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AmpliPhi Biosciences Reports Fourth Quarter and Full Year 2018 Financial Results and Business Highlights

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  • 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 (NYSE: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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