Armata Pharmaceuticals (ARMP) Stock Flies On $25 Million Investment

Armata Pharmaceuticals ARMP Stock News

Armata Pharmaceuticals Inc (NYSEAMERICAN: ARMP) is running for the top in the market this morning, trading on gains of more than 95% early on. The gains come after the company announced the receipt of a strategic investment from Innoviva (NASDAQ: INVA).

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ARMP Stock Rockets On $25 Million Strategic Investment

In the press release announcing the investment, Armata Pharmaceuticals said that it entered into an agreement with Innoviva. The agreement surrounds the purchase of securities, which will include a $25 million investment in Armata for both common stock and warrants.

In the release, ARMP said that it will use the proceeds from the offering to support the ongoing advancement of its bacteriophage development programs. These programs include the expected first in human studies of its lead phage candidate known as AP-PA02. The coming study will target Pseudomonas aeruginosa.

The company also said that it will use the funds to continue the development of AP-SA02, a candidate for the treatment of Staphylococcus Aureus.

Under the agreement, Innoviva has agreed to buy 8.7 million newly issued shares of ARMP at a price of $2.87 per share. The company has also agreed to purchase warrants that will allow it to purchase an additional 8.7 million shares at an exercise price of $2.87 per share.

Armata Pharmaceuticals said that the investment will take place in two tranches. The first will be the purchase of about 1 million shares of common stock at an aggregate price of $2.8 million.

Following the closing, ARMP shareholders will be able to vote on the second traunch, which will include the sale of 7.7 million shares at a price of $22.2 million. Of course, the transaction will not close until investors vote to approve it.

Moreover, if the first transaction closes, Innoviva will be entitled to appoint two directors to the company’s Board of Directors. The company said that Innoviva currently expects to appoint Sarah Schlesinger, M.D. and Odysseas Kostas, M.D. to serve on its board of directors.

As is just about always the case, the transaction is subject to closing conditions, including approval by investors, regulatory conditions and other conditions. In a statement, Todd R. Patrick, CEO at ARMP, had the following to offer:

Over the course of the last several months, we have made significant progress advancing our bacteriophage development programs. As we now prepare to enter human clinical trials, we are excited to enter into this agreement with Innoviva given its team’s experience with drug development and clinical medicine. We are particularly looking forward to welcoming Drs. Kostas and Schlesinger to our Board. Their commitment to provide novel solutions for patients suffering from antibiotic resistance will be invaluable as we develop our bacteriophage platform. As we look forward, the funding from this transaction will allow us to pursue meaningful milestones in 2020 and 2021.

The above statement was followed up by Odysseas Kosts, M.D., Chairman of Innoviva’s Board of Directors:

We are excited by this opportunity and are eager to work with the Armata team in the development of this novel treatment for multi drug resistant bacterial infections which represent a serious and growing public health crisis.

Why Investors Are So Excited

This is big news. Ultimately, Innoviva is no small player. In fact, the company is focused on transactions like these, leading to royalties, which it receives from several mainstream pharmaceutical companies of today.

The investment that Innoviva is making into ARMP is massive for the company. After all, before today, the company traded with a market cap around $25 million. So, the investment represented just about all of the value of the company!

With the expertise and funding offered by Innoviva, it’s not surprising to see that investors are so excited.

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