Armata Pharmaceuticals, Inc. (ARMP)

[lesgetrich]

Reiterating some points on the expected merger from post #1212...

Liked the news on the merger until I read about the REVERSE SPLIT that WILL happen. Concern is, post the split which they say will happen prior to the merger completing this quarter so that they can meet 'listing requirements',

A reverse split is value neutral. In other words, if you had 10 shares at a price of $.10/share before a 1 for 10 reverse split, you would have one share at a price of $1.00 after the split. The problem with a reverse split is psychological because it is often used by penny stocks to hide the fact that a company has had runaway dilution, usually due to toxic debt. That's not the case here. There's also the impact on current shareholders of feeling that they're getting fewer shares for the same amount of money.

Reverse splits are also used by companies to increase their per share price in order to qualify for listing on a major exchange. This is the reason Ampliphi has given for considering this move. This was stated in their 1/4/2019 PR...

AmpliPhi Biosciences and C3J Therapeutics Agree to Merge January 4, 2019

Prior to closing, AmpliPhi will seek stockholder approval to conduct a reverse split of its outstanding shares to satisfy listing requirements of the NYSE American. The combined company is expected to trade on the NYSE American under a new ticker symbol.

That said, however, any actual reverse split seems to be on hold for the time being, at least until after the deal closes. We apparently will only be asked to approve such a split before closing, which is expected in May. In the meantime, a group of investors has agreed to purchase $10 million worth of newly issued shares at a purchase price of $.36/share, which will be based on a combined company valuation of $40 million ($28 million for c3j and $12 million for AmpliPhi). The total outstanding shares, fully diluted, is expected to be 169,107,551...

APHB 8-K Feb 7 2019




The operations of c3j will be combined with the operations of AmpliPhi in a wholly owned subsidiary called Ceres. c3j shareholders get newly issued shares of APHB and get controlling interest in the combined company. Apparently the plan is to do a reverse merger after closing and become listed on the NYSE with a spin off of Ceres to a major exchange to follow at a later date.

The combined company will have two clinical trial candidates and $18 million in cash. c3j also has a partnership with a major american pharmaceutical company...

January 14 APHB 8-K

Todd Patrick:

Following completion of the merger and concurrent capital raise, our combined company will have a sound financial footing as well as a diverse clinical-stage pipeline, including a Phase 1/2-ready natural phage candidate targeting bacteremia, a synthetic phage candidate targeting respiratory infections poised to enter Phase 1 clinical trials in 2019, and an existing partnership with a U.S.-based global pharmaceutical company for an undisclosed large market indication.

In addition, the company will have an extensive natural phage library and the capability to develop synthetic phage against a wide range of microbial agents. Furthermore, the combined company will have two Phage-specific GMP manufacturing sites, with the C3J GMP facility in Los Angeles and AmpliPhi’s phage-specific GMP drug manufacturing capabilities in Slovenia. We believe this is a key differentiator for the combined company in this exciting field...

... I want to highlight a partnership C3J has in place with a U.S.-based multinational pharmaceutical company for an undisclosed large market indication. This development program is currently preclinical, and we believe it provides an important validation of our synthetic phage technology and strategy. C3J is responsible for the pre-clinical development and, under the current agreement, we will hand off clinical candidates to our partner, who then has the responsibility to take them through U.S. and international regulatory approvals and onto commercial launch. We have a variety of pre-clinical, as well as clinical milestone payments along the way, as well as royalties on sales. The partner will assume all clinical, regulatory, production and sales/marketing expenses. C3J is responsible for its own R&D expenses.

Since C3J is currently a private company, this partnership has remained confidential and for the time being we will not be providing additional information until we work out an acceptable disclosure with our partner. We expect to have more to say on this program in the near future.

Back to the original point, while there may (or may not) be a dip in price after a reverse merger, there is plenty of evidence that the combined company will have a greater value than it has today. The pps is currently under-valued relative to the price ($.36/share) paid by the private $10 million investors. You can assume that they've done their DD and expect to profit from their investment.

The full Proxy Statement detailing the merger can be found at the following link...

ALYI Proxy Statement - Schedule 14A