ARMP 10-K & 10-Q changes, risk factors and insider trading

The audited consolidated financial statements and accompanying notes thereto included disclosures that our recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements as of December 31, 20242025 and December 31, 20232024 were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. As of December 31, 2024,2025, we had unrestricted cash and cash equivalents of $9.3$8.7 million, and we have had recurring losses from operations and negative operating cash flows since inception. In March 2024, we received an additional loan from Innoviva of $35.0 million. Our outstanding term loans, which comprise of $60.0$85.0 million of principal and $9.4$18.1 million of accrued interest, mature in JanuaryJune 20262027 and inJanuary June 2025.2029.

On June 15, 2020, we entered into an agreement with the Medical Technology Enterprise Consortium (“MTEC Agreement”), pursuant to which we received a $15.0 million award and have entered into a multi-year program administered by the U.S Department of Defense through MTEC and managed by the Naval Medical Research Command (NMRC) – Naval Advanced Medical Development (NAMD) with funding from the Defense Health Agency and Joint Warfighter Medical Research Program. This award has been used to partially fund the Phase 1b/2a, multicenter, randomized, double-blind, placebo-controlled dose escalation study to assess the safety, tolerability and efficacy of our phage-based candidate, AP-SA02, for the treatment of adults with S. aureus (the “diSArm” study) and to support activities required for the EOP2 meeting with the FDA. On September 29, 2022, the MTEC Agreement was modified to increase the total award by $1.3 million to $16.3 million and extend the term into the third quarter of 2024. InOn July 29, 2024, the MTEC Agreement was modified to increase the total award by $5.3 million to $21.6 million and extend the term into the third quarter of 2025. WeOn areApril using29, 2025, we received $4.65 million of additional non-dilutive award funding through MTEC, thereby increasing the total MTEC award to partially$26.2 fundmillion, a Phase 1b/2a, multicenter, randomized, double-blind, placebo-controlled dose escalation study that will assessand the safety,MTEC tolerabilityAgreement andwas efficacymodified ofto our phage-based candidate, AP-SA02, forextend the treatmentterm ofto adultsSeptember with30, S.2025. aureusOn (“diSArm”July study).2, 2025, the MTEC Agreement was modified to extend the term to March 31, 2026.

We use third parties, such as clinical research organizations, to assist in conducting our clinical trials and for many aspects of our manufacturing process development of our product candidates. However, we may face delays outside of our control if these parties do not perform their obligations in a timely or competent fashion or if we are forced to change service providers. This risk is heightened for clinical trials conducted outside of the United States, where it may be more difficult to ensure that clinical trials are conducted in compliance with FDA requirements. Any third party that we hire to conduct clinical trials may also provide services to our competitors, which could compromise the performance of their obligations to us. If we experience significant delays in the progress of our clinical trials and in our plans to submit Biologics License Applications,BLA, the commercial prospects for product candidates could be harmed and our ability to generate product revenue would be delayed or prevented.

Most healthcare providers are subject to privacy and security regulations promulgated under HIPAA, as amended by HITECH, as well as similar state laws governing the collection, use, and disclosure of health-related information. We are not currently classified as a covered entity or business associate under HIPAA and thus are not subject to its requirements or penalties. However, any person may be prosecuted under HIPAA’s criminal provisions either directly or under aiding-and-abetting or conspiracy principles. Consequently, depending on the facts and circumstances, we could face substantial negative consequences – including criminal penalties, regulatory fines, reputational damage, and other harmful effects – if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information. In addition, if we receive sensitive personally identifiablepersonal information, including health information, we may be subject to state laws governing the use, security, and disclosure of such information.

We cannot assure you that we, our CROs, our clinical trial sites, and our clinical trial principal investigators with access to personallypersonal identifiableinformation and other sensitive or confidential information relating to the patients in our clinical trials will not breach contractual obligations, or that we or they will not experience data security breaches or attempts thereof. This could have a corresponding effect on our business, including putting us in breach of our obligations under privacy laws and regulations as discussed above, which could in turn adversely affect our business, financial condition, results of operations, and prospects. We also cannot assure you that our contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage, and transmission of such information.

The regulatory framework for the collection, use, safeguarding, sharing, transfer, and other processing of personal information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally, many jurisdictions have established their own data security and privacy frameworks. In the United States, there are a broad variety of data protection laws that are either currently in place or under way and a wide range of enforcement agencies at both the state and federal levels have the authority to review companies for privacy and data security concerns based on general consumer protection laws. The Federal Trade Commission (“FTC”), and state Attorneys General have been aggressive in reviewing privacy and data security protections for consumers. New laws also are being considered at both the state and federal levels. For example, the California Consumer Privacy Act (the “CCPA”), which went into effect on January 1, 2020, provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Many other states are considering similar legislation. A broad range of legislative measures also have been introduced at the federal level. There also is the threat of consumer class actions related to these laws and the overall protection of personal data.

Additionally, the CCPA was amended by the California Privacy Rights Act, which significantly amends the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also createcreated a new California data protection agency authorized to issue substantive regulations, which could result in increased privacy and information security enforcement. The majority of the provisionsamendments went into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required. Similar so-called comprehensive privacy laws have passedbeen enacted in, or are being considered by, other states. In addition, a broad range of privacy-related legislative measures also have been introduced at the federal level, though none has yet been enacted. The enactment of suchnew or amended privacy laws in other states or at the federal level could result in potentially conflicting requirements, which would make compliance challenging and costly.

The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European UnionEconomic Area (the “EUEEA”), including personal health data, is subject to the General Data Protection Regulation, (EU) 2016/679 (the “EU GDPR”). The EU GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. The EU GDPR hasbroadly expanded the definition ofdefines personal data to include data which identities, directly or indirectly, a natural person, including coded data and requiring changes to informed consent practices and more detailed notices for clinical trial patients and investigators. In addition, the EU GDPR imposes strict rules on the transfer of personal data to countries outside the EU,EEA, including the United States and, as a result, increases the scrutiny that clinical trial sites located in the European Economic AreaEEA should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the United States. The EU GDPR also permits data protection authorities to require destruction of improperly gathered or used personal informationdata or impose substantial fines for violations of the EU GDPR, which can be up to 4% of global revenues or €20 million, whichever is greater, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR. In addition, the EU GDPR provides that EU member states may make their ownenact additional laws and regulations further limiting the processing of personal data, including genetic, biometric, or health data.

Furthermore, since the United Kingdom is no longer part of the EU, its data protection regulatory regime is independent of the EU. From January 1, 2021, companies have had to comply with both the EU GDPR and the United Kingdom GDPR, which, together with the amended United Kingdom Data Protection Act 2018, retainsassimilates the GDPR in UK national law.law The(collectively, relationshipthe “UK GDPR”). While the differences between the UnitedEU KingdomGDPR and theUK EU in relationGDPR to certaindate aspectsare largely administrative, the substantive requirements of datathe protectionlaws lawmay remainsdiverge unclear.over time as regulators and courts impose differing interpretations on otherwise similar provisions. In addition, the longer term economic, legal, political, regulatory, and social framework to be put in place between the United Kingdom and the EU has had, and may continue to have, a material and adverse effect on global economic conditions and the stability of global financial markets and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could materially and adversely affect our business, financial condition, and results of operations.

AI technologies offer numerous potential benefits, such as creating or increasing operational efficiencies, and we expect an increase in the use of AI and generative AI by us, third parties on our behalf, and other market actors, including our competitors. However, the deployment of such technologies also poses certain risks, including that the algorithms may be flawed, misused or otherwise function in an unexpected manner; data sets may be insufficient, of poor quality, or contain biased information; and inappropriate or controversial data practices by data scientists, engineers, and end-users could impair results. The relative newness of the technology, the speed at which itAI istechnologies are being adopted, and the paucityuncertainty regarding the scope and details of laws, regulations or standards expresslygoverning their use, combined with the growing interest of various legislatures and specificallyregulators governingto itsaddress usethe development and deployment of AI technologies in a manner which may not be consistent across jurisdictions, increases these risks. If the analyses that AI-based applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability and brand or reputational harm. Our competitors may also adopt AI or generative AI more quickly or more effectively than we do, which could cause competitive harm. Furthermore, use of AI-based software may lead to the release of confidential information which may impact our ability to realize the benefits of our intellectual property.

Our operations could be disrupted if our information systems—or those of our vendors— fail, if communications or other critical infrastructure fail, if we or our vendors are unsuccessful in implementing necessary upgrades, or if we or our vendors are subject to successful cyber-attacks. Our business depends on the efficient and uninterrupted operation of our computer and communications systems and networks, hardware and software systems and our other information technology. We collect and maintain information, which includes confidential and proprietary informationinformation, as well as personal information regarding our employees and others, in digital form. Data maintained in digital form is subject to risk of cyber-attacks, which could include the deployment of harmful malware, viruses, worms, and other means to affect service reliability and threaten data confidentiality, integrity and availability. Despite our efforts to monitor and safeguard our systems to prevent data compromise (as discussed below in Item 1C), such attacks are increasing in frequency and sophistication, including as a result of threat actors’ use of artificial intelligence, and the possibility of a future data compromise, and risks associated with intrusion, tampering, and theft, cannot be eliminated entirely. We have experienced cyber-attacks in various forms, including phishing and other attempts to compromise our systems, but none of these hasincidents have resulted in a material incident.adverse impact on our business operations, financial condition, or reputation. A failure of our systems, or an inability to successfully expand the capacity of these systems, or an inability to successfully integrate new technologies into our existing systems could have a material adverse effect on our business, results of operations, financial condition, and cash flows. Further, our cybersecurity controls may not function as intended or our logging may be insufficient to fully investigate an incident.

A system failure, accident or security breach may also result in a material disruption of our independent drug development programs. For example, the loss of clinical trial data from ongoing or future clinical trials for any of our product candidates could result in delays in regulatory approval efforts and significantly increase costs to recover or reproduce the data. Our information security systems are also subject to laws and regulations requiring that we take measures to protect the privacy and security of certain information we gather and use in our business. For example, federal and state laws, including, without limitation, state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and storage of personal information. To the extent that any disruption or security breach were to result in a loss of or damage to data or applications, or inappropriate disclosure of confidential or proprietary information or personal health information, we could incur substantial liability, our reputation wouldmay be damaged and the further development of our product candidates could be delayed.

The Company’s and its vendors’ sophisticated information technology operations are spread across multiple, sometimes inconsistent, platforms, which can pose difficultiesoperational difficulties, such as in maintaining data integrity across systems. The ever-increasing use and evolution of technology, including cloud-based computing, creates opportunities for the unintentional or improper dissemination or destruction of confidential information stored in the Company’s systems. A compromise of the security or integrity of any of these systems could adversely affect our security posture.

Any breach of our security measures or the accidental loss, inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other cause, including employee error or malfeasance, could adversely affect our business position. Further, any such interruption, security breach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to the Company and could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.

We are a clinical-stage biotechnology company focused on the development of high-purity, pathogen-specific bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat bacteria using our proprietary bacteriophage-based technology. We see bacteriophages as a potentially safer and effective alternative to antibiotics and an essential response to the growing bacterial resistance to current classes of antibiotics. Bacteriophages or “phages” have a powerful and highly differentiated mechanism of action that enables binding to and killing of specific targeted bacteria while uniquely preserving the normal human microbiome or “healthy bacteria”. This is in direct contrast to traditional broad-spectrum antibiotics which can alter the human microbiome increasing susceptibility to opportunistic pathogens, such as C.Clostridium difficile. We believe that phages represent a promising means to effectively treat bacterial infections as an alternative to broad-spectrum antibiotics, especially for patients with bacterial infections resistant to current standard of care therapies, including the multidrug-resistant or “superbug” strains of bacteria. We are a leading developer of clinical-stage phage therapeutics of high purity,purity and potency, and believe we are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections. We have completed three critical Phase 2 trials, utilizing two distinct phage cocktails against two different bacterial pathogens with the potential to treat chronic pulmonary disease complicated by bacterial infection, as well as acute systemic bacterial infection. We believe we are on a critical pathway towards pivotal Phase 3 clinical studies.

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 host-engineered cGMP manufacturing capabilities to advance a targetclinical pipeline of high-quality bacteriophage product candidates for late-stage clinical development. We have improved our manufacturing processes by significantly increasing phage titers and improving production efficiency with the goal of ensuring commercial viability.candidates. We believe that we are uniquely advancing two leaddistinct clinical candidates, referred to as AP-PA02 and AP-SA02, targeting two different bacterial pathogens with the potential to address bothtreat chronic andpulmonary disease complicated by bacterial infection as well as acute systemic bacterial infections.infection. To date, we have completed three critical Phase 2 randomized, double-blind, placebo controlled clinical trials. We have combined our clinical data with rigorous and innovative in vitro science to extend our knowledge of phage biology enabling continued enhancement of in vivo phage function.

We remain committed to our mission to evaluate phage-based therapeutics in randomized controlled clinical trials that evaluate safety and efficiacyefficacy required to support potential regulatory approval and commercialization of our phage products as alternatives to traditional antibiotics, providing a potential method of treating patients suffering from drug-resistant and difficult-to-treat bacterial infections.

InOn July 2024,2, we extended2025, the MTEC Agreement was modified to August 2025 and increasedextend the amount of the award by $5.3 millionterm to aMarch total31, of $21.6 million.2026. We will continue to recognize an increase inadditional grant and award revenue from the third quarter of 2024 until the full amount of the amended award is utilized.

On March 4, 2024, the Companywe entered into the 2024 Credit Agreement for the 2024 Loan in an aggregate amount of $35.0 million. The 2024 Loan bears interest at an annual rate of 14.0% and was scheduled to maturematures on June 4,1, 2025.2027. Principal and accrued interest are payable at maturity. Repayment of the 2024 Loan is guaranteed by the Company’sour domestic subsidiaries, and the loan is secured by substantially all of theour assets of the Company and the subsidiary guarantors. Concurrently with the execution of the 2024 Credit Agreement, the Companywe amended certain provisions of the Convertible Loan and Convertible Credit Agreement and the 2023 Loan and 2023 Credit Agreement to, among other things, conform certain terms relating to permitted indebtedness and permitted liens.

Our common stock, par value $0.01 per share (the “Common Stock”) is traded on the NYSE American exchange under the symbol “ARMP.” We are headquartered in Los Angeles, California, and we have a research and development facility (the “McConnell Facility”) to support advancing phage products from discovery to the clinic. The facility is also equipped with approximately 10,000 square feet of licensed current good manufacturing practice (“cGMP”) drug manufacturing suites enabling the production, testing and release of clinical trial material.

We seeview bacteriophages as a potentially safer and more effective critical future alternative to antibiotics and ana essentialcore response to the growing bacterial resistance to current classes of antibiotics. Bacteriophages or “phages” have a powerful andmechanism of action highly differentiated mechanismfrom ofall actioncurrent antibiotics, that enables binding to and killing of specific targeted bacteria while uniquely preserving the normal human microbiome or “healthy bacteria”. This is in direct contrast to traditional broad-spectrum antibiotics which can alter the human microbiome increasing susceptibility to opportunistic pathogens, such as Clostridium difficile. There have been significant advances in understanding the importance of preserving our gut microbiome which is substantially altered by broad-spectrum antibiotics, uniquely positioning phage therapy as a novel precision-targeted antibacterial treatment. We believe that phages represent a promising means to effectively treat bacterial infections as an alternative to broad-spectrum antibiotics, especially for patients with bacterial infections resistant to current standard of care therapies, including the multidrug-resistant or “superbug” strains of bacteria. We are a leading developer of clinical-stage phage therapeutics of high purity and potency, and believe we are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections.

Importantly, we have improved our manufacturing processes, which significantly increases phage titers and purity, and improves production efficiency. Aligned with these improvements, we have been able to reproducibly produce high titer and high purity phages with lot-to-lot consistency, configuring our phage platform for full commercialization with the goal of ensuring commercial viability of our current and future phage product candidates across a variety of potential use cases. Our demonstrated ability to reproducibly produce high titer functional phages of the highest purity allows us to administer our phages intravenously opening up a future of potential broad use across direct injection into privileged and closed spaces.

Our first phage candidate, inhaled AP-PA02, is focused primarily on the treatment of chronic pulmonary infections due to Pseudomonas aeruginosa (“P. aeruginosa”). On October 14, 2020, we received the approval to proceed from the U.S. Food and Drug Administration (the “FDA”) for our Investigational New Drug (“IND”) application for AP-PA02. In the first quarter of 2023, we announced positive topline results from the completed “SWARM-P.a.” study – a Phase 1b/2a, multicenter, double-blind, randomized, placebo-controlled, single ascending dose and multiple ascending dose clinical trial to evaluate the safety and tolerability of inhaled AP-PA02 in subjects with cystic fibrosis (“CF”) and chronic pulmonary P. aeruginosa infection. Data indicate that AP-PA02 was well-tolerated with a treatment emergenttreatment-emergent adverse event profile similar to placebo. PharmacokineticsPharmacokinetic findings confirm that AP-PA02 can be effectively delivered to the lungs through nebulization with minimal systemic exposure, with single ascending doses and multiple ascending doses resulting in a proportional increase in exposure as measured in induced sputum. AP-PA02 exposures were generally consistent across subjects. Additionally, bacterial levels of P. aeruginosa in the sputum measured at several timepoints suggest improvement in bacterial load reduction for subjects treated with AP-PA02 at the end of treatment as compared to placebo after ten days of dosing. In addition, a correlation was seen between increasing phage dose (higher AP-PA02 exposures) and reduction in the bacterial load, supporting the biologic plausibility of a bacterial specific mechanism of action and creating the opportunity for phage as a therapeutic alternative to inhaled antibiotics. This study was supported by the CFF, which granted us a Therapeutics Development Award of $5.0 million. The total amount of the CFF Award was recognized through December 2023, and the final payment was received in 2024. Following the promising Phase 1b/2a results of a favorable safety and tolerability profile and a plausible mechanism of action, an additional confirmatory Phase 2 trial was initiated in non-cystic fibrosis bronchiectasis (“NCFB”) patients with similar chronic pulmonary disease with infections due to P. aeruginosa.

On February 22, 2022, Armata announced that it had received from the FDA the approval to proceed forwith our IND application for AP-PA02, in a second indication, NCFB. On December 19, 2024, Armata announced encouraging results from the completed “Tailwind” study – a Phase 2 multicenter, double-blind, randomized, placebo-controlled study to evaluate the safety, phage kinetics, and efficacy of inhaled AP-PA02 in subjects with NCFB and chronic pulmonary P. aeruginosa infection. Data indicated that inhaled AP-PA02 provides a durable reduction of P. aeruginosa in the lung, with a favorable safety and tolerability profile. The Tailwind study was conducted in two cohorts running in parallel: subjects in one cohort (cohort A) received inhaled AP-PA02 as monotherapy, while subjects in another cohort (cohort B) received inhaled AP-PA02 in combination with inhaled anti-pseudomonal antibiotic treatment. Subjects in both cohorts were dosed at home by nebulization with study drug administered every 12 hours for 10 days and were followed for approximately four weeks after receiving their last dose of study drug. The primary efficacy endpoint was the reduction in P. aeruginosa colony formingcolony-forming units (“CFUs”) in lung sputum at one week following completion of dosing (day 17) compared to baseline. Per the statistical analysis plan, efficacy analysis of each independent cohort showed no significant difference between subjects treated with AP-PA02 and placebo due to small numbers of subjects in each cohort. Notably, a post-hoc intent-to-treat analysis (n=33 active and n=15 placebo; all subjects from both cohorts) demonstrated a statistically significant reduction of P. aeruginosa CFUs in the lung at day 17 (AP-PA02 vs. placebo; P=0.05). The reduction in P. aeruginosa CFUs persisted two weeks following completion of dosing with AP-PA02 when compared with placebo at day 24 (AP-PA02 vs. placebo; P=0.015). Additionally, paired analysis of P. aeruginosa CFU density at baseline compared to day 10 (P=0.03), day 11 (P=0.01), day 17 (P=0.003) and day 24 (P=0.018) was significant in the AP-PA02-treated cohort. We believe the data suggest that AP-PA02 alone is as effective as the combination therapy of phage and antibiotics in reducing P. aeruginosa CFUs in the lung. Additionally, approximately one-third of subjects treated with phage monotherapy exhibited at least a 2-log CFU reduction in P. aeruginosa compared to no reduction in placebo treatedplacebo-treated subjects. Safety data indicate that inhaled AP-PA02 was well-tolerated with treatment-emergent adverse events mild and self-limiting. There was one possibly related serious adverse event that was linked to an acute pulmonary event requiring hospitalization that was responsive to antibiotics. We believe the safety and tolerability of AP-PA02 offers a promising profile for treating chronically infected NCFB patients.

Results from the Phase 2 Tailwind study demonstrate the potential of Armata’s high-purity phage cocktail, AP-PA02, as a new monotherapy treatment alternative for chronic pulmonary disease caused by P. aeruginosa infection, including drug-resistant bacteria, and indicate the potential for phage therapy to reduce reliance on chronic antibiotic use. The Phase 2 Tailwind study represents the second successful clinical trial for AP-PA02, Armata’s lead pulmonary candidate, which was first evaluated in people with cystic fibrosis in the Phase 1b/2a SWARM-P.a. trial that was completed in 2023. We believe the learnings on dose-schedule regimens gained from the two completed Phase 2 studies position us to define a safe and promising biologic correlation for a Phase 3 definitive trial to evaluate inhaled AP-PA02 as an alternative to antibiotics in chronic pulmonary P. aeruginosa infection.

Based on clinical findings with our intravenously administered S. aureus phage product candidate AP-SA02 (described below), and the approach that the Company’s P. aeruginosa phage cocktails are formulated with the same high potency and purity standards, we are exploring preclinical development of an intravenously administered P. aeruginosa phage cocktail for the treatment of acute ventilator-associated pneumonia (“VAP”) and other severe and difficult-to-treat infections caused by antibiotic-resistant and multidrug-resistant P. aeruginosa. Recognizing the distinct physiology of acute hospitalized pneumonia compared to chronic respiratory infections such as CF and NCFB, we are developing a novel phage cocktail specifically for acute bacterial pneumonia and have leveraged our extensive P. aeruginosa clinical isolate collection and phage library to identify AP-PA03 as a potential clinical candidate for this indication. Contingent upon securing sufficient funding, we maymay, at the appropriate time in the futurefuture, file an IND application in order to initiate clinical development of AP-PA03 for the treatment of VAP.acute pneumonia caused by P. aeruginosa.

Additionally, and consistent with the clinical response rate, patients treated with AP-SA02 showed trends toward rapid normalization of key predictors of mortality and complications in SAB including C-reactive protein and interleukin-10, shorter time to negative blood culture, quicker time to resolution of signs and symptoms at the infection site, and shorter intensive care unit and hospital utilization.

Clinical efficacy was observed independent of the BAT utilized, in that all patients responded despite receiving different classes of antibiotics. The active and placebo arms were well-matched for antibiotics utilized. The clinical response rate also occurred independent of the site of infection, which were well-matched between the active and placebo arms, and were diverse ranging from endocarditis, to osteomyelitis, to septic joints, to deep wounds, and pneumonia. Moreover, phages in AP-SA02 administered systemically by IV push, were able to honehome toin on the site of infection, bind to, penetrate and kill the target bacteria, enabling phage progeny to exit the burst bacteria and reenter the intravascular space including further target any remaining local bacteria. PhagePhages are not able to continue to exist and replicate once all target bacteria have been killed.

Findings from the Phase 1b/2a study, including the favorable safety and tolerability profile of AP-SA02, inform the design of a larger definitive efficacy study to demonstrate superiority of AP-SA02 in treating complicated SAB. In January 2026, the Company announced the conclusion of an End-of-Phase 2 (“EOP2”) meeting written response from the FDA. The FDA’s Center for Biologics Evaluation and Research (“CBER”) division, upon reviewing our detailed EOP2 meeting package, confirmed that the safety and efficacy data from our Phase 2a diSArm study support advancement to Phase 3. The FDA provided critical guidance on key elements of the Phase 3 clinical study design, which will assess the superiority of AP-SA02 over the current standard of care for the treatment of complicated S. aureus bacteremia. The FDA provided comments on Chemistry, Manufacturing, and Controls (“CMC”) which we are aligning with our existing Phase 3 manufacturing and quality strategy. The FDA also included recommendations for the future Biologics License Application (“BLA”). As of the date of this filing, we are continuing to address many of the clinical and CMC comments from the FDA.

On February 20, 2026, under Section 505E of the Federal Food, Drug, and Cosmetic Act, the FDA designated AP-SA02 for intravenous use as a Qualified Infectious Disease Product Designation (“QIDP”) for adjunct treatment of complicated bacteremia caused by methicillin-sensitive or methicillin-resistant S. aureus. To achieve QIDP designation, a drug candidate must be intended to treat serious or life-threatening infections, particularly those caused by bacteria and fungi that are resistant to treatment, or that treat qualifying resistant pathogens identified by the FDA. The QIDP designation makes AP-SA02 eligible to benefit from certain incentives for the development of new antibacterials provided under the Generating Antibiotic Incentives Now (“GAIN”) Act, including an additional five-year extension of Hatch- WaxmanHatch-Waxman market exclusivity. Further, the QIDP designation makes AP-SA02 eligible for Fast Track status, which provides an opportunity for more frequent meetings and communication with the FDA, priority and rolling review, leading to potential accelerated approval of its BLA. As of the date of this filing, the Company has submitted to the FDA a request for Fast Track Designation for 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 received a $15.0 million award and entered into a multi-year program administered by the U.S. Department of DefenseWar (the “DoDDoW”) through MTEC and managed by the Naval Medical Research Command – Naval Advanced Medical Development with funding from the Defense Health Agency and Joint Warfighter Medical Research Program. On September 29, 2022, the MTEC Agreement was modified to increase the total award by $1.3 million to $16.3 million and extend the term into the second half of 2024. On July 29, 2024, the MTEC Agreement was modified to increase the total award by $5.3 million to $21.6 million and extend the term into the third quarter of 2025. On April 29, 2025, we received $4.65 million of additional non-dilutive award funding through MTEC, thereby increasing the total MTEC award to $26.2 million, and the MTEC Agreement was modified to extend the term to September 30, 2025. On July 2, 2025, the MTEC Agreement was modified to extend the term to March 31, 2026. On March 26, 2026, the MTEC Agreement was modified to extend the term to September 30, 2026. On June 22, 2026, the MTEC Agreement was modified to increase the total award by $2.5 million to $28.7 million. This award has been used to partially fund the Phase 1b/2a, multicenter, randomized, double-blind, placebo-controlled dose escalation study to assess the safety, tolerability and efficacy of AP-SA02 for the treatment of adults with complicated S. aureus bacteremia (the “diSArm” study), and to support activities related to the EOP2 meeting with the FDA.FDA, as well as to support activities related to the Company’s continued preparation and readiness for its planned Phase 3 clinical study.

The current proposed Phase 3 clinical study design, which incorporates feedback from the Company’s EOP2 meeting with the FDA, is intended to assess the superiority of AP-SA02 administered as an adjunct to 4–6 weeks of BAT for the treatment of adults with complicated S. aureus bacteremia. The trial will evaluate clinical response at 7 days post BAT and/or 28 days post BAT as the primary study endpoint, and defined as resolution of all baseline signs and symptoms of bacteremia and negative blood cultures. Secondary endpoints include clinical response at day 14 (TOC), and time to sustained microbiological eradication. Tertiary endpoints include hospital discharge,utilization microbiologic eradication evidenced by two consecutive negative blood cultures, anddays, S. aureus-specific and all-cause mortality at day 14, 7 days post BATBAT, and/or 28 days post BAT.BAT, health resource utilization, MRSA specific clinical response, participant self-assessment of improvement, and the impact of full AP-SA02 exposure on the primary and secondary endpoints. The study is expected to enroll approximately 450 patients in a 2:1 randomization, powered to detect a 15% absolute improvement with 90%95% power at a 0.05 alpha level, and is designed to provide safety data from approximately 300 AP-SA02-treated subjects (receiving the full 7-day course and followed for 28 days post-BAT) to support a potential BLA. Safety and healthcare resource impact analyses will be included.

The Company believes that, if clinical superiority of AP-SA02 is demonstrated in the Phase 3 registrational study in adults with complicated S. aureus bacteremia, it is plausible the Phase 3 safety and efficacy data may potentially drive changes to infectiousInfectious diseaseDiseases Society of America (“IDSA”) clinical treatment guidelines, requiring the use of AP-SA02 with antibiotics as new standard of care. With demonstration of superiority and following a potential initial approval of AP-SA02 in adults with complicated S. aureus bacteremia, the Company believes there may be additional development opportunities for AP-SA02, including use as adjunct therapy with shorter antibiotic treatment durations, and evaluation of AP-SA02 as a potential front-line therapy. Moreover, a potential future bridging study may support label expansion, including expanding into adults with uncomplicated S. aureus bacteremia, and a potential opportunity to expand into the pediatric population given the high titer formulation of AP-SA02 enables administration at small volume doses.

2. Department of DefenseWar (DoDDoW) award received through the Medical Technology Enterprise Consortium (MTEC) and managed by the Naval Medical Research Command (NMRC) – Naval Advanced Medical Development (NAMD) with funding from the Defense Health Agency and Joint Warfighter Medical Research Program.

We have incurred net losses since our inceptioninception, and our operations to date have been primarily limited to research and development and raising capital. As of MarchJune 31,30, 2026, we had an accumulated deficit of $616.9$542.7 million. We currently expect to use our existing cash and cash equivalents for the focused research and development of our current product candidates and forcandidates, working capitalcapital, and other general corporate purposes. We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the development of and seeking to obtain regulatory approval for our product candidates. We do not expect to generate product revenue unless and until we successfully complete development and obtain marketing approval for at least one of our product candidates. We may also use a portion of our existing cash and cash equivalents for the potential acquisition of, or investment in, product candidates, technologies, formulations or companies that complement our business, although we have no current understandings, commitments or agreements to do so.

Our existing cash and cash equivalents of $4.8$24.0 million as of MarchJune 31,30, 2026 will not be sufficient to enable us to complete all necessary development of any potential product candidates and fund our operations for the next 12 months from the date the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Accordingly, we will be required to obtain further funding through one or more other public or private equity offerings, debt financings, collaboration, strategic financing, grants or government contract awards, licensing arrangements or other sources. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and potential disruptions to, and volatility in, financial markets in the United States and worldwide. Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on acceptable terms, we may be required to defer, reduce or eliminate significant planned expenditures, restructure, curtail or eliminate some or all of our development programs or other operations, dispose of assets, enter into arrangements that may require us to relinquish rights to certain of our product candidates, technologies or potential markets, file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, financial condition and results of operations and result in a loss of investment by our stockholders.

Effective April 24, 2026, Daniel B. Gilmer, Ph.D. joined our Board of Directors. On June 24, 2026, the Board appointed Dr. Gilmer to serve on the Nominating and Corporate Governance Committee of the Board. Dr. Gilmer brings 20 years of experience in healthcare commercialization, management consulting, and academic research. Most recently, Dr. Gilmer led an organization at Pfizer responsible for quality and promotional review across 50+ U.S. brands, working closely with medical, legal, and regulatory subject matter experts to advise commercial stakeholders on content quality, compliance, and risk-benefit balance. Previously, from April 2022 to February 2025, Dr. Gilmer led cross-functional teams in Pfizer’s Antiviral and Diagnostics Business, where he launched PAXLOVIDTM in the United States as it received New Drug Approval from the FDA. Earlier at Pfizer, from April 2021 to April 2022, Dr. Gilmer worked in Inflammation & Immunology Commercial Development, where he helped shape strategy for a portfolio of rheumatology and immunology assets. Dr. Gilmer joined Pfizer in Research & Development in May 2019, where he contributed to Pfizer’s COVID-19 vaccine-enabling operating model and R&D portfolio strategy. Dr. Gilmer is an equal co-inventor on the patent for Exebacase (also termed “CF-301” or “PlySs2”), a first-in-class Staphylococcus bacteriophage endolysin. Exebacase received Fast Track and Breakthrough Therapy designations from the FDA before advancing to Phase 3 clinical trials. Dr. Gilmer has authored multiple peer-reviewed publications on phage lysins and antimicrobial resistance. Prior to joining Pfizer, Dr. Gilmer worked at McKinsey & Co. focusing on commercial growth strategies, market access, and lean manufacturing in the United States, Canada, and France. Earlier in his career, he conducted microbiology and infectious disease research at leading academic institutions and the National Institutes of Health. He has a Ph.D. in Microbiology from Rockefeller University (“RU”) and a B.S. from Howard University. As an RU alum, he serves on both the RU Board of Trustees Educational Affairs Committee and the RU Ford Center Incubator selection committee. He is a member of the New York Academy of Sciences and a term member at the Council on Foreign Relations.

On January 23, 2026, we entered into amendments to the credit and security agreement, dated March 12, 2025 (the “March 2025 Credit Agreement”), the credit and security agreement, dated March 4, 2024 (the “2024 Credit Agreement”), the credit and security agreement, dated July 10, 2023 (the “2023 Credit Agreement”), and the secured convertible credit and security agreement, dated January 10, 2023 (the “Convertible Credit Agreement”) with Innoviva Strategic Opportunities LLC (“Innoviva Sub”), extending the maturity dates to June 1, 2027 (collectively, the “2026 Debt Amendments”). In exchange for the 2026 Debt Amendment,Amendments, we also amended certain outstanding Innoviva Sub warrants to extend their expiration dates to January 26, 2031, and amended the related voting agreement to align with the revised warrant expiration date or FDA approval, as applicable. Refer to Note 7, “Convertible Loan” and Note 8, “Term Debt”, in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

December 2025 SalesAt Agreementthe Market Offering

On December 1, 2025, we entered into a Capital on Demand™ Sales Agreement (the “Sales2025 Agreement”)ATM with JonesTrading Institutional Services LLC (“Jones”), relating to the offerat-the-market offering and sale of shares of itsour common stock. In accordance with the terms of the Sales2025 Agreement,ATM, we may offer and sell shares of our common stock having an aggregate offering price of up to $100,000,000 from time to time subject to certain conditions, through or to Jones, acting as agent or principal. During the six months ended June 30, 2026, we issued 338,000 shares under the 2025 ATM for net proceeds of approximately $2.4 million, after deducting commissions and other issuance costs payable by us.

On August 11, 2025, we entered into a credit and security agreement (the “August 2025 Credit Agreement”) for a secured term loan facility in the aggregate amount of $15.0 million (the “August 2025 Loan”) with Innoviva.Innoviva Sub. The August 2025 Loan bears interest at an annual rate of 14.0% and matures on January 11, 2029. Principal and accrued interest are payable at maturity. Repayment of the August 2025 Loan is guaranteed by our domestic subsidiaries, and the August 2025 Loan is secured by substantially all of our and the subsidiary guarantors’ assets.

On March 26, 2026, the MTEC Agreement was further modified to extend the term to September 30, 2026. On June 22, 2026, the MTEC Agreement was modified to increase the total award by $2.5 million to $28.7 million. We will continue to recognize additional grant and award revenue until the full amount of the amended award is utilized.

Comparison of three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

We recognized $0.8$2.5 million and $0.5$2.2 million of grant and award revenue during the three months ended MarchJune 31,30, 2026 and 2025, and $3.3 million and $2.7 million during the six months ended June 30, 2026 and 2025, respectively, which represents MTEC’s share of the costs incurred for our AP-SA02 program for the treatment of SAB.

The following table summarizes our research and development expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Research and development expenses increased by $0.7$1.2 million, from $5.4$6.4 million for the three months ended MarchJune 31,30, 2025 to $6.1$7.6 million for the three months ended MarchJune 31,30, 2026.

Other external researchResearch and development costsexpenses increased by $0.3$1.9 millionmillion, from $0.6$11.8 million for the threesix months ended MarchJune 31,30, 2025 to $0.9$13.7 million for the threesix months ended MarchJune 31,30, 2026. The increase was primarily due to an increase of lab supplies related to the end-of-Phase 2 FDA meeting and engineering runs.

Our expenses by product and by project for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows (in thousands):

Personnel-related costs, including employee payroll and related expenses, increased by $0.3$1.2 million, from $2.3 million for the three months ended MarchJune 31,30, 2025 to $2.6$3.5 million for the three months ended MarchJune 31,30, 2026. The increase was primarily due to a $0.2 million increase in incentive compensation, salaries and wages, and employee benefits and a $0.1$1.3 million increase in stock-based compensation.compensation, mainly related to option grants issued after the second quarter of 2025.

FacilitiesPersonnel-related costs, including employee payroll and overheadrelated costsexpenses, increased by $0.1$1.6 million, from $2.4$4.6 million for the threesix months ended MarchJune 31,30, 2025 to $2.5$6.2 million for the threesix months ended MarchJune 31,30, 2026. The increase was primarily due to ana $1.4 million increase in labstock-based equipmentcompensation, maintenancemainly costs.related to option grants issued after the second quarter of 2025, and a $0.2 million increase in other personnel-related costs including incentive compensation, salaries and wages, and employee benefits.

General and administrative expenses were $3.5$5.2 million and $3.3$2.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase of $0.2$2.6 million is primarily related to an increase in stock-based compensationcompensation, expense.mainly related to option grants issued after the second quarter of 2025, legal fees, and incentive compensation.

Interest income remainedwas consistent$0.1 atmillion and $0.1 million for the three months ended MarchJune 31,30, 2026 and 2025, and $0.1 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively, and related to interest earned on our money market fund investments.

We recognized a lossgain of $101.1$91.0 million and gainloss of $5.2$5.8 million on the change in the fair value of the Convertible Loan for the three months ended MarchJune 31,30, 2026 and 2025, respectively. We recognized a loss of $10.0 million and $0.5 million on the change in the fair value of the Convertible Loan for the six months ended June 30, 2026 and 2025, respectively.

TheDuring the year ended December 31, 2025, we estimated the fair value of our Convertible Loan received from Innoviva Sub in January 2023 and amended in July 2023, November 2024, March 2025, and January 2026 is accounted for at fair value using a weighted probability model of various debt settlement scenarios ofduring the Convertible Loan during its term discounted to eachthe reporting date. Conversion option scenarios are valued using an option pricing modelmodels with significant assumptions and estimates such as volatility, expected termterm, and risk-free interest rates. Changes in fair value for the three months ended March 31, 2026 and 2025 were primarily due to fluctuations of our stock price. Refer to Note 7, “Convertible Loan”, in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details.

We have incurred net losses since our inception and have negative operating cash flows. Our cash and cash equivalents of $4.8$24.0 million as of MarchJune 31,30, 2026 will not be sufficient to fund our operations for the next 12 months from the date the condensed consolidated financial statements included elsewhere in this Quarterly Report are issued. We plan to control our expenses and to raise additional capital through a combination of public and private equity, debt financing, strategic alliances, and grant and award arrangements. These circumstances raise substantial doubt about our ability to continue as a going concern. While management believes this plan to raise additional funds will alleviate the conditions that raise substantial doubt, these plans are not entirely within our control and cannot be assessed as being probable of occurring. We may not be able to secure additional financing in a timely manner or on favorable terms, if at all.

On December 1, 2025, we entered into the Sales2025 AgreementATM with Jones, relating to the offer and sale of shares of itsour common stock. In accordance with the terms of the Sales2025 Agreement,ATM, we may offer and sell shares of our common stock having an aggregate offering price of up to $100,000,000 from time to time subject to certain conditions, through or to Jones, acting as agent or principal. During the six months ended June 30, 2026, we issued 338,000 shares under the 2025 ATM for net proceeds of approximately $2.4 million, after deducting commissions and other issuance costs payable by us.

On April 29, 2025, we received $4.65 million of additional non-dilutive award funding through MTEC, thereby increasing the total MTEC award to $26.2 million, and the MTEC Agreement was modified to extend the term to September 30, 2025. On July 2, 2025, the MTEC Agreement was modified to extend the term to March 31, 2026. On March 26, 2026, the MTEC Agreement was modified to extend the term to September 30, 2026. On June 22, 2026, the MTEC Agreement was modified to increase the total award by $2.5 million to $28.7 million. We will continue to recognize additional grant and award revenue until the full amount of the amended award is utilized.

Net cash used in operating activities was $5.8$14.4 million and $7.6$14.8 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Cash used in operating activities in the threesix months ended MarchJune 31,30, 2026 was primarily due to our net loss for the period of $115.3$41.2 million, adjusted by non-cash items of $108.7$28.8 million and an increase of $0.9 millionchanges in our net operating assets and liabilities.liabilities that resulted in a net use of cash of $2.0 million. The non-cash items consist of $101.1$10.0 million related to a loss from the change in fair value of the Convertible Loan, $5.6$12.2 million of non-cash interest expense on the 2023 Loan, 2024 Loan, March 2025 Loan, and August 2025 Loan, $1.1and May 2026 Loan, $4.5 million related to stock-based compensation expense, $0.5$1.0 million related to depreciation expense, and $0.5$1.0 million related to change in right-of-use asset. The increasechanges in our net operating assets and liabilities waswere primarily due to ana increasedecrease of $0.6$0.1 million in accrued compensation, a decrease of $0.4$0.1 million in accounts payable and accrued liabilities, a decrease of $0.3$0.7 million in the operating lease liability, and an increase of $0.9$1.1 million in prepaid expenses and other current assets.

Cash used in operating activities in the threesix months ended MarchJune 31,30, 2025 was primarily due to our net loss for the period of $6.5$22.8 million, adjusted by non-cash items of $0.1$11.2 million and a decrease of $1.2$3.2 million in our net operating assets and liabilities. The non-cash items consist of $5.2$0.5 million related to a gainloss from change in fair value of the Convertible Loan, $3.6$7.4 million of non-cash interest expense on the 2023 Loan, 2024 Loan and March 2025 Loan, $0.8$1.4 million related to stock-based compensation expense, $0.4$0.7 million related to depreciation and amortization expense and $0.6$1.2 million related to change in right-of-use asset. The decrease in our net operating assets and liabilities was primarily due to a decrease of $0.9$0.7 million in accrued compensation, a decrease of $0.6$0.8 million in accounts payable and accrued liabilities, a decrease of $0.3$0.5 million in the operating lease liability, and aan decreaseincrease of $0.5$1.2 million in prepaid expenses and other current assets.