Armata Pharmaceuticals, Inc.

(Unaudited)

1. Organization and Description of the Business

Armata Pharmaceuticals, Inc. (“Armata”) together with its subsidiaries (the “Company”), is a late clinical-stage biotechnology company focused on the development of high-purity and potency, pathogen-specific bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat bacterial infections using its proprietary bacteriophage-based technology.

Armata’s common stock, par value $0.01 per share (the “Common Stock”) is traded on the New York Stock Exchange (the “NYSE”) American under the ticker symbol “ARMP.”

2. Liquidity and Going Concern

The Company has incurred significant operating losses since inception and has primarily relied on equity, debt, grant, and award financing to fund its operations. As of June 30, 2026, the Company had an accumulated deficit of $542.7 million. The Company expects to continue to incur substantial losses, and its transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the achievement of sufficient revenues to support its cost structure. The Company may never achieve profitability, and unless and until then, the Company will need to continue to raise additional capital. The existing cash and cash equivalents of $24.0 million as of June 30, 2026 will not be sufficient to fund its operations for the next 12 months from the date that these condensed consolidated financial statements are issued. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has prepared its condensed consolidated financial statements on a going concern basis, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

Recent Financing:

May 2026 Credit Agreement

On May 12, 2026, the Company entered into a credit and security agreement (the “May 2026 Credit Agreement”) for a secured term loan facility in the aggregate amount of $25.0 million (the “May 2026 Loan”) with Innoviva Sub. The May 2026 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 May 2026 Loan is guaranteed by the Company’s domestic subsidiaries, and the May 2026 Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

Credit Agreements and Warrants Extensions

On January 23, 2026, the Company entered into amendments to thecredit 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 thesecured convertible credit and security agreement, dated January 10, 2023 (the “Convertible Credit Agreement”) with Innoviva Strategic Opportunities LLC (“Innoviva Sub”), a wholly owned subsidiary of Innoviva, Inc. (NASDAQ: INVA), the Company’s principal stockholder and a related party (collectively, “Innoviva”), extending the maturity dates to June 1, 2027 (collectively, the “2026 Debt Amendments”). In exchange for the 2026 Debt Amendments, the Company also amended certain outstanding Innoviva Sub warrants to extend their expiration dates to January 26, 2031 (the “Warrant Amendments,” and together with the 2026 Debt Amendments, the “2026 Debt and Warrant Amendments”), and amended the related voting agreement to align with the revised warrant expiration date or FDA approval, as applicable.

December 2025 At the Market Offering

On December 1, 2025, the Company entered into a Capital on Demand™ Sales Agreement (the “2025 ATM”) with JonesTrading Institutional Services LLC (“Jones”), relating to the at-the-market offering and sale of shares of its common stock. In accordance with the terms of the 2025 ATM, the Company may offer and sell shares of its 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, the Company 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 the Company.

August 2025 Credit Agreement

On August 11, 2025, the Company 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 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 the Company’s domestic subsidiaries, and the August 2025 Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

The Company plans to raise additional capital through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. While the Company believes this plan to raise additional funds will alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not entirely within its control and cannot be assessed as being probable of occurring. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the United States and worldwide. The Company may not be able to secure additional financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its potential products on terms that are not favorable to the Company. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce or eliminate its research and development programs or other operations. If any of these events occur, the Company’s ability to achieve the development and commercialization goals would be adversely affected.

3. Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto as of and for the year ended December 31, 2025 included in the Company’s Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 25, 2026. The information as of December 31, 2025 included in the condensed consolidated balance sheets was derived from the Company’s audited financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the SEC for interim reporting. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments that are of a normal and recurring nature and that are necessary for the fair presentation of the Company’s financial position and the results of its operations and cash flows for the periods presented. Interim results are not necessarily indicative of results for the full year or any future period.

Any reference in the condensed consolidated financial statements to applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Significant Accounting Policies

The significant accounting policies used in preparation of the condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025 are consistent with those discussed in Note 3 to the consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2025, filed with the SEC on March 25, 2026.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates estimates and assumptions, including but not limited to those related to the fair value of the Convertible Loan, stock-based compensation expense, accruals for research and development costs, the valuation of deferred tax assets, impairment of goodwill and intangible assets and impairment of long-lived assets. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Concentration of Credit Risks and Certain Other Risks

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and restricted cash. As of June 30, 2026, cash equivalents and restricted cash were invested primarily in money market funds through highly rated financial institutions in accordance with the Company’s investment policy, to a concentration limit per issuer or sector.

Other receivables represent amounts due from the Medical Technology Enterprise Consortium (“MTEC”) (Note 13,“Grants and Awards”).

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):* Disaggregation of Income Statement Expenses*. The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s consolidated financial statement disclosures.

4. Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering

market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels:

●Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

●Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

●Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The financial assets and liabilities measured and recognized at fair value were as follows as of June 30, 2026 and December 31, 2025 (in thousands):

The Company’s Convertible Loan (Note 7,“Convertible Loan”) is measured at fair value at inception and remeasured at each measurement period, with changes in fair value recorded as other income (expense) in the condensed consolidated statement of operations. The Company estimates the fair value of its Convertible Loan using a weighted probability model of various debt settlement scenarios during its term discounted to the reporting date. Conversion option scenarios are valued using option pricing models with assumptions and estimates such as volatility, expected term, and risk-free interest rates. Level 3 fair value inputs include probability and timing of various settlement scenarios and selection of comparable companies.

The Company estimated the fair value of its Convertible Loan using the following inputs during the year ended December 31, 2025:

During the six months ended June 30, 2026, the Company estimated the fair value of the Convertible Loan on an as-converted basis, assuming a 100% conversion into equity.

The following table presents a summary of the changes in the fair value of its Convertible Loan for the six months ended June 30, 2026 and 2025 (in thousands):

5. Net Income (Loss) per Share

The computation of basic EPS is based on the weighted-average number of the Company’s Common Stock outstanding. The computation of diluted EPS is based on the weighted-average number of the Company’s Common Stock outstanding and potential dilutive common stock. Diluted EPS is computed using the treasury stock method, which reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted to the Company’s Common Stock. The Company’s Common Stock options, warrants, and unvested restricted stock units were not included in dilutive EPS for the periods presented as their impact would be antidilutive.

The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders for the three and six months ended June 30, 2026 and 2025 (in thousands, except share and per share data):

The following outstanding securities have been excluded from the computation of diluted weighted-average shares outstanding for the applicable periods presented, as they would have been anti-dilutive:

(1) The Company determined the number of shares issuable upon the conversion of the Convertible Loan as of June 30, 2026, based on the Convertible Loan principal amount of$30.0 million, accrued and unpaid interest of$8.4 million, calculated at an annual interest rate of 8%, converted at$1.52 per share.

6. Balance Sheet Details

Property and Equipment, net

Property and equipment as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands):

Depreciation expense totaled $0.5 million and $0.3 million for the three months ended June 30, 2026 and 2025, and $1.0 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively. Property and equipment not yet in use was $3.5 million and $7.8 million as of June 30, 2026 and December 31, 2025, respectively, and is included in the laboratory equipment in the table above. These assets are not depreciated until they are placed in service.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands):

7. Convertible Loan

On January 10, 2023, the Company received the convertible loan in the aggregate amount of $30.0 million (the “Convertible Loan”) from Innoviva Sub pursuant to the Convertible Credit Agreement. The Convertible Loan bears interest at a rate of 8.0% per annum and is scheduled to mature on June 1, 2027.

The Convertible Loan principal and accrued interest are payable at maturity. Repayment of the Convertible Loan is guaranteed by the Company’s domestic subsidiaries and foreign material subsidiaries, and the Convertible Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors.

The Convertible Credit Agreement provides that if there is a financing from new investors of at least $30.0 million (a “Qualified Financing”), the outstanding principal amount of and all accrued and unpaid interest on the Convertible Loan shall be converted into shares of the Company’s Common Stock, at a price per share equal to a 15.0% discount to the lowest price per share for Common Stock paid by investors in such Qualified Financing. The Convertible Credit Agreement also required the Company to file a registration statement for the resale of all securities issued to the lender in connection with any conversion under the Convertible Credit Agreement, which the Company originally filed on February 13, 2023, and which was declared effective by the SEC on April 6, 2023. The Convertible Credit Agreement also confers upon the lender the option to convert any outstanding Convertible Loan amount, including all accrued and unpaid interest thereon, at the lender’s option, into shares of Common Stock at a price per share equal to the greater of book value or market value per share of Common Stock on the date immediately preceding the effective date of the Convertible Credit Agreement, which was $1.52 (as may be appropriately adjusted for any stock split, combination or similar act).

The Company evaluated authoritative guidance for accounting for the Convertible Loan and concluded that the Convertible Loan should be accounted for at fair value under ASC 480,Distinguishing Liabilities from Equity, due to the fact that the Convertible Loan will predominantly be settled with the Company’s Common Stock. Consequently, the Company recorded the Convertible Loan in its entirety at fair value on its consolidated balance sheet, with changes in fair value recorded as other income (expense) in the consolidated statements of operations during each reporting period.

On January 23, 2026, the Company entered into amendments to the Convertible Credit Agreement, the March 2025 Credit Agreement, the 2024 Credit Agreement, and the 2023 Credit Agreement with Innoviva Sub, which, among other things, extended the maturity dates of the respective agreements to June 1, 2027 as well as extended maturity dates of certain outstanding warrants (Note 9) to January 26, 2031 (collectively, the “2026 Debt and Warrant Amendments”).

The Company determined that the 2026 Debt and Warrant Amendments should be accounted for as a single combined transaction. The Company further concluded that the amendments constitute a troubled debt restructuring (“TDR”) for accounting purposes, as the Company was experiencing financial difficulty, and Innoviva Sub, in connection with the 2026 Debt and Warrant Amendments, granted a concession to the Company.

Following the January 23, 2026 amendment of the Convertible Loan, the Company continues to account for the Convertible Loan at fair value on its consolidated balance sheets, with changes in fair value recognized in other income (expense), net, in the consolidated statements of operations in each reporting period. The Company recognized a gain of $91.0 million and a loss of $5.8 million as the change in fair value of the Convertible Loan for the three months ended June 30, 2026 and 2025, and a loss of $10.0 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, accrued stated interest related to the Convertible Loan was approximately $8.4 million and $7.2 million, respectively.

8. Term Debt

The 2023 Credit Agreement, 2024 Credit Agreement, March 2025 Credit Agreement, August 2025 Credit Agreement, and May 2026 Credit Agreement each contain customary affirmative and negative covenants and representations and warranties, including financial reporting obligations and certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, mergers or acquisitions and fundamental corporate changes. Each of the 2023 Credit Agreement, the 2024 Credit Agreement, the March 2025 Credit Agreement, the August 2025 Credit Agreement, and the May 2026 Credit Agreement also includes customary events of default, including payment defaults, breaches of provisions under the loan documents, certain losses or impairment of collateral and related security interests, the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth therein, certain bankruptcy or insolvency events, and a material deviation from the Company’s operating budget. In addition, each of the credit agreements includes customary mandatory prepayment provisions that require the Company to apply specified proceeds received by the Company to prepay outstanding borrowings under the respective credit

facilities. Mandatory prepayment events are triggered upon the receipt of proceeds from asset sales or other dispositions, casualty or condemnation events, the incurrence of indebtedness not otherwise permitted under the agreements, or the issuance of certain equity interests.

On July 10, 2023, the Company entered into the 2023 Credit Agreement. The 2023 Credit Agreement provides for a secured term loan facility in an aggregate amount of $25.0 million at an interest rate of 14.0% per annum (the “2023 Loan”), and is scheduled to mature on June 1, 2027. Principal and accrued interest are payable at maturity. Repayment of the 2023 Loan is guaranteed by the Company’s domestic subsidiaries, and the 2023 Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2023 Loan was initially recognized at fair value of $21.2 million and subsequently recognized at the amortized cost net of debt issuance costs and debt discount of $3.8 million. Debt issuance costs are amortized using the effective interest method to interest expense over the term of the 2023 Loan. As of June 30, 2026 and December 31, 2025, accrued stated interest related to the 2023 Loan was approximately $10.6 million and $8.8 million, respectively.

On March 4, 2024, the Company entered into the 2024 Credit Agreement for a secured term loan facility in an aggregate amount of $35.0 million (the “2024 Loan”). The 2024 Loan bears interest at an annual rate of 14.0% and is scheduled to mature on June 1, 2027. Principal and accrued interest are payable at maturity.

Repayment of the 2024 Loan is guaranteed by the Company’s domestic subsidiaries, and the 2024 Loan is secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2024 Loan was initially recognized at cash proceeds of$35.0 million net of debt issuance costs of $0.1 million and is subsequently recognized at amortized cost. Debt issuance costs are amortized using the effective interest method to interest expense over the term of the 2024 Loan. As of June 30, 2026 and December 31, 2025, accrued stated interest related to the 2024 Loan was approximately $11.5 million and $9.1 million, respectively.

On March 12, 2025, the Company entered into the March 2025 Credit Agreement for a secured term loan facility in an aggregate amount of $10.0 million (the “March 2025 Loan”). The March 2025 Loan bears interest at an annual rate of 14.0% and is scheduled to mature on June 1, 2027. Principal and accrued interest are payable at maturity. Repayment of the March 2025 Loan is guaranteed by the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors. The March 2025 Loan was initially recognized at cash proceeds of $10.0 million and is subsequently recognized at amortized cost. As of June 30, 2026 and December 31, 2025, accrued stated interest related to the March 2025 Loan was approximately $1.8 million and $1.1 million, respectively.

On August 11, 2025, the Company entered into the August 2025 Credit Agreement for the August 2025 Loan in an aggregate amount of $15.0 million. 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 the Company’s domestic subsidiaries, and the loan is secured by substantially all of the assets of the Company and the subsidiary guarantors. The August 2025 Loan was initially recognized at cash proceeds of $15.0 million and is subsequently recognized at amortized cost. The August 2025 Loan’s annual effective interest rate was 12.27% as of June 30, 2026. As of June 30, 2026 and December 31, 2025, accrued stated interest related to the August 2025 Loan was approximately $1.9 million and $0.8 million, respectively.

Since the 2026 Debt and Warrant Amendments constitute a TDR and the total undiscounted future cash payments under the amended debt terms exceed the carrying amount of the existing debts as of the 2026 Debt and Warrant Amendments date, no adjustment to the carrying amounts of the debts was recorded, and no gain was recognized. Instead, the Company established a revised effective interest rate based on the modified contractual cash flows. The revised effective interest rate of 36.19% was applied prospectively to all term loans to accrete the carrying amount of the term loans to their respective contractual repayment amounts at maturity.

The Company recorded a $20.6 million increase in the fair value of the warrants as a debt discount, with a corresponding increase to additional paid-in capital. The Company determined that as a result of the TDR fair value of the convertible debt not changing, the entire debt discount was allocated to the term loans using a yield-based methodology that results in a consistent effective interest rate across the amended term loans.

The debt discount is subsequently amortized to interest expense over the remaining term of the amended debts using the effective interest method.

On May 12, 2026, the Company entered into the May 2026 Credit Agreement for the May 2026 Loan in the aggregate amount of $25.0 million with Innoviva Sub. The May 2026 Loan bears interest at an annual rate of 14.0% and matures on January 11, 2029. Principal and accrued interest are payable at maturity. As of June 30, 2026, accrued stated interest related to the May 2026 Loan was approximately $0.5 million.

The Company estimated the increase in the fair value of the warrants associated with the 2026 Debt and Warrant Amendments utilizing the Black-Scholes valuation model with the following assumptions:

9. Stockholders’ Deficit

Warrants

As of June 30, 2026, outstanding warrants to purchase shares of the Company’s Common Stock were as follows:

On January 23, 2026, the Company extended the expiration date of 10,653,847 warrants to January 26, 2031. The increase in the fair value of the warrants resulting from the 2026 Debt and Warrant Amendments was accounted for as part of the TDR (see Notes 7 and 8).

Shares Reserved for Future Issuance

As of June 30, 2026, the Company had reserved shares of its Common Stock for future issuance as follows:

10. Equity Incentive Plans

Stock Award Plans

The Company maintains a 2016 Equity Incentive Plan (the “2016 Plan”), which provides for the issuance of incentive share awards in the form of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance-based stock awards. As of June 30, 2026, there were 3,963,929 shares available for issuance under the 2016 Plan.

Stock option transactions during the six months ended June 30, 2026 are presented below:

The aggregate intrinsic value of options at June 30, 2026 is based on the Company’s closing stock price on that date of $6.48 per share.

Restricted stock unit award transactions during the six months ended June 30, 2026 are presented below:

Stock-based Compensation

The Company estimates the fair value of stock options with performance and service conditions using the Black-Scholes valuation model (“Black-Scholes”). Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized on the accelerated attribution method over the requisite service period.

The assumptions used in the Black-Scholes model during the three and six months ended June 30, 2026 and 2025 are presented below. There wereno stock options granted during the three months ended June 30, 2025.

The table below summarizes the total stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the periods presented (in thousands):

As of June 30, 2026, there was $15.6 million of total unrecognized compensation expense related to unvested stock options and restricted stock units, which the Company expects to recognize over the weighted average remaining period of approximately 2.2 years.

11. Income Taxes

The Company didnot record a provision or benefit for income taxes during the six months ended June 30, 2026 and 2025. The Company expects to generate net taxable losses and continues to maintain a full valuation allowance against all of its deferred tax assets.

12. Commitments and Contingencies

Operating Leases

The Company leases office and research and development space under a non-cancelable operating lease in Marina del Rey, California, with the lease term running through December 31, 2031. Annual base rent is $1.9 million and increases by 3% annually and will be $2.5 million by the end of the lease term.

On October 28, 2021, the Company entered into a lease for office and research and development space under a non-cancellable lease in Los Angeles, California (the “2021 Lease”). The 2021 Lease payment start date was May 1, 2022, and the total lease term is for 16 years and runs through 2038. The Company was responsible for construction costs over the tenant improvement allowance of$7.2 million. The construction was completed as of December 31, 2024, and the Company received the full allowance. Out-of-pocket expenses to be incurred by the Company are considered noncash lease payments, and included in the lease liability and right-of-use (“ROU”) asset.

In connection with the execution of the 2021 Lease, the Company delivered an irrevocable standby letter of credit in the amount of $5.0 million to the landlord in 2022, which was reduced to $4.0 million as of June 30, 2026.

Future minimum annual lease payments under the Company’s non-cancelable operating leases as of June 30, 2026 are as follows (in thousands):

Operating lease expenses were $1.8 million and $2.0 million for the three months ended June 30, 2026 and 2025, and $3.6 million and $4.0 million for the six months ended June 30, 2026 and 2025, respectively. Variable costs related to operating expenses and taxes, which are recognized as incurred, were $0.4 million and $0.5 million for the three months ended June 30, 2026 and 2025, and $0.7 million and $0.8 million for the six months ended June 30, 2026 and 2025.

The following table summarizes supplemental cash flow information related to the Company’s operating leases for the six months ended June 30, 2026 and 2025 (in thousands):

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases as of June 30, 2026 and December 31, 2025:

Impairment of ROU Asset

During the year ended December 31, 2025, an impairment charge of $5.4 million was recognized related to the Company’s office and research and development space under a non-cancelable operating lease in Marina del Rey, California. The impairment resulted from changes in the anticipated timeline in the Company’s plan to sublease the vacated space. The ROU asset was determined to be not fully recoverable as the estimated undiscounted cash flows expected from sublease income were insufficient to recover the ROU asset’s carrying amount. The impairment charge was determined using level 3 inputs measured based on an income approach, with unobservable inputs including the estimates and assumptions for sublease income and a discount rate commensurate with the remaining lease term of 21.6%. There was no impairment of long-lived assets during the six months ended June 30, 2026.

Legal Proceedings

From time to time, the Company may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business. Any of these claims could subject the Company to costly legal expenses and, while management generally believes that there is adequate insurance to cover many different types of liabilities, the Company’s insurance carriers may deny coverage or policy limits may be inadequate to fully satisfy any damage

awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the Company’s consolidated results of operations and financial position. Additionally, any such claims, whether or not successful, could damage the Company’s reputation and business. The Company is currently not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations or financial position.

13. Grants and Awards

MTEC Award

On June 15, 2020, the Company entered into an agreement (the “MTEC Agreement”) with MTEC, pursuant to which the Company received a $15.0 million award and entered into a multi-year program administered by the DoW 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. 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. On July 29, 2024, the MTEC Agreement was modified toincrease 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, the Company 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, randomized, double-blind, placebo-controlled, dose escalation clinical study to assess the safety, tolerability and efficacy of the Company’s therapeutic phage-based candidate, AP-SA02, for the treatment of complicatedS. aureus bacteremia (“SAB”) infections, and to support activities required for an end-of-Phase 2 meeting with the FDA, as well as to support activities related to the Company’s continued preparation and readiness for its planned Phase 3 clinical study. The MTEC Agreement specifies that the award will be paid to the Company over the term of the award through a cost-reimbursable model, based on agreed-upon cost-share percentages, and the money received is not refundable to MTEC.

Upon license or commercialization of intellectual property developed with the funding from the MTEC Agreement, additional fees will be due to MTEC. The Company will elect whether to (a) pay a fixed royalty amount, which is subject to a cap based upon total funding received, or (b) pay an additional assessment fee, which would also be subject to a cap based upon a percentage of total funding received.

The MTEC Agreement is effective through September 30, 2026, and may be terminated, in whole or in part, upon 30 calendar days’ prior written notice from the Company to MTEC. In addition, MTEC has the right to terminate the MTEC Agreement upon material breach by the Company.

The Company determined that the MTEC Agreement is not in the scope of ASC 808 or ASC 606. Applying ASC 606 by analogy, the Company recognizes proceeds received under the MTEC Agreement as grant and award revenue in the statement of operations when related costs are incurred. The Company recognized $2.5 million and $2.2 million in grant and award revenue from the MTEC Agreement during the three months ended June 30, 2026 and 2025, and $3.3 million and $2.7 million during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, the Company had $2.5 million and $0.5 million as awards receivable from MTEC.

CFF Therapeutics Development Award

On March 13, 2020, the Company entered into an award agreement (the “Award Agreement”) with the CFF, pursuant to which the Company received a Therapeutics Development Award of up to $5.0 million (the “CFF Award”). The CFF Award was used to fund a portion of the Company’s Phase 1b/2a clinical trial of thePseudomonas aeruginosa(“P. aeruginosa”)* *phage candidate, AP-PA02, as a treatment for Pseudomonas airway infections in people with cystic fibrosis (“CF”).

The first payment under the Award Agreement, in the amount of $1.0 million, became due upon signing the Award Agreement and was received in April 2020. The remainder of the CFF Award was payable to the Company incrementally in installments upon the achievement of certain milestones related to the development program and progress of the Phase 1b/2a clinical trial of AP-PA02, as set forth in the Award Agreement. The total amount of the CFF Award was recognized through December 2023 and the final payment was received in 2024.

If the Company ceases to use commercially reasonable efforts directed to the development of AP-PA02, or any other Product (as defined in the Award Agreement), for a period of 360 days (an “Interruption”) and fails to resume the development of the Product after receiving from CFF notice of an Interruption, then the Company must either repay the amount of the CFF Award actually received by the Company, plus interest, or grant to CFF (1) an exclusive (even as to the Company), worldwide, perpetual, sublicensable license under technology developed under the Award Agreement that covers the Product for use in treating infections in CF patients (the “CF Field”), and (2) a non-exclusive, worldwide, perpetual, sublicensable license under certain background intellectual property covering the Product, to the extent necessary to commercialize the Product in the CF Field.

Upon commercialization by the Company of any Product, the Company will owe a fixed royalty amount to CFF, which is to be paid in installments determined, in part, based on commercial sales volumes of the Product. The Company will be obligated to make an additional fixed royalty payment upon achieving specified sales milestones. The Company may also be obligated to make a payment to CFF if the Company transfers, sells or licenses the Product in the CF Field, or if the Company enters into a change of control transaction.

The term of the Award Agreement commenced on March 10, 2020 and expires on the earlier of the date on which the Company has paid CFF all of the fixed royalty payments set forth therein, the effective date of any license granted to CFF following an Interruption, or upon earlier termination of the Award Agreement. Either CFF or the Company may terminate the Award Agreement for cause, which includes the Company’s material failure to achieve certain development milestones. The Company’s payment obligations survive the termination of the Award Agreement.

The Company concluded that the CFF Award is in the scope of ASC 808. Accordingly, as discussed in Note 3, “*Significant Accounting Policies”*of its 2025 Annual Report, the Company recognizes the award upon achievement of certain milestones as credits to research and development expenses. No credits to research and development expenses were recognized during the six months ended June 30, 2026 and 2025, related to the CFF Award. In addition, the Company concluded under the guidance in ASC 730 that it does not have an obligation to repay funds received once related research and development expenses are incurred.

14. Segment Reporting

The Company operates and manages its business asone reportable operating segment, which is the business of developing pathogen-specific bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat acute and chronic bacterial infections using its proprietary bacteriophage-based technology. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Chief Executive Officer, who reviews financial information on an aggregate basis forpurposes of assessing performance, making operating decisions, allocating resources and evaluating financial performance. The Company maintains 99.6% of its$11.2 million property and equipment, net within the United States.

The following table includes certain segment information for the periods presented (in thousands):