- Entered into a merger agreement with C3J Therapeutics that is expected to result in an NYSE American-listed company focused on development of precisely-targeted bacteriophage therapeutics
- $10.0 million of new capital will be invested in combined company to be re-named Armata Pharmaceuticals
- Preliminary Merger proxy filed with the SEC on March 25, 2019, transaction expected to close in May 2019
AmpliPhi Biosciences Corporation APHB, a clinical-stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections, today announced financial results for the fourth quarter and full year ended December 31, 2018. AmpliPhi Biosciences will not be conducting a conference call in conjunction with this financial results release.
"I am pleased with the strong progress AmpliPhi achieved in 2018, capped off by the announcement of the pending merger with C3J at the beginning of 2019," said Paul C. Grint, M.D., CEO of AmpliPhi Biosciences. "Leading up to the closing of the merger, which is expected in May 2019, we remain on track to initiate a clinical trial of AB-SA01 for the treatment of S. aureus bacteremia later in 2019. The increasing prevalence of antibiotic-resistant infections has become a global public health crisis, and we believe precisely targeted bacteriophage therapeutics, with their novel mechanism of action, could be an important therapeutic option where currently-available antibiotic treatments have become ineffective."
Recent Business Highlights
- In January 2019, AmpliPhi and C3J Therapeutics, Inc., a private clinical stage biotechnology company focused on the development of novel synthetically engineered bacteriophage products, announced they had entered into a definitive agreement under which a wholly owned subsidiary of AmpliPhi will merge with C3J in an all-stock transaction, subject to shareholder approval. Certain existing C3J shareholders have agreed to purchase $10.0 million of common stock of the combined company immediately following the closing of the merger, subject to customary conditions. The financing will help fund further development of the combined company's preclinical and clinical programs, and is expected to close immediately following the completion of the merger. Management expects the merger will close in May 2019.
- Presented clinical case data from the expanded access program at the ID Week 2018 Conference in October 2018. Thirteen patients with serious and life-threatening S. aureus infections were treated with AB-SA01 at the Westmead Hospital in Sydney. Eighty-three percent (10 out of 12) patients in the modified intent-to-treat (mITT) population achieved treatment success at the end of therapy as reported by treating physicians. Bacteriophage treatment was well tolerated, with no adverse events attributable to the therapy.
- Completed treatment of 21 patients at 7 hospitals with serious or life-threatening infections not responding to antibiotics with AmpliPhi's bacteriophage product candidates, AB-SA01 and AB-PA01. Following administration of 1,000+ doses, a treatment success rate of 84% was observed at the end of therapy, and treatment was generally well tolerated.
- Completed an underwritten public offering in October 2018 generating net proceeds of $5.8 million.
Fourth Quarter and Full Year Ended December 31, 2018 Financial Results
- Research and development (R&D) expenses for the fourth quarter of 2018 were $1.4 million compared to $1.1 million for the fourth quarter of 2017. The increase of $0.3 million was primarily attributable to an increase in clinical costs and related professional services.
- R&D expenses for the year ended December 31, 2018 were $4.9 million compared to $2.9 million for the year ended December 31, 2017. The increase in 2018 was impacted by a $1.2 million tax incentive payment received in 2018 from the Australian tax authority, compared to a $2.0 million tax incentive payment from the Australian tax authority received in 2017. Excluding any benefit from tax incentive payments, R&D expenses were $6.1 million and $4.9 million, respectively. The increase of $1.2 million in 2018 was primarily related to an increase in clinical activities and related professional and consulting expenses.
- General and administrative (G&A) expenses were $1.5 million for the fourth quarter of 2018 compared to $1.3 million for the fourth quarter of 2017. The increase of $0.2 million was primarily due to higher legal and professional fees in the fourth quarter of 2018.
- G&A expenses for the year ended December 31, 2018 were $5.7 million compared to $7.6 million for the year ended December 31, 2017. The $1.9 million decrease was primarily attributable to a decrease in severance costs, legal and professional fees and lower non-cash charges in 2018.
- Operating expenses in the fourth quarter of 2018 included a non-cash charge of $1.9 million for the impairment of intangible assets for the excess of book value over the computed fair value of those assets as of December 31, 2018. The impaired assets were recorded in connection with acquisitions of a predecessor company in 2011.
- Net cash used in operating activities for the year ended December 31, 2018 was $9.4 million, as compared to $9.2 million for the year ended December 31, 2017.
- Cash and cash equivalents as of December 31, 2018 totaled $8.2 million.
- As of March 8, 2019, there were approximately 32.3 million shares of common stock outstanding.
- The audit opinion included in the company's Annual Report on Form 10-K for the year ended December 31, 2018 contains a going concern explanatory paragraph.
About AmpliPhi Biosciences
AmpliPhi Biosciences Corporation is a clinical-stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections using its proprietary bacteriophage-based technology. AmpliPhi's lead product candidates, AB-SA01 and AB-PA01, target Staphylococcus aureus and Pseudomonas aeruginosa, respectively, including multidrug-resistant strains, which are included on the WHO's 2017 Priority Pathogens List. Phage therapeutics are uniquely positioned to address the threat of antibiotic-resistance as they can be precisely targeted to kill select bacteria, have a differentiated mechanism of action, can penetrate and disrupt biofilms (a common bacterial defense mechanism against antibiotics), are potentially synergistic with antibiotics and have been shown to restore antibiotic sensitivity to drug-resistant bacteria. For more information visit www.ampliphibio.com.
Forward Looking Statements
This communication contains "forward-looking" statements, including, without limitation, statements related to the anticipated consummation of the transactions contemplated by the merger agreement and related transactions, the consummation of the sale of $10 million of the combined company's common stock to certain shareholders of C3J immediately following the closing of the merger, the anticipated benefits of such financing, and statements related to the anticipated initiation of a clinical trial of AB-SA01 for the treatment of S. aureus bacteremia later in 2019. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon AmpliPhi's current expectations. Forward-looking statements involve risks and uncertainties. AmpliPhi's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, related to AmpliPhi's ability to complete the merger and the related $10 million common stock financing immediately thereafter, on the proposed terms and schedule, or at all, including risks and uncertainties related to the satisfaction of the closing conditions related to the merger agreement and the share purchase agreement for the $10 million private placement; the company's ability to advance its preclinical and clinical programs and the uncertain and time-consuming regulatory approval process. Additional risks and uncertainties relating to AmpliPhi and its business can be found under the caption "Risk Factors" and elsewhere in AmpliPhi's filings and reports with the SEC, including in AmpliPhi's Annual Report on Form 10-K, filed with the SEC on March 25, 2019. AmpliPhi expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in AmpliPhi's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
| AmpliPhi Biosciences Corporation | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| December 31, 2018 | December 31, 2017 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 8,157,000 | $ | 5,132,000 | ||||
| Prepaids and other current assets | 251,000 | 253,000 | ||||||
| Total current assets | 8,408,000 | 5,385,000 | ||||||
| Property and equipment, net | 503,000 | 816,000 | ||||||
| Intangible assets, net | 2,976,000 | 4,937,000 | ||||||
| Total assets | $ | 11,887,000 | $ | 11,138,000 | ||||
| Liabilities and stockholders' equity | ||||||||
| Total current liabilities | $ | 2,572,000 | $ | 1,968,000 | ||||
| Derivative liabilities | 22,000 | 292,000 | ||||||
| Deferred tax liability | 819,000 | 1,147,000 | ||||||
| Total liabilities | 3,413,000 | 3,407,000 | ||||||
| Stockholders' equity | 8,474,000 | 7,731,000 | ||||||
| Total liabilities and stockholders' equity | $ | 11,887,000 | $ | 11,138,000 | ||||
| AmpliPhi Biosciences Corporation | ||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
| Revenue | $ | - | $ | 20,000 | $ | - | $ | 115,000 | ||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development | 1,375,000 | 1,090,000 | 4,892,000 | 2,881,000 | ||||||||||||||
| General and administrative | 1,475,000 | 1,295,000 | 5,702,000 | 7,590,000 | ||||||||||||||
| Impairment charges | 1,930,000 | - | 1,930,000 | 5,800,000 | ||||||||||||||
| Total operating expenses | 4,780,000 | 2,385,000 | 12,524,000 | 16,271,000 | ||||||||||||||
| Loss from operations | (4,780,000 | ) | (2,365,000 | ) | (12,524,000 | ) | (16,156,000 | ) | ||||||||||
| Other income: | ||||||||||||||||||
| Change in fair value of derivative liabilities | 132,000 | 13,000 | 86,000 | 2,010,000 | ||||||||||||||
| Other income, net | - | - | - | 6,000 | ||||||||||||||
| Total other income | 132,000 | 13,000 | 86,000 | 2,016,000 | ||||||||||||||
| Loss before income taxes | (4,648,000 | ) | (2,352,000 | ) | (12,438,000 | ) | (14,140,000 | ) | ||||||||||
| Income tax benefit | 328,000 | - | 328,000 | 1,302,000 | ||||||||||||||
| Net loss | $ | (4,320,000 | ) | $ | (2,352,000 | ) | $ | (12,110,000 | ) | $ | (12,838,000 | ) | ||||||
| Net loss per share, basic | $ | (0.15 | ) | $ | (0.25 | ) | $ | (0.64 | ) | $ | (2.01 | ) | ||||||
| Weighted average shares outstanding, basic | 29,541,157 | 9,493,140 | 18,980,796 | 6,387,425 | ||||||||||||||
| Net loss per share, diluted | $ | (0.15 | ) | $ | (0.25 | ) | $ | (0.64 | ) | $ | (2.18 | ) | ||||||
| Weighted average shares outstanding, diluted | 29,551,786 | 9,493,140 | 19,059,895 | 6,574,117 | ||||||||||||||
| AmpliPhi Biosciences Corporation | ||||||||||
| Condensed Consolidated Statement of Cash Flows | ||||||||||
| Year Ended December 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Operating activities: | ||||||||||
| Net loss | $ | (12,110,000 | ) | $ | (12,838,000 | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||||
| Change in fair value of derivative liabilities | (86,000 | ) | (2,010,000 | ) | ||||||
| Stock-based compensation | 478,000 | 700,000 | ||||||||
| Depreciation and amortization | 389,000 | 374,000 | ||||||||
| Impairment charges | 1,930,000 | 5,800,000 | ||||||||
| Deferred taxes | (328,000 | ) | (1,302,000 | ) | ||||||
| Other non-cash adjustments, net | - | 22,000 | ||||||||
| Charge for common stock issuance | - | 519,000 | ||||||||
| Changes in operating assets and liabilities, net | 345,000 | (457,000 | ) | |||||||
| Net cash used in operating activities | (9,382,000 | ) | (9,192,000 | ) | ||||||
| Investing activities: | ||||||||||
| Purchases of property and equipment | (44,000 | ) | (58,000 | ) | ||||||
| Net cash used in investing activities | (44,000 | ) | (58,000 | ) | ||||||
| Financing activities: | ||||||||||
| Proceeds from sale of common stock, net of offering costs | 12,248,000 | 9,353,000 | ||||||||
| Other financing activities | 203,000 | (682,000 | ) | |||||||
| Net cash provided by financing activities | 12,451,000 | 8,671,000 | ||||||||
| Net increase (decrease) in cash and cash equivalents | 3,025,000 | (579,000 | ) | |||||||
| Cash and cash equivalents, beginning of period | 5,132,000 | 5,711,000 | ||||||||
| Cash and cash equivalents, end of period | $ | 8,157,000 | $ | 5,132,000 | ||||||
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