NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 1 – GENERAL
BiomX Inc., (individually, and together with its subsidiaries,
BiomX Ltd, (“BiomX Israel”) and RondinX Ltd., 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, stock exchange,
asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.
On October 29, 2019, the Company merged with BiomX Israel,
who survived the merger as a wholly owned subsidiary of BiomX Inc. The Company acquired all outstanding shares of BiomX Israel. In exchange,
shareholders of BiomX Israel received 15,069,058 shares of the Company’s Common Stock, representing 65% of the total shares issued
and outstanding after the acquisition (“Recapitalization Transaction”). BiomX Israel was deemed the “accounting acquirer”
due to the largest ownership interest in the Company. The Company’s shares of Common Stock, units, and warrants are traded on the
NYSE American under the symbols PHGE, PHGE.U, and PHGE.WS, respectively.
BiomX is developing both natural and engineered
phage cocktails designed to target and destroy harmful bacteria in chronic diseases, focusing its efforts at this point on cystic fibrosis
and to a lesser degree on atopic dermatitis. 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 issuance date 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”)
(See note 6 and 10) 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. 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. See notes
8A and 10D regarding the PIPE.
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
| 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 statement 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, 2022, that the Company filed with the U.S. Securities and Exchange Committee (the “SEC”)
on March 29, 2023. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2022.
| 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 markets.
| D. | Recent Accounting Standards |
Recently adopted accounting pronouncements
In June 2016, the Financial Accounting
Standards Board issued Accounting Standards Update 2016-13, “Financial Instruments—Credit Losses—Measurement of Credit
Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that
reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit
loss estimates. The guidance will be effective for smaller reporting companies (as defined by the rules under the Securities Exchange
Act of 1934, as amended) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The Company adopted
the guidance on January 1, 2023, and has concluded the adoption did not have a material impact on its consolidated financial statements.
NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company accounts for financial instruments
in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 establishes a fair
value hierarchy that prioritizes the inputs to 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 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 three months ended March 31, 2023 and year ended December 31, 2022.
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
The following table summarizes the fair
value of our financial assets and liabilities that were accounted for at fair value on a recurring basis, by level within the fair value
hierarchy:
| |
March 31, 2023 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Fair Value | |
Assets: | |
| | |
| | |
| | |
| |
Cash equivalents: | |
| | |
| | |
| | |
| |
Money market funds | |
| 23,897 | | |
| - | | |
| - | | |
| 23,897 | |
| |
| 23,897 | | |
| - | | |
| - | | |
| 23,897 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Contingent consideration | |
| | | |
| | | |
| 152 | | |
| 152 | |
Foreign exchange contracts payable | |
| - | | |
| 95 | | |
| - | | |
| 95 | |
| |
| - | | |
| 95 | | |
| 152 | | |
| 247 | |
| |
December 31, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Fair Value | |
Assets: | |
| | |
| | |
| | |
| |
Cash equivalents: | |
| | |
| | |
| | |
| |
Money market funds | |
| 27,824 | | |
| - | | |
| - | | |
| 27,824 | |
| |
| 27,824 | | |
| | | |
| - | | |
| 27,824 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Contingent consideration | |
| - | | |
| - | | |
| 148 | | |
| 148 | |
Foreign exchange contracts payable | |
| | | |
| 55 | | |
| | | |
| 55 | |
| |
| - | | |
| 55 | | |
| 148 | | |
| 203 | |
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 accounts payable, due to their short-term nature.
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 3.60% to 3.99%. The contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate.
Changes in the fair value of contingent consideration are recorded in 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 liability.
The change in contingent consideration for the three months ended March 31, 2023 resulted from revaluation. For the three months
ended March 31, 2022, the Company did not record any expenses related to 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 March 31, 2023, the Company had outstanding foreign exchange contracts for the exchange of USD to NIS in the amount
of approximately $4,647 with a fair value liability of $95. As of December 31, 2022, the Company had outstanding foreign exchange contracts
for the exchange of USD to NIS in the amount of approximately $4,547 with a fair value liability of $55.
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE
4 – OTHER CURRENT ASSETS
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
| | |
| |
Government institutions | |
| 47 | | |
| 90 | |
Prepaid insurance | |
| 1,545 | | |
| 1,410 | |
Other prepaid expenses | |
| 171 | | |
| 84 | |
Grants receivables | |
| 853 | | |
| 567 | |
Other | |
| 16 | | |
| 436 | |
Other current assets | |
| 2,632 | | |
| 2,587 | |
NOTE 5 – OTHER ACCOUNTS PAYABLE
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
| | |
| |
Employees and related institutions | |
| 789 | | |
| 800 | |
Accrued expenses | |
| 1,803 | | |
| 887 | |
Government institutions | |
| 156 | | |
| 166 | |
Deferred income | |
| 114 | | |
| 242 | |
Other | |
| 94 | | |
| 55 | |
| |
| 2,956 | | |
| 2,150 | |
NOTE 6 – COMMITMENTS AND CONTINGENCIES
| A. | In March 2021, the IIA approved two new applications in relation to the Company’s cystic fibrosis product candidate for an aggregate budget of NIS 10,879 (approximately $3,286) and for the Company’s product candidate for Inflammatory Bowel Disease (“IBD”) and Primary Sclerosing Cholangitis for an aggregate revised budget of NIS 6,753 (approximately $2,118). The IIA committed to fund 30% of the approved budgets. The programs are for the period beginning January 2021 through December 2021. Through March 31, 2023, the Company received NIS 4,284 (approximately $1,347) from the IIA with respect to these programs. See note 10B regarding funds received with respect to these programs after the balance sheet date. 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. Through March 31, 2023, the Company received NIS 1,912 (approximately $577) from the IIA 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 March 31, 2023, the Company received NIS 1,365 (approximately $395) from the IIA with respect to this program. In March 2023, the IIA approved an application
for a total budget of NIS 11,283 (approximately $3,164) 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 2023 through December 2023. See note 10C
regarding funds received with respect to these programs after the balance sheet date. |
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 6 – COMMITMENTS AND CONTINGENCIES (Cont.)
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 March 31, 2023; therefore, no liability was recorded in these condensed consolidated financial statements. IIA grants are recorded as a reduction of R&D expenses, net. Through March 31, 2023, total grants approved from the IIA aggregated to approximately $9,353 (NIS 32,068). Through March 31, 2023, the Company had received an aggregate amount of $6,960 (NIS 23,645) in the form of grants from the IIA. Total grants subject to royalties’ payments aggregated to approximately $6,370. As of March 31, 2023, the Company had a contingent obligation to the IIA in the amount of approximately $6,640 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 the LIBOR, the Company does not expect it will have significant impact on its financial statements. |
| B. | On June 23, 2022 (“Effective Date”), BiomX Israel entered
into a new research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration to identify
biomarkers for IBD. Under the agreement, BiomX Israel is eligible to receive fees totaling $1,411 to cover costs to be incurred by BiomX
Israel in conducting the research plan under the collaboration. The fees will be paid in instalments of $500 within 30 days of the Effective
Date and three additional installments of $500, $200 and $211 upon completion of certain activities under the research plan. Unless terminated
earlier, this agreement will remain in effect until (a) a period of eighteen (18) months after the Effective Date or (b) completion of
the project plan and submission and approval of the final report, whichever occurs sooner, unless otherwise extended. The consideration
is recorded as a reduction of R&D expenses, net in the condensed consolidated statements of operations according to the input model
method on a cost-to-cost basis. The remainder of the consideration is recorded as other accounts payable in the condensed consolidated
balance sheets. During the three months ended March 31, 2023, the Company recorded $125 in the condensed consolidated statements of operations
as a reduction of R&D expenses. Through March 31, 2023, the Company received total funds of $500 from BI with respect to this agreement.
See note 10A regarding funds received after the balance sheet date. |
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 7 – 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 $10,000 (“the second tranche”),
would have become available, and upon the occurrence of specified milestones and continuing through September 30, 2023, a loan in the
aggregate principal amount of up to $5,000 (“the third tranche”), may become available. The milestones for the second tranche
and for the extension of the period of interest only payments to September 1, 2023, were not reached and have expired. The milestones
for the third tranche have not yet been reached as of March 31, 2023 and the Company does not expect to reach them. The Company was required
to make interest only payments through March 1, 2023, and started to then repay the principal balance and interest in equal monthly installments
through September 1, 2025.
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 March 31,
2023, the Prime Rate was 8.00%. 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 March 31, 2023, the effective interest rate was 16.79%.
As of March 31, 2023, the carrying value
of the term loan consists of $14,581 principal outstanding less the debt discount and issuance costs of approximately $59. 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 is 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 $565 and $461 for the three months ended March
31, 2023 and 2022, respectively.
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:
| |
March 31, 2023 | |
2023 | |
$ | 3,842 | |
2024 | |
| 5,785 | |
2025 | |
| 4,954 | |
Total principal payments | |
| 14,581 | |
Unamortized discount and debt issuance costs | |
| (59 | ) |
Total future principal payments | |
$ | 14,522 | |
Current portion of long-term debt | |
| (5,216 | ) |
Long-term debt, net | |
$ | 9,306 | |
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 8 – STOCKHOLDERS EQUITY
Private Investment in Public Equity:
On February 22, 2023, the Company entered
into a Securities Purchase Agreement to issue and sell an aggregate of 15,997,448 shares of its Common Stock and 14,610,714 pre-funded
warrants (the “Pre-Funded Warrants”, and collectively, the “Securities”) at a price of $0.245 per share and $0.244
per Pre-Funded Warrant, through a private investment in public equity financing (“PIPE”). The gross proceeds from this offering
are approximately $7,484, before deducting issuance costs. The financing closed in two parts. The first closing, which covers 3,199,491
shares of Common Stock and 2,776,428 Pre-Funded Warrants for gross proceeds of $1,469, occurred on February 27, 2023. Such Pre-Funded
Warrants became exercisable on February 27, 2023, at an exercise price of $0.001 per share of Common Stock and have no expiration date.
At the first closing the Company raised net proceeds of $1,293, after deducting issuance costs of $176. The second closing for the remaining
Securities, which was contingent upon approval of the issuance of the additional Securities under the Securities Purchase Agreement by
the Company’s stockholders in accordance with NYSE American rules, occurred on May 4, 2023. See note 10D.
The exercise of the outstanding Pre-Funded
Warrants is subject to a beneficial ownership limitation between 9.90%-9.99%, The exercise price and number of shares of Common Stock
issuable upon the exercise of the Pre-Funded Warrants are subject to adjustment in the event of any stock dividends, stock splits, reverse
stock split and reclassification, as described in the agreements. Pursuant to the sole discretion of the holder, the Pre-Funded Warrants
may be exercisable on a “cashless” basis. The Pre-Funded Warrants were classified as a component of stockholders’ equity.
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 three months ended
March 31, 2023, the Company did not sell any shares of Common Stock under the ATM Agreement. During the three months ended March 31, 2022,
the Company sold 27,171 shares of Common Stock under the ATM Agreement, at an average price of $1.36 per share, raising aggregate net
proceeds of approximately $37, after deducting an aggregate commission of $1.
Maruho Agreement:
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 initially expected in
2022. 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’s announcement on May 24, 2022, regarding the delaying of the Company’s atopic dermatitis
program, the contract liability was classified as a non-current liability.
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 8 – STOCKHOLDERS
EQUITY (Cont.)
|
A. |
Share Capital: (Cont.) |
CFF Agreement:
In December 2021, the Company entered
into a Securities Purchase Agreement with 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 patient
dosing in Part 1 of the Company’s Phase 1b/2a study of BX004, the Company had 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 ten trading days prior to the second
tranche completion is less than $2.57, the Company had the right in its sole discretion to waive the second tranche payment and in such
event the CF Foundation would not have any right to receive additional shares. Ultimately, the CF Foundation decided to participate
in the PIPE and invested an aggregate amount of $2,000 and the Company waived the right to receive the second tranche of $2,000 mentioned
above.
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 Board of Directors (the “Board”).
Warrants:
As of March 31, 2023, 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 | |
Pre-Funded Warrants | |
February 27, 2023 | |
| |
| 0.001 | | |
| 2,776,428 | |
| |
| |
| |
| | | |
| 11,988,929 | |
|
B. |
Stock-based Compensation: |
On March 1, 2023, the Board of Directors
approved the grant of 1,543,000 options to 49 employees, five senior officers and three directors under the Company’s 2019 Equity Incentive
Plan, without consideration. Options were granted at an exercise price of $0.40 per share with a vesting period of four years. Directors
and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the
Company and the end of their engagement with the Company.
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 8 – STOCKHOLDERS EQUITY (Cont.)
|
B. |
Stock-based Compensation: (Cont.) |
The fair value of each option was estimated
as of the date of grant or reporting period using the Black-Scholes option-pricing model, using the following assumptions:
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Underlying value of Common Stock ($) | |
| 0.40 | | |
| 1.41 | |
Exercise price ($) | |
| 0.40 | | |
| 1.41 | |
Expected volatility (%) | |
| 94.3 | | |
| 85.3 | |
Expected terms of the option (years) | |
| 6.11 | | |
| 6.11 | |
Risk-free interest rate (%) | |
| 4.21 | | |
| 2.50 | |
The cost of the benefit embodied in the
options granted during the three months ended March 31, 2023, based on their fair value as of the grant date, is estimated to be approximately
$487. 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 Three Months Ended March 31, 2023 | |
| |
Number of Options | | |
Weighted Average Exercise Price | | |
Aggregate Intrinsic Value | |
Outstanding at the beginning of period | |
| 4,769,441 | | |
$ | 2.93 | | |
$ | 40 | |
Granted | |
| 1,543,000 | | |
$ | 0.40 | | |
| | |
Forfeited | |
| (197,841 | ) | |
$ | 3.16 | | |
| | |
Exercised | |
| - | | |
$ | - | | |
| | |
Outstanding at the end of period | |
| 6,114,600 | | |
$ | 2.28 | | |
$ | 67 | |
Exercisable at the end of period | |
| 2,971,229 | | |
$ | 3.08 | | |
| | |
Weighted average remaining contractual life of outstanding options – years as of March 31, 2023 | |
| 4.95 | | |
| | | |
| | |
BIOMX
INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per
share data)
(unaudited)
NOTE 8 – STOCKHOLDERS EQUITY (Cont.)
|
B. |
Stock-based Compensation: (Cont.) |
Warrants:
As of March 31, 2023, the Company
had the following outstanding 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 scientific founders (see below) | |
November 27, 2017 | |
| | | |
| - | | |
| 2,974 | |
| | In November 2017, BiomX Israel issued 2,974 warrants to its scientific founders. The 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: |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Research and development expenses, net | |
| 87 | | |
| 258 | |
General and administrative | |
| 88 | | |
| 357 | |
| |
| 175 | | |
| 615 | |
NOTE 9 – 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 months ended March 31, 2023 does not
include 6,114,600, 9,215,475 and 4,000,000 of shares underlying options, shares underlying warrants and contingent shares, respectively,
because the effect would be anti-dilutive. The calculation of the loss per share includes fully vested Pre-Funded Warrants for the Company’s
Common Stock at an exercise price of $0.001 per share, as the Company considers these shares to be exercised for little to no additional
consideration.
NOTE 10 – SUBSEQUENT EVENTS
| A. | On April 11, 2023, the Company received funds in total of $700 from BI as part of the research collaboration agreement. |
| | |
| B. | On April 18, 2023, the Company received the final payments of NIS 995 (approximately $275) from the IIA with respect to the IIA programs approved in March 2021. |
| | |
| C. | On April 18, 2023, the Company received the first payments of NIS 1,185 (approximately $328) from the IIA with respect to the IIA program approved in March 2023. |
| | |
| D. | On April 24, 2023 the Company’s
stockholders approved the issuance of up to 24,632,245 shares of Common Stock, comprised of shares and shares underlying Pre-Funded Warrants,
in accordance with the Securities Purchase Agreement dated February 22, 2023, in order to comply with the listing rules of the NYSE American,
as part of the second closing of the PIPE. On May 4, 2023, subsequent to the approval of the Company’s stockholders, the Company
completed the second closing of the PIPE and issued an aggregate of 24,632,243 Securities for gross proceeds of approximately $6,000. |