UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended SeptemberJune 30, 20212022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                  

Commission file number: 001-38762

BiomX Inc.

(Exact Name of Registrant as Specified in Its Charter) 

Delaware82-3364020
(State or other jurisdiction of 
incorporation or organization) 		(I.R.S. Employer 
Identification No.) 

22 Einstein St., 54th Floor, Ness Ziona, Israel7414003
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: +972 723942377

Securities registered pursuant to Section 12(b) of the Act: 

Title of each classTrading Symbol(s)Name of each exchange on which
registered
Units, each consisting of one share of common stock, $0.0001 par value, and one Warrant entitling the holder to receive one half share of common stockPHGE.UNYSE American
Common stock, $0.0001 par valuePHGENYSE American
Warrants, each exercisable for one-half of a share of common stock, $0.0001 par value, at an exercise price of $11.50 per sharePHGE.WSNYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Emerging growth company☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 10, 2021, 28,581,229August 5, 2022, 29,982,282 shares of common stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

 

BIOMX INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021MARCH 31, 2022

 

TABLE OF CONTENTS

 Page
Part I. Financial Information 1
Item 1. Financial Statements 1
Condensed Consolidated Balance Sheets (unaudited) F-1
Condensed Consolidated Statements of Operations (unaudited) F-3
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) F-4
Condensed Consolidated Statements of Cash Flows (unaudited) F-6
Notes to Condensed Consolidated Financial Statements (unaudited) F-7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 2
Item 3. Quantitative and Qualitative Disclosures About Market Risk 98
Item 4. Controls and Procedures 98
 
Part II. Other Information 109
Item 1A. Risk Factors 109
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds6. Exhibits 11
Item 5. Other Information11
Item 6. Exhibits119
  
Part III. Signatures 1210

i

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 

This quarterly report on Form 10-Q, or the Quarterly Report, includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and other securities laws. The statements contained herein that are not purely historical, are forward-looking statements. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. For example, we are making forward-looking statements when we discuss operations, cash flows, financial position, business strategy and plans, market growth, our clinical and pre-clinical development program, including timing and milestones thereof as well as the design thereof, including acceptance of regulatory agencies of such design, the potential opportunities for and benefits of the BacteriOphage Lead to Treatment, or BOLT, platform, the potential of our product candidates, the potential effect of the coronavirus disease 2019, or COVID-19, on our business and levels of expenses, sufficiency of financial resources and financial needs and impacts of changes in our management and the corporate restructuring we announced on May 24, 2022 on our business. However, you should understand that these statements are not guarantees of performance or results, and there are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed in the forward-looking statements, including, among others:

●the ability to generate revenues, and raise sufficient financing to meet working capital requirements;

●the unpredictable timing and cost associated with our approach to developing product candidates using phage technology;

●political and economic instability, including, without limitation, due to natural disasters or other catastrophic events, such as the Russian invasion of Ukraine and world sanctions on Russia, Belarus, and related parties, terrorist attacks, hurricanes, fire, floods, pollution and earthquakes;

●obtaining U.S. Food and Drug Administration, or FDA, acceptance of any non-U.S. clinical trials of product candidates;

●the ability to pursue and effectively develop new product opportunities and acquisitions and to obtain value from such product opportunities and acquisitions;

●penalties and market withdrawal associated with any unanticipated problems with product candidates and failure to comply with labeling and other restrictions;

●expenses associated with compliance with ongoing regulatory obligations and successful continuing regulatory review;

●market acceptance of our product candidates and ability to identify or discover additional product candidates;

●our ability to obtain high titers for specific phage cocktails necessary for preclinical and clinical testing;

●the availability of specialty raw materials and global supply chain challenges;

●the ability of our product candidates to demonstrate requisite, safety and efficacy for drug products, or safety, purity and potency for biologics without causing adverse effects;

●the success of expected future advanced clinical trials of our product candidates;

●our ability to obtain required regulatory approvals;

●our ability to enroll patients in clinical trials and achieve anticipated development milestones when expected;

●delays in developing manufacturing processes for our product candidates;

●the continued impact of COVID-19 on general economic conditions, our operations, the continuity of our business, including our preclinical and clinical trials and our ability to raise additional capital;

●obtaining U.S. Food and Drug Administration, or FDA, acceptance of any non-U.S. clinical trials of product candidates;

●the ability to pursue and effectively develop new product opportunities and acquisitions and to obtain value from such product opportunities and acquisitions;

●penalties and market withdrawal associated with any unanticipated problems with product candidates and failure to comply with labeling and other restrictions;

●expenses associated with compliance with ongoing regulatory obligations and successful continuing regulatory review in various global markets;

●market acceptance of our product candidates and ability to identify or discover additional product candidates;

●our ability to obtain high titers for specific phage cocktails necessary for preclinical and clinical testing;

●the availability of specialty raw materials;

●the ability of our product candidates to demonstrate requisite safety and tolerability for cosmetics, safety and efficacy for drug products, or safety, purity and potency for biologics without causing adverse effects;

●the success of expected future advanced clinical trials of our product candidates;

●our ability to obtain required regulatory approvals, especially with governments undergoing changes in administration and priorities;

●our ability to enroll patients in clinical trials and achieve anticipated development milestones when expected;

●delays in developing manufacturing processes for our product candidates;

ii

 

●competition from similar technologies, products that are more effective, safer or more affordable than our product candidates or products that obtain marketing approval before our product candidates;

●the impact of unfavorable pricing regulations, third-party reimbursement practices or health carehealthcare reform initiatives on our ability to sell product candidates or therapies profitably;

●protection of our intellectual property rights and compliance with the terms and conditions of current and future licenses with third parties;

●infringement on the intellectual property rights of third parties and claims for remuneration or royalties for assigned service invention rights;

●our ability to acquire, in-license or use proprietary rights held by third parties necessary to our product candidates or future development candidates;

●ethical, legal and social concerns about synthetic biology and genetic engineering that may adversely affect market acceptance of our product candidates;

●reliance on third-party collaborators;

●our ability to manage the growth of the business;

●our ability to attract and retain key employees or to enforce the terms of noncompetition agreements with employees;

  

●the failure to comply with applicable laws and regulations other than drug manufacturing compliance;

●potential security breaches, including cybersecurity incidents;

●receipt of the second and / or third tranches under the Term Loan Facility, as such term is defined below;below, or the second tranche under our agreement with the Cystic Fibrosis Foundation;

●political, economic and military instability in the State of Israel; and

●other factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, or the 20202021 Annual Report.

For a detailed discussion of these and other risks, uncertainties and factors, see Part I, Item 1A “Risk Factors” of our 20202021 Annual Report and in Part II, Item 1A of this Quarterly Report. All forward-looking statements contained in this Quarterly Report speak only as of the date hereof. Except as required by law, we are under no duty to (and expressly disclaim any such obligation to) update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, and should be viewed only as historical data. 

 

iii

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

 Page
 
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20212022 and December 31, 20202021 (unaudited) F-1-F-2
 
Condensed Consolidated Statements of Operations for the ThreeSix and NineThree Months Ended SeptemberJune 30, 20212022 and 20202021 (unaudited) F-3
 
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the periods ended SeptemberSix and Three Months Ended June 30, 20212022 and September 30, 20202021 (unaudited) F-4-F-5
 
Condensed Consolidated Statements of Cash Flows for the NineSix Months Ended September June 30, 20212022 and 20202021 (unaudited) F-6
 
Notes to Condensed Consolidated Financial Statements (unaudited) F-7-F-16

 

1


 

 

BIOMX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(USD in thousands, except share and per share data)

(unaudited)

   As of    As of 
 Note September 30,
2021		  December 31,
2020		  Note June 30,
2022		  December 31,
2021		 
ASSETS              
              
Current assets              
                 
Cash and cash equivalents        67,346 �� 36,477     37,745   62,099 
Restricted cash    985   763   963   996 
Short-term deposits    -   19,851   8,000   - 
Other current assets    1,467   3,576     1,605   3,543 
Total current assets    69,798   60,667     48,313   66,638 
                    
Property and equipment, net    5,863   2,228     5,252   5,694 
Intangible assets, net    1,899   3,038     760   1,519 
Operating lease right-of-use assets    4,239   4,430     4,057   4,139 
Total non-current assets    12,001   9,696     10,069   11,352 
    81,799   70,363           
    58,382   77,990 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

F-1


 

 

BIOMX INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(USD in thousands, except share and per share data)

(unaudited)

   As of    As of 
 Note September 30,
2021		  December 31,
2020		  Note June 30,
2022		  December 31,
2021		 
              
LIABILITIES AND STOCKHOLDERS’ EQUITY              
              
Current liabilities              
Trade account payables    1,879   2,320 
Other account payables    6,321   3,978 
Trade accounts payable    1,656   2,795 
Other accounts payable    2,394   5,453 
Contract liability    -   1,976 
Current portion of operating lease liabilities    799   863     708   819 
Current portion of long-term debt 4  1,732   - 
Total current liabilities    8,999   7,161     6,490   11,043 
                    
Non-current liabilities                    
Long-term debt 4  14,225   - 
Contract liability    1,976   - 
Long-term debt, net of current portion 4  12,929   14,410 
Operating lease liabilities, net of current portion    4,728   5,032     4,039   4,787 
Other liabilities    420   701     209   215 
Total non-current liabilities    19,373   5,733     19,153   19,412 
                    
Commitments and Collaborations 3        
Commitments and Contingencies 3        
                    
Stockholders’ equity 5         5        
                    
Preferred Stock, $0.0001 par value; Authorized - 1,000,000 shares as of September 30, 2021 and December 31, 2020. No shares issued and outstanding as of September 30, 2021 and December 31, 2020.    -   - 
Common Stock, $0.0001 par value; Authorized - 60,000,000 shares as of September 30, 2021 and December 31, 2020. Issued – 28,206,229 shares as of September 30, 2021 and 23,270,337 shares as of December 31, 2020. Outstanding – 28,200,529 shares as of September 30, 2021 and 23,264,637 shares as of December 31, 2020.    3   2 
Preferred Stock, $0.0001 par value; Authorized - 1,000,000 shares as of June 30, 2022 and December 31, 2021. No shares issued and outstanding as of June 30, 2022 and December 31, 2021.    -   - 
Common Stock, $0.0001 par value; Authorized - 60,000,000 shares as of June 30, 2022 and December 31, 2021. Issued – 29,780,409 shares as of June 30, 2022 and 29,753,238 shares as of December 31, 2021. Outstanding – 29,774,709 shares as of June 30, 2022 and 29,747,538 shares as of December 31, 2021.    2   2 
                    
Additional paid in capital    151,451   129,725     156,872   156,017 
Accumulated deficit    (98,027)  (72,258)    (124,135)  (108,484)
Total stockholders’ equity    53,427   57,469     32,739   47,535 
    81,799   70,363     58,382   77,990 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

F-2


 

 

BIOMX INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(USD in thousands, except share and per share data)

(unaudited)

   Three Months Ended
September 30,		  Nine Months Ended
September 30,		     Three Months Ended
June 30,		  Six Months Ended
June 30,		 
 Note 2021  2020  2021  2020  Note  2022  2021  2022  2021 
                      
Research and development (“R&D”) expenses, net    6,608   6,056   16,102   13,302       4,584   3,824   9,513   9,494 
Amortization of intangible assets    380   380   1,139   1,139       379   380   759   759 
General and administrative expenses    2,845   2,394   8,436   6,749       2,361   3,098   4,838   5,591 
Operating loss    9,833   8,830   25,677   21,190       7,324   7,302   15,110   15,844 
                                      
Interest expenses      488   -   949   - 
Financial expenses (income), net    188   5   76   (248)      (339)  31   (426)  (112)
                                      
Loss before tax    10,021   8,835   25,753   20,942       7,473   7,333   15,633   15,732 
                                      
Tax expenses    10   -   16   -       9   3   18   6 
                                      
Net Loss    10,031   8,835   25,769   20,942 
Net loss      7,482   7,336   15,651   15,738 
                                      
Basic and diluted loss per share of Common Stock 6  0.37   0.38   1.03   0.91   6   0.25   0.30   0.53   0.65 
                                      
Weighted average number of shares of Common Stock outstanding, basic and diluted    27,077,903   23,150,253   25,120,037   23,013,790       29,774,709   24,320,259   29,764,588   24,134,065 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

 

F-3


 

 

BIOMX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(USD in thousands, except share and per share data)

(unaudited)

  Common Stock  Additional
Paid-in		  Accumulated  Total
Stockholders’		 
  Shares  Amount  Capital  Deficit  Equity 
                
Balance as of January 1, 2021  23,264,637   2   129,725   (72,258)  57,469 
                     
Exercise of stock options  12,646   *   23       23 
Exercise of warrants (**)  362,383   *   -       - 
Issuance of Common Stock under Open Market Sales Agreement, net of $134 issuance costs  601,674   *   4,334       4,334 
Stock-based compensation expenses          530       530 
Net loss              (8,402)  (8,402)
                     
Balance as of March 31, 2021  24,241,340   2   134,612   (80,660)  53,954 
Exercise of stock options  55,246   *   78       78 
Issuance of Common Stock under Open Market Sales Agreement, net of $24 issuance costs  132,490   *   801       801 
Stock-based compensation expenses          1,095       1,095 
Net loss              (7,336)  (7,336)
                     
Balance as of June 30, 2021  24,429,076   2   136,586   (87,996)  48,592 
Exercise of stock options  11,653   *   20       20 
Issuance of Common Stock under Open Market Sales Agreement, net of $2 issuance costs  9,800   *   53       53 
Issuance of Common Stock under securities purchase agreement (“SPA”), net of $1,235 issuance costs (***)  3,750,000   1   13,765       13,766 
Stock-based compensation expenses          1,027       1,027 
Net loss              (10,031)  (10,031)
Balance as of September 30, 2021  28,200,529   3   151,451   (98,027)  53,427 
  Common Stock  Additional
Paid-in		  Accumulated  Total
Stockholders’		 
  Shares  Amount  Capital  Deficit  Equity 
                
Balance as of January 1, 2022  29,747,538   2   156,017   (108,484)  47,535 
                     
Issuance of Common Stock under Open Market Sales Agreement, net of $1 issuance costs**  27,171              *   37   -   37 
Stock-based compensation expenses  -   -   615   -   615 
Net loss  -   -   -   (8,169)  (8,169)
                     
Balance as of March 31, 2022  29,774,709   2   156,669   (116,653)  40,018 
                     
Stock-based compensation expenses  -   -   184   -   184 
Proceeds on account of shares          19       19 
Net loss  -   -   -   (7,482)  (7,482)
                     
Balance as of June 30, 2022  29,774,709   2   156,872   (124,135)  32,739 

(*)Less than $1.

(**)See Note 5B.

(***)See Note 5A.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

 

F-4


 

 

BIOMX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(USD in thousands, except share and per share data)

(unaudited)

 Common Stock  Additional
Paid-in		  Accumulated  Total
Stockholders’		  Common Stock  Additional
Paid-in		  Accumulated  Total
Stockholders’		 
 Shares  Amount  Capital  Deficit  Equity  Shares  Amount  Capital  Deficit  Equity 
                      
Balance as of January 1, 2020  22,862,835   2   126,626   (42,172)  84,456 
Balance as of January 1, 2021  23,264,637   2   129,725   (72,258)  57,469 
                                        
Exercise of stock options  57,325   (*)  106       106   12,646   *   23   -   23 
Exercise of warrant  362,383   *   -       - 
Issuance of Common Stock under Open Market Sales Agreement, net of $134 issuance costs  601,674               *   4,334   -   4,334 
Stock-based compensation expenses          337       337   -   -   530   -   530 
Net loss              (5,901)  (5,901)  -   -   -   (8,402)  (8,402)
                                        
Balance as of March 31, 2020  22,920,160   2   127,069   (48,073)  78,998 
Balance as of March 31, 2021  24,241,340   2   134,612   (80,660)  53,954 
Exercise of stock options  220,104   (*)  52   -   52   55,246   *   78   -   78 
Issuance of Common Stock under Open Market Sales Agreement, net of $24 issuance costs  132,490   *   801   -   801 
Stock-based compensation expenses  -   -   677   -   677   -   -   1,095   -   1,095 
Net loss  -   -   -   (6,206)  (6,206)  -   -   -   (7,336)  (7,336)
                                        
Balance as of June 30, 2020  23,140,264   2   127,798   (54,279)  73,521 
Exercise of stock options  27,414   (*)  38   -   38 
Stock-based compensation expenses  -   -   1,114   -   1,114 
Net loss  -   -   -   (8,835)  (8,835)
                    
Balance as of September 30, 2020  23,167,678   2   128,950   (63,114)  65,838 
Balance as of June 30, 2021  24,429,076   2   136,586   (87,996)  48,592 

(*)Less than $1.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

F-5


 

 

BIOMX INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(USD in thousands, except share and per share data)

(unaudited)

  For the Nine Months Ended
September 30,		 
 2021  2020  For the
Six Months Ended
June 30,		 
      2022  2021 
CASH FLOWS – OPERATING ACTIVITIES          
Net loss  (25,769)  (20,942)  (15,651)  (15,738)
                
Adjustments required to reconcile cash flows used in operating activities:                
Depreciation and amortization  1,746   1,618   1,267   1,121 
Stock-based compensation  2,652   2,128   799   1,625 
Finance expense, net  2   - 
Amortization of debt issuance costs  251   - 
Effect of exchange rate changes on cash and cash equivalents and restricted cash  (79)  11 
Changes in other liabilities  (281)  116   (6)  (282)
Loss from sale of property and equipment  24   - 
Capital loss, net  5   24 
                
Changes in operating assets and liabilities:                
Other current assets  2,109   1,318   1,941   991 
Trade account payables  (549)  (1,877)
Other account payables  1,760   218 
Trade accounts payable  (1,139)  (763)
Other accounts payable  (3,059)  417 
Net change in operating leases  (177)  46   (777)  (205)
Related parties      50 
Net cash used in operating activities  (18,483)  (17,325)  (16,448)  (12,799)
                
CASH FLOWS – INVESTING ACTIVITIES                
Investment in short-term deposits  -   (387)  (10,000)  - 
Proceeds from short-term deposits  19,851   -   2,000   19,851 
Purchases of property and equipment  (3,579)  (662)  (74)  (2,268)
Proceeds from sale of property and equipment  4   -   -   4 
Net cash provided by (used in) investing activities  16,276   (1,049)
Net cash provided (used in) by investing activities  (8,074)  17,587 
                
CASH FLOWS – FINANCING ACTIVITIES                
Issuance of Common Stock under Open Market Sales Agreement, net of issuance costs  5,188   -   37   5,135 
Issuance of Common Stock under SPA, net of issuance costs  13,766   - 
Proceeds from long-term debt, net of issuance costs  14,225   - 
Outflows in connection with current assets and liabilities acquired in reverse recapitalization  -   (75)
Proceeds on account of shares  19   - 
Exercise of stock options  121   196   -   101 
Net cash provided by financing activities  33,300   121   56   5,236 
                
Increase (decrease) in cash and cash equivalents and restricted cash  31,093   (18,253)  (24,466)  10,024 
                
Effect of exchange rate changes on cash and cash equivalents and restricted cash  (2)  -   79   (11)
                
Cash and cash equivalents and restricted cash at the beginning of the period  37,240   72,410   63,095   37,240 
                
Cash and cash equivalents and restricted cash at the end of the period  68,331   54,157   38,708   47,253 
                
Reconciliation of amounts on consolidated balance sheets        
Cash and cash equivalents  37,745   46,271 
Restricted cash  963   982 
Total cash and cash equivalents and restricted cash  38,708   47,253 
        
Supplemental disclosures of cash flow information                 
Cash paid for interest   60   -   692   - 
Taxes paid   16       18   - 
        
Supplemental disclosure of non-cash investing        
Property and equipment purchases included in accounts payable and other payables  691   - 
Right-of-use assets obtained in exchange for new operation lease liabilities  168   3,551 
Uncollected proceeds from sale of property and equipment  3   - 
Property and equipment purchases included in accounts payable and accrued expenses  -   1,016 
Recognition of operating lease right-of-use and liabilities  -   168 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-6


 

  

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NISin thousands, except share and per share data)

(unaudited)

 

NOTE 1 – GENERAL

 

  General information

 

BiomX Inc. (formerly known as Chardan Healthcare Acquisition Corp., individually prior to BiomX Inc.’s acquisition of 100% of the outstanding shares of BiomX Israel Ltd. (the “Recapitalization Transaction”, “BiomX Israel” respectively),(individually, and together with its subsidiaries, BiomX Ltd. and RondinX Ltd., after the Recapitalization Transaction, the “Company” or “BiomX”) was incorporated as a blank check company on November 1, 2017, under the laws of the state of Delaware, for the purpose of entering into a merger, sharestock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.

On July 16, 2019, the Company entered into a merger agreement with BiomX Ltd. (“BiomX Israel”), a company incorporated under the laws of Israel, CHAC Merger Sub Ltd. (“Merger Sub”) and Shareholder Representative Services LLC, as amended on October 11, 2019, pursuant to which, among other things, BiomX Israel merged with Merger Sub, with BiomX Israel being the surviving entity in accordance with the Israeli Companies Law, 5759-1999, as a wholly owned direct subsidiary of BiomX Inc.

 

On October 28, 2019, the Company consummated the acquisition of 100% of the outstanding shares of BiomX Israel (the “Recapitalization Transaction”). Pursuant to the aforementioned merger agreement, in exchange for all of the outstanding shares of BiomX Israel, the Company issued to the shareholders of BiomX Israel a total of 15,069,058 shares of the Company’s Common Stock representing approximately 65% of the total shares issued and outstanding after giving effect to the Recapitalization Transaction. As a result of the Recapitalization Transaction, BiomX Israel became a wholly owned subsidiary of the Company. As the shareholders of BiomX Israel received the largest ownership interest in the Company, BiomX Israel was renamed BiomX Inc. anddetermined to be the “accounting acquirer” in the Recapitalization Transaction.

The Company’s shares of Common Stock, units, and warrants began tradingare traded on the NYSE American under the symbols PHGE, PHGE.U, and PHGE.WS, respectively.

 

On February 6, 2020, the Company’s Common Stock also began trading on the Tel-Aviv Stock Exchange. See also Note 8B.

BiomX is developing both natural and engineered phage cocktails designed to target and destroy harmful bacteria in chronic diseases. BiomX discovers and validates proprietary bacterial targets and customizes phage compositions against these targets. The Company’s headquarters are located in Ness Ziona, Israel.

 

To date, the Company has not generated revenue from its operations. Based on the Company’s current cash and commitments, management believes that the Company’s current cash and cash equivalents are sufficient to fund its operations for more than 12 months from the date of issuance of these condensed consolidated financial statements and sufficient to fund its operations necessary to continue development activities.

 

Consistent with its continuing research and development activities, the Company expects to continue to incur additional losses for the foreseeable future. The Company plans to continue to fund its current operations, as well as other development activities relating to additional product candidates, through future issuances of debt and/or equity securities, loans and possibly additional grants from the Israel Innovation Authority (“IIA”) and other government institutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, the market demand for the Company’s Common Stock, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to it. If the Company is unable to raise capital when needed or on attractive terms, it may be forced to delay or reduce its research and development programs. If there are further increases in operating costs for facilities expansion, research and development and clinical activity, the Company will need to use mitigating actions such as to seek additional financing or postpone expenses that are not based on firm commitments. See note 7 for further information.regarding the Corporate Restructuring announced by the Company on May 24, 2022.

 

F-7


 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NISin thousands, except share and per share data)

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

 A.Unaudited Condensed Financial Statements

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for condensed financial information. They do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentationstatement have been included (consisting only of normal recurring adjustments except as otherwise discussed).

 

The financial information contained in this report should be read in conjunction with the annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, that the Company filed with the U.S. Securities and Exchange Committee (the “SEC”) on March 30, 2022. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2021.2021, but not all disclosures required by GAAP are included.

 

 B.Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

 

 C.Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the amounts of expenses during the reported years. Actual results could differ from those estimates. 

 

The full extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. In March 2022, the Company updated its guidance on the timing of certain clinical milestones resulting from challenges it continues to face in clinical trial enrollment due to COVID-19. The Company examined the impact of COVID-19 on its financial statements, and although there is currently no major impact, there may be changes to those estimates in future periods. Actual results may differ from these estimates.

 

 D.Recent Accounting Standards

 

In May 2021, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). The guidance isbecame effective for the Company on January 1, 2022. The Company is currently evaluatingadopted the guidance on January 1, 2022, and has concluded the adoption did not have a material impact of adopting this standard.on its unaudited condensed consolidated financial statements.

 

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses,” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU No. 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. This guidance is effective for the Company beginning on January 1, 2023, with early adoption permitted. The Company does not expect that the adoption of this standard will have a significant impact on its condensed consolidated financial statements and related disclosures.

 


BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In August 2020, the FASB issued ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance isamendments in ASU 2020-06 are effective for annual and interim periods beginning after December 15, 2021, and early adoption is permittedsmaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2020, and2023, including interim periods within those fiscal years. Effective January 1, 2022, the Company early adopted ASU 2020-06 using the modified retrospective approach which resulted in no effect.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company doesis currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832),” which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021. The Company expects that this guidance will not expect that the adoption of this standard will have a significant impact on its condensedthe Company’s consolidated financial statements and related disclosures.

F-8

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont.)

E.Derivative Activity

The Company uses foreign exchange contracts (mainly option and forward contracts) to hedge cash flows from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, the Company recognizes gains or losses that offset the revaluation of the cash flows also recorded under financial expenses (income), net in the condensed consolidated statements of operations. As of September 30, 2021, the Company had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $2,787 with a fair value of $20. As of December 31, 2020, the Company had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $1,555 with a fair value of $90.statements.

  

 F.E.Fair Value of Financial Instruments

 

The fair value of certain of the Company’sCompany accounts for financial instruments including cash, accounts receivable, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure”Disclosures” (“ASC 820”), which defines. ASC 820 establishes a fair value establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

Fair value, as defined in ASC 820, ishierarchy that prioritizes the price that would be receivedinputs to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:are described below:

 

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2 – Quoted prices in non-active markets or in active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data.

 

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

There were no changes in the fair value hierarchy levelling during the period ended SeptemberJune 30, 20212022 and year ended December 31, 2020.2021.

The following table summarizes the fair value of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis, by level within the fair value hierarchy: 

 

F-9


 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NISin thousands, except share and per share data)

(unaudited)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis:

  June 30, 2022 
  Level 1  Level 2  Level 3  Fair Value 
Assets:            
Cash equivalents:            
Money market funds  30,020   -   -   30,020 
   30,020   -   -   30,020 
Liabilities:                
Contingent consideration  -   -   169   169 
Foreign exchange contracts payable  -   222   -   222 
   -   222   169   391 

 

  September 30, 2021 
  Level 1  Level 2  Level 3  Fair Value 
Assets:            
Cash equivalents:            
Money market funds  30,007   -   -   30,007 
Foreign exchange contracts receivable  -   20   -   20 
   30,007   20   -   30,027 
Liabilities:                
Contingent consideration (*)  -   -   180   180 
   -   -   180   180 

 December 31, 2020  December 31, 2021 
 Level 1  Level 2  Level 3  Fair Value  Level 1  Level 2  Level 3  Fair Value 
Assets:                  
Cash equivalents:                  
Money market funds  30,000   -   -   30,000   30,007   -   -   30,007 
Foreign exchange contracts receivable  -   90   -   90   -   62   -   62 
  30,000   90   -   30,090   30,007   62   -   30,069 
Liabilities:                                
Contingent consideration (*)  -   -   83   83 
Contingent consideration  -   -   175   175 
  -   -   83   83   -   -   175   175 

 

Financial instruments with carrying values approximating fair value include cash and cash equivalents, restricted cash, short-term deposits, other current assets, trade accounts payable and other current liabilities,accounts payable, due to their short-term nature. 

(*) Changes in contingent consideration for the nine months ended on September 30, 2021 and 2020 resulted from revaluation.

 

The Company determined the fair value of the liabilities for the contingent consideration based on a probability discounted cash flow analysis. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration is based on several factors, such as: the attainment of future clinical, developmental, regulatory, commercial and strategic milestones relating to product candidates for treatment of primary sclerosing cholangitis. The discount rate applied ranged from 0.37%1.26% to 0.98%3.01%. The contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate. Changes in the fair value of contingent consideration are recorded in condensed consolidated statements of operations. Significant changes in unobservable inputs, mainly the probability of success and cash flows projected, could result in material changes to the contingent consideration liabilities.liability. For the six months ended June 30, 2022, the Company recorded an income of $6 as a result of a revaluation of the contingent consideration liability.

The Company uses foreign exchange contracts (mainly option and forward contracts) to hedge cash flows from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, the Company recognizes gains or losses that offset the revaluation of the cash flows also recorded under financial expenses (income), net in the condensed consolidated statements of operations. As of June 30, 2022, the Company had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $6,343 with a fair value liability of $222. As of December 31, 2021, the Company had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $4,180 with a fair value asset of $62.

 

F-10


 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

 

NOTE 3 – COMMITMENTS AND COLLABORATIONSCONTINGENCIES

 

 A.

In April 2019,March 2021, the IIA approved two new applications in relation to the Company’s cystic fibrosis product candidate for an application for a totalaggregate budget of NIS 4,22110,879 (approximately $1,185). The IIA funded 30% of the approved budget. The program was$3,286) and for the period beginning from July 2018 through June 2019. As of September 30, 2021, BiomX Israel received all funds with respect to this program.

In December 2019, the IIA approvedCompany’s product candidate for Inflammatory Bowel Disease (“IBD”) and Primary Sclerosing Cholangitis for an application for a totalaggregate budget of NIS 10,7948,565 (approximately $3,123). The IIA funded 30% of the approved budget. The program was for the period beginning from July 2019 through December 2019. As of September 30, 2021, BiomX Israel received all funds with respect to this program.

In April 2020, the IIA approved an application for a total budget of NIS 15,562 (approximately $4,287)$2,588). The IIA committed to fund 30% of the approved budget.budgets. The program was for the period beginning January 2020 through December 2020. As of September 30, 2021, BiomX Israel received all funds with respect to this program.

In March 2021, the IIA approved two new applications for a total budget of NIS 19,444 (approximately $5,874). The IIA committed to fund 30% of the approved budget. The program isprograms are for the period beginning January 2021 through December 2021. As of SeptemberThrough June 30, 2021,2022, the Company received NIS 2,0424,284 (approximately $625)$1,347) from the IIA with respect to these programs.

In August 2021, the IIA approved an application that supports upgrading the Company’s manufacturing capabilities for an aggregate budget of NIS 5,737 (approximately $1,778). The IIA committed to fund 50% of the approved budget. The program is for the period beginning July 2021 through June 2022. The program does not bear royalties. As of SeptemberThrough June 30, 2021,2022, the Company received NIS 1,004 (approximately $313) from the IIA with respect to this program.

See Note 8A regarding received funds with respect to this program.

In March 2022, the IIA approved an application for a total budget of NIS 13,004 (approximately $4,094) in relation to the Company’s cystic fibrosis product candidate. The IIA committed to fund 30% of the approved budget. The program is for the period beginning January 2022 through December 2022. Through June 30, 2022, the Company received NIS 1,365 (approximately $395) from the IIA with respect to this program.
According to the agreement with the IIA, excluding the August 2021 program, BiomX Israel will pay royalties of 3% to 3.5% of future sales up to an amount equal to the accumulated grant received including annual interest of LIBOR linked to the dollar. BiomX Israel may be required to pay additional royalties upon the occurrence of certain events as determined by the IIA, that are within the control of BiomX Israel. No such events have occurred or were probable of occurrence as of the balance sheet date with respect to these royalties. Repayment of the grant is contingent upon the successful completion of the BiomX Israel’s R&D programs and generating sales. BiomX Israel has no obligation to repay these grants if the R&D program fails, is unsuccessful or aborted or if no sales are generated. The Company had not yet generated sales as of SeptemberJune 30, 2021;2022; therefore, no liability was recorded in these condensed consolidated financial statements. Received IIA grants are recorded as a reduction of R&D expenses, net.

Through SeptemberJune 30, 2021,2022, total grants approved from the IIA aggregated to approximately $7,160$8,403 (NIS 24,731)28,683). Through SeptemberJune 30, 2021,2022, the Company had received an aggregate amount of $5,563$6,693 (NIS 19,075)22,726) in the form of grants from the IIA. Receipt of the remaining grants from approved programs depends on the actual utilization of approved budgets. Total grants subject to royalties’ payments aggregated to approximately $5,252.$6,380. As of SeptemberJune 30, 2021,2022, the Company had a contingent obligation to the IIA in the amount of approximately $5,386$6,547 including annual interest of LIBOR linked to the dollar.

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021. Even though the IIA has not declared the alternative benchmark rate to replace LIBOR, the Company does not expect it will have a significant impact on its financial statements.
B.On September 1, 2020June 23, 2022 (“Effective Date”), BiomX Israel entered into a new research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration on biomarker discoveryto identify biomarkers for inflammatory bowel disease (“IBD”). Under the agreement, BiomX Israel is eligible to receive fees totaling $439totalling $1,411 to cover costs to be incurred by BiomX Israel in installmentsconducting the research plan under the collaboration. The fees will be paid in instalments of $50$500 within 6030 days of the Effective Date $100and three additional installments of $500, $200 and $211 upon receipt of the BI materials, $150 upon the completion of data processing and $139 upon delivery ofcertain activities under the Final Report of observations and Results of the Project (as such terms are defined within the agreement).research plan. Unless terminated earlier, this agreement will remain in effect until one year after the Effective Date(a) a period of eighteen (18) months thereafter or (b) completion of the Project Plan (as defined in the agreement)project plan and submission and approval of the Final Report.final report, whichever occurs sooner, unless otherwise extended. During the ninesix months ended September 30,2021,June 30, 2022, no consideration was received regarding this agreement. See Note 8C.
C.On May 24, 2022, the Company notified Massachusetts Institute of $150 was received. AsTechnology of September 30, 2021, aggregate considerationthe termination of $300 had been received.the Patent License Agreement between the parties. The considerationtermination is recorded asexpected to become effective 90 days after the notice date, on August 22, 2022. During the notice period the Company is required to pay license maintenance fees.
D.In October 2019, BiomX Israel entered into a reduction of R&D expenses, netloan agreement in the condensed consolidatedamount of $19 with a stockholder of the Company. The loan is secured by shares of Common Stock of the Company. The granting of the loan and the restrictions imposed on the related shares of Common Stock until repayment of the loan and transfer of the shares of Common Stock back to the stockholder were accounted as an acquisition of treasury stock by the Company at an amount equal to the loan. During the six months ended June 30, 2022, the loan was repaid by the stockholder to the Company and was accounted as proceeds on account of shares in the statements of operations.changes in stockholders’ equity as the shares of Common Stock were not transferred to the stockholder as of June 30, 2022.

 

F-11


 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

NOTE 4 – LONG-TERM DEBT

On August 16, 2021, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), with respect to a venture debt facility. Under the Loan Agreement, Hercules provided the Company with access to a term loan with an aggregate principal amount of up to $30,000 (the “Term Loan Facility”), available in three tranches, subject to certain terms and conditions. The first tranche of $15,000 was advanced to the Company on the date the Loan Agreement was executed. Upon the occurrence of specified milestones and continuing through December 31, 2022, a loan in the aggregate principal amount of up to $10.0 million,$10,000, or the second tranche, and upon the occurrence of specified milestones and continuing through September 30, 2023, a loan in the aggregate principal amount of up to $5.0 million,$5,000, or the third tranche, may become available. The milestones for the remaining tranches have not yet been reached as of September 30, 2021. The Company is required to make interest only payments through March 1, 2023, or extended to September 1, 2023 upon satisfaction of certain milestones, and is required to then repay the principal balance and interest in equal monthly installments through September 1, 2025.

As of June 30, 2022, the milestones for the remaining tranches and for the extension of the period of interest only payments to September 1, 2023, have not yet been reached.

The Company may prepay advances under the Loan Agreement, in whole or in part, at any time subject to a prepayment charge equal to: (a) 3.0 % of amounts prepaid, if such prepayment occurs during the first 12 months following the Closing Date; (b) 2.0% after 12 months but prior to 24 months; (c) 1.0% after 24 months but prior to 36 months, and (d) no charge after 36 months. Upon prepayment or repayment of all or any of the term loans under the Term Loan Facility, the Company is required to pay an end of term charge (“End of Term Charge”) equal to 6.55% of the total aggregate amount of the term loans being prepaid or repaid.

Interest on the term loan accrues at a per annum rate equal to the greater of (i) the Prime Rate as reported in The Wall Street Journal plus 5.70% and (ii) 8.95%. On SeptemberJune 30, 2021,2022, the Prime Rate was 3.25%4.75%. Interest expense is calculated using the effective interest method and is inclusive of non-cash amortization of capitalized loan issuance costs. Debt issuance costs are recorded on the consolidated balance sheet as a reduction of liabilities. Amounts allocated to the debt, net of issuance cost, are subsequently recognized at amortized cost using the effective interest method. On SeptemberJune 30, 2021,2022, the effective interest rate was 13.51%14.33%.

As of SeptemberJune 30, 2021,2022, the carrying value of the term loan consists of $15,000 principal outstanding less the unamortized debt discount and issuance costs of approximately $775.$339. The End of Term Charge of $983 is recognized over the life of the term loan as interest expense using the effective interest method. The debt issuance costs have been recorded as a debt discount which are being accreted to interest expense through the maturity date of the term loan.

Interest expense relating to the term loan, which is included in interest expense in the condensed statements of operations was $172$488 and $949 for the three and ninesix months ended SeptemberJune 30, 2021.2022.

Under the terms of the Loan Agreement, the Company granted first priority liens and security interests in substantially all of the Company’s intellectual property as collateral for the obligations thereunder. The Company also granted Hercules the right, at their discretion, to participate in any closing of any single subsequent broadly marketed financing as defined up to a maximum aggregate amount of $2,000 under the terms as afforded to other investors in such financing. The Loan Agreement also contains representations and warranties by the Company and Hercules, indemnification provisions in favor of Hercules and customary affirmative and negative covenants, including a liquidity covenant beginning October 1, 2022, requiring the Company to maintain a minimum aggregate compensating cash balance of $5,000, and events of default, including a material adverse change in the Company’s business, payment defaults, breaches of covenants following any applicable cure period, and a material impairment in the perfection or priority of Hercules’ security interest in the collateral. In the event of default by the Company under the Loan Agreement, the Company may be required to repay all amounts then outstanding under the Loan Agreement.

Future principal payments for the long-term debt are as follows:

 September 30,
2021		  June 30,
2022		 
2021 (for the remaining 3 months)  - 
2022  - 
2023  4,458  $4,427 
2024  5,804   5,802 
2025  4,738   4,771 
Total principal payments  15,000   15,000 
Unamortized discount and debt issuance costs  (775)  (339)
Long-term debt  14,225 
Total future principal payments $14,661 
Current portion of long-term debt  (1,732)
Long-term debt, net $12,929 

F-12


 

 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NISin thousands, except share and per share data)

(unaudited)

NOTE 5 – STOCKHOLDERS EQUITY

 

 A.Share Capital:

 

At-the-market Sales Agreement:

 

In December 2020, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on December 11, 2020, the Company entered into an Open Market Sales Agreement (“ATM Agreement”) with Jefferies LLC. (“Jefferies”), which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell shares of Common Stock with an aggregate offering price of up to $50,000, with Jefferies acting as sales agent. During the ninesix months ended SeptemberJune 30, 2021,2022, the Company sold 743,96427,171 shares of Common Stock under the ATM Agreement, at an average price of $7.19$1.36 per share, raising aggregate net proceeds of approximately $5,188,$37, after deducting an aggregate commission of $160.$1. See Note 8D.

 

Securities PurchaseMaruho Agreement:

 

On July 26,In October 2021, the Company entered into a Stock Purchase Agreement with a subsidiary of Maruho Co. Ltd., (“Maruho”), a leading dermatology-focused pharmaceutical company in Japan, pursuant to which the Company issued to Maruho 375,000 shares of Common Stock at a price of $8.00 per share for gross proceeds of $3,000. The Company also granted Maruho a right of first offer to license its atopic dermatitis product candidate, BX005, in Japan. The right of first offer will commence following the availability of results from the Phase 1/2 study. The Company applied ASC 606 by analogy to the agreements. The agreements were combined into a single unit of account for the purpose of applying ASC 606. Part of the consideration paid under the agreements, equal to the grant date fair value of the shares issued to Maruho of $1,024, was attributed to the issuance of shares and accounted for as an increase in equity. The remainder of $1,976 was attributed to a contract liability, to be recognized as other income, at a point in time, once the clinical trials related to the product candidate are completed. Following the Company announcement on May 24, 2022, as mentioned in Note 7 below regarding the delaying of the Company’s atopic dermatitis program, the contract liability was classified as a non-current liability.

CFF Agreement:

In December 2021, the Company entered into a Securities Purchase Agreement with institutional investors,the Cystic Fibrosis Foundation (“CF Foundation”), an organization that historically played a role in supporting the development of innovative therapies for patients suffering from cystic fibrosis (“CF”). Under the terms of the agreement, the Company will receive up to $5,000 in two tranches. In the first tranche, which closed and fully received on December 21, 2021, the CF Foundation invested $3,000 as an initial equity investment based on a share price of $2.57. Upon completion of all patient dosing in Part 1 of the Company’s directors and certain executive officersPhase 1b/2a study of BX004, the Company would have the right to receive the second tranche of $2,000, also as an equity investment. In the event that the average closing price of the Common Stock for the saleten trading days prior to the second tranche completion is less than $2.57, the Company shall have the right in its sole discretion to waive the second tranche payment and in such event the CF Foundation shall not have any right to receive additional shares. The Company concluded that the second tranche is a freestanding financial instrument. The Company also concluded that since the instrument will be predominantly settled in a variable number of an aggregateshares at a fixed monetary amount, the second tranche is in the scope of 3,750,000ASC 480 and should be accounted for at fair value with subsequent changes in fair value recognized in the statements of operations in each period. The Company further determined that due to the settlement mechanism, the fair value of the second tranche is negligible, both at inception and on June 30, 2022.


BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

NOTE 5 – STOCKHOLDERS EQUITY (Cont.)

A.Share Capital: (Cont.)

Preferred Stock:

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Common Stock and warrants to purchase an aggregateBoard of 2,812,501 shares of the Company’s Common Stock in a registered direct offering, for gross proceeds of $15,000 before deducting placement agent fees and offering expenses and assuming that none of the warrants are exercised. The securities were sold at price of $4.00 per share and an accompanying warrant to purchase 0.75 of a share of the Company’s Common Stock at an exercise price of $5.00 per share. The warrants will be exercisable six months after the date of issuance and will expire five years from the date such warrant first becomes exercisable. The warrants issued were classified as equity in accordance with ASC 815-40. The securities were offered pursuant to the Company’s effective registration statement on Form S-3. All proceeds were received as of July 28, 2021. 125,000 shares of Common Stock and 93,750 warrants were sold to related parties.Directors (the “Board”). 

 

Warrants:

 

As of SeptemberJune 30, 2021,2022, the Company had the following outstanding warrants to purchase Common Stock issued to stockholders:

 

Warrant Issuance Date Expiration
Date		 Exercise
Price
Per Share		  Number of
Shares of
Common Stock
Underlying
Warrants		 
Private Placement Warrants IPO (December 13, 2018) December 13, 2023  11.50   2,900,000 
Public Warrants IPO (December 13, 2018) October 28, 2024  11.50   3,500,000 
2021 Registered Direct Offering Warrants SPA (July 28, 2021) January 28, 2027  5.00   2,812,501 
           9,212,501 

 

 B.Stock-based Compensation:

  

On March 30, 2021,29, 2022, the Board of Directors approved the grant of 985,5301,153,500 options to 9489 employees, including fivethree senior officers, one consultant, and sixfive directors under the Company’s 2019 Equity Incentive Plan, without consideration. Options were granted at an exercise price of $7.02$1.41 per share with a vesting period of four years. Directors and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.

 

On June 26, 2022, the Board of Directors approved the grant of 350,500 options to 53 employees, and one consultant under the Company’s 2019 Equity Incentive Plan, without consideration. Options were granted at an exercise price of $0.66 per share with a vesting period of four years.

F-13


 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

 

NOTE 5 – STOCKHOLDERS EQUITY (Cont.)

 

 B.Stock-based Compensation: (Cont.)

 

The fair value of each option was estimated as of the date of grant or reporting period using the Black-Scholes option-pricing model, using the following assumptions:

 

 Nine Months Ended
September 30,		  Six Months Ended
June 30,		 
 2021  2020  2022  2021 
Underlying value of Common Stock ($)  7.02   5.59-6.21   0.66-1.41   7.02 
Exercise price ($)  7.02   5.59-6.21   0.66-1.41   7.02 
Expected volatility (%)  85.0   85.0   85.3-87.0   85.0 
Expected terms of the option (years)  6.11   6.25   6.11   6.11 
Risk-free interest rate (%)  1.17   0.37-0.52   2.50-3.39   1.17 

 

The cost of the benefit embodied in the options granted during the ninesix and three months ended SeptemberJune 30, 2021,2022, based on their fair value as at the grant date, is estimated to be approximately $5,138.$1,477 and $1,307, respectively. These amounts will be recognized in statements of operations over the vesting period.

 

 (1)A summary of options granted to purchase the Company’s Common Stock under the Company’s share option plans is as follows:

 

 For the Nine Months Ended
September 30, 2021		  For the Six Months Ended
June 30 2022		 
 Number of
Options		  Weighted
Average
Exercise Price		  Aggregate
Intrinsic
Value		  Number of
Options		  Weighted
Average
Exercise Price		  Aggregate
Intrinsic
Value		 
Outstanding at the beginning of period  3,569,766   3.12   12,338   4,084,549  $3.95  $671 
Granted  985,530   7.02       1,504,000  $1.25     
Forfeited  (116,235)  4.72       (622,559) $4.07     
Exercised  (79,545)  1.52       -  $-     
Outstanding at the end of period  4,359,516   3.99   9,380   4,965,990  $3.12  $1,196 
Exercisable at the end of period  2,354,505           2,699,833         
Weighted average remaining contractual life of outstanding options – years as of September 30, 2021  7.43         
Weighted average remaining contractual life of outstanding options – years as of June 30, 2022  7.24         

 

F-14


 

 

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

 

NOTE 5 – STOCKHOLDERS EQUITY (Cont.)

 

 B.Stock-based Compensation: (Cont.)

 

Warrants:

 

As of SeptemberJune 30, 2021,2022, the Company had the following outstanding stock-based compensation related warrants to purchase Common Stock:

 

Warrant Issuance Date Expiration
Date		 Exercise
Price
Per Share		  Number of
Shares of
Common Stock
Underlying
Warrants
Private Warrants issued to Yeda (see 1 below) May 11, 2017May 11, 2025  (*)- 
Private Warrants issued to scientific founders (see 2 below) November 27, 2017    -2,974
   2,974 

 

(*)less than $0.001.

 1.

In May 2017, in accordance with a license agreement, the Company issued to Yeda Research and Development Company Limited (“Yeda”), for nominal consideration, 591,382 warrants to purchase Common Stock at $0.0001 nominal value, for nominal consideration. Yeda had the option to exercise the warrants on a cashless basis. In 2020, the license agreement was terminated.

On March 10, 2021, Yeda exercised 362,444 warrants on a cashless basis, resulting in the issuance of 362,383 shares of Common Stock. The remainder of the warrants were cancelled as part of the termination of the license agreement.

Expenses and income are included in R&D expenses, net in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, the Company did not record any expenses.

F-15

BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 5 – STOCKHOLDERS EQUITY (Cont.)

B.Stock-based Compensation: (Cont.)

2.In November 2017, BiomX Israel issued 7,615 warrants to Yeda and 2,974 warrants to its scientific founders. All theThe warrants were fully vested at their grant date and will expire immediately prior to a consummation of an M&A transaction. The warrants did not expire as a result of the Recapitalization Transaction and have no exercise price.

 

 (2)The following table sets forth the total stock-based payment expenses resulting from options granted, included in the statements of operations:

 

  Nine Months Ended
September  30,		 
  2021  2020 
Research and development expenses, net  1,539   1,345 
General and administrative  1,113   783 
   2,652   2,128 

 Three Months Ended
September  30,		  Six Months Ended June 30,  Three Months Ended June 30, 
 2021  2020  2022  2021  2022  2021 
Research and development expenses, net  581   843   248   958   (10)  627 
General and administrative  446   271   551   667   194   468 
  1,027   1,114   799   1,625   184   1,095 

 

NOTE 6 – BASIC AND DILUTED LOSS PER SHARE

 

Basic loss per share is computed on the basis of the net loss for the period divided by the weighted average number of shares of Common Stock outstanding during the period. Diluted loss per share is based upon the weighted average number of shares of Common Stock and of potential shares of Common Stock outstanding when dilutive. Potential shares of Common Stock equivalents include outstanding stock options and warrants, which are included under the treasury stock method when dilutive. The calculation of diluted loss per share for the three and ninesix months ended SeptemberJune 30, 20212022 does not include 4,359,516,4,965,990, 9,215,475 and 6,000,0004,000,000 of shares underlying options, shares underlying warrants and contingent shares, respectively, because the effect would be anti-dilutive.

 


BIOMX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(USD and NIS in thousands, except share and per share data)

(unaudited)

NOTE 7 - CORPORATE RESTRUCTRING

On May 24, 2022, the Company announced a corporate restructuring (the “Corporate Restructuring”), intended to extend the Company’s capital resources, while prioritizing the Company’s ongoing cystic fibrosis program and delaying the Company’s atopic dermatitis program. The Corporate Restructuring included a reduction of 36 full-time employees, two consultants and 9 part-time employees, or 42% of the Company’s employees as of such date. The Company incurred a one-time employee benefits and severance cost of approximately $214 in operating expenses in the second quarter of 2022. The related accrual is recorded in other accounts payable on the condensed balance sheet as of June 30, 2022. Non-cash stock-based compensation credits related to the forfeiture of stock options of approximately $0.4 million are included in operating expenses in the condensed statements of operations for the three and six months ended June 30, 2022.

NOTE 78 – SUBSEQUENT EVENTS

 

 A.In October 2021On July 5, 2022, the Company entered intoreceived a binding agreement with a subsidiarysecond payment of Maruho Co. Ltd., or Maruho, a leading dermatology-focused pharmaceutical company in Japan, pursuant to which the Company issued to Maruho 375,000 shares of Common Stock at a price of $8.00 per share for gross proceeds of $3,000. The company also granted Maruho a right of first offer to license its atopic dermatitis product candidate, BX005, in Japan. The right of first offer will commence following the availability of resultsNIS 908 (approximately $259) from the Phase 1/2 study expectedIIA with respect to the IIA program approved in 2022.August 2021.

 

 B.On October 18, 2021,July 6, 2022, the Company announced a voluntary delisting of its shares of Common Stock from the resultsTel-Aviv Stock Exchange. The delisting will become effective on October 6, 2022.

C.On July 27, 2022, the Company received the first installment of a Phase 2 cosmetic clinical study$500 as part of BX001. The study was a 12-week randomized, single center, double-blind, placebo-controlled trial in 140 womenthe research collaboration agreement with mild-to-moderate acne vulgaris. No meaningful difference was demonstrated for BX001 relative to placebo. TheBI. See Note 3B.

D.On July 28, 2022, the Company has decided not to continue pursuing this program.sold 201,873 shares of Common Stock under the ATM Agreement, at an average price of $1.20 per share, raising aggregate net proceeds of approximately $243. See Note 5A.

 

F-16


 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 

References in this Quarterly Report to “the Company”, “BiomX”, “we”, “us” or “our”, mean BiomX Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise. References in this Quarterly Report to “BiomX Ltd.” mean BiomX Ltd., our wholly owned Israeli subsidiary.

 

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. 

 

General

 

We are a clinical company developing products using both natural and engineered phage technologies designed to target and destroy bacteria that affect the appearance of skin, as well as harmful bacteria in the treatment of chronic diseases, such as Cystic Fibrosis, or CF, Atopic Dermatitis, or AD, inflammatory bowel disease, or IBD, primary sclerosing cholangitis, or PSC, and colorectal cancer, or CRC.diseases. Bacteriophage or phage are viruses that target bacteria and are considered inert to mammalian cells. By developing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology, we develop phage-based therapies intended to address large-market and orphan diseases.

 

Since inception in 2015, we have devoted substantially all our resources to organizing and staffing the company, raising capital, acquiring rights to or discovering product candidates, developing our technology platforms, securing related intellectual property rights, and conducting discovery, research and development activities for our product candidates. We do not have any products approved for sale, our products are still in the preclinical and clinical development stages, and we have not generated any revenue from product sales. As we move our product candidates from preclinical to clinical stage and continue with clinical trials, we expect our expenses to increase.

 

Our phage-based product candidates are developed utilizing our proprietary research and development platform named BOLT. The BOLT platform is unique, employing cutting edge methodologies and capabilities across disciplines including computational biology, microbiology, synthetic engineering of phage and their production bacterial hosts, bioanalytical assay development, manufacturing and formulation, to allow agile and efficient development of natural or engineered phage combinations, or cocktails.

 

BOLT is designed to allow parallelrapid phage cocktails. The BOLT cocktail targets a broad patient population and may be comprised of naturally-occurring or synthetically engineered phage. The cocktail contains phage with complementary features and is further optimized for multiple characteristics such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing. Development of the optimized phage cocktail development under two optional paths:is anticipated to require 1-2 years.

●A personalized approach aimed at conducting a rapid initial clinical proof of concept study in patients (Phase 2 results) within approximately 12-18 months of project initiation. In certain indications the time to clinical proof of concept may be longer depending on the indication, identity of target bacteria, recruitment rate, cohort size and other factors. Under this path we develop an initial phage cocktail or cocktails of naturally-occurring phage designed to target the bacterial strains isolated from each study subject participating in the clinical proof of concept study. This phage cocktail or cocktails may differ from the final optimized phage cocktail to be commercialized, if approved. The ability to move quickly into clinical development is also driven by the strong safety profile of naturally-occurring phage, which we believe will allow us to bypass GLP toxicity studies and safety studies in healthy volunteers based on feedback from the FDA in connection with our IBD development program, and to proceed directly to Phase 2 proof of concept.

2

●Development of the final optimized fixed phage cocktail to be commercialized – the optimized cocktail targets a broad patient population and may be comprised of naturally-occurring or synthetically engineered phage. The cocktail contains phage with complementary features and is further optimized for multiple characteristics such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing. Development of the optimized phage cocktail is anticipated to require 1-2 years and will be conducted in parallel to developing the personalized product candidates and executing the clinical proof of concept studies described above.

 

On November 15, 2021, we announced that we plan to focus on Cystic Fibrosis, or CF, and Atopic Dermatitis, or AD, programs in 2022 and to temporarily pause the development efforts in Inflammatory Bowel Disease, or IBD, and Colorectal Cancer, or CRC, for approximately one year, as neither program was expected to yield proof-of-concept data in patients over the next twelve months. In addition,As of today, we decided notcannot provide any guidance on resuming activities in these programs.

On May 24, 2022, we announced a corporate restructuring, or the Corporate Restructuring, whereby we plan to continueprioritize the CF program and delay the AD program. The Corporate Restructuring is intended to pursueextend the development planCompany’s capital resources until at least the middle of 2024 and included the laying off of approximately 42% of our BX001 product candidate, that was developed to treat acne.employees.

 

Clinical and Pre-Clinical Developments  

 

Cystic Fibrosis

 

On March 31, 2021, we announced the selection of the phage cocktail for BX004, our therapeutic phage product candidate under development for chronic respiratory infections caused by Pseudomonas aeruginosa, or P. aeruginosa, a main contributor to morbidity and mortality in patients with CF. Based on recommendations from the Cystic Fibrosis Therapeutic Development Network, we updated our Phase 2 proof-of-concept study design and timelines to a Phase 1b/2a trial in CF patients with chronic respiratory infections caused by P. aeruginosa. The Phase 1b/2a trial will be comprised of two parts. Part 1 will evaluate the safety, pharmacokinetics and microbiologic/clinical activity of BX004 in eight CF patients in a single ascending dose and multiple ascending dose design. Results from Part 1 are expected in the secondthird quarter of 2022. Part 2 of the Phase 1b/2a trial will evaluate the safety and efficacy of BX004 in 24 CF patients randomized to a treatment or placebo cohort in a 2:1 ratio. Results from Part 2 are expected by the thirdfirst quarter of 2022.2023. In September 2021, BX004 was cleared by the FDA to initiate the Phase 1b/2a trial in CF patients with chronic respiratory infections caused by P. aeruginosa. On June 27, 2022, we announced the dosing of the first two patients in the Phase 1b/2a.


 

Atopic Dermatitis

 

On March 31, 2021, we announced the selection of the phage cocktail for BX005, our topical phage product candidate targeting Staphylococcus aureus, or S. aureus, a bacterium associated with the development and exacerbation of inflammation in atopic dermatitis. By reducing S. aureus burden, BX005 is designed to shift the skin microbiome composition to its “pre-flare” state to potentially result in clinical improvement. Results fromOn April 8, 2022, the FDA approved the Company’s IND application for BX005. We are working on evaluating timelines for a Phase 2 proof-of-concept trial evaluating the safety and efficacy of BX005 in atopic dermatitis patients are expected in the third quarter of 2022.

Acne

On October 18, 2021, we announced the results of a Phase 2 cosmetic clinical study of BX001. The study was a 12-week randomized, single center, double-blind, placebo-controlled trial, in 140 womencoordination with mild-to-moderate acne vulgaris. Subjects were randomized into two cohorts: BX001 or placebo in a 1:1 ratio and self-administered BX001 or placebo twice daily. Key endpoints from the study evaluated the safety, tolerability and efficacy of BX001. BX001 was demonstrated to be safe and well-tolerated with no treatment-related adverse events. A statistically significant improvement from baseline was observed in appearance of acne-prone skin but no meaningful difference was demonstrated relative to the placebo arm of the Study. Significant improvements in the appearance of acne prone skin, as assessed by reduction in inflammatory lesion counts (48.3%, p<0.0001), non-inflammatory lesion counts (36.3%, p<0.0001), and by reduction in average Investigator’s Global Assessment, or IGA, score (-0.29, p<0.001), were observed when compared to baseline for both cohorts. No meaningful difference was demonstrated for BX001 relative to placebo. As mentioned above, we have decided not to continue pursuing this program.Maruho.

3

 

Inflammatory Bowel Disease and Primary Sclerosing Cholangitis

 

On November 12, 2020, we announced consolidation of our IBD and PSC programs into a single broad host range product candidate, named BX003, under development for both indications. Prior to November 2020, we had two separate phage product candidates for IBD and for PSC, with our IBD product candidate named BX002 and PSC product candidate named BX003. After the consolidation, the current BX003 product candidate is now under development to treat both IBD and PSC, targeting bacterial strains of Klebsiella pneumoniae, or K. pneumoniae, a potential pathogen implicated in both diseases. Prior to the consolidation, our Phase 1a clinical study was conducted only on BX002, and future clinical studies are planned to be conducted on BX003 for both IBD and PSC.

 

On February 2, 2021, we announced positive results of a randomized, single-blind, multiple-dose, placebo-controlled Phase 1a pharmacokinetic study of BX002, our product candidate for IBD and PSC, conducted under an investigational new drug, or IND, application submitted to the FDA. The study evaluated the safety and tolerability of orally administered BX002 in 18 healthy volunteers. Subjects were randomized to receive orally either BX002 or placebo, twice daily for three days. Subjects were monitored for safety for seven days in a clinical unit, with follow-up monitoring for safety assessments conducted at 14 and 28 days after completion of dosing. BX002 was demonstrated to be safe and well-tolerated, with no serious adverse events and no adverse events leading to discontinuation. In addition, the study met its objective of delivering high concentrations of viable phage to the gastrointestinal tract of approximately 1010 PFU, or plaque forming units. This equals approximately 1,000 times more viable phage compared to the bacterial burden of K. pneumoniae in IBD and PSC patients as measured in stool.

On November 15, 2021, we announced that we are pausing the development efforts of BX003 for approximately one year. We cannot provide any guidance on resuming the development of BX003 to treat IBD and PSC.

 

Colorectal Cancer 

 

For our CRC program, we are exploring phage mediated delivery of therapeutic payloads to Fusobacterium nucleatum bacteria residing in the tumors of patients with colorectal cancer. However, as announced on November 15, 2021, we paused our CRC program and cannot provide any guidance on resuming this program.

 

For more information regarding our product candidates, see Part I, Item 1 “Business” of our 20202021 Annual Report.

 

COVID-19

On March 12, 2020, the World Health Organization declared COVID-19 a global pandemic. In an effort to contain and mitigate the spread of COVID-19, many countries have imposed unprecedented restrictions on travel, mandatory business closures and other measures designed to mitigate the spread, leading to a substantial reduction in economic activities in countries around the world, resulting in certain disruptions to our business throughout 2020 and in 2021.

 

In response to the pandemic, we have implemented the mandatory as well as recommended measures to safeguard the health and safety of our employees and clinical trial participants, and the continuity of our business operations, including social distancing in our offices,operations. These measures currently include a work from home policy for all employees who are able to perform their duties remotely, and restricting all nonessential travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, clinical trial participants and others in light of COVID-19. As of November 10, 2021,August 5, 2022, COVID-19 has not had a material impact on our results of operations. However, uncertainty remains as to the potential impact of COVID-19 on our future research and development activities and the potential for a material impact on the Company increases the longer the virus impacts certain aspects of economic activity around the world. The full extent to which COVID-19 will directly or indirectly impact our business, results of operations and financial condition, including our ability to fulfill our clinical trial enrollment needs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets, the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, the effectiveness of vaccines and vaccine distribution efforts and the effectiveness of other actions taken in the United States and other countries to contain and treat the disease. During the second quarter of 2020,In March 2022, we updated our guidance on the timing of certain clinical milestones partly due to the health and safety precautions we had taken andresulting from challenges we continue to face in clinical trial enrollment due to COVID-19. It is not currently possible to predict how long the pandemic will last, what the long-term global effects will be, or the time that it will take for economic activity to return to pre-pandemic levels, and we do not yet know the full impact on our business and operations. We will continue to monitor COVID-19 closely and follow health and safety guidelines as they evolve.

 

4


 

 

Consolidated Results of Operations 

 

Comparison of the Three Months Ended SeptemberJune 30, 20212022 and 20202021

 

The following table summarizes our consolidated results of operations for the three months ended SeptemberJune 30, 20212022 and 2020:2021:

 

 Three Months ended
September 30,		  Three Months ended
June 30,		 
 2021  2020  2022  2021 
 USD in thousands  USD in thousands 
Research and development (“R&D”) expenses, net  6,608   6,056   4,584   3,824 
Amortization of intangible assets  380   380   379   380 
General and administrative expenses  2,845   2,394   2,361   3,098 
Operating loss  9,833   8,830   7,324   7,302 
Financial expense, net  188   5 
Interest expenses  488   - 
Finance expense (income), net  (339)  31 
Loss before tax  10,021   8,835   7,473   7,333 
Tax expenses  10   -   9   3 
Net loss  10,031   8,835   7,482   7,336 
Basic and diluted loss per share of Common Stock  0.37   0.38   0.25   0.30 
Weighted average number of shares of Common Stock outstanding, basic and diluted  27,077,903   23,150,253   29,774,709   24,320,259 

 

R&D expenses, net (net of grants received from the Israel Innovation Authority, or the IIA, and considerations from research collaborations) were $6.6$4.6 million for the three months ended SeptemberJune 30, 2021,2022, compared to $6.1$3.8 million for the three months ended SeptemberJune 30, 2020.2021. The increase of $0.5$0.8 million, or 8%21%, is primarily due to increased expenses related to conducting pre-clinical and clinical trials of our product candidates,a decrease in IIA grants, partially offset by an increasea decrease in IIA grants that weresalaries and related expenses and stock-based compensation expenses due to a reduction in workforce, as a result from the Corporate Restructuring. In addition, the decrease in R&D expenses is due to pausing the development of BX003, the product candidate for the treatment of our IBD and PSC, and CRC product candidate, as well as the discontinuing of the product candidate for the treatment of acne, BX001. We recorded during the period. The Company recorded $0.6$0.3 million and $2.6 million of IIA grants and grants receivables during the three months ended SeptemberJune 30, 2021. The Company did not record any grants2022 and grants receivables during the three months ended SeptemberJune 30, 2020.2021, respectively.

 

General and administrative expenses were $2.8$2.3 million for the three months ended SeptemberJune 30, 2021,2022, compared to $2.4$3.1 million for the three months ended SeptemberJune 30, 2020.2021. The increasedecrease of $0.4$0.8 million, or 17%26%, is primarily due to an increasea decrease in stock-based compensation and salaries and related expenses mainlyand stock-based compensation expenses due to a reduction in workforce. In addition, the growth in the number of employees anddecrease is due to an2021 expenses from moving into new premises.

Interest expenses were $0.5 million for the three months ended June 30, 2022. We had no interest expenses for the three months ended June 30, 2021. The increase of $0.5 million, is due to interest payments incurred under our loan from Hercules Capital, Inc., or the Hercules Loan, entered into in expenses associated with operating as a public company, such as directors’ and officers’ insurance.August 2021.

 

Financial expense,income, net was $188,000$0.3 million for the three months ended SeptemberJune 30, 2021,2022, compared to $5,000financial expense, net of $0.03 million for the three months ended SeptemberJune 30, 2020.2021. The increase in financial expense,income, net of $183,000, or 3900%,$0.4 million is primarily due to interest expense resulting from receiptappreciation of the first tranche ofU.S. dollar against the Term Loan Facility, and due to the decrease in interest rates on bank deposits and money market funds.NIS.

 

Basic and diluted loss per share of Common Stock was $0.37$0.25 for the three months ended SeptemberJune 30, 2021,2022, compared to $0.38$0.30 for the three months ended SeptemberJune 30, 2020.2021. The decrease in diluted loss per sharesshare of $0.01,$0.05, or 3%16%, is primarily due to the increase in outstanding shares as part of thea registered direct offering described below and other issuances of our Common Stock, offset by an increasecompleted in our operating loss.July 2021.

 

5


 

 

Comparison of the NineSix Months Ended SeptemberJune 30, 20212022 and 20202022

 

The following table summarizes our consolidated results of operations for the ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:

 

 Nine Months ended
September 30,		  Six Months ended
June 30,		 
 2021  2020  2022  2021 
 USD in thousands  USD in thousands 
R&D expenses, net  16,102   13,302   9,513   9,494 
Amortization of intangible assets  1,139   1,139   759   759 
General and administrative expenses  8,436   6,749   4,838   5,591 
Operating loss  25,677   21,190   15,110   15,844 
Financial expense (income), net  76   (248)
Interest expenses  949   - 
Finance income, net  (426)  (112)
Loss before tax  25,753   20,942   15,633   15,732 
Tax expenses  16   -   18   6 
Net loss  25,769   20,942   15,651   15,738 
Basic and diluted loss per share of Common Stock  1.03   0.91   0.53   0.65 
Weighted average number of shares of Common Stock outstanding, basic and diluted  25,120,037   23,013,790   29,764,588   24,134,065 

 

Research and developmentR&D expenses, net (net of grants received from the IIA, grants and considerationconsiderations from research collaborations) were $16.1$9.5 million for the ninesix months ended SeptemberJune 30, 2021, compared to $13.3 million for the nine months ended September2022 and June 30, 2020. The increase of $2.8 million, or 21%, is primarily due to2021. A decrease in IIA grants resulted in higher R&D expenses, related to conducting pre-clinical and clinical trials of our product candidates and due to an increasenet, offset by a decrease in stock-based compensation and salaries and related expenses mainlyand stock-based compensation expenses due to a reduction in workforce, as a result from the growthCorporate Restructuring. An additional offset is due to pausing in the numberdevelopment of employees in R&DBX003, the product candidate for the treatment of our IBD and clinical activities, partially offset by an increase in IIA grants. The CompanyPSC, and CRC product candidate, as well as the discontinuing of the product candidate for the treatment of acne, BX001. We recorded $3.3$0.7 million and $0.5$2.6 million of IIA grants and grants receivables during the ninesix months ended SeptemberJune 30, 20212022 and SeptemberJune 30, 2020,2021, respectively.

 

General and administrative expenses were $8.4$4.8 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared to $6.7$5.6 million for the ninesix months ended SeptemberJune 30, 2020.2021. The increasedecrease of $1.7$0.8 million, or 25%14%, is primarily due to an increasea decrease in stock-based compensation and salaries and related expenses mainlyand stock-based compensation expenses due to a reduction in workforce. In addition, the growth in the number of employees, as well as an increase in expenses associated with operating as a public company, such as directors’ and officers’ insurance anddecrease is due to 2021 expenses offrom moving into new premises.

 

Interest expenses were $0.95 million for the six months ended June 30, 2022. We had no interest expenses for the six months ended June 30, 2021. The increase of $0.95 million, is due to interest payments incurred under the Hercules Loan entered into in August 2021.

Financial expense,income, net was $0.4 million for the six months ended June 30, 2022, compared to $0.1 million for the ninesix months ended SeptemberJune 30, 2021, compared to financial income, net of $0.2 million for the nine months ended September 30, 2020.2021. The increase in financial expense,income, net of $0.3 million, or 150%300%, is primarily due to interest expense that resulted fromappreciation of the Term Loan Facility and toU.S. dollar against the decrease in interest rates on bank deposits and money market funds, partially offset by the USD/NIS exchange rate differences.NIS.

 

Basic and diluted loss per share of Common Stock was $1.03$0.53 for the ninesix months ended SeptemberJune 30, 2021,2022, compared to $0.91$0.65 for the ninesix months ended SeptemberJune 30, 2020.2021. The increasedecrease in diluted loss per share of $0.12, or 13%18%, is primarily due to the increase in our net loss, partially offset by the increase in outstanding shares as part of thea registered direct offering described belowcompleted in July 2021 and other issuances of our Common Stock.


 

Liquidity and Capital Resources 

 

We believe our cash and cash equivalents and short-term deposits on hand will be sufficient to meet our working capital and capital expenditure requirements until at least the endmiddle of 2023.2024. We have revised our operating plans in order to reduce expenses and, until we are ableincluding the Corporate Restructuring, which significantly reduced our expenses related to obtain further funding,employees, and, we currently plan to focus primarily on BX004, our product candidate for CF and continue advancing the development plan of BX005, our product candidatescandidate for CF and AD, respectively.AD. In the future we will likely require or desire additional funds to support our operating expenses, and capital requirements, resumption of our development plans for BX003 or our development plan in CRC or for other purposes,purposes. Accordingly, we are exploring and may seekexpect to raisefurther explore, raising such additional funds through public or private equity such as the registered direct offering discussed belowpotential second tranche in the Securities Purchase Agreement with the Cystic Fibrosis Foundation, or the CFF Agreement, or debt financings, loans such as the venture debt discussed belowHercules Loan, governmental or other grants or collaborative agreements or from other sources, as well as under the ATM Agreement discussed below. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. If there are further increases in operating costs for facilities expansion, research and development and clinical activity, the Company will need to use mitigating actions such as to seek additional financing or postpone expenses that are not based on firm commitments. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

 

6

Cash Flows

 

The following table summarizes our sources and uses of cash for the ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:  

 

 Nine Months Ended
September 30,		  Six Months Ended
June 30,		 
 2021  2020  2022  2021 
 USD in thousands  USD in thousands 
Net cash used in operating activities  (18,483)  (17,325)  (16,448)  (12,799)
Net cash provided by (used in) investing activities  16,276   (1,049)  (8,074)  17,587 
Net cash provided by financing activities  33,300   121   56   5,236 
Effect of exchange rate changes on cash and cash equivalents and restricted cash  (2)  -   79   (11)
Net increase (decrease) in cash and cash equivalents  31,091   (18,253)  (24,387)  10,013 

 

Operating Activities

 

Net cash used in operating activities for the ninesix months ended SeptemberJune 30, 20212022 was $18.5$16.4 million primarily due to a net loss of $25.8$15.6 million, mostly due to our R&D and general and administrative expenses, and due to changes in our operating assets and liabilities of $3.0 million, offset by non-cash charges of $4.1$2.2 million. Non-cash charges for the six months ended June 30, 2022 consisted primarily of depreciation and amortization expenses of $1.3 million and stock-based compensation expenses in the amount of $0.8 million. Net changes in our operating assets and liabilities consisted primarily of a decrease in trade accounts payable of $1.1 million, other accounts payable in the amount of $3.1 million and a net change in operating leases in the amount of $0.7 million, partially offset by an increase in other current assets in the amount of $1.9 million.

Net cash used in operating activities for the six months ended June 30, 2021 was $12.8 million primarily due to a net loss of $15.7 million, offset by non-cash charges of $2.5 million and changes in our operating assets and liabilities of $3.1$0.4 million. Non-cash charges for the ninesix months ended SeptemberJune 30, 2021 consisted primarily of depreciation and amortization expenses of $1.7$1.1 million and stock-based compensation expenses in the amount of $2.7$1.6 million, offset by changes in contingent considerationconsiderations of $0.3$0.2 million. Net changes in our operating assets and liabilities consisted primarily due to change in other current assets in the amount of $2.1 million and in other account payables in the amount of $1.8$0.9 million, partially offset by a decrease in accounts payable of $0.5$0.3 million and a decrease in net change in operating leases of $0.2 million.

 

Net cash used in operating activities for the nine months ended September 30, 2020 was $17.3 million and included our net loss of $20.9 million, mostly due to our R&D and general and administrative expenses. Net changes in our operating activities for the nine months ended September 30, 2020 consisted primarily of depreciation and amortization in the amount of $1.6 million and stock-based compensation in the amount of $2.1 million, partially offset by a decrease in accounts payable in the amount of $1.9 million.  

Investing Activities

 

During the ninesix months ended SeptemberJune 30, 2022, net cash provided by investing activities was $8.1 million, as a result of the net change in investment in short-term deposits of $8.0 million.

During the six months ended June 30, 2021, net cash provided by investing activities was $16.3$17.6 million, primarily as a result of liquidation of short-term deposits, of $19.9 million, partially offset by purchases of property and equipment of $3.6 million which consisted primarily of leasehold improvements and lab equipment as part of construction work on our new in-house manufacturing facility, laboratories and offices.

 

During the nine months ended September 30, 2020, net cash used in investing activities was $1.0 million, mainly as a result of an increase in bank deposits and purchases of property and equipment.


 

We have invested, and plan to continue to invest, our existing cash in short-term investments in accordance with our investment policy. These investments may include money market funds and investment securities consisting of U.S. Treasury notes, and high quality, marketable debt instruments of corporations and government sponsored enterprises. We use foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, we record gains or losses that offset the revaluation of the balance sheet items under financial expenses,income, net in our condensed consolidated statements of operations. As of SeptemberJune 30, 2021,2022, we had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $2.8$6.4 million with a fair value of $0.02$0.2 million. As of SeptemberJune 30, 2020,2021, we had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $3.5$4.0 million with a fair value of $0.01$0.07 million.

 

Financing Activities

 

During the ninesix months ended SeptemberJune 30, 2022, net cash provided by financing activities was $0.06 million, mainly due to issuance of Common Stock pursuant to the Open Market Sales Agreement referred to below.

During the six months ended June 30, 2021, net cash provided by financing activities was $33.3$5.2 million, primarily from a loan and security agreement, from the issuance of Common Stock in a registered direct offering and from the issuance of Common Stock pursuant to the Open Market Sales Agreement referred to below.

 

In December 2020, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on December 11, 2020, we entered into an Open Market Sales Agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, we may elect, from time to time, to offer and sell shares of Common Stock having an aggregate offering price of up to $50,000,000 through Jefferies acting as sales agent. We are not obligated to make any sales of Common Stock under the ATM Agreement. From January 1, 20212022 through SeptemberJune 30, 2021,2022, we issued an aggregate of 743,96427,171 shares of Common Stock under the ATM Agreement for aggregate gross proceeds of $5,351,120.$0.04 million. From OctoberJuly 1, 20212022 through November 10, 2021,August 5, 2022, we did not issue anyissued 201,873 shares of Common Stock pursuant to the ATM Agreement.Agreement for aggregate gross proceeds of $0.24 million. We may continue to sell shares under the ATM Agreement and otherwise to use our effective shelf registration statement to raise additional funds from time to time.

 

7

On July 28, 2021,Under the Loan Agreement, we completedhave a transaction underTerm Loan Facility, available in three tranches, subject to certain terms and conditions. The first tranche of $15.0 million was advanced to us on the date the Loan Agreement was executed. Upon the occurrence of specified milestones and continuing through December 31, 2022, a securities purchase agreement,loan in the aggregate principal amount of up to $10.0 million, or the Securities Purchase Agreement, with certain institutional investorssecond tranche, and allupon the occurrence of our directorsspecified milestones and certaincontinuing through September 30, 2023, a loan in the aggregate principal amount of our executive officers, or, collectively, the Investors, pursuantup to which we issued and sold, in a registered direct offering,$5.0 million, or the Offering, directlythird tranche, may become available. We are required to make interest only payments through March 1, 2023, or extended to September 1, 2023 upon satisfaction of certain milestones, and is required to then repay the principal balance and interest in equal monthly installments through September 1, 2025. As of June 30, 2022, the milestones for the remaining tranches and for the extension of the period of interest payment to September 1, 2023, have not yet been reached. Interest on the Hercules Loan accrues at a per annum rate equal to the Investors an aggregategreater of 3,750,000 units, at a purchase price of $4.00 per unit, with each unit consisting of one share of our Common Stock,(i) the Prime Rate as reported in The Wall Street Journal plus 5.70% and one warrant to purchase 0.75 of a share of our Common Stock, at an exercise price of $5.00 per share. The net proceeds from(ii) 8.95%. On June 30, 2022, the Offering amounted to $13.8 million, afterPrime Rate was 4.75%. On June 30, 2022, the deduction of fees and Offering expenses and assuming no exercise of the warrants. The warrants will be exercisable six months after the date of issuance and will expire five years from the date such warrants first become exercisable. The warrants will not be listed on the NYSE American Stock Market or any other exchange and no trading market for the warrants is expected to develop. The Securities Purchase Agreement contains customary representations, warranties and agreements by us.effective interest rate was 14.33%.

 

Additionally, in August 2021,Under the terms of the Loan Agreement, we entered into a loangranted first priority liens and security agreement, orinterests in substantially all of our intellectual property as collateral for the Term Loan Facility, withobligations thereunder. We also granted Hercules Capital, Inc., or Hercules, pursuantthe right, at their discretion, to which a term loanparticipate in an aggregate principal amountany closing of any single subsequent broadly marketed financing as defined up to $30.0a maximum aggregate amount of $2.0 million orunder the Termterms as afforded to other investors in such financing. The Loan is availableAgreement also contains representations and warranties by the Company and Hercules, indemnification provisions in favor of Hercules and customary affirmative and negative covenants, including a liquidity covenant beginning October 1, 2022, requiring us to us in three tranches. We received $14.2 million, netmaintain a minimum aggregate compensating cash balance of $0.8 million of closing charges and other transaction costs, promptly after signing the agreement on August 16, 2021 and, two additional tranches of $10$5.0 million, and $5 millionevents of default. In the event of default by the Company under the Loan Agreement, the Company may become availablebe required to us to borrow uponrepay all amounts then outstanding under the occurrenceLoan Agreement. As of certain milestone events.

In October 2021June 30, 2022, we entered into a binding agreementbelieve we were in compliance with a subsidiary of Maruho Co. Ltd., or Maruho, a leading dermatology-focused pharmaceutical company in Japan, for an equity investment of $3.0 million. On October 14, 2021, pursuant to such agreement, we issued to Maruho 375,000 shares of our Common Stock at a premium toall covenants under the market share price. The proceeds from this sale are intended primarily to support the Phase 1/2 study of BX005 expected in 2022. We also entered into an agreement granting Maruho a right of first offer to license our atopic dermatitis product candidate, BX005, in Japan. The right of first offer will commence following the availability of results from the Phase 1/2 study.

During the nine months ended September 30, 2020 net cash provided by financing activities was $0.1 million, mainly as a result of exercise of stock options of $0.2 million, partially offset by outflows in connection with the Recapitalization Transaction of $0.1 million.Loan Agreement.

  

Outlook 

 

We have accumulated a deficit of $98.0$124 million since our inception. To date, we have not generated revenue from our operations and we do not expect to generate any significant revenues from sales of products in the next twelve months. Our cash needs may increase in the foreseeable future. We expect to generate revenues, from the sale of licenses to use our technology or products, but in the short and medium terms any amounts generated are unlikely to exceed our costs of operations. According to our estimates and based on our current operating plans, our liquidity resources as of SeptemberJune 30, 2021,2022, which consisted primarily of cash, cash equivalents, short-term deposits and restricted cash of approximately $68.3$46.7 million and will be sufficient to fund our operations intountil at least the endmiddle of 2023.2024. 

 

Consistent with our continuing R&D activities, we expect to continue to incur additional losses in the foreseeable future. To the extent we require funds above our existing liquidity resources in the medium and long term, we plan to fund our operations, as well as other development activities relating to additional product candidates, through future issuances of public or private equity, including the CFF Agreement, or debt securities, including under our ATM Agreement, loans, including the Hercules Loan and possibly additional grants from the IIA or other government or non-profit institutions. Our ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, the market demand for our securities, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to us.

 

8


 

 

We entered into forward and option contracts to hedge against the risk of overall changes in future cash flow fromfor payments of salaries and related expenses, as well as other expenses denominated in NIS, for a period of less than one year.

 

As of SeptemberJune 30, 2022 and June 30, 2021, we had outstanding foreign exchange contracts for the exchange of USD to NIS in the amountamounts of approximately $2.8 million. As of September 30, 2020, we had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $3.5 million.$6.4 million and $4.0 million, respectively.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to make disclosures under this Item.

 

Item 4. Controls and Procedures

 

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation, as of the end of the period covered by this Quarterly Report, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2021.2022.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the quarter ended SeptemberJune 30, 20212022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

9


 

 

PART II - OTHER INFORMATION

  

Item 1A. Risk Factors.Factors

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, which could materially affect our business, financial condition or future results.

 

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, filed with the SEC on March 31, 2021,30, 2022, as amended, except as noted below.

 

Risks related to the Hercules Loan Agreement

 

The terms of the Hercules Loan Agreement place restrictionsRising interest rates may adversely increase interest rates on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our abilityoutstanding indebtedness to operate our business.Hercules

InOn August 16, 2021, we entered into Herculesthe Loan Agreement, with Hercules, providing for the Term Loana term loan in an aggregate principal amount of up to $30.0 million, subject to funding in three tranches and subject to certain terms and conditions.conditions, or the Term Loan. We received the first tranche of $15.0 million promptly after signing the agreement in August 2021.Loan Agreement. Two additional tranches in the amounts of $10 million and $5 million may become available to us to borrow upon the occurrence of certain milestone events. Our obligations under

Interest on the HerculesTerm Loan Agreement are secured byaccrues at a lienper annum rate equal to the greater of (i) the Prime Rate as reported in The Wall Street Journal plus 5.70% and (ii) 8.95%. On June 30, 2022, the Prime Rate was 4.75%, which reflects an increase of 1.5% from the Prime Rate on substantially allSeptember 30, 2021, which was 3.25%. Accordingly, the interest rate on the Term Loan increased from 8.95% to 10.45%, which results in an additional payment of our assets, other than intellectual property. We also agreed not to pledge or secure our intellectual property to others.interest.

 

The Hercules Loan Agreement includes affirmative and negative covenants and events of default applicable to us. The affirmative covenants include, among others, covenants requiring us to maintain our legal existence and governmental approvals, deliver certain financial reports and maintain insurance coverage. The negative covenants include, among others, restrictions on our transferring collateral, making changesrising interest rates caused due to the natureglobal inflation, and the dependency of the interest paid on the Term Loan on the Prime Rate, result in an increase in the repayment of the Term Loan, and may adversely decrease our business, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, engaging in transactions with affiliates. Events of default include, among other thingscash reserve, affect our ability finance research and subjectdevelopment activities and affect our ability to customary exceptions: (i) insolvency, liquidation, bankruptcy or similar events; (ii) failure to pay any debts due under the Hercules Loan Agreement or other loan documents on a timely basis; (iii) failure to observe certain covenants underrepay the loan and security agreement with Hercules; (v) occurrenceor qualify for the additional tranches of a material adverse effect; (vi) material misrepresentation by us; (vii) occurrence of any default under any other agreement involving material indebtedness; and (viii) certain material money judgments. the Term Loan.

If we default under the Hercules Loan Agreement, Hercules may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we are liquidated, the lenders’ right to repayment would be senior to the rights of the holders of our Common Stock to receive any proceeds from the liquidation. Any declaration by Hercules of an event of default could significantly harm our business and prospects and could cause the price of our Common Stock to decline. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.

 

10

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On October 14, 2021, we issued to Maruho Deutschland GmbH 375,000 shares of our Common Stock in consideration for $3,000,000, at a purchase price of $8.00 per share. We issued the shares pursuant to an exemption from registration under Rule 506 and Rule 903 under the Securities Act 1933, as amended.

Item 5. Other Information

On November 10, 2021, Dr. Sailaja Puttagunta, our Chief Medical Officer, or CMO, notified us that she will be stepping down as CMO on December 31, 2021. Dr. Puttagunta will be transitioning into a consulting role starting at the beginning of 2022.

Item 6. Exhibits

  

No. Description of Exhibit
3.1 Composite Copy of Amended and Restated Certificate of Incorporation of the Company, effective on December 11, 2018, as amended to date. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed by the registrant on August 13, 2020)
   
3.2 Amended and Restated Bylaws of the Company, effective as of October 28, 2019 (Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed by the Company on November 1, 2019)
   
31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a)
   
31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a)
   
32** Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350
   
101.INS* Inline XBRL Instance Document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*Filed herewith.

 

**Furnished herewith.

 

11


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 BIOMX INC.
   
Date: November 15, 2021August 10, 2022By:/s/ Jonathan Solomon
 Name: Jonathan Solomon
 Title:Chief Executive Officer
  (Principal Executive Officer)
   
Date: November 15, 2021August 10, 2022By:/s/ Marina Wolfson
 Name:Marina Wolfson
 Title:Senior Vice President of Finance and OperationsChief Financial Officer
  

(Principal Financial Officer and

Principal Accounting Officer)

 

 

1210

 

0001739174 2021-04-01us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-01-01 2021-06-30 iso4217:USD xbrli:shares