Armata Pharmaceuticals, Inc. (ARMP)

[lesgetrich]

My response is that the current pps is significantly below what the valuation will be following the merger and reverse split. While the RS may result in a brief negative psychological adjustment to the post RS pps, such an adjustment can not be sustained below the current valuation. The valuation post merger should be $.36/share and this doesn't take into account the additional $10 million commitment from C3J shareholders or revenues anticipated from milestone and royalty payments from a "U.S. based multinational pharmaceutical company for an undisclosed large market indication". From the conference call announcing the merger...

AmpliPhi Biosciences Corp. (APHB) CEO Paul Grint on C3J Therapeutics Merger Conference Call (Transcript) - Jan. 14, 2019 7:07 PM ET |

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 stage candidate targeting respiratory infections posed to enter phase 1 clinical trial in 2018 and an existing partnership with the 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 the 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. The combination of our two companies takes place against the backdrop of the rising and unmet medical needs created by antibiotic resistant infections. Our shared philosophy is that phage can bring a solution to this urgent public health threat.

According to the Centers for Disease Control and Prevention, there are approximately 2 million antibiotic resistant infections in the U.S. each year, resulting in about 23,000 deaths. Recent evidence as to how phage therapy can help combat this life-threatening and growing threat was provided by AmpliPhi's expanded access program. Between 2017 and 2018, more than 20 patients with serious or life-threatening infections who were not responding to antibiotics received phage treatment through this program. These treatments were made under emergency IND. The high success rate observed and the fact that these treatments were well-tolerated have demonstrated the promise of phage therapy in a real-world setting.

The FDA has stated desire to help advance the development of what have to-date been regarded as non-traditional antimicrobial products including bacteria phages and the feedback we have received shows us that there is a clinical pathway for us to potential approval of our development candidates.

Before I turn the call over to Brian Varnum, who will provide a brief summary of the expected lead development programs of the combined company, 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 preclinical development and under our current agreement we will hand out clinical candidates to our partner who then has the responsibility to take them through the U.S. and international regulatory approvals and onto commercial launch.

We have a variety of preclinical as well as clinical milestone payments along the way in addition to 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 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...

...1.5 million Americans develop bacteremia each year, and that around 250,000 deaths occur as a direct result of infection. This is believed to cost the U.S. hospital system some $24 billion each year. Staph aureus is a second most common pathogen associated with bacteremia causing approximately 150,000 cases and about 30,000 deaths each year. ABS01 has already been used to treat 15 patients with serious infections not responding to antibiotics with an 85% treatment success at the end of therapy. Thanks to positive feedback from the FDA in 2018, the FDA is supportive of AB-SA01 entering a randomized controlled phase 1/2 trial in staph aureus bacteremia, which is expected to begin in 2019.

Our second development indication is for respiratory infections. This program is in the preclinical stage where C3J has the pseudomonous aeruginosa synthetic phage candidate, as well as the staph aureus synthetic phage program. The synthetic pseudomonous phage candidate targeting respiratory infections is poised to enter phase 1 development later in 2019...

...The pre-financing ownership split was determined by the exchange ratio in the merger agreement, which was based on $28 million valuation for C3J and $12 million valuation for AmpliPhi. This $0.36 per share valuation for AmpliPhi represents an approximate 70% premium to the volume weighted average trading price of AmpliPhi stock for the 30 trading days prior to announcement.

On a proforma basis after giving effect to the contemplated $10 million financing, current C3J security holders are expected to own approximately 76% of the combined company and current AmpliPhi security holders are expected to own approximately 24% of the combined company. At the closing and considering the expected cash balances of each company, plus the new $10 million invested the combined company will have approximately $18 million of cash, allowing us to pursue significant operational milestones during 2019 and 2020.