do not anticipate clinical development of such a product until such time that we can evaluate the results of the CF study.

We plan to produce our proprietary bacteriophage therapeutics for these clinical trials at our cGMP-compliant manufacturing facility located in Marina del Rey, California.

We believe our cGMP-facility has the capacity to produce our proprietary bacteriophage therapeutics for these clinical trials through a potential biologics license application filing and potential approval.

Furthermore, we will investigate whether AP-PA02, and any other Pseudomonas phage product candidates that we may develop in the future, may be eligible for Fast Track Designation and for approval under the Limited Population pathway (“LPAD pathway”), which is intended to facilitate development of therapeutics to treat serious or life-threatening infections in a limited population of patients with unmet need.

Products eligible for approval under the LPAD pathway may follow streamlined approaches for clinical development, which may involve smaller, shorter, or fewer clinical trials to help reduce the overall product development timeline.

Exploring Additional Clinical Indications for Our P.

aeruginosa Phage Product Candidates

In addition to pursuing lung infections in CF patients, we have begun charting the appropriate clinical and regulatory paths for other respiratory infections with high unmet clinical need, such as in NCFB patients as well as acute pneumonias in hospitalized patients.

We intend to optimize P.

aeruginosa phage product candidates for the treatment of each of these indications.

Our clinical candidate for pneumonia, AP-PA03, took advantage of our collection of relevant P.

aeruginosa clinical isolates and our expanded phage library.

AP-PA03 is comprised of a cocktail of natural P.

aeruginosa phages originating from distinct genera, targeting multiple receptor classes, functioning with compatibility and cooperativity, and further characterized by being highly potent and having a broad host coverage against approximately 90% of tested clinical isolates.

We expect AP-PA03 to enter process development in the first half of 2021.

We do not anticipate clinical development of AP-PA02 for NCFB until such time that we can evaluate the results of the CF SWARM- P.a.

We plan to obtain regulatory approval to initiate clinical studies for NCFB and/or for pneumonia in 2021 or 2022.

Staphylococcus aureus Phage Product Candidate, AP-SA02

Our first-generation phage product candidate, AP-SA02 (previously AB-SA01) targets S.

The three natural lytic phage that comprise the product candidate were chosen for their ability to cover approximately 95% of S.

aureus clinical isolates, including multidrug-resistant strains.

The therapeutic potential of the first-generation S.

aureus bacteriophage product, AP-SA01, has been demonstrated through:

Historical Background

AP-SA02 is being developed as a more advanced version of its predicate AP-SA01 (previously known as AB-SA01).

The therapeutic potential of AP-SA01 has been demonstrated through:

● Efficacy in murine methicillin-resistant and methicillin-susceptible S.

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aureus -derived chronic rhinosinusitis).

More recently, AP-SA01 was provided for use under single-patient expanded access programs in the United States (Emergency INDs, per the FDA) or Australia (Special Access Scheme, per the Australian Therapeutic Goods Administration).

● More recently, AP-SA01 was provided for use under single-patient expanded access programs in the United States (Emergency INDs, per the Food and Drug Administration ) or Australia (Special Access Scheme, per the Australian Therapeutic Goods Administration).

A total of 18 patients with serious or life-threatening S.

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AP-SA01 was administered intravenously, with most patients treated for 14 days, every 12 hours as an adjunct to antibiotic therapy.

Investigators concluded that intravenous administration of AP-SA01 was well-tolerated with no treatment-related SAEs and warranted further study to support safety and efficacy through randomized controlled trials required to support registration.

AP-SA01 has previously advanced through a Type B pre-IND meeting with the FDA in August 2018.

Investigators concluded that intravenous administration of AP-SA01 was well-tolerated with no treatment-related serious adverse events.

We no longer offer AP-SA01 through any expanded access program.

Human exposure through treatment of single patients with AP-SA01 under the expanded access program has been helpful in demonstrating the promise of phage therapy and warrants further study to support safety and efficacy through randomized controlled trials required to support registration.

Feedback from a Type B pre-IND meeting with the FDA in August 2018 has been insightful for the regulatory path required for phage therapeutics in general, and specifically for a phage product candidate intended for systemic delivery.

We therefore have leveraged our experiences with AP-SA01 to derive a development plan for AP-SA02.

Product Optimization:

Development of AP-SA02

Using the same integrated approach and proprietary techniques that we employed to improve upon AP-PA01 as described above, we have developed an optimized phage cocktail for Staphylococcus aureus , with significantly improved attributes.

This product draws upon prior experience and expertise to derive bacteriophage cocktails with superior therapeutic attributes.

Unlike AP-SA01, which is comprised of three highly-related lytic phages of one family, this new product AP-SA02 consists of phage from different families with robust host range and superior killing kinetics compared to the phage which comprise AP-SA01.

AP-SA02 is a novel biologic product candidate comprising natural lytic phages that target the problematic pathogen, S.

Preclinical highlights of AP-SA02 include:

host range coverage of >90% across MRSA isolates tested;

● Coverage of more than 90% of clinical isolates tested, including against drug-resistant isolates (MRSA:

methicillin-resistant S.

aureus and VRSA:

vancomycin-resistant S.

● Efficiency of plating and plaque morphology reflect strongly potent component phages.

Potency further demonstrated by the failure of attempts to obtain phage-resistant bacteria;

robust potency against drug-resistant isolates, including MRSA, vancomycin-intermediate/-resistant S.

aureus (VISA/VRSA);

component phages are stable and retain infectivity in relevant biological fluids (blood and plasma);

biofilm eradication in vitro ranged between 60% and 90%, suggesting that AP-SA02 can penetrate pre-existing biofilms and decrease attached biomass;

maintains activity in the presence of current standard anti-staphylococcal therapy.

AP-SA02 Clinical Development Plans

We are committed to developing novel phage therapies that specifically address areas of high need which includes drug resistant and difficult to treat infections such as Staphylococcus aureus bacteremia (SAB).

The long-term potential for phage therapy is broad reaching, including potential use as front-line therapy.

We plan to file an IND Application with the FDA, and, upon regulatory clearance, initiate a Phase 1b/2, multicenter, randomized, double-blind, placebo-controlled dose escalation study that will assess the safety, tolerability, and efficacy of AP-SA02 administered intravenously as an adjunct to best available antibiotic therapy (“BAT”) for the treatment of SAB.

● Component phages are stable and retain infectivity after exposure to relevant biological fluids (blood and plasma);

● Penetrates pre-existing biofilms;

● Additive, indifferent, or synergistic effects in combination with vancomycin;

no antagonistic effects noted;

● Maintains activity in the presence of current standard-of-care anti-staphylococcal antibiotics.

We have developed AP-SA02 as a sterile solution, suitable for delivery by intravenous administration.

Feasibility batches of AP-SA02 have been completed meeting all intended specifications.

Verification batches are advancing with quality control data expected to support regulatory filings.

Potency of drug substance supports doses up to at least 1x10 9 PFU (plaque forming units) per phage, and endotoxin levels are well within specifications for an intravenous product.

Clinical trial material of AP-SA02 will be manufactured under cGMP at our production facility in Marina del Rey, California, to support the required regulatory filing(s) for clinical entry in the United States and ex-U.S.

Clinical Development of AP-SA02 in Bacteremia

We plan to file an IND application with the FDA in 2021, and, upon regulatory clearance, initiate a first-in-man Phase 1b/2a, multicenter, randomized, double-blind, placebo-controlled, multiple-ascending dose escalation study of the safety, tolerability, and efficacy of intravenous AP-SA02 as an adjunct to best available antibiotic therapy compared to best available antibiotic therapy alone for the treatment of adults with complicated bacteremia due to S.

The objectives of this study are to:

(i) demonstrate safety and tolerability of multiple different dose levels of AP-SA02;

(ii) evaluate optimal dosing through safety, PK and microbial efficacy;

and (iii) explore efficacy through evaluation of key meaningful endpoints.

We anticipate conducting the study at sites in the United States and potentially also at sites abroad.

We have developed a synopsis for the Phase 1b/2 study design that reflects feedback from the FDA, received by our predecessor in September 2018.

Additional refinements in trial design and study population will be derived through consultation with key opinion leaders from academic centers and U.S.

government medical treatment facilities, prior to incorporation into the final study protocol.

We anticipate findings from this study will provide the basis for constructing a robust trial strategy for registration which can be the basis for an End-of-Phase‑2 meeting with the FDA that enables us to obtain agreement on a path to approval.

We are actively seeking and intend to continue to seek non-dilutive financing and explore other opportunities to conduct this Phase 1/2 study.

Given our priorities to devote internal resources to the Pseudomonas respiratory indications outlined above, clinical trials in S.

aureus indications outside of respiratory infections will not proceed until we secure third party funding.

Improved patient outcomes are needed for other staphylococcal infections, particularly those caused by MRSA, in settings such as endocarditis, prosthetic joint infections, and pneumonia and we believe AP-SA02 could also have a meaningful impact in these indications.

As mentioned above, our initial priority will be targeting respiratory infections and, absent third-party funding, our priority would likely target AP-SA02 in such indications.

For example, having bacteriophage products for S.

aureus and P.

aeruginosa would enable us to address the two most common pathogens causing hospitalized pneumonia.

We will investigate whether AP-SA02, and any other Staphylococcal phage product candidates that we may develop in the future, may be eligible for Fast Track Designation and for approval under the LPAD pathway, which is intended to facilitate development of therapeutics to treat serious or life-threatening infections in a limited population of patients with unmet need.

(ii) evaluate optimal dosing through safety, pharmacokinetics and microbial efficacy;

and (iii) explore efficacy through

evaluation of key meaningful endpoints.

We anticipate conducting the study at sites in the United States and also at sites abroad.

The Phase 1b/2a study will be partially funded by a $15.0 million award from the DoD through the Medical Technology Enterprise Consortium (“MTEC”) with funding from the Defense Health Agency and Joint Warfighter Medical Research Program.

Data from this Phase 1b/2a study will be invaluable for a follow-on trial that will be designed to demonstrate of efficacy of AP-SA02 in treating S.

aureus bacteremia.

We anticipate findings from this Phase 1b/2a study will provide the basis for constructing a robust trial strategy for registration which can be the basis for an End-of-Phase-2 meeting with the FDA that enables us to obtain agreement on a path to approval.

Additional Clinical Indications for AP-SA02

Improved patient outcomes are needed for other Staphylococcal infections, in settings such as prosthetic joint infection (“PJI”), for which antimicrobial resistance is a growing concern.

We believe AP-SA02 could also have a meaningful impact in this indication, particularly PJIs caused by methicillin-resistant S.

aureus (“MRSA").

Merck Partnered Program

Proprietary synthetic phage candidates designed to target an undisclosed infectious disease agent are being developed in partnership with Merck, a collaboration that reflects the pharmaceutical industry’s growing interest in phage therapy.

Pursuant to the terms of the Amended and Restated Research Collaboration and Option to License Agreement between Armata and Merck (the “Research and Option Agreement”) we are engaged in the research and development of engineered phage, or a combination of two or more engineered phages, that infect specific bacteria, pursuant to the criteria set forth in the research plan.

We intend for the phage to be engineered for a wide host range, and to express anti-biofilm and antimicrobial payloads.

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We are responsible for our costs and expenses in connection with the research program.

Unless the Research and Option Agreement is terminated by Merck, it will continue in full force and effect

until one or more products developed thereunder has received marketing authorization and, thereafter, until expiration of all royalty obligations thereunder.

Upon expiration of the Research and Option Agreement, Merck’s licenses pursuant to the Research and Option Agreement will become fully paid-up, perpetual licenses.

Unless the Research and Option Agreement is terminated by Merck, it will continue in full force and effect until one or more products developed thereunder has received marketing authorization and, thereafter, until expiration of all royalty obligations thereunder.

Upon expiration of the Research and Option Agreement, Merck’s licenses pursuant to the Research and Option Agreement will become fully paid-up, perpetual licenses.

An amendment to the Research and Option Agreement with a revised research plan was agreed to by the parties in December 2019.

Engineered Phage-Based Diagnostic

We are developing a diagnostic test to help us to rapidly and accurately identify patients during our clinical trials and in connection with the commercialization of our phage product candidates that we are developing or may develop in the future.

The test is deigned to drive early use of our therapeutic phage in a treatment paradigm by identifying patients who are most likely to benefit.

We are developing a diagnostic test that, once fully developed, will help us to rapidly and accurately identify patients for future clinical trials and we believe will be useful in the commercialization of our phage product candidates.

These tests are deigned to drive early use of our therapeutic phage in a treatment paradigm by identifying patients who are most likely to benefit.

For example, those patients who are infected with a bacterial isolate that is sensitive to our particular therapeutic phage, and to monitor response to treatment with our particular therapeutic phage.

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Klebsiella pneumoniae phage, for example, is a potentially important addition to treatment options for serious lung infections.

A recent outbreak of VAP caused by a new emerging hypervirulent K.

An outbreak of ventilator-associated pneumonia caused by a new emerging hypervirulent K.

pneumoniae strain led to the death of five patients in the intensive care unit of a hospital in China (Lancet Infect.

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We operate in-house process development activities through to production, purification, formulation, and release of our therapeutic phage cocktails for use in human clinical trials.

Our facility is registered with the FDA and licensed by the California Department of Public Health (“CDPH”) for drug manufacturing, and is subject to periodic, unannounced inspections by both agencies for compliance with cGMP and other state and federal regulations.

Our facility is staffed with an independent Quality Unit and cGMP-trained Manufacturing and Facilities personnel.

Our facility is licensed by the California Department of Public Health (“CDPH”) for drug manufacturing, and is subject to periodic, unannounced inspections for compliance with cGMP and other state and federal laws and regulations.

The facility is subject to periodic inspections by the City of Los Angeles and Los Angeles County for fire hazard and waste management and is in compliance with all applicable regulations.

Our facility is staffed with an independent Quality Unit and Manufacturing and Facilities personnel trained under cGMPs.

We believe this facility will be sufficient to meet our manufacturing needs through our Phase 3 clinical trials.

Our current formulations for our Pseudomonas and Staphylococcal phage product candidates are intended for inhaled and intravenous delivery, both requiring our drug products to be sterile.

Our current formulations for our P.

aeruginosa and S.

aureus phage product candidates are intended for inhaled and intravenous delivery, both requiring our drug products to be sterile.

Our Marina del Rey facility is capable of manufacturing sterile drug products, utilizing ISO-certified cleanrooms and ISO 5-certified biological safety cabinets.

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Although our facility is capable of manufacturing our phage product candidates, we rely on, and may continue to rely on, third-party contract manufacturers for the manufacture of certain raw materials, components, or packaging of the product candidates that may be developed for clinical testing, as well as for commercialization.

We also had an additional cGMP-compliant manufacturing facility, located in in Ljubljana, Slovenia, that was leased by our wholly-owned subsidiary, AmpliPhi, Biotehnološke Raziskave in Razvoj, d.o.o.

This facility was comprised of approximately 5,300 square feet of laboratory and office space, including 1,080 square feet of cGMP laboratory space where cGMP clinical trial materials have previously been manufactured.

This facility was subject to inspection and regulation by JAZMP, the Agency for Medicinal Products and Medical Devices of the Republic of Slovenia.

In April 2019, the facility successfully completed a periodic regulatory cGMP inspection by JAZMP.

Subsequent to the Merger in May 2019, following an extensive evaluation and a technology transfer from the Slovenian facility to the Marina del Rey, California location, management determined that the Slovenia manufacturing facility was not essential to Armata’s business.

This conclusion was reached in September 2019 after considering the monthly expenses of maintaining the Slovenian facility and its location in Europe.

On November 8, 2019, the Company entered into an agreement to sell the Slovenian subsidiary to an un-related third-party buyer (“Buyer”).

The Company will no longer be responsible for funding the liabilities of the Slovenia facility.

The agreement requires that the Buyer maintain the ability of the Slovenia facility to manufacture the Company’s products.

If the Company requires such products, the Buyer and the Company would negotiate a supply agreement governing the purchase and sale of such products.

In addition, the Company has the right to repurchase the Slovenian subsidiary’s operations at any point in the five-year period immediately following the closing of the sale of the Slovenian subsidiary.

On December 5, 2019, the Company completed the sale transaction of its Slovenia subsidiary and recognized a non-cash loss on sale of $0.7 million in the operating expenses in the statement of operations and comprehensive loss for the year ended December 31, 2019.

Intellectual Property

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We also rely on trademarks, trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

We also depend upon the skills, knowledge, experience and know-how of our management and research and development personnel, as well as that of our advisors, consultants and other contractors.

To help protect our proprietary processes and know-how, which is not patentable, and for

inventions for which patents may be difficult to enforce, we currently and will in the future rely on trade secret protection and contractual obligations with third parties to protect our interests and to develop and maintain our competitive position.

We also depend upon the skills, knowledge, experience

and know-how of our management and research and development personnel, as well as that of our advisors, consultants and other contractors.

To help protect our proprietary processes and know-how, which is not patentable, and for inventions for which patents may be difficult to enforce, we currently and will in the future rely on trade secret protection and contractual obligations with third parties to protect our interests and to develop and maintain our competitive position.

To this end, we require all of our employees, consultants, advisors and other contractors to enter into agreements with contractual obligations that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.

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Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer, and because publication of discoveries in the scientific or patent literature often lags behind actual discoveries and patent application filings, we cannot be certain of the priority of inventions covered by pending patent applications.

Accordingly, we may not have been the first to invent the subject matter disclosed in some of our patent applications or the first to file patent applications covering such subject matter, and we may have to participate in interference proceedings or derivation proceedings declared by the United States Patent and Trademark Office (“U.S.

PTO”) to determine priority of invention.

Bacteriophage Patent Portfolio

As of December 31, 2019, we owned or had exclusive license rights to a total of 101 patents and applications:

patents, five U.S.

non-provisional patent applications, two U.S.

provisional applications, four pending Patent Cooperation Treaty applications, 60 foreign patents (includes six European patent validation countries that are in process for European patent 2 874 635 issued on December 18, 2019), and 20 foreign patent applications, with nominal expiration on various dates between 2024 and 2039.

As of January 14, 2021, we owned or had exclusive license rights to a total of 121 patents and applications:

patents, 7 U.S.

non-provisional patent applications, 2 U.S.

provisional applications, 62 foreign patents, and 39 foreign patent applications, with nominal expiration on various dates between 2024 and 2041.

Patent term adjustments or patent term extensions could result in later expiration dates.

We believe these patents and applications cover our lead phage therapeutic programs and use thereof, synthetic phage and methods of manufacture thereof, beneficial effects of bacteriophage treatment, bacteriophage combinations, the sequential use of bacteriophages in combination with conventional antibiotics, genetic sequence variations, methods to reduce antibiotic resistance, methods to design therapeutic combination panels of bacteriophage, disinfection methods using bacteriophages, and bacteriophage mutants having increased bacterial host spectra.

STAMP Patent Portfolio

As of December 31, 2019, we owned or had exclusive license rights to 13 United States and 24 foreign issued patents and allowed patent applications relating to our STAMP platform and its use in the development of product candidates and products, including, without limitation, C16G2, with nominal expiration on various dates between 2024 and 2035 (for United States patents) and between 2026 and 2029 (for foreign patents).

We have pending patent applications for compositions comprising our STAMP platform, including C16G2 that, if issued, would expire in the United States and in countries outside of the United States between 2031 and in 2038, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

The development and commercialization of new drugs is highly competitive.

We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions all seeking to develop novel treatment modalities for bacterial infections.

Many of our competitors have significantly greater financial, product development, manufacturing

and marketing resources than us.

Many of our competitors have significantly greater financial, product development, manufacturing and marketing resources than us.

Large pharmaceutical companies have extensive experience in clinical development and obtaining regulatory approval for drug products.

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There are a handful of small biotechnology companies developing bacteriophage products to treat human diseases.

To our knowledge, several biotechnology companies in the United States and Europe, including Adaptive Phage Therapeutics, Pherecydes Pharma, BiomX Ltd., Intralytix, Inc., EnBiotix, Inc., Locus Biosciences, Inc., PhagoMed Biopharma GmbH, Phi Therapeutics, Inc., TechnoPhage, SA, Felix Biotechnology, and LytPhage, Inc., as well as academic institutions, have discovery stage or clinical programs utilizing naturally occurring phages or synthetic biology approaches to genetically modify bacteriophages to remove or input genes to improve therapeutic properties such as increases to the bacterial host range to infect a larger number of bacterial strains and decrease the need for using multiple phages in a product.

To our knowledge, several biotechnology companies in the United States and Europe, including Adaptive Phage Therapeutics, Pherecydes Pharma, BiomX Inc., Intralytix, Inc., Locus Biosciences, Inc., PhagoMed Biopharma GmbH, TechnoPhage, SA, Felix Biotechnology, as well as academic institutions, have discovery stage or clinical programs utilizing naturally occurring phages or synthetic biology approaches to genetically modify bacteriophages to remove or input genes to improve therapeutic properties such as increases to the bacterial host range to infect a larger number of bacterial strains and decrease the need for using multiple phages in a product.

Our bacteriophage programs may compete with or be synergistic with currently approved antibiotics, and experimental approaches such as novel antibiotics, antimicrobial peptides, antimicrobial vaccines, metals, antisense, monoclonal antibodies and possibly microbiome manipulation.

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We have full worldwide commercial rights to all of our phage-based product candidates to treat drug-resistant bacterial infections, including our product candidates:

AP-SA01 and AP-SA02, for the treatment of S.

aureus infections, and AP-PA01 and AP-PA02 for the treatment of P.

aeruginosa infections.

AP-PA02 and AP-PA03 for the treatment of P.

aeruginosa infections, and AP-SA02 for the treatment of S.

aureus infections.

We believe we can maximize the value of our company by retaining substantial global commercialization rights to these product candidates and, where appropriate, entering into partnerships to develop and commercialize these product candidates.

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We granted to Merck an exclusive, worldwide license in our patent rights, and our interest in any joint patent rights, with the right to grant and authorize sublicenses, for any and all uses of any product candidates, or products, developed through the research plans set forth in the Research and Option Agreement in a specific field of use.

Further, we granted to Merck an exclusive, worldwide license, with the right to grant and authorize sublicenses, in our background intellectual property and know-how, solely to make, have made, use, import, offer to sell and sell (but not genetically modify) the product candidates, or products, developed through the research plans set forth in the Research and Option Agreement in the specific field of use.

Further, we granted

to Merck an exclusive, worldwide license, with the right to grant and authorize sublicenses, in our background intellectual property and know-how, solely to make, have made, use, import, offer to sell and sell (but not genetically modify) the product candidates, or products, developed through the research plans set forth in the Research and Option Agreement in the specific field of use.

We will be entitled to milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based on net sales of products developed pursuant to the Research and Option Agreement.

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Upon termination of the Research and Option Agreement, Merck’s licenses pursuant to the Research and Option Agreement will become fully paid-up, perpetual licenses.

License Agreement with United Kingdom Secretary of State for the Department of Health

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and the Health Protection Agency, Centre for Emergency Preparedness and Response, to use certain intellectual property rights to develop treatments for bacterial biofilm infections.

The agreement was subsequently assigned to the United Kingdom Secretary of State for the Department of Health (“DoH”).

Under the license agreement, we have obtained exclusive rights to a patent portfolio related to the use of bacteriophages combined with biofilm-disrupting agents in treating biofilm infections.

In consideration for the exclusive license, we may be required to pay to the DoH certain milestone payments in the aggregate of up to £10,000 per product, as well as single digit percentage royalty on net sales of products incorporating licensed intellectual property.

The license agreement will remain in effect until the expiration of the last patent exclusively licensed under the license agreement.

If we default on any milestone or royalty payments, or upon breach by us of certain other terms of the license agreement, the DoH may either terminate the license agreement immediately upon written notice or modify the license to be non-exclusive upon 30 days’

written notice.

Exclusive License Agreement with The Regents of the University of California

C3J was granted an exclusive license to its proprietary STAMP platform pursuant to the terms of an exclusive license agreement, dated April 24, 2007, as amended from time to time (the “UCLA Agreement”), with The Regents of the University of California (“UCLA”), including rights to develop and commercialize any products developed using the STAMP platform.

In exchange for the exclusive license, UCLA was entitled to receive from C3J an upfront payment, and is entitled to receive, for the term of the UCLA Agreement, milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based on net sales of products developed using the STAMP platform, subject to certain reductions.

C3J must diligently proceed with the development, manufacture and sale

of the products developed using the STAMP platform.

Unless earlier terminated pursuant to other provisions of the UCLA Agreement, the UCLA Agreement will be effective for the life of the last-to-expire patent related to the STAMP platform, or until the last patent application licensed under the UCLA Agreement is abandoned, provided that no licensed patent is issued.

Strategic Alliances and Research Agreements

Global R&D Agreement with U.S.

In June 2013, we entered into a Research and Development Agreement with the U.S.

Army Medical Research and Materiel Command (the “Research and Development Agreement”).

The Research and Development Agreement focuses on developing bacteriophage therapeutics to treat S.

aeruginosa infections, with the initial therapeutic development focus being wounds and skin infections from S.

aureus , which is the leading pathogen in healthcare-associated infections in the United States as a whole, accounting for 30.4% of surgical site infections.

We retain global regulatory ownership and commercial rights to all products developed by us under the Research and Development Agreement.

Army Medical Research and Materiel Command will have the right to retain a non-exclusive license to use any products developed by or on behalf of the U.S.

Government for non-commercial uses.

We also have the rights to exclusively license any intellectual property developed by the U.S.

Army Medical Research and Materiel Command under the collaboration on terms to be agreed upon.

The Research and Development Agreement will expire in June 2020 and can be terminated by either the U.S.

Army Medical Research and Materiel Command or us upon 60 days’

written notice to the other party at any time.

On June 15, 2020, we entered into a Research Project Award agreement (the “MTEC Agreement”) with the Medical Technology Enterprise Consortium (“MTEC”), pursuant to which we will receive a $15.0 million grant and entered into a three-year program administered by the DoD through MTEC with funding from the Defense Health Agency and Joint Warfighter Medical Research Program.

We plan to use the grant to partially fund a Phase 1b/2, randomized, double-blind, placebo-controlled, dose escalation clinical study of Armata's therapeutic phage-based candidate, AP-SA02, for the treatment of complicated S.

aureus bacteremia infections.

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

Upon license or commercialization of intellectual property developed with the funding from the MTEC Agreement, additional fees will be due to MTEC.

We 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 will be effective through January 25, 2024.

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

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

CFF Therapeutics Development Award

On March 13, 2020, we entered into an award agreement (the “Agreement”) with CFF, pursuant to which we received a Therapeutics Development Award of up to $5.0 million (the “Award”).

The Award will be used to fund a portion of our Phase 1b/2 clinical trial of the P.

aeruginosa phage candidate, AP-PA02, as a treatment for P.

aeruginosa airway infections in people with CF.

The first payment under the Agreement, in the amount of $1.0 million, became due upon signing the Agreement and was received in April 2020.

The remainder of the Award will be paid to us incrementally in installments upon the achievement of certain milestones related to the development program and progress of the Phase 1b/2 clinical trial of AP-PA02, as set forth in the Agreement.

If we cease to use commercially reasonable efforts directed to the development of AP-PA02, or any other Product (as defined in the 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 we must either repay the amount of the Award actually received by the Company, plus interest, or grant to CFF (1) an exclusive (even as to Armata), worldwide, perpetual, sublicensable license under technology developed under the 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 our commercialization of any Product, we 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.

We will be obligated to make an additional fixed royalty payment upon achieving specified sales milestones.

We may also be obligated to make a payment to CFF if we transfer, sell or license the Product in the CF Field, or if we enter into a change of control transaction.

The term of the Agreement commenced on March 10, 2020 and expires on the earlier of the date on which we have paid CFF all of the fixed royalty payments set forth therein, the effective date of any license granted to CFF following an Interruption, or upon earlier termination of the Agreement.

Either CFF or Armata may terminate the agreement for cause, which includes our material failure to achieve certain development milestones.

Our payment obligations survive the termination of the Agreement.

Our corporate headquarters are located in Marina del Rey, California, where we currently lease 35,500 square feet of laboratory and office space.

The lease expires on December 31, 2021 and includes an option to extend for an additional ten years.

The lease expires on December 31, 2031.

The facility includes 19,500 square feet of BSL2 laboratory space dedicated to phage product development.

The facility includes approximately 3,000 square feet of cGMP laboratory space, designed to produce clinical quantities of our phage product candidates for human trials and to perform in-house Quality Control (“QC”) testing.

The manufacturing space consists of two ISO-certified cleanrooms capable of production, purification, drug product formulation and aseptic filling of drug product.

The QC laboratory contains qualified analytical instruments to support the testing and release of clinical trial material.

The facility is registered with the FDA and licensed by the California Department of Public Health (“CDPH”) for drug manufacturing, and is subject to periodic, unannounced inspections by both agencies for compliance with cGMP and other state and federal regulations.

To date, this facility has not been inspected by any regulatory party.

The facility is licensed by the California Department of Public Health (“CDPH”) for drug manufacturing, and is subject to periodic, unannounced inspections for compliance with cGMP and other state and federal laws and regulations.

Armata’s facility is subject to periodic inspections by the City of Los Angeles and Los Angeles County for fire hazard and waste management and is in compliance with all applicable regulations.

In addition, we lease a 5,000 square foot facility located in Sydney, Australia.

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Legal Proceedings

Between April 15 and April 25, 2019, three putative class action lawsuits (captioned Midgarden v.

AmpliPhi Biosciences Corp., et al., No.

19‑cv‑0684 (S.D.

AmpliPhi Biosciences Corp., et al., No.

19‑cv‑0728 (S.D.

and Plumley v.

AmpliPhi Biosciences Corp., et al., No.

19‑cv‑0617 (W.D.

25, 2019)) were filed in federal court against us and the former AmpliPhi board of directors related to the Merger.

The lawsuits asserted violations of Section 14(a) of the Exchange Act and Rule 14a‑9 promulgated

thereunder against all defendants, and asserted violations of Section 20(a) of the Exchange Act as to the individual defendants.

The plaintiffs contended that the Definitive Proxy Statement on Schedule 14A, filed on April 4, 2019 (the “April 2019 Proxy Statement”), omitted or misrepresented material information regarding the Merger.

The complaints sought injunctive relief, rescission, or rescissory damages and an award of plaintiffs’

costs, including attorneys’

fees and expenses.

On May 1, 2019, we amended the April 2019 Proxy Statement to provide additional disclosure to our stockholders.

Each of the above cases have since been dismissed.

In addition, from time to time, we are a party to certain litigation that is either judged to be not material or that arises in the ordinary course of business.

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The process required by the FDA before a biological product may be marketed in the United States generally involves the following:

Completion of preclinical laboratory tests, animal studies and formulation studies according to good laboratory practice requirements (“GLP”) or other applicable regulations;

● Completion of preclinical laboratory tests, animal studies and formulation studies according to good laboratory practice requirements (“GLP”) or other applicable regulations;

● Submission to the FDA of an IND application, which must be granted before human clinical trials may begin in the United States or internationally if submitting results to the FDA;

Performance of adequate and controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (“GCPs”) and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use or uses;

Submission to the FDA of a Biologics License Application (“BLA”) for a new biological product;

Satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with the FDA’s cGMP regulations, to assure that the

facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

● Performance of adequate and controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (“GCPs”) and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use or uses;

● Submission to the FDA of a Biologics License Application (“BLA”) for a new biological product;

● Satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with the FDA’s cGMP regulations, to assure that the

facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;

● Potential FDA inspection of the nonclinical study sites and clinical trial sites that generated the data in support of the BLA;

FDA’s approval of the BLA which must occur before a biological product can be marketed or sold in the United States.

● FDA’s approval of the BLA which must occur before a biological product can be marketed or sold in the United States.

The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require the expenditure of substantial resources even when approvals are inherently uncertain.

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Clinical trials must be conducted in accordance with GCP requirements.

Further, each clinical trial must be reviewed and approved by an independent institutional review board (“IRB”) or ethics committee if conducted outside of the United States, at or servicing each institution at which the clinical trial will be conducted.

An IRB or ethics committee is charged with protecting the welfare and rights of trial participants and considers such items as whether the

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Progress reports detailing the results of the clinical trials must be submitted annually to the FDA and written safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggest that there may be a significant risk for human subjects.

The FDA or the sponsor or, if used, the sponsor’s data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

Similarly, an IRB or ethics committee can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s or ethics committee’s requirements or if the pharmaceutical product has been associated with unexpected serious harm to patients.

Suspension of a clinical trial due to safety risks attributed to the investigational product will result in termination of the trial and possibly others that are underway.

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FDA Review and Approval Processes

In order to obtain approval to market a biological product in the United States, a BLA that provides data establishing to the FDA’s satisfaction the safety and effectiveness of the investigational product candidate for the proposed indication

must be submitted to the FDA.

The application includes all data available from nonclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s manufacture and composition, and proposed labeling, among other things.

The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

Under the Prescription Drug User Fee Act, as amended (“PDUFA”), each BLA must be accompanied by a significant user fee.

The FDA adjusts the PDUFA user fees on an annual basis.

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Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review.

The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information.

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The resubmitted application is also subject to review before the FDA accepts it for filing.

After the BLA is accepted for filing, the FDA reviews it to determine, among other things, whether the proposed product is safe and effective for its intended use, has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency, and purity.

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months from the filing date in which to complete its initial review of an original BLA and respond to the applicant, and six months from the filing date of an original BLA designated for priority review.

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Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication but that could be used off-label in the orphan indication.

Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are seeking approval, or if our product is determined to be contained within the scope of the competitor’s product for the same indication or disease.

If one of our products designated as an orphan drug receives marketing approval for an indication broader than that which is designated, it may not be entitled to orphan drug exclusivity.

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Pediatric Information

Under the Pediatric Research Equity Act (“PREA”), a BLA or supplement to a BLA must contain data to assess the safety and efficacy of the biologic for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may grant deferrals for submission of pediatric data or full or partial waivers.

A sponsor who is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration must submit an initial Pediatric Study Plan (“PSP”) within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 study.

The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

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The purpose of these programs is to provide important new drugs and biological products to patients earlier than under standard FDA review procedures.

To be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need, or if the drug or biological product qualifies as a qualified infectious disease product under the Generating Antibiotic Incentives Now Act (the “GAIN Act”).

The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapies based on efficacy or safety factors.

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We intend to request approval under LPAD in the BLA for our product candidates if applicable.

A sponsor can also request designation of a product candidate as a “breakthrough therapy.”

A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs or biological products, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the biological product or drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

A sponsor can also request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs or biological products, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the biological product or drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

Drugs or biological products designated as breakthrough therapies are also eligible for accelerated approval.

The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.

We intend to request “breakthrough therapy”

designation for our product candidates if applicable.

We intend to request “breakthrough therapy” designation for our product candidates if applicable.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

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As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot.

The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer.

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The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally one half the time between the effective date of an IND, and the submission date of an NDA or BLA, plus the time between the submission date of an NDA or BLA and the approval of that application.

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Biosimilars and Interchangeable Biologic Products

The Biologics Price Competition and Innovation Act of 2009 amended the Public Health Service Act to create an abbreviated approval pathway for two types of “generic”

biologics —

biosimilars and interchangeable biologic products, and provides for a twelve-year data exclusivity period for the first approved biological product, or reference product, against which a biosimilar or interchangeable application is evaluated;

The Biologics Price Competition and Innovation Act of 2009 amended the Public Health Service Act to create an abbreviated approval pathway for two types of “generic” biologics — biosimilars and interchangeable biologic products, and provides for a twelve-year data exclusivity period for the first approved biological product, or reference product, against which a biosimilar or interchangeable application is evaluated;

however, if pediatric clinical trials are performed and accepted by the FDA, the twelve-year data exclusivity period will be extended for an additional six months.

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Pediatric Exclusivity

Pediatric exclusivity is a type of marketing exclusivity available in the United States under the Best Pharmaceuticals for Children Act, which provides for an additional six months of marketing exclusivity and may be available if a sponsor conducts clinical trials in children in response to a written request from the FDA (the “Written Request”).

If the Written Request does not include clinical trials in neonates, the FDA is required to include its rationale for not requesting those clinical trials.

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medical devices by the FDA and, as such, require either clearance or approval prior to commercialization.

The level of risk combined with available controls to mitigate risk determines whether a companion diagnostic device requires Premarket Approval Application (“PMA”) approval or is cleared through the 510(k) premarket notification process.

For a novel therapeutic product for which a companion diagnostic device is essential for the safe and effective use of the product, the companion diagnostic device should be developed and approved or 510(k)-cleared contemporaneously with the therapeutic.

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The laws that may affect our ability to operate include:

the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs;

a person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act or federal civil money penalties statute;

● the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs; a person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation.

● federal civil and criminal false claims laws and civil monetary penalties laws, such as the federal False Claims Act, which impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things:

knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent;

making, using or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government;

or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government;

the anti-inducement law, which prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of items or services reimbursable by a federal or state governmental program;

HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent; making, using or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government;

● the anti-inducement law, which prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of items or services reimbursable by a federal or state governmental program;

● HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services

for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

the federal transparency requirements under the Affordable Care Act, including the provision commonly referred to as the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S.

for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

● the federal transparency requirements under the Affordable Care Act, including the provision commonly referred to as the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S.

Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members;

federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs;

● federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs; and

● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

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states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by any source, not just governmental payors, including private insurers.

In addition, some states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on Interactions with Healthcare Professionals.

Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state.

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extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans;

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’

outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’

share of sales to federal healthcare programs;

imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs coverage under Medicare Part D;

subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs;

imposed a new federal excise tax on the sale of certain medical devices;

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and established the Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

Since its enactment, there have been a number of significant changes to the Affordable Care Act (the “ACA”).

On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the Affordable Care Act.

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In January 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

The Tax Cuts and Jobs Act of 2017 (“TCJA”), includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.”

Additionally, on January 22,

2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac”

tax on certain high cost employer sponsored insurance plan, the annual fee imposed on certain health insurance providers based on market share, and the medical device exercise tax on non-exempt medical devices.

Congress will likely consider other legislation to replace or modify elements of the Affordable Care Act.

2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer sponsored insurance plan, the annual fee imposed on certain health insurance providers based on market share, and the medical device exercise tax on non-exempt medical devices.

Further, the Bipartisan Budget Act of 2018, among other things, amends the ACA, effective January 1, 2019, to reduce the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Congress will likely consider other legislation to replace or modify elements of the Affordable Care Act.

We continue to evaluate the effect that the Affordable Care Act and its possible repeal, replacement or further modification could have on our business.

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Clinical trial application must be accompanied by an investigational medicinal product dossier with supporting information prescribed by the Clinical Trials Directive (and corresponding national laws of the member states) and further detailed in applicable guidance documents.

Once the CTA is approved in accordance with a country’s requirements, the clinical trial may proceed.

A similar process to the one described for the European Union is required in Israel for initiation of clinical trials.

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In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country.

To obtain marketing approval of a medicinal product under the European Union regulatory system, an applicant must submit a marketing authorization application (“MAA”), under either a centralized or a decentralized procedure.

The decentralized procedure is based on a collaboration among the member states selected by the applicant.

In essence, the applicant chooses a ‘lead’

member state that will carry out the scientific assessment of the MAA and review the product information.

The other member states must recognize the outcome of such assessment and review except in case of a “serious potential risk to public health.”

The decentralized procedure results in the grant of a national marketing authorization in each selected country.

In essence, the applicant chooses a ‘lead’ member state that will carry out the scientific assessment of the MAA and review the product information.

The other member states must recognize the outcome of such assessment and review except in case of a “serious potential risk to public health.” The decentralized procedure results in the grant of a national marketing authorization in each selected country.

That procedure is available for all medicinal products unless they fall into the mandatory scope of the centralized procedure.

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The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid for all European Union member states.

The centralized procedure is compulsory for certain medicinal products, including for medicinal products produced by certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products (“ATMPs”) and products with a new active substance and indicated for the treatment of certain diseases.

For products with a new active substance and indicated for the treatment of other diseases, products that are highly innovative or for which a centralized process is in the interest of patients, the centralized procedure is optional.

Under the centralized procedure, the Committee for Medicinal Products for Human Use (“CHMP”), the main scientific committee established at the EMA, is responsible for conducting the scientific assessment of the future medicinal product.

The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.

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The European Commission grants or refuses the marketing authorization, following a procedure that involves representatives of the member states.

The European Commission’s decision is in accordance with the CHMP scientific assessment except in very rare cases.

Pursuant to Regulation (EC) 1394/2007, specific rules apply to ATMPs, a category that is comprised of gene therapy medical products, somatic cell therapy medicinal products, and tissue-engineered medicinal products.

Those rules have triggered the adoption of guidelines on manufacturing, clinical trials and pharmacovigilance that adapt the general regulatory requirements to the specific characteristics of ATMPs.

Regulation (EC) 1394/2007 introduced a “hospital exemption.”

which authorizes hospitals to develop ATMP for their internal use without having obtained a marketing authorization and to complying with European Union pharmaceutical law.

Regulation (EC) 1394/2007 introduced a “hospital exemption.” which authorizes hospitals to develop ATMP for their internal use without having obtained a marketing authorization and to complying with European Union pharmaceutical law.

The hospital exemption, which is in essence a compounded ATMP, has been transposed in all Member States, sometimes in such a way that the ATMPs under the hospital exemption are competitive alternatives to ATMPs with marketing authorization.

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For example, in the European Union, Regulation 141/2000 organizes the grant of orphan drug designations to promote the development of products that are intended for the diagnosis, prevention or treatment of life threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Economic Area (the European Union, plus Iceland, Liechtenstein and Norway) (or where it is unlikely that the development of the medicine would generate sufficient return to justify the investment) and for which no satisfactory method of diagnosis, prevention or treatment has been authorized or, if a method exists, the product would be of significant benefit to those affected.

The EMA’s Committee for Orphan Medicinal Products (“COMP”) examines if the orphan criteria are met and gives opinions thereon, and the orphan status is granted by the European Commission.

The meeting of the criteria for orphan designation is examined again by the COMP at the time of approval of the medicinal product, which typically occurs several years after the grant of the orphan designation.

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This 10-year period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

The orphan exclusivity may be lost vis-à-vis another medicinal product in cases the manufacturer is unable to assure sufficient quantity of the medicinal product to meet patient needs or if that other product is proved to be clinically superior to the approved orphan product.

A drug is clinically superior if it is safer, more effective or makes a major contribution to patient care.

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A conditional marketing authorization may be granted when the CHMP finds that, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, all the following requirements are met:

the risk/benefit balance of the medicinal product is positive;

it is likely that the applicant will be in a position to provide the comprehensive clinical data;

unmet medical needs will be addressed;

● the risk/benefit balance of the medicinal product is positive;

● it is likely that the applicant will be in a position to provide the comprehensive clinical data;

● unmet medical needs will be addressed; and

● the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data is still required.

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If, however, the conditions are not fulfilled within the timeframe set by the EMA, the conditional marketing authorization ceases to be renewed.

The EMA has also implemented the so-called “PRIME”

(PRIority MEdicines) status in order support the development and accelerate the approval of complex innovative medicinal products addressing an unmet medical need.

PRIME status enables early dialogue with the relevant EMA scientific committees and, possibly, some payors and thus reinforces the EMA’s scientific and regulatory support.

The EMA has also implemented the so-called “PRIME” (PRIority MEdicines) status in order support the development and accelerate the approval of complex innovative medicinal products addressing an unmet medical need.

PRIME status enables early dialogue with the relevant EMA scientific committees and, possibly, some payors and thus reinforces the EMA’s scientific and regulatory support.

It also opens accelerated assessment of the MAA as PRIME status, is normally reserved for medicinal products that may benefit from accelerated assessment, i.e., medicines of major interest from a public health perspective, in particular from a therapeutic innovation perspective.

Finally, all medicinal products (i.e.

decentralized and centralized procedures) may benefit from an MA “under exceptional circumstances.”

This marketing authorization is close to the conditional marketing authorization as it is reserved to medicinal products to be approved for severe diseases or unmet medical needs and the applicant does not hold the complete data set legally required for the grant of a marketing authorization.

decentralized and centralized procedures) may benefit from an MA “under exceptional circumstances.” This marketing authorization is close to the conditional marketing authorization as it is reserved to medicinal products to be approved for severe diseases or unmet medical needs and the applicant does not hold the complete data set legally required for the grant of a marketing authorization.

However, unlike the conditional marketing authorization, the applicant does not have to provide the missing data and will never have to.

The risk/benefit of the medicinal product is reviewed annually.

As a result, although the MA “under exceptional circumstances”

is granted definitively, the risk/benefit balance of the medicinal product is reviewed annually and the marketing authorization is withdrawn in case the risk/benefit ratio is no longer favorable.

As a result, although the MA “under exceptional circumstances” is granted definitively, the risk/benefit balance of the medicinal product is reviewed annually and the marketing authorization is withdrawn in case the risk/benefit ratio is no longer favorable.

Mandatory testing in the pediatric population is required in more and more jurisdictions.

The European Union has enacted a complex and very stringent system that has inspired other jurisdictions, including the United States and Switzerland.

Any application for approval of (i) a medicinal product containing a new active substance or (ii) a new therapeutic indication, pharmaceutical form or route of administration of an already authorized medicinal product which contains an active substance still protected by a supplementary protection certificate (“SPC”) or a patent that qualifies for an SPC, must include pediatric data.

Otherwise, the application is not validated by the competent regulatory authority.

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Moreover, that submission can be postponed if the EMA grants a deferral in order not to delay the submission of the MAA for the adult population.

The pediatric data are generated through the implementation of a pediatric investigation plan (“PIP”) that is proposed by the company after completion of the PK studies in adults and agreed upon by the EMA, typically after some modifications.

The PIP lists all the studies to conduct and measures to take in order to prove the safety and efficacy of the future medicinal product when used in children.

The EMA may agree to modify the PIP at the company’s request.

The scope of the PIP is the adult therapeutic indication or the condition of which the adult application is part or even the

mechanism of action of the active substance, at the EMA’s quasi-discretion.

This very broad discretion enables the EMA to require companies to develop children indications that are different from the adult indications.

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An SPC is an extension of the term of a patent that compensates for the patent protection lost because of the legal requirements to conduct safety and efficacy tests and to obtain a marketing authorization before placing a medicinal product on the market.

An SPC may be applied for any active substance that is protected by a “basic patent”

(a patent chosen by the patent holder, which can be a product, process or application patent) and has not been placed on the market as a medicinal product before having obtained a marketing authorization in accordance with European Union pharmaceutical law.

The term of the SPC is maximum five years, and the combined patent and SPC protection may not exceed fifteen years from the date of the first marketing authorization in the European Economic Area (“EEA”).

An SPC may be applied for any active substance that is protected by a “basic patent” (a patent chosen by the patent holder, which can be a product, process or application patent) and has not been placed on the market as a medicinal product before having obtained a marketing authorization in accordance with European Union pharmaceutical law.

SPC rights are restricted by both the basic patent and the marketing authorization, i.e., the SPC grants the same rights as those conferred by the basic patent but limited to the active substance covered by the marketing authorization (and any use as medicinal product approved afterwards).

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additional protection.

The authorization of any new development is considered as “falling”

into the initial marketing authorization with regard to regulatory protection;

The authorization of any new development is considered as “falling” into the initial marketing authorization with regard to regulatory protection;

hence, the new development only benefits from the regulatory protection that remains when it is authorized.

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Such new indication will add one-year of market protection to the global marketing authorization, provided that it is authorized within the first eight years of authorization (i.e., during the data exclusivity period).

Moreover, a new therapeutic indication of a “well-established substance”

benefits from one-year data exclusivity but limited to the non-clinical and clinical data supporting the new indication.

Moreover, a new therapeutic indication of a “well-established substance” benefits from one-year data exclusivity but limited to the non-clinical and clinical data supporting the new indication.

Any active substance approved for at least ten years in the EEA qualifies as well-established substance.

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The approval of biosimilars requires the applicant to demonstrate similarity between the biosimilar and the biological medicinal product and to submit the non-clinical and clinical data defined by the EMA.

The biosimilar legal regime has been mainly developed through EMA’s scientific guidelines applicable to categories of biological active substances.

Unlike in the United States, interchangeability is regulated by each member state.

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Completion of a PIP renders the company eligible for a pediatric reward, which can be six-month extension of the term of the SPC or, in the cases of orphan medicinal products, two additional years of market exclusivity (see above).

In case a PIP is completed on a voluntary basis, i.e., for an approved medicinal product that is not or no longer protected by an SPC or a basic patent, the pediatric reward takes the form of a “pediatric use marketing authorization”

(“PUMA”).

That special authorization does not fall into the global marketing authorization and thus benefits from eight years of data exclusivity followed by two or three years of market protection.

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In certain member states, payments made to physicians must be publicly disclosed.

Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual member states.

These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the member states.

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Much like the U.S.

Foreign Corrupt Practices Act, to which we are subject, that prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity, similar rules apply to many other countries worldwide such as France (“Loi Sapin”) or the United Kingdom (UK Bribery Act).

It is illegal to pay, offer to pay or authorize the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

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Historically, products launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.

As of March 6, 2020, we had thirty-three full-time employees and five part-time employees.

Of these 38 employees, thirty-one employees were engaged in research and development activities and seven employees were engaged in finance, legal, human resources, facilities and general management.

Employees and Human Capital

As of March 1, 2021, we had 59 full-time employees and three part-time employees.

Of the 59 full-time employees, 52 were engaged in research and development activities and seven employees were engaged in finance, legal, human resources, facilities and general management.

We have no collective bargaining agreements with our employees, we have not experienced any work stoppages and we believe our relations with our employees are good.

Diversity and Inclusion

We are committed to our continued efforts to increase diversity and foster an inclusive work environment.

We recruit the best qualified employees regardless of gender, ethnicity, or other protected traits and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace.

Our diversity, equity and inclusion principles are also reflected in our employee training and policies.

We continue to enhance our diversity, equity and inclusion policies that are guided by our executive leadership team.

Workforce Health and Safety

In response to the COVID-19 pandemic in 2020, we instituted a remote work protocol to help ensure the safety of our employees, our community, and to adhere to federal, state, and local requirements and the CDC recommendations of social distancing and limited public exposure in connection with the COVID-19 pandemic.

We did not implement any furlough, layoff, or salary reductions during this time.

We continue to evaluate our ability to operate in light of recent resurgences of COVID-19 and the advisability of continuing operations based on federal, state and local guidance, evolving data concerning the pandemic and the best interests of our employees, third parties with whom we collaborate, and our stockholders.

Compensation and Benefits

We believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain qualified personnel.

In addition to cash compensation, we provide equity

compensation, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and employee assistance programs.

Corporate History and Reorganization

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Immediately prior to the closing of the Merger, AmpliPhi changed its name to Armata Pharmaceuticals, Inc.

C3J’s predecessor, C3 Jian, Inc., was incorporated under the laws of the State of California on November 4, 2005.

On February 26, 2016, as part of a reorganization transaction, C3 Jian, Inc.

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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 1. Business