AmpliPhi Biosciences Corporation (NYSEMKT:APHB) Files An 8-K Other Events

Item 8.01 Other Events.

We are filing the following information with the SEC for the
purpose of updating certain aspects of our publicly disclosed
descriptions of our business and risk factors.

Company Overview

We are a biotechnology company focused on the discovery,
development and commercialization of novel phage therapeutics.
Phage therapeutics use bacteriophages, a family of viruses, to
kill pathogenic bacteria. Phages have powerful and highly
selective mechanisms of action that permit them to target and
kill specific bacteria. We believe that phages represent a
promising means to treat bacterial infections, especially those
that have developed resistance to current therapies, including
the so-called multi-drug-resistant or superbug strains of
bacteria.

The extensive use of antibiotics since the beginning of the
modern antibiotics era in the 1940s has resulted in drug
resistance among many disease-causing bacteria. According to the
U.S. Centers for Disease Control and Prevention, or CDC,
resistance to antibiotics threatens to reverse many of the key
medical advances of the last half-century. Examples of clinically
important microbes that are rapidly developing resistance to
available antimicrobials include bacteria that cause skin, bone,
lung and bloodstream infections (e.g., Staphylococcus aureus,
or S. aureus and methicillin-resistant S. aureus,
or MRSA), pneumonia and lung infections in both community and
hospital settings and cystic fibrosis, or CF, patients (e.g.,
A. baumanii, P. aeruginosa, and K. pneumoniae),
meningitis (e.g., S. pneumonia ), urinary tract and
gastrointestinal infections (e.g., E. coli and C.
difficile ). As phages kill bacteria in ways entirely unlike
the mechanisms used by traditional antibiotics, we believe that
most multi-drug resistant bacteria will be susceptible to phage
therapy. Furthermore, should resistant bacteria emerge or evolve,
we believe it will remain possible to identify phages that can
effectively kill these resistant bacteria.

Our goal is to be the leading developer of phage therapeutics. We
are combining our expertise in the manufacture of drug-quality
bacteriophages and our proprietary approach and expertise in
identifying, characterizing and developing naturally occurring
bacteriophages with that of collaboration partners in
bacteriophage biology, synthetic biology and manufacturing, to
develop state-of-the-art bacteriophage products. We are
developing phage products to combat multi- or pan-drug-resistant
bacterial pathogens, leveraging advances in sequencing and
molecular biology. We have developed certain phage combinations
that we believe maximize efficacy and minimize phage resistance.
We currently have product candidates for the treatment of S.
aureus infections, including MRSA, P. aeruginosa
infections, and C. difficile infections.

Our lead product candidate is AB-SA01, for the treatment of
S. aureus infections, including MRSA. We also have
another product candidate in earlier stage development, AB-PA01
for the treatment of P. aeruginosa infections, and an
additional discovery program, AB-CD01 for the treatment of C.
difficile infections.

We are developing our phage product candidates using a
proprietary discovery and development platform, which is designed
for rapid identification, characterization and manufacturing of
multiple phage therapeutics, allowing for real-time manufacturing
of personalized phage cocktails following isolate screen and
phage selection. Each product candidate combines several
carefully chosen phages, which target a specific disease-causing
bacteria such as S. aureus, Salmonella, P. aeruginosa,
Enterococcus, E. coli, Klebsiella, Enterobacter, Acinetobacter,
Streptococcus, and C. difficile. We believe that
the combination of our platform, our manufacturing capability,
our understanding of the regulatory and development requirements
of bacteriophage therapeutics, and the clinical and scientific
expertise of our collaboration partners may enable the rapid
advancement of phage therapeutics through the clinic and the
regulatory approval process.

In November 2015, our Australian subsidiary, AmpliPhi Australia
Pty Ltd, entered into a clinical trial research agreement with
the University of Adelaide and the Queen Elizabeth Hospital, both
in Adelaide, SA, Australia, to conduct a Phase 1 clinical trial
titled A Phase 1 Investigator Initiated Study to Evaluate the
Safety, Tolerability and Preliminary Effectiveness of AB-SA01 in
Patients with Chronic Rhinosinusitis Associated with S.
aureus infection. The University of Adelaide sponsored the
clinical trial while we supplied AB-SA01 and controlled the trial
protocol. This clinical trial primarily measured the safety and
tolerability of AB-SA01 and secondarily examined the presence of
S. aureus and symptoms assessed by the patient as well
as by the physician using standard questionnaires used by
physicians to assess treatment efficacy. We enrolled nine
patients in the trial, divided into three cohorts. The first
cohort received a twice daily dose of AB-SA01 for seven days. The
second cohort received the same dose twice daily for 14 days. The
third cohort received a higher dose of AB-SA01 twice daily for 14
days. Patients were monitored an additional 30 days following
their last day of treatment. In October 2016, we reported topline
safety and tolerability results which demonstrated that AB-SA01
was well tolerated with no drug-related serious adverse events.
In December 2016, we reported the final results from the Phase 1
trial. AB-SA01 met the trials primary endpoints of safety and
tolerability and all nine patients enrolled in the study
experienced a reduction in the quantity of S. aureus
infecting their sinuses, with some patients showing complete
eradication of the bacterial infection. A comparison of pre- and
post-treatment endoscopic images showed symptomatic improvement,
including reductions in mucosal edema, discharge and polyps. In
February 2017, we held a telephonic meeting with the FDA during
which we received positive feedback from the FDA regarding our
previously submitted proposal to commence a Phase 2 clinical
trial of AB-SA01 in chronic rhinosinusitis, or CRS, patients. We
are evaluating whether or when to pursue the initiation of such
Phase 2 trial, but we believe AB-SA01 is well-positioned for
study in a Phase 2 trial in patients with CRS.In the official
minutes from the meeting, the FDA acknowledged that phage therapy
is an exciting approach to treatment of multidrug-resistant
organisms and expressed a commitment to addressing the unique
regulatory challenges that might arise during product
development. The FDA further acknowledged that the clinical
safety and effectiveness data collected during development,
including from emergency case studies, could inform future
discussions for clinical development and ultimately, the
regulatory pathway to approval. The FDA indicated they were open
for continued discussions and suggested various potential next
steps.

In June 2013, we entered into a cooperative research and
development agreement, or Research and Development Agreement,
with the United States Army Medical Research and Materiel Command
focusing on developing bacteriophage therapeutics to treat S.
aureus, E. coli and P. aeruginosa
infections. In 2016, under this Research and Development
Agreement, we completed enrollment of a Phase 1 safety study of
AB-SA01 for the treatment of wounds infected with S.
aureus and we reported safety and tolerability results which
demonstrated that AB-SA01 was well tolerated throughout the
trial. No subject had a treatment-emergent adverse event, or
TEAE, which was considered definitely or probably related to
AB-SA01, and there were no severe or higher grade TEAEs, serious
adverse events or discontinuation of treatment due to TEAEs.
Additionally, all laboratory values and vital sign parameters
were within normal ranges. Overall, treatment with AB-SA01 was
well tolerated when administered topically to the intact skin of
healthy adults.

Personalized Precision Medicine Applications

We believe our bacteriophage technology may have unique
application in the area of personalized medicine. In particular,
we believe our bacteriophage technology can be used to develop
personalized, targeted therapies for patients who suffer from
serious or life-threatening antibiotic-resistant bacterial
infections and who have limited or no other satisfactory
treatment options. Moreover, we believe our ability to customize
phage therapies for antibiotic-resistant infections, combined
with the ability of bacteriophage to re-sensitize drug-resistant
populations to antibiotics, represents what could be a powerful
tool against the growing challenge of antibiotic-resistant
infections. We have commenced a focused effort to develop
precisely targeted and personalized bacteriophage therapies aimed
at addressing the unmet medical need of serious or
life-threatening antibiotic-resistant infections.

Under existing compassionate-use guidelines, we expect to provide
personalized phage therapies to patients suffering from severe,
multidrug-resistant, or MDR, infections who have failed prior
therapies. We believe this strategic approach will not only
provide potential benefit to patients to whom we are able to
provide personalized phage therapies under the compassionate-use
guidelines, but also provide the clinical data from these
compassionate use cases that we expect to support the potential
validation of the clinical utility of phage therapy and inform
our future discussions with the FDA in 2018 or later on defining
a potential path to market approval. We anticipate that we will
initially make personalized phage therapies available in
Australia, where we plan to collaborate with leading hospitals
and key opinion leaders to identify and select eligible patients.
We believe Australia has a favorable regulatory framework with
respect to treating patients under compassionate use guidelines.

Our new emphasis on personalized medicine builds upon our prior
successes using tailored bacteriophage therapies under emergency
investigational new drug applications to treat individual
patients battling life-threatening, MDR bacterial pathogens who
had exhausted their treatment options. In March 2016 we
collaborated with several academic institutions and a U.S. Navy
laboratory to produce a personalized bacteriophage therapy that
successfully treated a critically ill, comatose patient with an
MDR Acinetobacter baumannii (A. baumannii)
infection. Shortly after phage therapy was initiated, the patient
emerged from the coma and continued to improve under an ongoing
combination of phage and antibiotic therapies until the infection
was cleared. To date, the infection has not returned.
Additionally, in December 2007 our wholly owned subsidiary,
Special Phage Services, was instrumental in developing a
personalized phage therapy that, together with a course of
antibiotics, eliminated a previously
antibiotic-resistantPseudomonas aeruginosa(P.
aeruginosa) infection in the bladder of a female cancer
patient.

We currently estimate that we may be able to leverage
compassionate-use data to demonstrate the clinical utility of our
bacteriophage therapies between 2017 and 2018. During this
period, we anticipate optimizing bacteriophage therapeutic
regimens, expanding our phage libraries for MDR pathogens and
potentially publishing clinical evidence in collaboration with
treating physicians and other researchers involved with the
patient treatment.

The Need for New Anti-Infective Therapies

The rapid and continuous emergence of antibiotic-resistant
bacteria has become a global crisis. Despite this crisis, the
number of novel anti-infective therapies currently in development
is at historically-low levels. The CDC estimates that more than
two million people in the United States acquire an
antibiotic-resistant infection each year and more than 23,000 of
these prove fatal. In a reported filed in September 2016, a
Reuters analysis found that nationwide, drug-resistant infections
were mentioned as contributing or causing the death of more than
180,000 people, meaning drug-resistant infections now kill more
patients every year than breast cancer. In a report commissioned
by the U.K. government and published in May 2016, it is estimated
that 700,000 people die yearly from drug-resistant infections
worldwide and by 2050 that number could reach 10,000,000. It is
estimated that 50% of hospital-acquired infections are resistant
to first-line anti-infective therapies. The cumulative annual
cost for treating resistant bacterial infections in the United
States alone is estimated to be $20 billion, and it is further
estimated that by 2050 the cumulative annual cost to global
economic output could reach $100 trillion.

The CDCs latest report on the matter, Antibiotic Resistance
Threats in the United States, 2013, notes that there are
potentially catastrophic consequences of inaction. Despite the
potential market opportunity, only two New Drug Applications, or
NDAs, for antibacterial drugs were approved by the FDA between
2010 and 2012 compared to 18 in the period between 1980 and 1984.
One of the primary recommendations of the CDC is the development
of new antimicrobials to diversify treatment options.

We believe bacteriophage technology is uniquely positioned to
address the global health threat of antibiotic resistance, due to
the ability of bacteriophage to precisely target bacterial
infections and work synergistically with antibiotics by
re-sensitizing multi-drug resistant bacterial infections to
antibiotics.

Product Candidates

AB-SA01: Infections Caused by S. aureus

By screening our proprietary library of phages, we selected a
phage product candidate mix that has demonstrated, in in
vitro studies, greater than 92% activity against a global
diversity panel that includes some of the most virulent isolates
of S. aureus, including MRSA isolates. The three phage
constituents of AB-SA01 were subsequently tested for their
ability to infect clinically relevant bacterial isolates
collected from around the world and were shown to have similar
activity with maximal complementation. Complementation, defined
as the percentage of S. aureus isolates susceptible to
more than one phage, is emphasized in product selection to reduce
risk of the emergence of bacterial resistance.

In connection with our Research and Development Agreement with
the U.S. Army Medical Research and Materiel Command, we have been
developing AB-SA01 to treat acute and chronic infections caused
by S. aureus, including infections caused by MRSA strains of the
same bacterium. MRSA infections are one of the most common causes
of hospital-acquired (nosocomial) infections. The CDC estimates
that more than 850,000 patients were treated for S. aureus
infections of the skin or soft tissue in 2013 and, due to failure
of first-line treatment, more than 50% of these patients required
a second-line treatment and approximately 35% of them required a
third-line treatment. Global Data estimates the market for MRSA
infection treatments alone was more than $2.7 billion in 2007.
This market is forecasted to grow to more than $3.5 billion by
2019. We initiated the Phase 1 clinical trial in May 2016 and
completed enrollment in July 2016. In December 2016, we reported
final results from this Phase 1 trial to evaluate the safety and
tolerability of AB-SA01, our proprietary investigational phage
cocktail targeting Staphylococcus aureus (S. aureus) infections.
Overall, treatment with AB-SA01 was well tolerated when
administered topically to the intact skin of healthy adults.

In December 2015, we initiated a Phase 1 trial at the University
of Adelaide Queen Elizabeth Hospital to evaluate the safety and
preliminary efficacy of AB-SA01 in CRS patients infected with
S. aureus. In December 2016, we reported final results
from this trial. AB-SA01 met the trials primary endpoints of
safety and tolerability and all nine patients enrolled in the
study experienced a reduction in the quantity of S.
aureus infecting their sinuses, with some patients showing
complete eradication of the bacterial infection.

AB-PA01: Lung Infections in Cystic Fibrosis (CF)
Patients Caused by P. aeruginosa

We are initially developing AB-PA01, a cocktail comprised of four
phages, for the treatment of P. aeruginosa, the most
prevalent bacterial infection in cystic fibrosis (CF) patients.
P. aeruginosa is the primary cause of lung infection in
approximately 80% of CF patients ages 25 to 34, causing an
estimated 450 deaths per year in the United States. To develop
our product candidates, we have created a global diversity panel
of relevant clinical isolates (bacteria isolated from patients)
from clinics around the globe. These diversity panels have been
screened against our phage libraries, which are isolated and
characterized according to our set of proprietary discovery
protocols. We have demonstrated, in in vitro and in
vivo studies, that our proprietary phage mix is able to
effectively kill targeted bacteria. Furthermore, our phage mixes
are selected to exhibit a high degree of overlap, defined as the
strains of bacteria targeted by more than one phage in the
product. We believe that high overlap is an important factor in
preventing bacteria from developing resistance to our phage
product candidates.

Similar to work described above for S. aureus, we have
tested over 400 clinical P. aeruginosa clinical
isolates. As an example, initial host range testing was performed
with a reference panel of 67 CF isolates. AB-PA01 showed an
activity of 95.5% (64/67) with 87.5% (56/64) of the positives
isolates hit by more than one phage in the mix.

In collaboration with Institut Pasteur (Paris, France) and also
with the Brompton Hospital, Imperial College (London, United
Kingdom), we have demonstrated in the preclinical studies that
phages can effectively treat infections in animal models of acute
P. aeruginosa lung infections. In one such study, we
inoculated eight mice with P. aeruginosa and treated them with
either PBS (control group), our phage mix, or with an antibiotic.

Bacterial counts and the number of bacteriophage infection units
detected by assay, or phage titers, were measured in these
animals after 24 hours, and the results demonstrated that our
phage mix effectively lowered the bacterial counts, or CFU, in
the mouse lung to levels comparable to antibiotic treatment (PBS
vs. antibiotic, p=0.0003; PBS vs. bacteriophage, p=0.0003). A
p-value is a statistical measure of the probability that the
difference in two values could have occurred by chance. The
smaller the p-value, the lower the likelihood is that the
difference occurred by chance, or the greater our confidence is
that the results are statistically significant. Furthermore, it
was evident that phage replicated to high levels in the infected
lung.

Another preclinical study conducted at the Institut Pasteur in
mice (12 mice in each of the treatment and control groups)
demonstrated the ability of our phage mix to reach the lung
within two hours of being delivered by oral administration. The
phage levels increased between two and six hours post-treatment,
and the difference was statistically significant (p-value 0.001).
These results demonstrate that when orally administered in mice,
phages not only reached the lungs, but were also able to infect
and multiply in target bacteria.

In a separate in vivo study of acute P.
aeruginosa infection of the mouse lung conducted at the
Brompton Clinic, results demonstrated that our phage mix reduced
CFU levels upon simultaneous intranasal administration (six mice
in each of the treatment and control groups) and also when
administered 24 hours post-bacterial infection (seven mice in the
treatment group and eight mice in the control group) using a
standard strain of P. aeruginosa.

We were granted an advisory meeting with the MHRA in the first
quarter of 2014 to discuss our plans and intend to move the
AB-PA01 compound into additional preclinical testing in
preparation for a Phase 1/2 clinical trial in CF patients. We
also sought advice on the acceptability of CMC plans. The MHRA
concurred with our approach and plans as presented, including a
first-in-man dose ranging clinical trial in CF patients. We have
completed product candidate selection and have conducted
manufacturing process development and scale-up. We estimate that
we may be in a position to initiate a Phase 1 clinical study of
AB-PA01 for the treatment of P. aeruginosa infections in
CF patients in as early as approximately nine months after
electing to move forward with such study.

We have also begun an evaluation of our P. aeruginosa
phages in preclinical animal models of CRS in collaboration with
the University of Adelaide.

If we achieve successful proof of concept studies, we may
consider developing this compound for the treatment of other
acute and chronic lung infections, such as ventilator associated
bacterial pneumonia, or VABP, and chronic obstructive pulmonary
disease, or COPD and chronic suppurative otitis media. P.
aeruginosa is the predominant pathogen in these indications.

AB-CD01: Gastrointestinal (GI) Infection Caused by C.
difficile, or CDI

From 2000 through 2007, deaths in the United States from
infections caused by C. difficile, or CDI, increased over 400%.
Over 90% of such deaths occur in hospitalized or confined
patients over the age of 65. Global Data estimates that the major
European Union and United States markets for CDI therapies grew
to more than $314 million in 2011 and they are expected to grow
to more than $500 million by 2019.

According to the CDC almost 250,000 people each year require
hospitalization for CDI and at least 14,000 people die each year
in the United States from CDI. The CDC also estimates that 20 40%
of CDI recurs with standard antibiotic treatment. We believe that
orally delivered phages are well suited to treat CDI. Researchers
at the University of Leicester have discovered phages that have
been shown to be effective in vitro and in vivo
against clinically-relevant strains of C. difficile
isolated from around the world. These same researchers have also
shown phage cocktails to be effective in preventing C.
difficile biofilm formation in vitro. While current
pathogenic strains of C. difficile are not yet
antibiotic-resistant, the CDC has categorized C.
difficile as an urgent threat and has stated that CDI
requires urgent and aggressive action. We believe that there may
be a significant market opportunity for a phage therapy in
treating this infection. We have conducted preclinical studies to
select and optimize our phage cocktail and manufacturing strains
as well as evaluate their efficacy in animal models. Data
published in 2016 by our collaborators (Nale et al) in Frontiers
in Microbiology suggest that the phages significantly reduced
C. difficile biofilms in vitro, and in
vivo prevented bacterial colonization in a wax model (G.
mellonella) when phages were used alone or in combination with
vancomycin and antibiotic commonly used to treat CDI.

Prior Clinical Development

In 2010, our wholly owned subsidiary, Biocontrol Ltd, reported a
double-blind placebo-controlled, randomized Phase 1/2 clinical
trial targeting chronic ear infections (otitis) caused by P.
aeruginosa . To our knowledge, this was the first randomized
placebo-controlled efficacy trial of bacteriophage therapy.
Results were published demonstrating decreasing levels of P.
aeruginosa in the ear and improvement of clinical condition
with a single input dose of 2.4 nanograms of bacteriophage
preparation. While this was a small trial (n=24), changes from
baseline at the end of the trial in the test group (n=12) were
statistically significant for both clinical condition (p=0.001)
and bacterial load (p=0.016). No significant changes were seen in
the control group (n=12) compared to baseline at the end of the
trial. Difference between test and control groups was
statistically significant by analysis by covariance on day 21 for
bacterial count (p=0.0365). These results will need to be
validated in larger well-controlled trials.

Anti-Infective Therapeutics Market

The market opportunity for antibiotics is large, with the market
estimated to reach $44.7 billion in annual sales globally in
2020. Almost one in every five deaths worldwide occurs as a
result of infection and, according to the World Health
Organization, or WHO, many bacterial infections will become
difficult or impossible to cure as the efficacy of current
antibiotic drugs wanes. Despite the advances in antimicrobial and
vaccine development, infectious diseases still remain as the
third-leading cause of death in the United States and the
second-leading cause of death worldwide.

The number of new antibiotics approved by the FDA and other
global regulatory authorities has declined consistently over the
last two decades. According to the PEW Charitable Trusts report,
as of December 2016 there were an estimated 40 new antibiotics in
clinical development for the U.S. market. Historically, the
success rate from Phase 1 to marketing approval is only one in
five for infectious disease products. We therefore believe there
is a need for new approaches to treat serious bacterial
infections. Hospital-acquired (nosocomial) infections are a major
healthcare problem throughout the world, affecting developed
countries as well as resource-poor countries. The WHO reports
that hospital-acquired infections are among the major causes of
death and increased morbidity among hospitalized patients and
estimates that more than 1.4 million people per year worldwide
suffer from infectious complications from a hospital stay.

A recent CDC report also cites that in the United States, between
5 and 10% of all patients admitted to a hospital will be affected
by a hospital-acquired infection during their stay, typically
requiring extended stays and additional care. There is also a
significant risk of death from such infections. In the United
States, the CDC estimates that approximately 99,000 people die
from hospital-acquired infections each year. The Cystic Fibrosis
Foundation estimates that P. aeruginosa accounts for 10%
of all hospital-acquired infections.

Compounding the above situations is the alarming and continuing
rise in the prevalence of antibiotic-resistant bacterial
infections. This, coupled with the lack of new antibiotics in
current discovery and development pipelines, has generated a
significant clinical management problem worldwide, leading to
increases in morbidity and mortality due to these
antibiotic-resistant bacteria as well as increases in healthcare
costs.

The first of these antibiotic-resistant infections to reach
epidemic proportions was caused by the Gram-positive bacterium
S. aureus. S. aureus resistance to a broad
range of antibiotics has necessitated the use of expensive and
potentially toxic drugs of last resort, most notably vancomycin.
Antibiotic-resistant forms of S. aureus, usually termed
MRSA, VISA (vancomycin-intermediate S. aureus), or VRSA
(vancomycin-resistant S. aureus ), can be extremely
challenging to treat. Although several antibiotics targeting
S. aureus have been developed, rapidly developing
bacterial resistance has been noted for all of these including
linezolid, daptomycin and tigecycline. On the basis of historical
evidence, resistance to these existing products is likely to
increase over time, and this picture is further complicated by
the reduced efficacy of conventional antibiotics against
Staphylococcus biofilms.

Typically, S. aureus infection causes a variety of
suppurative (pus-forming) infections and toxinoses (lesions) in
humans. It causes superficial skin lesions such as boils, styes
and furuncles; more serious infections such as pneumonia,
mastitis, phlebitis, meningitis and urinary tract infections; and
deep-seated infections, such as osteomyelitis and endocarditis.
S. aureus is the leading cause of wound infections, in
particular, hospital-acquired (nosocomial) infection of surgical
wounds and infections associated with indwelling medical devices.
S. aureus is the leading pathogen in
healthcare-associated infections in the United States as a whole,
accounting for 30.4% of surgical site infections, or SSI, and
15.6% of such infections overall.

Infections also occur in patients with CF, which is a genetic
disease affecting primarily Caucasians of northern European
descent. According to the Cystic Fibrosis Foundation, there are
approximately 50,000 cases of CF in North America and Europe.
P. aeruginosa opportunistically infects the mucous
membranes, primarily the lungs, of CF patients and quickly grows
out of control, resulting in pneumonia. P. aeruginosa
infections are notoriously resistant to known antibiotics, and
treatment may be further complicated by the formation of
biofilms. Biofilms are organized structures of microorganisms
growing on solid surfaces (such as lung tissue) and often limit
access of antibiotics to the covered tissues. Since phages attack
bacteria in a manner independent of chemical antibiotic
resistance mechanisms and can infect bacteria growing in
biofilms, we believe that P. aeruginosa infection among
CF patients represents a compelling indication to pursue. The
availability of Pseudomonas-specific phages along with
validated animal models of P. aeruginosa lung infections
has contributed to the development of our bacteriophage program
in CF.

Anti-Infective Treatments with Bacteriophages

Background

The dramatic rise in antibiotic resistance, the appearance of an
increasing number of new superbugs and the lack of new
antibiotics in the pipeline has prompted calls to action from
many of the worlds major health bodies such as the CDC and the
WHO, who warn of an antibiotic cliff and a post-antibiotic era.
In 2009, the European Antimicrobial Resistance Surveillance
System, or EARSS, concluded that the loss of effective
antimicrobial therapy increasingly threatens the delivery of
crucial health services in hospitals and in the community. This
conclusion was reinforced by The Antimicrobial Availability Task
Force, or AATF, of the Infectious Diseases Society of America, or
IDSA, and the European Centre for Disease Prevention and Control,
or ECDC, in conjunction with the European Medicine Agency, or
EMA. We therefore believe there is a pressing need to find
alternative antibacterial therapies.

Bacteriophage therapy has the potential to be an alternative
method of treating bacterial infection. Phages are ubiquitous
environmental viruses that grow only within bacteria, but are
among the most abundant and diverse organisms on the planet. The
name bacteriophage translates as eaters of bacteria and reflects
the fact that as they grow, phages kill the bacterial host by
multiplying inside and then bursting through the cell membrane in
order to release the next generation of phages. Phages can differ
substantially in morphology and each phage is active against a
specific range of a given bacterial species. Phages were first
discovered in 1915 at the Institut Pasteur and were shown to kill
bacteria taken from patients suffering from dysentery.
Furthermore, it was noted that phage numbers rose as patients
recovered from infection, suggesting a direct association.

Life Cycle of a Bacteriophage

Until the discovery of effective antibiotics, phages were used as
an effective means of combating bacterial infection. When
broad-spectrum antibiotics came into common use in the early
1940s, phages were considered unnecessary, with antibiotics being
seen for many years as the answer to bacterial disease. This
attitude persisted until the development of the wide-ranging, and
in some cases total, resistance to antibiotics seen within the
last 10 years.

Phages have the potential to provide both an alternative to, and
a synergistic approach with, antibiotic therapy. Since they use
different mechanisms of action, phages are unaffected by
resistance to conventional antibiotics. Phages containing certain
enzymes also have the ability to disrupt bacterial biofilms, thus
potentiating the effect of chemical antibiotics when used in
combination with them.

Our Strategy

Our strategy is to use techniques of modern biotechnology and
current state-of-the-art practices for drug development in
concert with existing regulatory guidance to develop a pipeline
of bacteriophage products that will destroy bacteria such as
MRSA, which are resistant to antibiotics. We intend to leverage
advances in sequencing and molecular biology to build upon the
demonstrated ability of using phages therapeutically to
successfully treat bacterial infections.

As discussed in greater detail above, we also plan to use our
bacteriophage technology to develop personalized targeted
therapies for patients who suffer from serious or
life-threatening antibiotic-resistant bacterial infections and
who have few or no other satisfactory treatment options. Our
long-term strategy is to become the world leader in treating
drug-resistant bacterial infections.

We supplement our internal resources with world-class scientific
and medical collaborations throughout the world. For example,
through a collaboration with The University of Adelaide in
Australia and the University Hospital Ghent in Belgium, we
conducted preclinical studies showing the ability of S.
aureus phage preparations to kill over 140 clinical isolates
from CRS patients demonstrating activity of greater than 90%.
Furthermore, a S. aureus mixture was shown to be safe
and efficacious in a preclinical sheep model of CRS. A Phase 1
clinical trial for this program was conducted at the University
of Adelaides Queen Elizabeth Hospital for the treatment of
patients suffering from CRS associated with S. aureus
infection. In December 2016, we reported final results from the
Phase 1 trial of AB-SA01 in patients with CRS. AB-SA01 met the
trials primary endpoints of safety and tolerability and all nine
patients enrolled in the study experienced a reduction in the
quantity of S. aureus infecting their sinuses, with some
patients showing complete eradication of the bacterial infection.
In August 2016, we tested AB-SA01 against 90 S. aureus
clinical isolates from CRS patients located in Belgium and showed
similar activity to isolates obtained from Australian patients,
highlighting the diverse geographic activity of our phage
cocktail.

In collaboration with the U.S. Army, we completed a Phase 1
safety study under an IND that we believe will support the
further development of a treatment for S. aureus
infections for wound and skin infections. In December 2016, we
reported final results from the Phase 1 trial to evaluate the
safety and tolerability of AB-SA01. Overall, treatment with
AB-SA01 was well tolerated when administered topically to the
intact skin of healthy adults.

We collaborate with the Royal Brompton Hospital in London where
we have demonstrated that a phage product candidate can survive
nebulization, was effective in killing over 83% of recent
clinical P. aeruginosa isolates, and in preclinical
mouse models demonstrated that a phage mixture dose-dependently
clears P. aeruginosa infection from the lung and reduced
inflammation. We have completed selection of the phages for drug
product selection for AB-PA01, and we estimate that we may be in
a position to initiate a Phase 1 clinical study of AB-PA01 for
the treatment of P. aeruginosa infections in CF patients
in as early as approximately nine months after electing to move
forward with such study.

Strategic Alliances and Research Agreements

Global RD Agreement with U.S. Army

In June 2013, we entered into a Research and Development
Agreement with the U.S. Army Medical Research and Materiel
Command. The Research and Development Agreement focuses on
developing bacteriophage therapeutics to treat S.
aureus, E. coli and P. aeruginosa
infections, with the initial therapeutic development focus being
wounds and skin infections from S. aureus, which is the
leading pathogen in healthcare-associated infections in the
United States as a whole, accounting for 30.4% of surgical site
infections.

We retain global regulatory ownership and commercial rights to
all products developed by us under the Research and Development
Agreement. The U.S. Army Medical Research and Materiel Command
will have the right to retain a non-exclusive license to use any
products developed by or on behalf of the U.S. Government for
non-commercial uses. We also have the rights to exclusively
license any intellectual property developed by the U.S. Army
Medical Research and Materiel Command under the collaboration on
terms to be agreed upon.

The Research and Development Agreement expires in June 2018 and
can be terminated by either the U.S. Army Medical Research and
Materiel Command or us upon 60 days written notice to the other
party at any time.

University of Leicester License
Agreement

In September 2013, we entered into a license agreement with the
University of Leicester which provides us with exclusive rights
to certain patents and materials owned by the University of
Leicester, as well as non-exclusive licenses to related know-how,
to research, develop, manufacture, use and sell one or more phage
therapy products for treating C. difficile infection or
carriage in humans or animals.

Under the license agreement, we have paid an up-front fee and
have agreed to pay the University of Leicester royalties based on
product sales and make certain milestone payments based on
product development. The license agreement expires on the later
of the expiration of the licensed patents or September 2028, and
is terminable by us at any time upon 60 days notice, by the
University of Leicester (a) if we legally challenge the validity
or ownership of any of the licensed patents, (b) if we fail to
pay the fees, milestones or royalties due under the license
agreement or (c) if we fail to make substantial commercial
progress in developing the licensed technology and, following
good faith discussions, the parties are unable to identify
feasible next steps to remedy any such failure to make
substantial commercial progress. The license agreement is also
terminable by either party upon the material breach by the other
party (subject to a 30-day cure period) or upon the other partys
bankruptcy or insolvency.

In April 2017, the University of Leicester provided us with
notice that it intends to terminate the license agreement as a
result of its determination that we have not continued to make
substantial commercial progress in relation to the technology
licensed to us under the agreement. Under the license agreement,
we have the right to enter in good faith discussions with the
University of Leicester to identify feasible next steps to remedy
the perceived lack of commercial progress prior to a termination
of the license agreement on such basis. Although we intend to
engage in such discussions with the University of Leicester,
there can be no assurance that the parties will be able to
identify or agree upon feasible next steps to remedy the
purported lack of commercial progress, or that we will otherwise
be able to resolve the matter in a manner that results in our
retaining the rights licensed to us on the original terms of the
agreement, on other favorable terms, or at all. The licensed
rights relate to bacteriophage therapeutic products for the
treatment of C. difficile, which is a program we are not
actively developing at present, but may choose to develop in the
future pending the rights to do so.

License Agreement with United Kingdom Secretary of
State for the Department of Health

In January 2011, upon completion of our acquisition of Biocontrol
Ltd., we assumed a license agreement entered into in March 2007
between Biocontrol Ltd. and the Health Protection Agency, Centre
for Emergency Preparedness and Response, to use certain
intellectual property rights to develop treatments for bacterial
biofilm infections. The agreement was subsequently assigned to
the United Kingdom Secretary of State for the Department of
Health, or DoH.

Under the license agreement, we have obtained exclusive rights to
a patent portfolio related to the use of bacteriophages combined
with biofilm-disrupting agents in treating biofilm infections. In
consideration for the exclusive license, we may be required to
pay to the DoH certain milestone payments in the aggregate of up
to 10,000 per product, as well as single digit percentage royalty
on net sales of products incorporating licensed intellectual
property.

The license agreement shall remain in full force and effect until
the expiration of the last patent exclusively licensed under the
license agreement. If we default on any milestone or royalty
payments, or upon breach by us of certain other terms of the
license agreement, the DoH may either terminate the license
agreement immediately upon written notice or modify the license
to be non-exclusive upon 30 days written notice.

Intellectual Property

General

Our goal is to obtain, maintain and enforce patent protection for
our product candidates, formulations, processes, methods and any
other proprietary technologies, preserve our trade secrets and
operate without infringing on the proprietary rights of other
parties, both in the United States and in other countries. Our
policy is to actively seek to obtain, where appropriate, the
broadest intellectual property protection possible for our
current product candidates and any future product candidates,
proprietary information and proprietary technology through a
combination of contractual arrangements and patents, both in the
United States and abroad. However, patent protection may not
afford us with complete protection against competitors who seek
to circumvent our patents.

We also depend upon the skills, knowledge, experience and
know-how of our management and research and development
personnel, as well as that of our advisors, consultants and other
contractors. To help protect our proprietary know-how, which is
not patentable, and for inventions for which patents may be
difficult to enforce, we currently and will in the future rely on
trade secret protection and confidentiality agreements to protect
our interests. To this end, we require all of our employees,
consultants, advisors and other contractors to enter into
confidentiality agreements that prohibit the disclosure of
confidential information and, where applicable, require
disclosure and assignment to us of the ideas, developments,
discoveries and inventions important to our business.

As of December 31, 2016, we owned or had exclusive license rights
to a total of 65 patents and applications: five U.S. patents,
seven U.S. patent applications, 40 foreign patents, and 13
foreign patent applications, expiring on various dates between
2024 and 2036. These patents and applications cover our lead
phage-therapeutic programs and use thereof, the sequential use of
bacteriophages in combination with conventional antibiotics,
genetic sequence variations, biofilm disrupting agents, methods
to reduce antibiotic resistance, methods to design therapeutic
combination panels of bacteriophage, disinfection methods using
bacteriophages, and bacteriophage mutants having increased
bacterial host spectra.

US 7758856 and national patents within the EU
deriving from PCT WO2004062677; Bacteriophage for the treatment
of bacterial biofilms

Under an existing license from the United Kingdom Secretary of
State for the Department of Health (DoH), we have exclusive
rights to a patent portfolio related to the use of bacteriophages
combined with biofilm-disrupting agents in treating biofilm
infections. This portfolio includes one issued patent in the
United States and a patent granted in Europe (EP1587520 is
validated in France, Germany, Netherlands, Switzerland,
Liechtenstein and the United Kingdom). Claims issued in these
patents include those directed to compositions and methods
related to agents that are able to facilitate the penetration of
biofilms, and their combination with therapeutic bacteriophage
preparations. The U.S. patent is expected to expire in December
2026 (absent any extensions). The foreign patents are expected to
expire in January 2024 (absent any extensions).

US 7807149, US 8105579, US 8388946, continuation
application and national filings deriving from PCT WO2005009451;
Bacteriophage containing therapeutic agents

Through our wholly owned subsidiary, Biocontrol Ltd, we own three
granted U.S. patents and one pending U.S. continuation patent
application with claims directed generally to bacteriophage
compositions, therapeutic methods of using bacteriophages, and
methods of treating bacterial infections by sequentially
administering bacteriophages in combination with conventional
antibiotics. The pending U.S. continuation application (US
13/757655) relates generally to panels of bacteriophages with
different strain specificities for bacterial infections.
Corresponding patents have been granted in Australia
(AU2004258731), Europe (EP1663265 and EP2570130 both patents are
validated in the United Kingdom, Switzerland, Liechtenstein,
Germany, Spain, France, Italy and the Netherlands), Japan
(JP5731727 and JP5856556) and Canada (CA2533352). Claims issued
in these patents include those directed to therapeutic and
non-therapeutic applications of bacteriophage and the sequential
use of antibiotics to treat bacterial infections. U.S. patents
are expected to expire from July 2024 to March 2027 (absent any
extensions). The foreign patents are expected to expire in July
2024 to March 2027 (absent any extensions).

US 8475787, continuation application and national
filings deriving from PCT WO2008110840; Beneficial effects of
bacteriophage treatment

Through our wholly owned subsidiary, Biocontrol Ltd, we own one
granted U.S. patent (8475787), and one pending continuation
application (14/625049). This patent family broadly relates to
bacteriophage-induced induction of antibiotic sensitivity in a
bacterial target, such as P. aeruginosa. The granted
U.S. patent is expected to expire in July 2029 (absent any
extensions). Corresponding patents have been granted in Australia
(AU2008224651), Europe (EP2136826 validated in the United
Kingdom, Switzerland/Liechtenstein, Germany, Spain, France, Italy
and the Netherlands), and Japan (JP5988417 and JP6004543). A
related Canadian application (CA2680108) has been allowed and
will be officially granted upon the payment of the issuance fee
due July 4, 2017. Foreign patents in this family are expected to
expire in March 2028 (absent any extensions).

PCT WO2013/164640 (United Kingdom priority filing
1207910.9); Therapeutic bacteriophage compositions

Through our wholly owned subsidiary, Biocontrol Ltd, we own a
Patent Cooperation Treaty, or PCT, application relating to the
design of effective bacteriophage combinations and elimination of
antagonistic effects between said bacteriophage. The PCT
application published on November 7, 2013, and following
International Preliminary Examination a positive patentability
opinion issued. National/regional phase applications are
currently pending in the U.S. (US14/398384), Canada (CA2871986),
Europe (EP2874635), Japan (JP2015/523850), and Australia
(AU2013255583). Patents issuing from this PCT, if any, are
expected to expire in May 2032 (absent any extensions).

PCT WO2009/044163 (United Kingdom priority filing
0719438.4); Anti-bacterial compositions

to the terms of the Asset Purchase Agreement with Novolytics
Ltd., we acquired and currently own one U.S. continuation
application (14/686315) relating to methods for killing/treating
Staphylococcus and MRSA, among other bacteria, using a combined
bacteriophage K and bacteriophage P68 composition. A
corresponding patent has been granted in Australia
(AU2008306626), and China (CN101835384), and Japan (JP6053727),
while European application (EP2197284) has been allowed. Related
applications are pending in Australia (AU2015264918) and Canada
(CA2700646). The granted foreign patents are expected to expire
October 2028 (absent any extensions).

PCT WO2013/068743 (United Kingdom priority filing
1119167.3); Novel bacteriophages

to the terms of the Asset Purchase Agreement with Novolytics
Ltd., we acquired and currently own a U.S. patent application
(14/356869) relating to Staphylococcus aureus and MRSA
therapeutics, and in particular Phage K mutants capable of
targeting an increased number of Staphylococcus aureus strains
when compared to wild-type Phage K, as well as uses of said
mutant. U.S. patent application 14/356869 has been allowed.
Related applications are also pending in Australia
(AU2012335397), Canada (CA2890450), Japan (JP 2014/533943) and
Europe (EP2776559). Any granted patents will expire in November
2033.

US 15/237496 (converted from United States
provisional filing 62/204915); Therapeutic bacteriophage
compositions

We own U.S. patent application 15/237496, which is directed to
our AB-SA01 bacteriophage panel, mutants thereof, and methods of
treating Staphylococcus aureus infections (including MRSA)
comprising the use of same. Corresponding foreign applications
are being pursued by way of a parallel PCT application. Any
granted US patent is expected to expire in August 2036 (absent
extensions). Corresponding foreign applications are being pursued
by way of a parallel PCT application.

Our success in preserving market exclusivity for our product
candidates relies on patent protection, including extensions to
this where appropriate, and on data exclusivity relating to an
approved biologic. This may be extended by orphan drug and/or
pediatric use protection where appropriate. Once any regulatory
period of data exclusivity expires, depending on the status of
our patent coverage, we may not be able to prevent others from
marketing and selling biosimilar versions of our product
candidates. We are also dependent upon the diligence of our
appointed agents in national jurisdictions, acting for and on our
behalf, which manage the prosecution of pending domestic and
foreign patent applications and maintain granted domestic and
foreign patents.

Competition

We operate in highly competitive segments of the biotechnology
and biopharmaceutical markets. We face competition from many
different sources, including commercial pharmaceutical and
biotechnology enterprises, academic institutions, government
agencies and private and public research institutions all seeking
to develop novel treatment modalities for bacterial infections.
Many of our competitors have significantly greater financial,
product development, manufacturing and marketing resources than
we do. Large pharmaceutical companies have extensive experience
in clinical development and obtaining regulatory approval for
drugs. In addition, many universities and private and public
research institutes are active in antibacterial research, some in
direct competition with us. We also may compete with these
organizations to recruit scientists and clinical development
personnel.

There are a handful of small biotechnology companies developing
bacteriophage products to treat human diseases. Other than our
ongoing clinical trials there is, to our knowledge, one
corporate-sponsored clinical trial currently enrolling. A French
biotechnology company, Pherecydes Pharma, is acting as clinical
trial sponsor of a Phase 1/2 clinical trial in Europe of a phage
therapy for the treatment of burn wounds infected with either
E. coli and P. aeruginosa , referred to as
PhagoBurn. This clinical trial is a randomized, multi-center open
label study to assess tolerance and efficacy of local treatment
with a bacteriophage cocktail. A multi-center clinical trial also
sponsored by Pherecydes Pharma evaluating a bacteriophage
cocktail versus placebo for diabetic foot ulcers, is listed on
clinicaltrials.gov as active but not yet enrolling. To our
knowledge, a small number of biotechnology companies, including
Synthetic Genomics and LytPhage, Inc., as well as academic
institutions, have earlier stage discovery programs utilizing
synthetic biology approaches to genetically modify bacteriophages
to remove or input genes to improve therapeutic properties such
as increases to the bacterial host range to infect a larger
number of bacterial strains and decrease the need for using
multiple phages in a product.

A related approach to treating Staphylococcus infections
is being pursued by Contrafect Corporation using a bacteriophage
lysin (a hydrolytic enzyme produced by bacteriophages) to treat
S. aureus bacteremia (infection in the blood).
Contrafect has recently completed a Phase 1 intravenous single
dose escalation study in healthy volunteers.

Our bacteriophage programs may compete with or be synergistic
with currently approved antibiotics, and experimental approaches
such as novel antibiotics, antimicrobial peptides, antimicrobial
vaccines, metals, antisense, monoclonal antibodies and possibly
microbiome manipulation. For example, Seres Therapeutics is
developing a single-dose capsule (SER-109) consisting of
bacterial spores to treat recurrent CDI (Clostridium
difficile infection). SER-109, or similar products that may
be in development by third parties, could prove to be competitive
to or used in conjunction with a bacteriophage therapeutic
approach.

Manufacturing and Supply

We have developed our own manufacturing capabilities at a
facility in Ljubljana, Slovenia that is leased by our wholly
owned subsidiary, AmpliPhi, Biotehnoloke Raziskave in Razvoj,
d.o.o. We believe that our facility complies with applicable cGMP
regulations, which require, among other things, quality control
and quality assurance as well as the corresponding maintenance of
records and documentation. Pharmaceutical product manufacturers
and other entities involved in the manufacture and distribution
of approved pharmaceutical products are required to register
their establishments with the FDA, and certain state agencies,
including the applicable government agency where the facility is
located, and are subject to periodic unannounced inspections by
the FDA and certain state agencies for compliance with cGMP and
other laws.

After conducting a global search, we elected to proceed with
establishing a wholly owned cGMP compliant manufacturing facility
in Ljubljana, Slovenia. Upon final product selection, we plan to
manufacture each of our product candidates in this facility. We
have been able to access and hire highly skilled process
development and phage manufacturing expertise and believe that we
have control of our proprietary platform from phage
identification through final product fill and finish. Our
facility is comprised of approximately 6,000 sq. ft. of
laboratory and office space, where we produce cGMP clinical trial
supplies in our 40-liter bioreactor for our current and planned
clinical trials. We believe this facility will be sufficient to
meet our manufacturing needs through initial Phase 3 clinical
trials. Our current formulation for AB-SA01 is intended for
sinonasal or topical delivery via a nasal wash solution or
dressed bandage. We plan to further optimize future formulations
of our product candidates.

Our facility in Ljubljana, Slovenia is subject to inspection and
regulation by JAZMP, the Slovenian agency that regulates and
supervises pharmaceutical products in Slovenia. Discovery of
problems with a product after approval may result in restrictions
on a product, manufacturer or holder of an approved New Drug
Application/Biologics License Application, including withdrawal
of the product from the market. In addition, changes to the
manufacturing process generally require prior regulatory approval
before being implemented and other types of changes to the
approved product, such as adding new indications and additional
labeling claims, are also subject to further regulatory review
and approval, including approval by the FDA.

Commercialization and Marketing

We have full worldwide commercial rights to all of our
phage-based product candidates to treat drug-resistant bacterial
infections, including our product candidates: AB-PA01 for the
treatment of CF patients with P. aeruginosa lung
infections; AB-SA01, for the treatment of S. aureus
infections; and AB-CD01 for the prevention or treatment of C.
difficile infections. We believe we can maximize the value
of our company by retaining substantial global commercialization
rights to these product candidates and, where appropriate,
entering into partnerships to develop and commercialize our other
product candidates. We plan to build a successful commercial
enterprise using a sales team in the United States and possibly
other major markets and with partners in other territories.

We have not yet established a sales, marketing or product
distribution infrastructure because our lead candidates are still
in early clinical development. We generally expect to retain
commercialization and co-commercialization rights in the United
States for all of our product candidates for which we receive
marketing approvals. Subject to receiving marketing approvals, we
intend to explore building the necessary marketing and sales
infrastructure to market and sell our current product candidates.
We also intend to explore the use of a variety of distribution
agreements and commercial partnerships in those territories where
we do not establish a sales force for any of our product
candidates that obtain marketing approval.

Government Regulation and Product Approval

Government authorities in the United States, at the federal,
state and local level, and other countries extensively regulate,
among other things, the research, development, testing,
manufacture, quality control, approval, labeling, packaging,
storage, record-keeping, promotion, advertising, distribution,
post-approval monitoring and reporting, marketing and export and
import of products such as those we are developing.

United States Product Development
Process

In the United States, the FDA regulates biological products under
the Federal Food, Drug and Cosmetic Act, or FDCA, and the Public
Health Service Act, or the PHS Act, and related regulations.
Biological products are also subject to other federal, state and
local statutes and regulations. The process of obtaining
regulatory approvals and the subsequent compliance with
appropriate federal, state, local and foreign statutes and
regulations require the expenditure of substantial time and
financial resources. Failure to comply with the applicable United
States requirements at any time during the product development
process or approval process, or after approval, may subject an
applicant to administrative or judicial sanctions. FDA sanctions
could include refusal to approve pending applications, withdrawal
of an approval, a clinical hold, warning letters, product
recalls, product seizures, total or partial suspension of
production or distribution injunctions, fines, refusals of
government contracts, restitution, disgorgement or civil or
criminal penalties. Any agency or judicial enforcement action
could have a material adverse effect on us. The process required
by the FDA before a biological product may be marketed in the
United States generally includes the following:

completion of preclinical laboratory tests, animal studies and formulation studies according to good laboratory practice requirements, or GLP, or other applicable regulations;

submission to the FDA of an IND, which must become effective before human clinical trials may begin in the United States;

performance of adequate and well-controlled human clinical trials according to the FDAs regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use or uses;

submission to the FDA of a Biologics License Application, or BLA, for a new biological product;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with the FDAs cGMP regulations, to assure that the facilities, methods and controls are adequate to preserve the biological products identity, strength, quality and purity;

potential FDA audit of the nonclinical study sites and clinical trial sites that generated the data in support of the BLA; and

FDA review and approval, or licensure, of the BLA which must occur before a biological product can be marketed or sold.

The lengthy process of seeking required approvals and the
continuing need for compliance with applicable statutes and
regulations require the expenditure of substantial resources even
when approvals are inherently uncertain.

The strategies, nature, and technologies of bacteriophage
products are different from the conventional antibiotic therapy
products. From the regulatory requirements established to ensure
the safety, efficacy and quality of bacteriophage preparations,
there are several major points to consider during the
development, manufacturing, characterization, preclinical study
and clinical trial of bacteriophage. The major issues include:

bacteriophage preparation design (single agent versus phage mixes and wild-type phage versus genetically engineered phage);

proof of concept in development of bacteriophage products;

selectivity of bacteriophage replication and targeting to specific species of bacteria;

relevant animal models in preclinical studies; and

clinical safety and efficacy.

Before testing any compounds with potential therapeutic value in
humans, the biological product candidate enters the preclinical
testing stage. Preclinical tests include laboratory evaluations
of product biology, toxicity and formulation, as well as animal
studies to assess the potential safety and activity of the
biological product candidate. The conduct of the preclinical
tests must comply with federal regulations and requirements
including GLP. The sponsor must submit the results of the
preclinical tests, together with manufacturing information,
analytical data, any available clinical data or literature and a
proposed clinical protocol, to the FDA as part of the IND. The
IND automatically becomes effective 30 days after receipt by the
FDA, unless the FDA places the IND on a clinical hold within that
30 day time period. In such a case, the IND sponsor and the FDA
must resolve any outstanding concerns before the clinical trial
can begin. The FDA may also impose clinical holds on a product
candidate at any time before or during clinical trials due to
safety concerns or non-compliance. Accordingly, we cannot be
certain that submission of an IND will result in the FDA allowing
clinical trials to begin, or that, once begun, issues will not
arise that suspend or terminate such clinical trial.

Clinical trials involve the administration of the product
candidate to healthy volunteers or patients under the supervision
of qualified investigators, generally physicians not employed by
the sponsor. Clinical trials are conducted under protocols
detailing, among other things, the objectives of the clinical
trial, dosing procedures, subject inclusion and exclusion
criteria and the parameters to be used to monitor subject safety.
Each protocol must be submitted to the FDA. Clinical trials must
be conducted in accordance with GCP requirements. Further, each
clinical trial must be reviewed and approved by an independent
institutional review board, or IRB, or ethics committee if
conducted outside of the U.S., at or servicing each institution
at which the clinical trial will be conducted. An IRB or ethics
committee is charged with protecting the welfare and rights of
trial participants and considers such items as whether the risks
to individuals participating in the clinical trials are minimized
and are reasonable in relation to anticipated benefits. The IRB
or ethics committee also approves the informed consent form that
must be provided to each clinical trial subject or his or her
legal representative and must monitor the clinical trial until
completed. We intend to use third-party Clinical Research
Organizations, or CROs, to administer and conduct our planned
clinical trials and will rely upon such CROs, as well as medical
institutions, clinical investigators and consultants, to conduct
our trials in accordance with our clinical protocols. The failure
by any of such third parties to meet expected timelines, adhere
to our protocols or meet regulatory standards could adversely
impact the subject product development program and we remain
legally responsible for compliance with applicable laws and
regulations governing the conduct of these clinical trials.

Human clinical trials are typically conducted in three sequential
phases that may overlap or be combined:

Phase 1: The product candidate is initially introduced into healthy human subjects and tested primarily for safety and dosage tolerance. Absorption, metabolism, distribution and excretion may also be tested.

Phase 2: The product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

Phase 3: Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall
risk/benefit ratio of the product and provide an adequate basis
for product labeling. Generally, two adequate and well-controlled
Phase 3 clinical trials are required by the FDA and other
regulatory authorities for approval of a marketing application.

Post-approval studies, or Phase 4 clinical trials, may be
requested by the FDA as a condition of approval and are conducted
after initial marketing approval. These studies are used to gain
additional experience from the treatment of patients in the
intended therapeutic indication.

Progress reports detailing the results of the clinical trials
must be submitted at least annually to the FDA and written safety
reports must be submitted to the FDA and the investigators for
serious and unexpected adverse events or any finding from tests
in laboratory animals that suggest that there may be a
significant risk for human subjects. The FDA or the sponsor or,
if used, its data safety monitoring board may suspend a clinical
trial at any time on various grounds, including a finding that
the research subjects or patients are being exposed to an
unacceptable health risk. Similarly, an IRB or ethics committee
can suspend or terminate approval of a clinical trial at its
institution if the clinical trial is not being conducted in
accordance with the IRBs or ethics committees requirements or if
the pharmaceutical product has been associated with unexpected
serious harm to patients. Suspension of a clinical trial due to
safety risks attributed to the investigational product will
result in termination of the trial and possibly others that are
underway.

Concurrently with clinical trials, companies usually complete
additional animal studies and must also develop additional
information about the physical characteristics of the product
candidate as well as finalize a process for manufacturing the
product candidate in commercial quantities in accordance with
cGMP requirements. To help reduce the risk of the introduction of
adventitious agents or other impurities with the use of
biological products, the PHS Act emphasizes the importance of
manufacturing control for products whose attributes cannot be
precisely defined. The manufacturing process must be capable of
consistently producing quality batches of the product candidate
and, among other things, the sponsor must develop methods for
testing the identity, strength, quality, potency, and purity of
the final biological product. Additionally, appropriate packaging
must be selected and tested and stability studies must be
conducted to demonstrate that the biological product candidate
does not undergo unacceptable deterioration over its shelf life.

United States Review and Approval
Processes

In order to obtain approval to market a biological product in the
United States, a BLA that provides data establishing to the FDAs
satisfaction the safety and effectiveness of the investigational
product candidate for the proposed indication must be submitted
to the FDA. The application includes all data available from
nonclinical studies and clinical trials, including negative or
ambiguous results as well as positive findings, together with
detailed information relating to the products manufacture and
composition, and proposed labeling, among other things. The
testing and approval processes require substantial time and
effort and there can be no assurance that the FDA will accept the
BLA for filing and, even if filed, that any approval will be
granted on a timely basis, if at all.

Each BLA must be accompanied by a significant user fee. The FDA
adjusts the user fees on an annual basis. Fee waivers or
reductions are available in certain circumstances, including a
waiver of the application fee for the first application filed by
a small business. Additionally, no user fees are assessed on BLAs
for products designated as orphan drugs, unless the product also
includes a non-orphan indication.

The FDA has 60 days from its receipt of a BLA to determine
whether the application will be accepted for filing based on the
agencys threshold determination that the application is
sufficiently complete to permit substantive review. The FDA may
refuse to file any BLA that it deems incomplete or not properly
reviewable at the time of submission and may request additional
information. In this event, the BLA must be resubmitted with the
additional information. The resubmitted application also is
subject to review before the FDA accepts it for filing. After the
BLA is accepted for filing, the FDA reviews it to determine,
among other things, whether the proposed product is safe and
effective for its intended use, has an acceptable purity profile,
and whether the product is being manufactured in accordance with
cGMP to assure and preserve the products identity, safety,
strength, quality, potency, and purity. The FDA may refer
applications for novel product candidates or those that present
difficult questions of safety or efficacy to an advisory
committee, typically a panel that includes clinicians and other
experts, for review, evaluation and a recommendation as to
whether the application should be approved and, if so, under what
conditions. The FDA is not bound by the recommendations of an
advisory committee, but it considers such recommendations
carefully when making decisions. The FDA may ultimately decide
that the BLA does not satisfy the criteria for approval. If a
product receives regulatory approval, the approval may be
significantly limited to specific diseases and dosages or the
indications for use may otherwise be limited, which could
restrict the commercial value of the product. Further, the FDA
may require that certain contraindications, warnings or
precautions be included in the product labeling.

Special FDA Expedited Review and Approval
Programs

The FDA has various programs, including Fast Track designation,
accelerated approval and priority review, that are intended to
expedite the process for the development and FDA review of drugs
that are intended for the treatment of serious or life
threatening diseases or conditions and demonstrate the potential
to address unmet medical needs. The purpose of these programs is
to provide important new drugs and biological products to
patients earlier than under standard FDA review procedures.

To be eligible for a Fast Track designation, the FDA must
determine, based on the request of a sponsor, that a product is
intended to treat a serious or life threatening disease or
condition and demonstrates the potential to address an unmet
medical need, or if the drug or biological product qualifies as a
qualified infectious disease product under the Generating
Antibiotic Incentives Now Act, or GAIN Act. The FDA will
determine that a product will fill an unmet medical need if it
will provide a therapy where none exists or provide a therapy
that may be potentially superior to existing therapy based on
efficacy or safety factors. We intend to request Fast Track
designation for our product candidates if applicable.

Fast Track designation applies to the combination of the product
and the specific indication for which it is being studied. The
sponsor of a new drug or biological may request the FDA to
designate the drug or biologic as a Fast Track product at any
time during the clinical development of the product. Unique to a
Fast Track product, the FDA may consider for review sections of
the marketing application on a rolling basis before the complete
application is submitted, if the sponsor provides a schedule for
the submission of the sections of the application, the FDA agrees
to accept sections of the application and determines that the
schedule is acceptable, and the sponsor pays any required user
fees upon submission of the first section of the application.

Any product submitted to the FDA for marketing, including under a
Fast Track program, may be eligible for other types of FDA
programs intended to expedite development and review, such as
priority review and accelerated approval. Any product is eligible
for priority review if it has the potential to provide safe and
effective therapy where no satisfactory alternative therapy
exists or a significant improvement in the treatment, diagnosis
or prevention of a disease compared to marketed products. The FDA
will attempt to direct additional resources to the evaluation of
an application for a new drug or biological product designated
for priority review in an effort to facilitate the review.
Additionally, a product may be eligible for accelerated approval.
Drug or biological products studied for their safety and
effectiveness in treating serious or life-threatening illnesses
and that provide meaningful therapeutic benefit over existing
treatments may receive accelerated approval, which means that
they may be approved on the basis of adequate and well-controlled
clinical trials establishing that the product has an effect on a
surrogate endpoint that is reasonably likely to predict a
clinical benefit, or on the basis of an effect on a clinical
endpoint other than survival or irreversible morbidity or
mortality, that is reasonably likely to predict an effect on
irreversible morbidity or mortality or other clinical benefit,
taking into account the severity, rarity or prevalence of the
condition and the availability or lack of alternative treatments.

As a condition of approval, the FDA may require a sponsor of a
drug or biological product receiving accelerated approval to
perform post-marketing studies to verify and describe the
predicted effect on irreversible morbidity or mortality or other
clinical endpoint, and the drug or biological product may be
subject to accelerated withdrawal procedures. In addition, the
FDA currently requires as a condition for accelerated approval
pre-approval of promotional materials, which could adversely
impact the timing of the commercial launch of the product. Fast
Track designation, priority review and accelerated approval do
not change the standards for approval but may expedite the
development or approval process.

A sponsor can also request designation of a product candidate as
a breakthrough therapy. A breakthrough therapy is defined as a
drug or biological product that is intended, alone or in
combination with one or more other drugs or biological products,
to treat a serious or life-threatening disease or condition, and
preliminary clinical evidence indicates that the biological
product or drug may demonstrate substantial improvement over
existing therapies on one or more clinically significant
endpoints, such as substantial treatment effects observed early
in clinical development. Drugs or biological products designated
as breakthrough therapies are also eligible for accelerated
approval. The FDA must take certain actions, such as holding
timely meetings and providing advice, intended to expedite the
development and review of an application for approval of a
breakthrough therapy. We intend to request breakthrough therapy
designation for our product candidates if applicable.

Even if a product qualifies for one or more of these programs,
the FDA may later decide that the product no longer meets the
conditions for qualification or decide that the time period for
FDA review or approval will not be shortened.

Patent Term Extension and Biosimilars

Depending upon the timing, duration and specifics of FDA approval
of our drugs, some of our U.S. patents may be eligible for
limited patent term extension under the Drug Price Competition
and Patent Term Restoration Act of 1984, referred to as the Hatch
Waxman Amendments. The Hatch Waxman Amendments permit a patent
restoration term of up to five years as compensation for patent
term lost during product development and the FDA regulatory
review process. However, patent term restoration cannot extend
the remaining term of a patent beyond a total of 14 years from
the products approval date. The patent term restoration period is
generally one half the time between the effective date of an IND,
and the submission date of an NDA or BLA, plus the time between
the submission date of an NDA or BLA and the approval of that
application. Only one patent applicable to an approved drug is
eligible for the extension, and the extension must be applied for
prior to expiration of the patent. The United States Patent and
Trademark Office, in consultation with the FDA, reviews and
approves the application for any patent term extension or
restoration.

Pediatric exclusivity is a type of marketing exclusivity
available in the U.S. under the Best Pharmaceuticals for Children
Act, or BPCA, which provides for an additional six months of
marketing exclusivity may be available if a sponsor conducts
clinical trials in children in response to a written request from
the FDA, or a Written Request. If the Written Request does not
include clinical trials in neonates, the FDA is required to
include its rationale for not requesting those clinical trials.
The FDA may request studies on approved or unapproved indications
in separate Written Requests. The issuance of a Written Request
does not require the sponsor to undertake the described clinical
trials.

Biologics Price Competition and Innovation Act of
2009

The Biologics Price Competition and Innovation Act of 2009, or
BPCIA, amended the PHSA to create an abbreviated approval pathway
for two types of generic biologics biosimilars and
interchangeable biologic products, and provides for a twelve year
data exclusivity period for the first approved biological
product, or reference product, against which a biosimilar or
interchangeable application is evaluated; however if pediatric
clinical trials are performed and accepted by the FDA, the twelve
year data exclusivity period will be extended for an additional
six months. A biosimilar product is defined as one that is highly
similar to a reference product notwithstanding minor differences
in clinically inactive components and for which there are no
clinically meaningful differences between the biological product
and the reference product in terms of the safety, purity and
potency of the product. An interchangeable product is a
biosimilar product that may be substituted for the reference
product without the intervention of the health care provider who
prescribed the reference product.

The biosimilar applicant must demonstrate that the product is
biosimilar based on data from (1) analytical studies showing that
the biosimilar product is highly similar to the reference
product; (2) animal studies (including toxicity); and (3) one or
more clinical trials to demonstrate safety, purity and potency in
one or more appropriate conditions of use for which the reference
product is approved. In addition, the applicant must show that
the biosimilar and reference products have the same mechanism of
action for the conditions of use on the label, route of
administration, dosage and strength, and the production facility
must meet standards designed to assure product safety, purity and
potency.

An application for a biosimilar product may not be submitted
until four years after the date on which the reference product
was first approved. The first approved interchangeable biologic
product will be granted an exclusivity period of up to one year
after it is first commercially marketed, but the exclusivity
period may be shortened under certain circumstances.

FDA Post-Approval Requirements

Maintaining substantial compliance with applicable federal,
state, local, and foreign statutes and regulations requires the
expenditure of substantial time and financial resources. Rigorous
and extensive FDA regulation of new products continues after
approval, particularly with respect to cGMP. We will rely on
third parties for the production of commercial quantities of any
products that we may commercialize. We and third party
manufacturers of our products are required to comply with
applicable requirements in the cGMPs, including quality control
and quality assurance and maintenance of records and
documentation. We cannot be certain that we or our present or
future suppliers will be able to comply with the cGMP and other
FDA requirements. Other post-approval requirements applicable to
biological products include reporting of cGMP deviations that may
affect the identity, potency, purity and overall safety of a
distributed product, record-keeping requirements, reporting of
adverse effects, reporting updated safety and efficacy
information, and complying with electronic record and
requirements. After a BLA is approved, the product also may be
subject to official lot release. As part of the manufacturing
process, the manufacturer is required to perform certain tests on
each lot of the product before it is released for distribution.
If the product is subject to official release by the FDA, the
manufacturer submits samples of each lot of product to the FDA
together with a release protocol showing a summary of the history
of manufacture of the lot and the results of all of the
manufacturers tests performed on the lot. The FDA also may
perform certain confirmatory tests on lots of some products, such
as viral vaccines, before releasing the lots for distribution by
the manufacturer. In addition, the FDA conducts laboratory
research related to the regulatory standards on the safety,
purity, potency, and effectiveness of biological products.

Discovery of previously unknown problems or the failure to comply
with the applicable regulatory requirements, by us or our
suppliers, may result in restrictions on the marketing of a
product or withdrawal of the product from the market as well as
possible civil or criminal sanctions and adverse publicity. FDA
sanctions could include refusal to approve pending applications,
withdrawal of an approval, clinical hold, warning or untitled
letters, product recalls, product seizures, total or partial
suspension of production or distribution, injunctions, fines,
refusals of government contracts, mandated corrective advertising
or communications with doctors, debarment, restitution,
disgorgement of profits, or civil or criminal penalties. Any
agency or judicial enforcement action could have a material
adverse effect on us.

Biological product manufacturers and other entities involved in
the manufacture and distribution of approved products are
required to register their facilities with the FDA and certain
state agencies, and are subject to periodic unannounced
inspections by the FDA and certain state agencies for compliance
with cGMPs and other laws. In addition, changes to the
manufacturing process or facility generally require prior FDA
approval before being implemented and other types of changes to
the approved product, such as adding new indications and
additional labeling claims, are also subject to further FDA
review and approval.

Labeling, Marketing and Promotion

The FDA closely regulates the labeling, marketing and promotion
of drugs and biological products, including direct-to-consumer
advertising, promotional activities involving the internet, and
industry-sponsored scientific and educational activities. While
doctors are free to prescribe any product approved by the FDA for
any use, a company can only make claims relating to safety and
efficacy of a product that are consistent with FDA approval, and
the company is allowed to actively market a product only for the
particular use and treatment approved by the FDA. In addition,
any claims we make for our products in advertising or promotion
must be appropriately balanced with important safety information
and otherwise be adequately substantiated. Failure to comply with
these requirements can result in adverse publicity, warning
letters, corrective advertising, injunctions and potential civil
and criminal penalties.

Other Healthcare Laws and Compliance
Requirements

In the United States, our activities are potentially subject to
regulation by various federal, state and local authorities in
addition to the FDA, including the Centers for Medicare and
Medicaid Services, other divisions of the United States
Department of Health and Human Services (e.g., the Office of
Inspector General), the United States Department of Justice and
individual United States Attorney offices within the Department
of Justice and state and local governments.

International Regulation

In addition to regulations in the United States, we will be
subject to a variety of foreign regulations governing clinical
trials and commercial sales and distribution of our future
products. Our manufacturing facility in Ljubljana, Slovenia is
subject to inspection and regulation by JAZMP, the Slovenian
agency that regulates and supervises pharmaceutical products in
Slovenia. Whether or not we obtain FDA approval for a product, we
must obtain approval of a product by the comparable regulatory
authorities of foreign countries before we can commence clinical
trials or marketing of the product in those countries. The
approval process varies from country to country, and the time may
be longer or shorter than that required for FDA approval. The
requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary greatly from country to
country.

Under European Union regulatory systems, marketing authorizations
may be submitted either under a centralized or a mutual
recognition procedure. The centralized procedure, which is
compulsory for medicinal products produced by biotechnology or
those medicinal products containing new active substances for
specific indications such as the treatment of AIDS, cancer,
neurodegenerative disorders, diabetes, viral diseases and
designated orphan medicines and optional for other medicines
which are highly innovative. Under the centralized procedure, a
marketing application is submitted to the European Medicines
Agency where it will be evaluated by the Committee for Medicinal
Products for Human Use and a favorable opinion typically results
in the grant by the European Commission of a single marketing
authorization that is valid for all European Union member states
within 67 days of receipt of the opinion. The initial marketing
authorization is valid for five years, but once renewed is
usually valid for an unlimited period.

Pricing and Reimbursement

Although none of our product candidates has been commercialized
for any indication, if they are approved for marketing,
commercial success of our product candidates will depend, in
part, upon the availability of third-party reimbursement from
payors at the federal, state and private levels. Third party
payors include government healthcare programs, such as Medicare
and Medicaid, private health insurers and managed-care plans. We
anticipate third party payors will provide reimbursement for our
products. However, these third party payors are increasingly
challenging the price and examining the cost effectiveness of
medical products and services. In addition, significant
uncertainty exists as to the reimbursement status of newly
approved healthcare products. We may need to conduct expensive
pharmacoeconomic studies in order to demonstrate the cost
effectiveness of our products. Our product candidates may not be
considered cost effective. It is time consuming and expensive for
us to seek reimbursement from third party payors. Reimbursement
may not be available or sufficient to allow us to sell our
products on a competitive and profitable basis.

We expect that there will continue to be a number of federal and
state proposals to implement governmental pricing controls and
limit the growth of healthcare costs, including the cost of
prescription drugs.

In addition, in some foreign countries, the proposed pricing for
a drug must be approved before it may be lawfully marketed. The
requirements governing drug pricing vary widely from country to
country. For example, the European Union provides options for its
member states to restrict the range of medicinal products for
which their national health insurance systems provide
reimbursement and to control the prices of medicinal products for
human use. A member state may approve a specific price for the
medicinal product or it may instead adopt a system of direct or
indirect controls on the profitability of the company placing the
medicinal product on the market. There can be no assurance that
any country that has price controls or reimbursement limitations
for pharmaceutical products will allow favorable reimbursement
and pricing arrangements for any of our products. Historically,
products launched in the European Union do not follow price
structures of the U.S. and generally tend to be significantly
lower.

RISK FACTORS

Investment in our stock involves a high degree of risk. You
should consider carefully the risks described below, together
with other information in this Current Report on Form8-K and
other public filings with the SEC, before making investment
decisions regarding our stock. If any of the following events
actually occur, our business, operating results, prospects or
financial condition could be materially and adversely affected.
This could cause the trading price of our common stock to decline
and you may lose all or part of your investment. Additional risks
facing our company are described under the heading Risk Factors
in our Annual Report on Form 10-K for the year ended December31,
2016, or Annual Report, as filed with the SEC. The risk factors
below do not appear as separate risk factors in, or reflect
changes to the similarly titled risk factors included in, our
Annual Report.Moreover, the risks described below and in our
Annual Report are not the only ones that we face. Additional
risks not presently known to us or that we currently deem
immaterial may also affect our business, operating results,
prospects or financial condition.

Results from preclinical studies and Phase 1 or 2
clinical trials of our product candidates or from
compassionate-use treatments may not be predictive of the results
of later stage clinical trials.

Preclinical studies, including studies of our product candidates
in animal disease models, may not accurately predict the result
of human clinical trials of those product candidates. In
particular, promising animal studies suggesting the efficacy of
prototype phage products in the treatment of bacterial
infections, such asP. aeruginosaandS. aureus,
may not predict the ability of these products to treat similar
infections in humans. Despite promising data in our completed
Phase 1 clinical trials, our phage technology may be found not to
be efficacious in treating bacterial infections alone or in
combination with other agents, when studied in later-stage
clinical trials.

In addition, we have used and plan to continue to use our
bacteriophage technology in the area of personalized medicine
under compassionate-use guidelines, which permit the use of phage
therapy outside of clinical trials, beginning in Australia and
then expanding to the United States and potentially other
countries. Despite prior compassionate use successes, no
assurance can be given that will have similar compassionate-use
treatment successes in the future. Compassionate use is a term
that is used to refer to the use of an investigational drug or
therapy outside of a clinical trial to treat a patient with a
serious or immediately life-threatening disease or condition who
has no comparable or satisfactory alternative treatment options.
Regulators often allow compassionate use on a case-by-case basis
for an individual patient or for defined groups of patients with
similar treatment needs. In some countries, such as Australia,
the treating physician can administer treatment under
compassionate-use guidelines without pre-approval from the
applicable regulatory authority.

To satisfy FDA or foreign regulatory approval standards for the
commercial sale of our product candidates, we must demonstrate in
adequate and controlled clinical trials that our product
candidates are safe and effective. Success in early clinical
trials, including Phase 1 and Phase 2 trials, or in our
compassionate-use program does not ensure that later clinical
trials will be successful. Our initial results from early stage
clinical trials or our compassionate-use program also may not be
confirmed by later analysis or subsequent larger clinical trials.
A number of companies in the pharmaceutical industry have
suffered significant setbacks in advanced clinical trials, even
after obtaining promising results in earlier clinical trials and
most product candidates that commence clinical trials are never
approved for commercial sale.

Our personalized phage therapies strategy may not be
successful, which in turn could adversely affect our
business.

Our personalized phage therapies strategy involves providing
phage therapy under compassionate-use guidelines to patients
outside of clinical trials with antibiotic-resistant infections
who have few or no other therapeutic options. We believe this
strategic approach will not only provide potential benefit to
patients to whom we are able to provide personalized phage
therapies under the compassionate-use guidelines, but also
provide the clinical data from these compassionate-use cases that
we expect to support the potential validation of the clinical
utility of phage therapy and inform our future discussions with
the FDA in 2018 or later on defining a potential path to market
approval. However, this program is subject to numerous risks and
uncertainties, including the following:

We have not established a cost reimbursement structure or otherwise entered into an arrangement that would at least offset our manufacturing costs for our phage therapies that may be administered to patients under compassionate-use guidelines. Increasing demand for our phage therapies in compassionate-use cases could result in significant costs to us.

Responding to compassionate-use requests could divert attention of our personnel and use manufacturing resources that could otherwise be deployed in other development program activities.

Compassionate-use treatment data may not establish proof-of-concept, and the FDA or other regulatory authorities may not accept compassionate-use data as sufficient clinical validation in support of our regulatory approval efforts, which could materially delay and increase the costs of our product development and commercialization activities.

Patient access to phage therapy will be provided on an individual basis where physicians will make an application or post-treatment notification to the applicable regulatory authorities on a patient-by-patient basis. This can impose a significant administrative burden on participating physicians, who may be resistant to navigating a process with which they are unfamiliar.

About AmpliPhi Biosciences Corporation (NYSEMKT:APHB)

AmpliPhi Biosciences Corporation is a biotechnology company. The Company is focused on the discovery, development and commercialization of phage therapeutics. The Company is engaged in identifying, characterizing and developing naturally occurring bacteriophages with its collaboration partners in bacteriophage biology, synthetic biology and manufacturing, to develop second-generation bacteriophage products. The Company is engaged in developing these phage product candidates using a discovery and development platform, which is designed for identification, characterization and manufacturing of multiple phage therapies. Each product candidate combines several chosen phages, which target a specific disease-causing bacterial pathogen, such as staphylococcus aureus (S. aureus), Pseudomonas aeruginosa (P. aeruginosa) and clostridium difficile (C. difficile). Its product candidates include AB-SA01, AB-PA01 and AB-CD01.

AmpliPhi Biosciences Corporation (NYSEMKT:APHB) Recent Trading Information

AmpliPhi Biosciences Corporation (NYSEMKT:APHB) closed its last trading session down -0.22 at 2.65 with 307,583 shares trading hands.