UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

      

Filed by the Registrant  ☒   Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement
   
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
   
Definitive Proxy Statement
   
Definitive Additional Materials
   
Soliciting Material Pursuant to §240.14a-12

 

BIOMX INC.

(Exact name of registrant as specified in its charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.
   
Fee paid previously with preliminary materials.
   
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a–6(i)(1) and 0–11.

 

 

 

 

 

 

Proxy Statement dated [●], 2024

and first mailed to stockholders on or about [●], 2024

 

Dear Stockholders:

 

You are cordially invited to attend the 2024 Annual Meeting of Stockholders of BiomX Inc. at [●], Eastern Time, on [●], [●], 2024. This year’s Annual Meeting will be held entirely online to allow for greater participation. Stockholders may participate in this year’s annual meeting by visiting the following hosting URL: https://www.virtualshareholdermeeting.com/PHGE2024.

 

Your vote is very important! Whether or not you plan to attend the Annual Meeting, we urge you to read the enclosed proxy statement and vote as soon as possible via the Internet, by telephone or, if you receive a paper proxy card or voting instruction form in the mail, by mailing the completed proxy card or voting instruction form.

 

A record of our business activities for the 2023 fiscal year is contained in our 2023 Annual Report to Stockholders. Thank you for your confidence and continued support.

 

Sincerely,  
   
/s/ Jonathan Solomon  
Jonathan Solomon
Chief Executive Officer
 

 

 

 

PRELIMINARY PROXY STATEMENT DATED [●], 2024—SUBJECT TO COMPLETION

 

 

BIOMX INC.

22 Einstein St., 4th Floor

Ness Ziona 7414003, Israel

 

 

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

To be held [●], 2024

 

Notice is hereby given that the 2024 Annual Meeting of Stockholders, or “Annual Meeting,” of BiomX Inc., or “we,” “our,” “us,” “BiomX” or the “Company,” will be held online on [●], 2024 at [●] Eastern Time. You, or your proxy may attend the meeting virtually via the Internet at https://www.virtualshareholdermeeting.com/PHGE2024, where you, or your proxy, will be able to vote electronically and examine the Company’s stockholder list during the Annual Meeting. You will need the 16-digit control number included with these materials to attend the Annual Meeting and to vote and otherwise participate in the Annual Meeting. The purpose of the Annual Meeting is the following:

 

1.To approve the conversion of 256,887 shares of our Series X Non-Voting Convertible Preferred Stock, par value $0.0001 per share, and the exercise of certain warrants issued in connection with the acquisition of Adaptive Phage Therapeutics, Inc., a Delaware corporation, that closed on March 15, 2024 and a concurrent private placement offering that closed on March 15, 2024 into shares of our common stock, par value $0.0001 per share (“Common Stock”), in accordance with Section 713 of the NYSE American LLC Listed Company Guide (“Proposal No. 1”);

 

2.To approve the amendment and restatement of the Company’s 2019 Omnibus Long-Term Incentive Plan (“Proposal No. 2”);

 

  3. To approve an amendment to our amended and restated certificate of incorporation, as amended, to increase the number of authorized shares of the Common Stock from one hundred and twenty million (120,000,000) shares of Common Stock to seven hundred fifty million (750,000,000) shares of Common Stock (“Proposal No. 3”);
     
  4. To elect two Class I directors to serve until the 2027 annual meeting of stockholders, and in each case, until their successors are duly elected and qualified (“Proposal No. 4”);
     
  5. To approve, on a nonbinding advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and the narrative discussion related thereto (“Proposal No. 5”);
     
  6. To conduct a nonbinding advisory vote on the frequency (every one, two or three years) of future advisory votes on the compensation of the Company’s named executive officers (“Proposal No. 6”);
     
  7.

To authorize the Company’s Board of Directors to amend the amended and restated certificate of incorporation, as amended, of the Company to effect one reverse stock split of the Company’s outstanding Common Stock at any ratio between 1-for-5 and 1-for-10 at such time as our Board of Directors shall determine, in its sole discretion, any time before [●]1, 2025 (“Proposal No. 7”);

     
  8. To ratify the appointment of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2024 (“Proposal No. 8”);
     
  9. To approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for Proposals No. 1 through 8 (“Proposal No. 9”); and
     
  10. To transact any other business that may properly come before the meeting or any adjournment or postponement thereof.

 

 

1To be one year from the date of the Annual Meeting.

 

 

 

Only BiomX Inc. stockholders of record at the close of business on May 28, 2024 will be entitled to vote at the Annual Meeting and any adjournment or postponement thereof.

 

Your vote is important. Whether or not you are able to attend the virtual meeting, it is important that your shares be represented. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the virtual meeting, by submitting your proxy via the Internet at the address listed on the proxy card or by signing, dating and returning the proxy card.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on [●], 2024: The proxy statement and proxy card are also available at www.proxyvote.com.

 

  By order of the Board of Directors,
   
  /s/ Jonathan Solomon
  Jonathan Solomon
  Chief Executive Officer

 

Ness Ziona, Israel

[●], 2024

 

 

 

TABLE OF CONTENTS

 

SUMMARY TERM SHEET iv
   
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING 3
   
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS 9
   
PROPOSAL NO. 1: THE CONVERSION PROPOSAL 10
   
PROPOSAL NO. 2: THE INCENTIVE PLAN PROPOSAL 13
   
PROPOSAL NO. 3: THE CHARTER AMENDMENT PROPOSAL 22
   
PROPOSAL NO. 4: THE DIRECTOR ELECTION PROPOSAL 25
   
THE BOARD AND ITS COMMITTEES 29
   
Board Composition and Leadership Structure 29
   
Director Independence 29
   
Board Meetings and Attendance 29
   
Board Committees 29
   
The Board’s Role in Risk Oversight 31
   
Code of Business Conduct and Ethics 31
   
Insider Trading, Prohibition Against Pledging, and Anti-Hedging Policies 31
   
Stockholder Communications with Our Board   32
   
PROPOSAL NO. 5: THE SAY-ON-PAY PROPOSAL 33
   
PROPOSAL NO. 6: THE SAY-ON-FREQUENCY PROPOSAL 34
   
PROPOSAL NO. 7: THE REVERSE STOCK SPLIT PROPOSAL 35
   
PROPOSAL NO. 8: THE AUDITOR RATIFICATION PROPOSAL 41
   
PROPOSAL NO. 9: THE ADJOURNMENT PROPOSAL 42
   
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION 43
   
PAY VERSUS PERFORMANCE 49
   
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 51
   
PRINCIPAL STOCKHOLDERS 52

 

i

 

 

THE MERGER 55
   
Background of the Acquisition 55
   
BiomX’s Reasons for the Acquisition 57
   
Overview of APT 58
   
Regulatory Matters 59 
   
Opinion of BiomX’s Financial Advisor 59 
   
Interests of BiomX’s Directors and Executive Officers in the Acquisition 70
   
Federal Securities Law Consequences; Resale Restrictions 72
   
Material U.S. Federal Income Tax Considerations of the Acquisition 72
   
THE MERGER AGREEMENT 73
   
The Acquisition 73
   
Closing and Effective Time of the Acquisition 73
   
Consideration Received in the Acquisition 73
   
Treatment of Equity Awards 74
 
Proxy Statement; Company Stockholder Meeting 74
   
Incentive Plan 74
   
Amendments to the Company’s Certificate of Incorporation 74
   
Representations and Warranties 74
   
Conditions to the Completion of the Acquisition 75
   
Indemnification of Directors and Officers 76
   
Support Agreements 77
   
Lock-Up Agreements 77
   
Other Agreements 78
   
Amendment 78
   
Specific Performance 78
   
Governing Law 78

 

ii

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 79
   
THE PRIVATE PLACEMENT 86
   
RISK FACTORS 89
   
BIOMX’S BUSINESS 90
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 91
   
DESCRIPTION OF BIOMX’S SECURITIES 98
   
WHERE YOU CAN FIND ADDITIONAL INFORMATION 102
   
HOUSEHOLDING 102
   
STOCKHOLDER PROPOSALS 102
   
OTHER MATTERS 102
   
INFORMATION INCORPORATED BY REFERENCE 103
   
FINANCIAL STATEMENTS OF BIOMX F-1
   
FINANCIAL STATEMENTS OF APT F-24

 

ANNEX A—PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION (SHARE INCREASE AMENDMENT)
ANNEX B—PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION (REVERSE STOCK SPLIT AMENDMENT)
ANNEX C— A&R PLAN
ANNEX D—OPINION OF H.C. WAINWRIGHT & CO., LLC
ANNEX E—AGREEMENT AND PLAN OF MERGER
ANNEX F—SECURITIES PURCHASE AGREEMENT
ANNEX G—SERIES X PREFERRED STOCK CERTIFICATE OF DESIGNATION
ANNEX H—FORM OF MERGER WARRANT
ANNEX I—FORM OF PRIVATE PLACEMENT WARRANT
ANNEX J—FORM OF PLACEMENT AGENT WARRANT
ANNEX K—FORM OF REGISTRATION RIGHTS AGREEMENT
ANNEX L—PROXY CARD

 

iii

 

 

SUMMARY TERM SHEET

 

This summary term sheet, together with the sections entitled “The Merger Agreement” and “The Private Placement,” summarizes certain information contained in this proxy statement, but may not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the 2024 Annual Meeting of Stockholders (the “Annual Meeting”).

 

On March 6, 2024, BiomX entered into the an Agreement and Plan of Merger (the “Merger Agreement”) by and among BiomX, BTX Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), BTX Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and Adaptive Phage Therapeutics, Inc., a Delaware corporation (“APT”). Pursuant to the Merger Agreement, First Merger Sub merged with and into APT, with APT being the surviving corporation and becoming a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, APT merged with and into Second Merger Sub, pursuant to which Second Merger Sub became the surviving entity (together with the First Merger, the “Acquisition”).

 

Prior to the Acquisition, APT was a Delaware clinical-stage company focused on advancing therapies addressing multi-drug resistant infections. APT’s approach leveraged a library of systematically discovered, selected, catalogued, and curated phages, with the goal of providing broad coverage against many of the world’s highest priority antibiotic-resistant bacteria. For information about APT, please see the section entitled “Overview of APT.”

 

The closing of the Acquisition (the “Acquisition Closing”) occurred on March 15, 2024, substantially simultaneously with the consummation of a private placement offering (the “Private Placement”) of BiomX’s Series X Preferred Stock pursuant to a Securities Purchase Agreement related thereto (the “Purchase Agreement”), as described further below.

 

The aggregate merger consideration paid in connection with the Acquisition consisted of (a) 9,164,968 shares of Common Stock, which shares represented a number of shares equal to no more than 19.9% of the outstanding shares of Common Stock as of immediately before the First Merger effective time, (b) 40,470 shares of Series X Preferred Stock and (c) warrants (“Merger Consideration Warrants”) exercisable for an aggregate of 2,166,497 shares of Common Stock. In addition, the Company issued warrants to purchase an aggregate of 250,000 shares of Common Stock (collectively with the Merger Consideration Warrants, the “Merger Warrants”) to APT’s landlord in connection with an amendment, dated March 5, 2024, to a lease agreement by and between APT and its landlord. Each share of Series X Preferred Stock will be convertible into 1,000 shares of Common Stock and Merger Warrant will be exercisable for one share of Common Stock at an exercise price of $5.00 per share, in each case subject to and contingent upon stockholder approval of Proposal No. 1 and Proposal No. 3 at this Annual Meeting. The Merger Warrants and shares of Common Stock and Series X Preferred Stock were allocated among the stockholders of APT as set forth on the allocation certificate delivered pursuant to the Merger Agreement.

 

Pursuant to the Merger Agreement, the Company has agreed to submit to its stockholders for their consideration the approval of (i) the conversion of 256,887 shares of the Series X Preferred Stock and the exercise of the Warrants (as defined below) into shares of Common Stock in accordance with the rules of NYSE American LLC (“NYSE American”) (the “Conversion Proposal”), (ii) a new stock incentive plan or amendment to the Company’s 2019 Omnibus Long-Term Incentive Plan (following its amendment and restatement, the “A&R Plan”), pursuant to which shares of Common Stock equal to 15% of the fully-diluted outstanding equity interests of the Company immediately following the Acquisition and the Private Placement will be reserved for issuance to the Company’s employees, directors, consultants and other service providers (the “Incentive Plan Proposal”) and (iii) an amendment to the certificate of incorporation of the Company to authorize sufficient shares of Common Stock for (a) the conversion of the Series X Preferred Stock issued in connection with the Private Placement and Acquisition and the exercise of the Warrants and (b) the A&R Plan (the “Charter Amendment Proposal”). For more information regarding these proposals, please see “Proposal No. 1: The Conversion Proposal,” “Proposal No. 2: The Incentive Plan Proposal” and “Proposal No. 3: The Charter Amendment Proposal”.

 

iv

 

 

  On March 5, 2024, H.C. Wainwright & Co., LLC (“Wainwright”) rendered its oral opinion to the Board of Directors of BiomX (the “Board” or the “BiomX Board”) (which was subsequently confirmed in writing by delivery of Wainwright’s written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion, as of March 5, 2024, the Merger Consideration (as defined in the Merger Agreement) was fair, from a financial point of view, to BiomX.

 

The BiomX Board considered various factors in determining whether to approve the Merger Agreement and the transactions contemplated thereby, including the Acquisition. For more information about the BiomX Board’s reasons for approving the Acquisition, see the section entitled “BiomX’s Reasons for the Acquisition.”

 

Each party’s obligation to complete the Acquisition was subject to the satisfaction or waiver by each of the parties, at or prior to the Acquisition, of various conditions, which include the following, each of which was satisfied prior to the Acquisition Closing:

 

BiomX’s Common Stock must have been continually listed on NYSE American through date of the Acquisition Closing; and
   
the Purchase Agreement must have been in full force and effect with cash proceeds of not less than $50,000,000.

 

In addition, the obligation of the Company, First Merger Sub and Second Merger Sub to complete the Acquisition was further subject to the satisfaction or waiver, prior to the Acquisition, of various conditions, which include the following, each of which was satisfied prior to the Acquisition Closing:

 

§the affirmative vote (or written consent) of (a) the holders of a majority of the outstanding shares of APT’s capital stock, voting as a single class on an as converted to common stock basis, (b) the majority of the outstanding shares of APT’s Series B-1 Preferred Stock, which majority must include the Largest Lead Investor (as defined in the Merger Agreement”) and (c) the majority of the outstanding shares of APT’s Series B Preferred Stock, which majority must include the Largest Lead Investor, adopting and approving the Merger Agreement;

 

§the receipt of a fully executed FIRPTA Certificate from APT; and

 

§the representations and warranties set forth in Article II of the Merger Agreement must have been true and correct in all material respects as of the date of Closing.

 

Finally, the obligation of APT to complete the Acquisition was further subject to the satisfaction or waiver, prior to the Acquisition, of various conditions, which include the following, each of which was satisfied prior to the Acquisition Closing:

 

§the receipt of written resignations of certain directors of BiomX who would not continue as directors after the Acquisition Closing;

 

§the receipt of fully executed Support Agreement (as defined below) from certain stockholders of BiomX;

 

§the receipt of notices from certain holders of the Company’s pre-funded warrants that the beneficial ownership limitation of such pre-funded warrants shall be eliminated to the maximum extent permitted and that such pre-funded warrants shall be exercised pursuant to their terms;

 

§the representations and warranties set forth in Article III of the Merger Agreement must have been true and correct in all material respects as of the date of the Acquisition Closing; and

 

§each designee of APT, as previously agreed upon between APT and Company, must have been appointed to the Company Board of Directors and each must have entered into indemnification agreements.

 

v

 

 

In connection with the execution of the Merger Agreement, BiomX and APT entered into stockholder support agreements (the “Support Agreements”) with certain of the Company’s stockholders who constituted a majority of the voting stockholders of the Company. The Support Agreements provide that, among other things, each of the parties thereto shall vote or cause to be voted all of the shares of capital stock owned by such stockholder in favor of Proposals 1 through 3 at this Annual Meeting.

 

On March 6, 2024, the Company entered into the Purchase Agreement with the investors thereto (the “Investors”), pursuant to which the Company agreed to sell (i) an aggregate of 216,417 shares of Series X Preferred Stock, and (ii) warrants (“Private Placement Warrants”) exercisable for an aggregate of 108,208,500 shares of Common Stock at an exercise price of $0.2311 per share, for a combined purchase price of $231.10 per share of Series X Preferred Stock and accompanying Private Placement Warrant, for aggregate gross proceeds to the Company of approximately $50,000,000 before deducting placement agent fees and other offering expenses. The closing of the Private Placement occurred on March 15, 2024.

 

RBC Capital Markets and Laidlaw & Company (UK) Ltd. acted as placement agents (the “Placement Agents”) for the Private Placement. As partial compensation for their services as placement agents, the Company issued warrants to the Placement Agents (“Placement Agent Warrants,” and collectively with the Merger Warrants and the Private Placement Warrants, the “Warrants”) exercisable for up to an aggregate of 9,523,809 shares of Common Stock at an exercise price of $0.2311 per share.

 

The consummation of the Private Placement was subject to the satisfaction or waiver of, among other customary closing conditions, the accuracy of the representations and warranties in the Purchase Agreement, the compliance by the parties with the covenants in the Purchase Agreement, the absence of any legal order barring the Private Placement, no suspension in the trading of the Common Stock and the occurrence of the Acquisition Closing. The parties were also provided with customary termination rights, and the Purchase Agreement was subject to automatic termination in the event that (i) the Private Placement had not been consummated on or prior to 5:00 P.M., New York City time, on the 15th day following the date of the Purchase Agreement or (ii) the Merger Agreement was terminated in accordance with is terms.

 

§The Company made certain covenants under the Purchase Agreement, including, among others the following:

 

§the Company may not effect any conversion of the Series X Preferred Stock or exercise of the Private Placement Warrants issued in connection with the Private Placement that would result in the holder thereof beneficially owning a number of shares of Common Stock in excess of its respective beneficial ownership limitation (“Beneficial Ownership Limitation”), to initially be set at the discretion of each Investor to a percentage between 0% and 19.999% of the number of shares of the Common Stock outstanding or deemed to be outstanding as of the applicable measurement date, and to be set at 19.999% for any Investor that does not make such designation;

 

§the Company is required to hold a meeting of stockholders within 150 days of the closing of the Private Placement for the purpose of obtaining stockholder approval of (i) the conversion of all issued and outstanding shares of Series X Preferred Stock into shares of Common Stock and (ii) the exercise of all Private Placement Warrants and Placement Agent Warrants into Common Stock, and use its reasonable best efforts to solicit its stockholders’ approval of such resolution and to cause the Board to recommend to the stockholders that they approve such resolution; and

 

§the Company may not effect certain issuances of securities until 30 days after the later of (i) the date on which the Company’s stockholders approve the conversion of the Series X Preferred Stock and the exercise of the Private Placement Warrants and Placement Agent Warrants and (ii) the effective date of the resale registration statement to be filed with respect to the securities issued in the Acquisition and the Private Placement, subject to certain exceptions, and may not effect any variable rate transactions until the date that is the earlier of (a) nine months from the closing of the Private Placement or (b) the date on which no securities issued in the Private Placement, Placement Agent Warrants or shares of Common Stock underlying such securities are outstanding.

 

vi

 

 

The Investors made certain covenants under the Purchase Agreement, including, among others, that no Investor may effect any conversion of its Series X Preferred Stock or exercise of its Private Placement Warrants to the extent that, after giving effect to such attempted conversion or exercise, such Investor would beneficially own a number of shares of Common Stock in excess of such Investor’s Beneficial Ownership Limitation, as may be increased or decreased by the Investor from time to time to any other percentage not in excess of 19.999%.

 

On March 6, 2024, in connection with the Purchase Agreement, the Company entered into a registration rights agreement with the Investors with respect to the securities issued in connection with the Acquisition and the Private Placement.

 

At the Annual Meeting, the Company is requesting that its stockholders vote on the following proposals:

 

1.To approve the conversion of 256,887 shares of Series X Preferred Stock and the exercise of the Warrants, in accordance with Section 713 of the NYSE American Listed Company Guide;

 

  2. To approve the amendment and restatement of the Company’s 2019 Omnibus Long-Term Incentive Plan;

 

  3. To approve an amendment to our amended and restated certificate of incorporation, as amended, to increase the number of authorized shares of the Common Stock from one hundred and twenty million (120,000,000) shares of Common Stock to seven hundred fifty million (750,000,000) shares of Common Stock;
     
  4. To elect two Class I directors to serve until the 2027 annual meeting of stockholders, and in each case, until their successors are duly elected and qualified;
     
  5. To approve, on a nonbinding advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and the narrative discussion related thereto;
     
  6. To conduct a nonbinding advisory vote on the frequency (every one, two or three years) of future advisory votes on the compensation of the Company’s named executive officers;
     
  7. To authorize the Board to amend our amended and restated certificate of incorporation, as amended, to effect one reverse stock split of our outstanding Common Stock at any ratio between 1-for-5 and 1-for-10 at such time as our Board shall determine, in its sole discretion, any time before [●], 2025;
     
  8. To ratify the appointment of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2024;
     
  9. To approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for Proposals No. 1 through 8; and
     
  10. To transact any other business that may properly come before the meeting or any adjournment or postponement thereof.

 

Please see the sections entitled “Proposal No. 1 – The Conversion Proposal,” “Proposal No. 2 - The Incentive Plan Proposal,” “Proposal No. 3 - The Charter Amendment Proposal,” “Proposal No. 4 - The Director Election Proposal,” “Proposal No. 5 - The Say-on-Pay Proposal,” “Proposal No. 6 – The Say-on-Frequency Proposal,” “Proposal No. 7 - The Reverse Stock Split Proposal,” “Proposal No. 8 - The Auditor Ratification Proposal” and “Proposal No. 9 – The Adjournment Proposal.” The Conversion Proposal and the Incentive Plan Proposal are conditioned upon stockholders’ approval of the Charter Amendment Proposal.

 

The Acquisition and Private Placement involve numerous risks. For more information about these risks, please see the section entitled “Risk Factors.”

 

vii

 

 

PRELIMINARY PROXY STATEMENT DATED [●], 2024—SUBJECT TO COMPLETION

 

BIOMX INC.

22 Einstein St., 4th Floor

Ness Ziona 7414003, Israel

 

PROXY STATEMENT

FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD [●], 2024

 

This proxy statement contains information about the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of BiomX Inc., which will be held online on [●], 2024 at [●] Eastern Time. You may attend the meeting virtually via the Internet at https://www.virtualshareholdermeeting.com/PHGE2024, where you will be able to vote electronically. The board of directors of BiomX Inc. (the “BiomX Board” or the “Board”) is using this proxy statement to solicit proxies for use at the Annual Meeting. In this proxy statement, the terms “BiomX,” “we,” “us,” and “our” refer to BiomX Inc. The mailing address of our principal executive offices is BiomX Inc., 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel.

 

All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the proxies will be voted in accordance with the recommendation of our Board with respect to each of the matters set forth in the accompanying Notice of 2024 Annual Meeting of Stockholders. You may revoke your proxy at any time before it is exercised at the meeting by giving our corporate secretary written notice to that effect.

 

At the Annual Meeting, BiomX will ask its stockholders to:

 

approve the conversion of 256,887 shares of our Series X Non-Voting Convertible Preferred Stock, par value $0.0001 per share (“Series X Preferred Stock”), and the Merger Warrants, the Private Placement Warrants and the Placement Agent Warrants (each as defined below, and collectively, the “Warrants”) into shares of our common stock, par value $0.0001 per share (“Common Stock”), issued in the acquisition of Adaptive Phage Therapeutics, Inc., a Delaware corporation (“APT”), which closed on March 15, 2024 (the “Acquisition”) and a concurrent private placement offering that closed on March 15, 2024 (the “Private Placement”), in accordance with Section 713 of the NYSE American LLC Listed Company Guide (“Proposal No. 1”);

 

approve the amendment and restatement of BiomX’s 2019 Omnibus Long-Term Incentive Plan (“Proposal No. 2”);

 

approve an amendment to our amended and restated certificate of incorporation, as amended (the “Certificate of Incorporation”) to increase the number of authorized shares of the Common Stock from one hundred and twenty million (120,000,000) shares of Common Stock to seven hundred fifty million (750,000,000) shares of Common Stock (“Proposal No. 3”);

 

elect two Class I directors to serve until the 2027 annual meeting of stockholders, and in each case, until their successors are duly elected and qualified (“Proposal No. 4”);

 

approve, on a nonbinding advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K (“Named Executive Officers” or “NEOs”) (“Proposal No. 5”);

 

conduct a nonbinding advisory vote (every one, two or three years) on the frequency of future advisory votes on the compensation of the Company’s Named Executive Officers (“Proposal No. 6”);
   
authorize the Board to amend our Certificate of Incorporation to effect one reverse stock split of the Company’s outstanding Common Stock, $0.0001 par value per share, at any ratio between 1-for-5 and 1-for-10 at such time as the Board shall determine, in its sole discretion, any time before [●], 20252 (“Proposal No. 7”);

 

 

2To be one year from the date of the Annual Meeting.

 

1

 

 

ratify the appointment of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2024 (“Proposal No. 8”); and

 

BiomX will ask its stockholders to approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the above-mentioned proposals (“Proposal No. 9”).

 

After careful consideration, the Board has approved the proposals referred to above, and has determined that they are advisable, fair and in the best interests of BiomX’s stockholders. Accordingly, the Board recommends that stockholders vote “FOR” Proposal No. 1, “FOR” Proposal No. 2, “FOR” Proposal No. 3, “FOR” each director nominee for Proposal No. 4, “FOR” Proposal No. 5, “EVERY THREE YEARS” for Proposal No. 6, “FOR” Proposal No. 7, “FOR” Proposal No. 8 and “FOR” Proposal No. 9, if necessary to solicit additional proxies if there are not sufficient votes to approve Proposals No. 1 through 8.

 

Your vote is important. Whether or not you expect to attend the virtual Annual Meeting, please complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares will be represented and voted at the Annual Meeting. You can also vote your shares via the internet or by telephone as provided in the instructions set forth in the enclosed proxy card. If you hold your shares in “street name” through a broker, you should follow the procedures provided by your broker.

 

We thank you for your consideration and continued support.

 

  Yours sincerely,
   
  /s/ Jonathan Solomon 
  Jonathan Solomon
  Chief Executive Officer

 

This proxy statement is dated [●], 2024 and is first being mailed to stockholders on or about [●], 2024.

 

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BIOMX INC.

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

 

The following section provides answers to frequently asked questions about the Annual Meeting. This section, however, only provides summary information. These questions and answers may not address all issues that may be important to you as a stockholder. You should carefully read this entire proxy statement, including each of the annexes.

 

When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?

 

On or about [●], 2024, we will begin mailing our proxy materials, including the Notice of the Annual Meeting, this proxy statement, our 2023 Annual Report and the accompanying proxy card or, for shares held in street name (i.e. held for your account by a broker or other nominee), a voting instruction form.

 

How do I attend the Annual Meeting?

 

The meeting will be held entirely online on [●], 2024 at [●] [a.m./p.m.] Eastern Time at www.virtualshareholdermeeting.com/PHGE2024. Directions to the annual meeting may be found at www.biomx.com. Information on how to vote at the virtual Annual Meeting is discussed below.

 

Who is soliciting my vote?

 

Our Board is soliciting your vote for the Annual Meeting.

 

When is the record date for the Annual Meeting?

 

The record date for determination of stockholders entitled to vote at the Annual Meeting (the “Record Date”) is the close of business on May 28, 2024.

 

How many votes can be cast by all stockholders?

 

There were 69,806,440 shares of our Common Stock outstanding on May 23, 2024, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each outstanding share of our Common Stock is entitled to one vote on each matter considered at the Annual Meeting. 256,887 shares of our Series X Preferred Stock were outstanding as of May 23, 2024, none of which are entitled to vote with respect to any matters to be acted upon at the Annual Meeting.

 

Of the shares of our Common Stock issued and outstanding and entitled to vote, 9,164,968 shares of Common Stock were issued in the Acquisition and are not entitled to vote on Proposal No. 1, Proposal No. 2 and Proposal No. 3 (collectively, the “Transaction Proposals”) for purposes of the NYSE American LLC (“NYSE American”) rules. The Company anticipates that these 9,164,968 shares of Common Stock will be voted in favor of the Transaction Proposals for purposes of adopting the proposals under Delaware law. However, to comply with NYSE American rules, BiomX will instruct the inspector of elections to conduct a separate tabulation that excludes 9,164,968 shares from the total number of shares voted in favor of each of the Transaction Proposals for purposes of determining whether these proposals have been adopted.

 

How do I vote?

 

By Internet at the Annual Meeting.

 

Instructions on how to attend and vote at the Annual Meeting are described at https://www.virtualshareholdermeeting.com/PHGE2024, although BiomX encourages you to vote by proxy at your earliest convenience to ensure your shares are represented, in case you later decide not to attend the Annual Meeting virtually. Stockholders will need their unique 16-digit control number that accompanied the proxy materials. A technical support telephone number will be posted on the log-in page of https://www.virtualshareholdermeeting.com/PHGE2024 that you can call if you encounter any difficulties accessing the virtual meeting during the check-in or during the Annual Meeting.

 

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By Proxy

 

If your shares are held directly in your own name, and you received printed copies of the proxy materials, you may vote your shares by mail by completing, signing and dating the proxy card. To vote over the internet or by telephone, you should refer to your proxy card for instructions.

 

If your shares are held in street name, meaning registered in the name of your broker, bank or other nominee, you should vote your shares by following the instructions from your broker, bank or other nominee.

 

To ensure your shares are voted by proxy, proxies submitted by Internet or by telephone should be received by the cutoff time of [●] p.m. Eastern Time on [●], 2024. Proxies submitted by mail must be received before the start of the Annual Meeting.

 

If you complete and submit your proxy before the Annual Meeting, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy without giving voting instructions, your shares will be voted in the manner recommended by the Board on all matters presented in this proxy statement.

 

What shares are included on a proxy card or voting instruction form?

 

Each proxy card or voting instruction form represents the shares registered to you as of the close of business on the Record Date. You may receive more than one proxy card or voting instruction form if you hold your shares in multiple accounts, some of your shares are registered directly in your name with our transfer agent, or some of your shares are held in street name through a broker, bank, or other nominee. Please vote the shares on each proxy card or voting instruction form to ensure that all of your shares are counted at the Annual Meeting.

 

What if I have shares registered in my name and don’t vote on a particular matter when returning a proxy card?

 

Properly signed proxy cards received before the close of voting at the Annual Meeting will be voted according to the directions provided. If a signed proxy card is returned without stockholder direction on a matter, the shares will be voted as recommended by the Board.

 

Can I change my vote?

 

Stockholder of Record: Shares Registered in Your Name

 

If your shares are registered directly in your name, you may change your vote or revoke your proxy by:

 

delivering written notice to our Corporate Secretary or sent to our principal executive offices at BiomX Inc., 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel, Attention: Corporate Secretary at any time before the close of voting at the Annual Meeting;

 

submitting a later dated proxy over the internet or by telephone in accordance with the instructions in the proxy card; or

 

voting your shares electronically during the Annual Meeting.

 

If your shares are held in street name, you should contact your broker, bank or other nominee to change your vote or revoke your proxy.

 

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How do I revoke my proxy?

 

You may revoke your proxy by (1) following the instructions on the proxy card and entering a new vote by mail that we receive before the start of the Annual Meeting or over the Internet or by telephone by the cutoff time of [●] p.m. Eastern Time on [●], 2024, (2) attending and voting at the virtual Annual Meeting (although attendance at the Annual Meeting will not in and of itself revoke a proxy), or (3) by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with our Corporate Secretary. Any written notice of revocation or subsequent proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Corporate Secretary or sent to our principal executive offices at BiomX Inc., 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel, Attention: Corporate Secretary.

 

If a broker, bank, or other nominee holds your shares, you must contact such broker, bank, or nominee in order to find out how to change your vote.

 

How is a quorum reached?

 

Our amended and restated bylaws (the “Bylaws”) provide that one-third (1/3) of the stock issued and outstanding and entitled to vote, present at the virtual meeting or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.

 

Under the General Corporation Law of the State of Delaware, shares that are voted “abstain” or “withheld” and “broker non-votes” (if any) are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is not present, the meeting may be adjourned until a quorum is obtained.

 

What proposals will be voted on at the Annual Meeting?

 

There are eight proposals scheduled to be voted on at the meeting:

 

1.Approval of the issuance of shares of Common Stock upon conversion of 256,887 shares of the Series X Preferred Stock and the Warrants in accordance with Section 713 of the NYSE American Listed Company Guide (“Proposal No. 1,” or the “Conversion Proposal”).

 

  2. To approve the amendment and restatement of BiomX’s 2019 Omnibus Long-Term Incentive Plan (“Proposal No. 2,” or the “Incentive Plan Proposal”).
     
  3. To approve an amendment to our Certificate of Incorporation to increase the number of authorized shares of the Common Stock from one hundred and twenty million (120,000,000) shares of Common Stock to seven hundred fifty million (750,000,000) shares of Common Stock. (“Proposal No. 3,” or the “Charter Amendment Proposal”).
     
  4. To elect two Class I directors to serve until the 2027 annual meeting of stockholders, and in each case, until their successors are duly elected and qualified (“Proposal No. 4,” or the “Director Election Proposal”).
     
  5. To approve, on a nonbinding advisory basis, the compensation of the Company’s Named Executive Officers (“Proposal No. 5,” or the “Say-On-Pay Proposal”).
     
  6. To conduct a nonbinding advisory vote on the frequency (every one, two or three years) of future advisory votes on the compensation of the Company’s Named Executive Officers (“Proposal No. 6,” or the “Say-On-Frequency Proposal”).
     
  7. To authorize the Board to amend our Certificate of Incorporation to effect one reverse stock split of our outstanding Common Stock at any ratio between 1-for-5 and 1-for-10 at such time as our Board of Directors shall determine, in its sole discretion, any time before [●], 2025  (“Proposal No. 7,” or the “Reverse Stock Split Proposal”).
     
  8. To ratify the appointment of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2024 (“Proposal No. 8,” or the “Auditor Ratification Proposal”).

 

  9. Approval of, if necessary, the adjournment or postponement of the Annual Meeting, to continue to solicit votes for Proposals No. 1 through 8 (“Proposal No. 9,” or the “Adjournment Proposal”).

 

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What vote is required to approve each item at the Annual Meeting?

 

You may vote “FOR,” “AGAINST” or “ABSTAIN” on Proposal No. 1, Proposal No. 2, Proposal No. 3, Proposal No. 5, Proposal No. 7, Proposal No. 8 and Proposal No. 9. You may vote “FOR” or “WITHHOLD” with respect to each director nominee for Proposal No. 4. You may vote “EVERY ONE YEAR,” “EVERY TWO YEARS,” “EVERY THREE YEARS” or “ABSTAIN” on Proposal No. 6. Under our Bylaws, any proposal other than an election of directors is decided by the vote of the holders of a majority of the stock present in person or represented by proxy and entitled to vote on the question, unless the question is one upon which by express provision of law, our Certificate of Incorporation or our Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Pursuant to the NYSE American Listed Company Guide, a “FOR” vote of a majority of votes cast is required to approve (i) the sale, issuance, or potential issuance by an issuer of common stock (or securities convertible into common stock) equal to 20% or more of presently outstanding stock for less than the greater of book or market value of the stock or (ii) a material amendment to a stock option or purchase plan or other equity compensation arrangement pursuant to which options or stock may be acquired by officers, directors, employees, or consultants (an “Incentive Plan”).

 

Proposal No. 1 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question (subject to the separate tabulation of votes described in “Questions and Answers About the Annual Meeting—How many votes can be cast by all stockholders?”).

 

Proposal No. 2 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question.

 

Proposal No. 3 requires that the votes cast “FOR” Proposal No. 3 exceed the votes cast “AGAINST” Proposal No. 3 (subject to the separate tabulation of votes described in “Questions and Answers About the Annual Meeting—How many votes can be cast by all stockholders?”).

 

Under Proposal No. 4, director nominees will be elected by a plurality of votes cast, which means that the director nominees receiving the highest number of votes will be elected.

 

Proposal No. 5 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question.

 

Under Proposal No. 6, the frequency of future advisory votes on executive compensation will be approved by a plurality vote of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the question, such that the option receiving the most votes will be considered the recommendation of the stockholders.

 

Proposal No. 7 requires that the votes cast “FOR” Proposal No. 7 exceed the votes cast “AGAINST” Proposal No. 7.

 

Proposal No. 8 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question.

 

Proposal No. 9 requires the affirmative vote of a majority of the stockholders present in person or represented by proxy at the meeting and entitled to vote, though less than a quorum (for the purpose of soliciting additional proxies to approve Proposals No. 1 through 8).

 

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How is the vote counted?

 

If your shares are registered directly in your name, you are a “stockholder of record” who may vote at the meeting, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to direct the voting of your shares by voting over the Internet, by telephone, by returning your proxy or by voting online during the Annual Meeting at https://www.virtualshareholdermeeting.com/PHGE2024.

 

If your shares are held in an account at a bank or at a brokerage firm or other nominee holder, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your bank, broker or other nominee who is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares and to participate in the Annual Meeting. You should receive a proxy card and voting instructions with these proxy materials from that organization rather than from us. You will receive instructions from your bank, broker or other nominee explaining how you can vote your shares and whether they permit Internet or telephone voting. Follow the instructions from your bank, broker or other nominee included with these proxy materials, or contact your bank, broker or other nominee to request a proxy form. We encourage you to provide voting instructions to your bank, broker or other nominee by giving your proxy to them. This ensures that your shares will be voted at the Annual Meeting according to your instructions.

 

If you hold shares through a bank, broker or other intermediary firm, the intermediary firm is subject to certain New York Stock Exchange, or NYSE, rules regarding voting. Under NYSE rules, Proposals No. 7 and 8 are considered “routine” items. This means that an intermediary firm may vote in its discretion on behalf of clients who have not furnished voting instructions on those proposals at least 10 days before the date of the Annual Meeting. In contrast, Proposals No. 1, 2, 3, 4, 5, 6, and 9 are each a non-discretionary item. Intermediary firms that have not received voting instructions from their clients on this item may not vote on Proposals No. 1, 2, 3, 4, 5, 6, or 9. A “broker non-vote” on a proposal results when shares are deemed present at the Annual Meeting but the shares are not voted because the proposal is a non-discretionary item and the intermediary firm has not received instructions from its client. A broker non-vote will have no effect on the outcome of Proposals No. 1, 2, 3, 4, 5, 6, and 9. Because the authorization of the Board to amend the Certificate of Incorporation to effect one reverse stock split of our outstanding Common Stock and the ratification of the independent registered public accounting firm are considered routine matters, your bank, broker, trustee or other nominee, as the case may be, may vote your shares without your instruction with respect to Proposals No. 7 and 8 unless you instruct your them otherwise. If a bank, broker, trustee or other nominee does not exercise this authority, such broker non-votes will have no effect on the results of the vote on these proposals.

 

Abstentions, if any, would have no effect on the vote for Proposals No.  3, 6 and 7 and the same effect as a vote “AGAINST” Proposals No.  1, 2, 5, 8 and 9. Abstentions are not applicable to Proposal No. 4. Abstentions and broker non-votes are counted as shares present and entitled to vote for the purpose of determining whether a quorum is present.

 

Are the proposals conditioned on one another?

 

Both Proposal No. 1 and Proposal No. 2 are conditioned on the approval of Proposal No. 3. In the event Proposal No. 3 is not approved, BiomX will not be able to implement the actions proposed under Proposal No. 1 or Proposal No. 2.

 

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Do I Have Appraisal Rights?

 

Our stockholders are not entitled to dissenters’ or appraisal rights under the General Corporation Law of the State of Delaware (“DGCL”) with respect to any of the proposals being voted on.

 

Who pays the cost for soliciting proxies?

 

We will bear the cost of soliciting proxies, including the printing, mailing and filing of this proxy statement, the proxy card and any additional information furnished to stockholders. You will need to obtain your own internet access if you choose to access the proxy materials and/or vote over the internet. BiomX may use the services of its directors, officers and other employees to solicit proxies from BiomX’s stockholders without additional compensation. Arrangements will also be made with banks, brokers, nominees, custodians and fiduciaries who are record holders of Common Stock for the forwarding of solicitation materials to the beneficial owners of Common Stock. BiomX will reimburse these banks, brokers, nominees, custodians and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

 

Could other matters be decided at the Annual Meeting?

 

We do not know of any other matters that may be presented for action at the Annual Meeting. Should any other business come before the meeting, the persons named on the proxy will have discretionary authority to vote the shares represented by such proxies in accordance with their best judgment. If you hold shares through a broker, bank or other nominee as described above, they will not be able to vote your shares on any other business that comes before the Annual Meeting unless they receive instructions from you with respect to such matter.

 

What happens if the meeting is postponed or adjourned?

 

Your proxy may be voted at the postponed or adjourned meeting. You will still be able to change your proxy until it is voted.

 

How can I know the voting results?

 

We plan to announce the final results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.

 

Who can provide me with additional information and help answer my questions?

 

If you would like additional copies, without charge, of this proxy statement or if you have questions about the proposals being considered at the Annual Meeting, including the procedures for voting your shares, you should contact BiomX’s Corporate Secretary, by telephone at (972) 72 394 2377.

 

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement contains express or implied “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements with respect to: future product development plans; stockholder approval of the conversion of 256,887 shares of the Series X Preferred Stock and the exercise of the Warrants and other matters related to the Acquisition, the Private Placement and matters described in this proxy statement. Forward-looking statements can be identified by words such as: “continue,” “intend,” “target,” “believe,” “expect,” “will,” “may,” “might,” “anticipate,” “estimate,” “would,” “positioned,” “future,” “could,” “should,” “plan,” “potential,” “predict,” “project,” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s management’s current beliefs, expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of BiomX’s control. Actual results and outcomes may differ materially from those indicated in the forward-looking statements, as a result of various important factors, including risks and uncertainties related to the ability to recognize the anticipated benefits of the Acquisition, the outcome of any legal proceedings that may be instituted against BiomX, the ability to obtain or maintain the listing of the Common Stock on NYSE American, costs related to the Acquisition, changes in applicable laws or regulations, the possibility that BiomX may be adversely affected by other economic, business, and/or competitive factors, including risks inherent in pharmaceutical research and development, such as: adverse results in BiomX’s drug discovery, preclinical and clinical development activities, the risk that the results of preclinical studies and early clinical trials may not be replicated in later clinical trials, BiomX’s ability to enroll patients in its clinical trials, and the risk that any of its clinical trials may not commence, continue or be completed on time, or at all, decisions made by the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies with respect to the Company’s development candidates, its ability to obtain, maintain and enforce intellectual property rights for its platform and development candidates, its potential dependence on collaboration partners, competition, uncertainties as to the sufficiency of BiomX’s cash resources to fund its planned activities for the periods anticipated and BiomX’s ability to manage unplanned cash requirements, and general economic and market conditions. Therefore, investors should not rely on any of these forward-looking statements and should review the risks and uncertainties described under the caption “Risk Factors” in BiomX’s Annual Report on Form 10-K filed with the SEC on April 4, 2024, and additional disclosures BiomX makes in its other filings with the SEC, which are available on the SEC’s website at www.sec.gov. Forward-looking statements are made as of the date of this proxy statement, and except as provided by law BiomX expressly disclaims any obligation or undertaking to update forward-looking statements, whether as result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.

 

Corporate Information

 

We were 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, BiomX merged with BiomX Israel, who survived the merger as a wholly owned subsidiary of BiomX (the “Business Combination”). BiomX acquired all outstanding shares of BiomX Israel in the Business Combination. In exchange, shareholders of BiomX Israel received 15,069,058 shares of BiomX 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 BiomX. BiomX’s shares of Common Stock, units, and warrants are traded on NYSE American under the symbols PHGE, PHGE.U, and PHGE.WS, respectively. On February 6, 2020, BiomX’s Common Stock also began trading on the Tel-Aviv Stock Exchange. On July 6, 2022, BiomX announced a voluntary delisting of its shares of Common Stock from the Tel-Aviv Stock Exchange which became effective on October 6, 2022. On May 23, 2024, we received a notification from NYSE American that we are no longer in compliance with NYSE American’s continued listing standards. Such notice provides that we must submit a plan of compliance by June 22, 2024, addressing how it intends to regain compliance with the continued listing standards by November 23, 2025. Such notice has no immediate impact on the listing of our Common Stock, which will continue to be listed and traded on NYSE American during this period, subject to our compliance with the other listing requirements of NYSE American. We have begun to prepare our plan for submission to NYSE American by the June 22, 2024 deadline. See “Risk Factors – Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our Common Stock.” Our principal executive offices are located at 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel, and our telephone number is (972) 72 394 2377. Our website address is https://www.biomx.com. The information contained in, or accessible through, our website does not constitute part of this proxy statement. We have included our website address in this proxy statement solely as an inactive textual reference.

 

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PROPOSALS

 

PROPOSAL NO. 1:

 

CONVERSION PROPOSAL

 

Overview

 

On March 6, 2024, BiomX entered into (i) an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, BTX Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), BTX Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and APT, and (ii) a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”). Pursuant to the Merger Agreement, First Merger Sub merged with and into APT, with APT being the surviving corporation and becoming a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, APT merged with and into Second Merger Sub, pursuant to which Second Merger Sub became the surviving entity (together with the First Merger, the “Acquisition”). The consummation of the Acquisition (the “Acquisition Closing”) occurred on March 15, 2024, substantially simultaneously with the consummation of the private placement of BiomX’s Series X Preferred Stock (the “Private Placement”) pursuant to the Purchase Agreement and the authorization by NYSE American of the shares of BiomX’s Common Stock to be issued in the Acquisition.

 

Pursuant to the Merger Agreement, the Company has agreed to submit to its stockholders for their consideration the approval of the conversion of 256,887 shares of the Series X Preferred Stock and the exercise of the Warrants into shares of Common Stock in accordance with the rules of NYSE American. Section 713 of the NYSE American Listed Company Guide requires stockholder approval of transactions involving the issuance of 20% or more of a company’s outstanding shares or voting power. Conversion or exercise, as applicable, of all of the Series X Preferred Stock and Warrants would result in an issuance of 20% or more of BiomX’s outstanding shares.

 

Background of the Proposal

 

Overview of Series X Preferred Stock

 

We issued 40,470 shares of Series X Preferred Stock in the Acquisition (the “Acquisition Preferred Stock”) and 216,417 shares of Series X Preferred Stock in the Private Placement (the “Private Placement Preferred Stock”). The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series X Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of the Series X Preferred Stock (the “Certificate of Designation”), which was filed with the Secretary of State of the State of Delaware prior to the Acquisition Closing. An aggregate of up to 256,887,000 shares of Common Stock are issuable upon conversion of the above-described Series X Preferred Stock, assuming the approval of Proposal No. 1 and subject to certain beneficial ownership limitations.

 

Subject to stockholder approval and certain beneficial ownership limitations set by each holder of Series X Preferred Stock, each share of Series X Preferred Stock will automatically convert into approximately 1,000 shares of Common Stock, subject to certain limitations. This Proposal No. 1 would provide the necessary approval to permit such conversion, subject to certain limitations.

 

Shares Issuable Upon Conversion

 

Set forth below is a table summarizing the issued and outstanding Series X Preferred Stock and the number of shares of Common Stock that are potentially issuable upon conversion of the Series X Preferred Stock. The sale into the public market of the underlying Common Stock could materially and adversely affect the market price of our Common Stock. See “Risk Factors.

 

   Series X Preferred
Stock Issued and
Outstanding
   Common Stock
(as converted)
 
         
Acquisition   40,470    40,470,000 
Private Placement   216,417    216,417,000 
Total   256,887    256,887,000 

 

Description of Series X Preferred Stock

 

Conversion. Following stockholder approval of this Proposal No. 1, each share of Series X Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain beneficial ownership limitations, including that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with any person whose beneficial ownership would be aggregated with such holder’s for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) would beneficially own more than a specified percentage to be established by the holder between 0% and 19.99% of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion.

 

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Dividends and Voting Rights. Holders of Series X Preferred Stock are entitled to receive dividends on shares of Series X Preferred Stock equal to, on an as-if-converted-to-Common-Stock basis, and in the same form as, dividends actually paid on shares of the Common Stock. Except as otherwise required by law or with respect to the Series X Preferred Stock protective provisions set forth in the Certificate of Designations, the Series X Preferred Stock does not have voting rights.

 

Restrictions. The Certificate of Designation contains certain covenants of the Company that are customary for documents of this type, including restrictions on (i) consummating Fundamental Transactions (as defined in the Certificate of Designation), or (ii) reclassifying the outstanding Common Stock, including but not limited to a stock dividend or reverse stock split, in each case prior to the stockholder approval of the Conversion Proposal without the affirmative vote or written approval, agreement or waiver of the holders of 70% of the then outstanding shares of the Series X Preferred Stock (the “Requisite Holders”).

 

Liquidation and Dissolution. The Series X Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.

 

Beneficial Ownership Limitations. Our Series X Preferred Stock is subject to certain beneficial ownership limitations, including that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with any person whose beneficial ownership would be aggregated with such holder’s for purposes of Section 13(d) or Section 16 of the Exchange Act would beneficially own more than own more than a specified percentage to be established by the holder between 0% and 19.99% of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion.

 

Approval Deadline; Cash Settlement. In the event the Series X Preferred Stock is not convertible pursuant to the terms of the Certificate of Designation by the earlier to occur of (i) such time as this Annual Meeting is ultimately concluded or (b) five months after the initial issuance of the Series X Preferred Stock (the “Deadline Date”), upon written request by the Requisite Holders, the Company shall be required to pay to each holder of Series X Preferred Stock an amount in cash equal to the fair value of the shares of Series X Preferred Stock held by such holder, based on an average of the daily volume weighted average price of the Common Stock for the 30 trading days ending on (i) the first trading day prior to the Annual Meeting or (ii) the Deadline Date.

 

Overview of Warrants

 

Pursuant to the terms of the Merger Agreement, we issued warrants exercisable for an aggregate of 2,166,497 shares of Common Stock at an exercise price of $5.00 per share as merger consideration to APT Stockholders (“Merger Consideration Warrants”). Pursuant to an amendment, dated March 5, 2024 (the “Lease Amendment”), to a lease agreement by and between APT and the landlord of APT (the “Landlord”), we issued a warrant bearing substantially the same terms as the Merger Consideration Warrants to purchase an aggregate of 250,000 shares of Common Stock to the Landlord (the “Landlord Warrant,” and together with the Merger Consideration Warrants, the “Merger Warrants”). Pursuant to the Purchase Agreement, we issued warrants exercisable for an aggregate of 108,208,500 shares of Common Stock at an exercise price of $0.2311 per share in the Private Placement (the “Private Placement Warrants”). In addition, as partial compensation for their services as placement agents for the Private Placement (the “Placement Agents”), we issued Placement Agent Warrants exercisable for up to an aggregate of 9,523,809 shares of Common Stock at an exercise price of $0.2311 per share to RBC Capital Markets (“RBC”) and Laidlaw & Company (UK) Ltd. (“Laidlaw”). An aggregate of 120,148,806 shares of Common Stock are issuable upon conversion of the above-described Warrants, assuming the approval of Proposal No. 1 and subject to certain beneficial ownership limitations.

 

Shares Issuable upon Exercise of Warrants

 

Set forth below is a table summarizing the exercise price and number of shares of Common Stock that are potentially issuable upon conversion of the Warrants. The sale into the public market of the underlying Common Stock could materially and adversely affect the market price of our Common Stock. See “Risk Factors.”

 

   Exercise Price   Common Stock
(as exercised)
 
         
Merger Warrants  $5.00    2,416,497 
Private Placement Warrants  $0.2311    108,208,500 
Placement Agent Warrants  $0.2311    9,523,809 
Total   N/A    120,148,806 

 

Description of Merger Warrants

 

The Merger Warrants may be exercised at any time following the approval of the Transaction Proposals and prior to their expiration on January 28, 2027. The exercise price of the Merger Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. There is no established public trading market for the Merger Warrants and the Company does not intend to list the Merger Warrants on any national securities exchange or nationally recognized trading system.

 

The foregoing description of the Merger Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Warrant, the form of which is attached as Annex H to this proxy statement.

 

Description of Private Placement Warrants

 

The Private Placement Warrants may be exercised at any time following stockholder approval of the Transaction Proposals at an exercise price of $0.2311 and will expire on the 24-month anniversary of the date on which they are first exercisable. The exercise price of the Private Placement Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like.

 

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The foregoing description of the Private Placement Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the Private Placement Warrant, the form of which is attached as Annex I to this proxy statement.

 

Description of Placement Agent Warrants

 

The terms of the Placement Agent Warrants are substantially the same as those of the Private Placement Warrants, except that the Placement Agent Warrants may, at the election of the holders thereof, be exercised either for cash or on a cashless basis, without regard to whether the shares underlying the Placement Agent Warrants have been registered for issuance or resale under the Securities Act of 1933, as amended (the “Securities Act”).

 

The foregoing description of the Placement Agent Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the Placement Agent Warrant, the form of which is attached as Annex J to this proxy statement.

 

Reasons for the Proposal 

 

Our Common Stock is listed on NYSE American, and, as such, we are subject to the applicable rules of the New York Stock Exchange, including Section 713 of the NYSE American Listed Company Guide, which requires stockholder approval in connection with the acquisition of another company if the NYSE American-listed company will issue more than 20% of its common stock. For purposes of Section 713 of the NYSE American Listed Company Guide, the issuance of any Common Stock in connection with the Acquisition and the Private Placement would be aggregated together. Thus, in order to permit the issuance of Common Stock upon conversion of the Series X Preferred Stock and exercise of the Warrants, we must first obtain stockholder approval of this conversion.

 

Consequences of Not Approving the Proposal

 

If our stockholders do not approve this proposal, we will not be able to effect the conversion of the Series X Preferred Stock or the exercise of the Warrants. If our stockholders do not approve the conversion of the Series X Preferred Stock within 150 days of the initial issuance of the Series X Preferred Stock, then upon written request by the Requisite Holders, we will be required to pay each holder of Series X Preferred Stock an amount in cash equal to the fair value of the shares of Series X Preferred Stock held by such holder, as described in the Certificate of Designation for the Series X Preferred Stock. We do not expect that we would have sufficient liquidity to settle a significant amount of the Series X Preferred Stock if required to do so. Additionally, if our stockholders do not approve this proposal, we are required pursuant to the Merger Agreement to use our reasonable best efforts to adjourn this Annual Meeting one or more times to a date or dates no more than 30 days after the scheduled date for this Annual Meeting, and to obtain such approval at such time. If this Annual Meeting is not so adjourned, and/or if the approval of this proposal is not then obtained, we are required pursuant to the Merger Agreement to use our reasonable best efforts to obtain such approval as soon as practicable thereafter, and in any event to hold a special meeting of stockholders within four months after this Annual Meeting and to hold an annual meeting or special meeting of our stockholders, at which a vote of the stockholders to approve this proposal will be solicited and taken, at least once every four months until we obtain approval of this proposal.

 

Interests of Certain Persons in the Proposal

 

When you consider our Board’s recommendation to vote in favor of this proposal, you should be aware that certain of our directors, officers and existing stockholders may have interests that may be different from, or in addition to, the interests of other of our stockholders. In particular, the Cystic Fibrosis Foundation (“CFF”), Deerfield Healthcare Innovations Fund II, L.P. (“Deerfield Healthcare Innovations”), Deerfield Private Design Fund V, L.P. (“Deerfield Private Design,” and collectively with Deerfield Healthcare Innovations and Deerfield Management Company, L.P., “Deerfield”), AMR Action Fund, L.P., Telmina Limited (“Telmina”) and an affiliate of OrbiMed Israel GP Ltd. (“OrbiMed”), each of whom beneficially owns more than 5% of our Common Stock, received Warrants and shares of Series X Preferred Stock in connection with the Merger and/or the Private Placement. Additionally, Jonathan Leff, one of our directors, is an affiliate of Deerfield. Such parties will not be able to convert their shares of Series X Preferred Stock or exercise their Warrants if this proposal is not approved by our stockholders. None of these parties will, by virtue of the issuance of shares of Common Stock to which each is entitled upon conversion of their respective shares of Series X Preferred Stock and exercise of their Warrants, acquire rights to a majority of the voting power of the Company, based on the number of shares of Common Stock outstanding as of the Record Date and giving effect to the conversion of the Series X Preferred Stock and exercise of the Warrants held by such parties. Additionally, the BiomX Board anticipates granting restricted stock units with an aggregate value of $156,943 to certain of its officers, as set forth in the table below, following stockholder approval of the Charter Amendment Proposal in recognition of their efforts in connection with the Acquisition.

 

Officer  Proposed Equity Bonus 
Avi Gabay    26,545 
Jonathan Solomon   51,048 
Dr. Merav Bassan   32,058 
Inbal Benjamini Elran   21,236 
Assaf Oron   26,055 
Total   156,943 

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 1 requires a “FOR” vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question (provided that a lawful quorum of stockholders be there represented in person or by proxy) (subject to the separate tabulation of votes described in “Questions and Answers About the Annual Meeting—How many votes can be cast by all stockholders?”). Abstentions will have the effect of a vote “AGAINST” Proposal No. 1. Broker non-votes will have no effect on Proposal No. 1.

 

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE APPROVAL OF, UNDER APPLICABLE NYSE AMERICAN LISTING RULES, THE ISSUANCE OF SHARES OF COMMON STOCK UPON CONVERSION OF THE ACQUISITION PREFERRED STOCK, PRIVATE PLACEMENT PREFERRED STOCK, MERGER WARRANTS, PRIVATE PLACEMENT WARRANTS AND PLACEMENT AGENT WARRANTS.

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PROPOSAL NO. 2:

 

APPROVAL OF AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2019 OMNIBUS LONG-

TERM INCENTIVE PLAN

 

Overview

 

Pursuant to the Merger Agreement, the Company has agreed to submit to its stockholders for their consideration the approval of a new stock incentive plan or amendment to the Company’s 2019 Omnibus Long-Term Incentive Plan (the “2019 Plan” and, following its amendment and restatement, the “A&R Plan”), pursuant to which shares of Common Stock equal to 15% of the fully-diluted outstanding equity interests of the Company immediately following the Acquisition and the Private Placement (after giving effect to the conversion of the Private Placement Preferred Stock and the Acquisition Preferred Stock and the exercise of the Warrants) will be reserved for issuance to the Company’s employees, directors, consultants and other service providers.

 

Background of the Proposal

 

The 2019 Plan was originally adopted by the Board on September 17, 2019 and subsequently approved by our stockholders on October 23, 2019 and further amended on August 28, 2023.

 

Our Common Stock is listed on NYSE American, and, as such, we are subject to the applicable rules of the New York Stock Exchange, including Section 711 of the NYSE American Listed Company Guide, which requires stockholder approval in connection with the establishment or material amendment of an Incentive Plan. For purposes of Section 711 of the NYSE American Listed Company Guide, an amendment to an Incentive Plan to materially increase the number of shares thereunder is deemed material. Accordingly, in order to effect the A&R Plan, we must first obtain stockholder approval.

 

The Board has determined that it is in the best interests of us and our stockholders to seek stockholder approval of the A&R Plan. The following is a summary of the key change to the 2019 Plan, as proposed to be amended and restated hereby. This summary, however, does not purport to be a complete description of all of the provisions of the A&R Plan and is qualified in its entirety by reference to the full text of the A&R Plan, which is attached as Annex C to this proxy statement:

 

Provide for an increase in the number of shares of Common Stock reserved for issuance thereunder equal to 15% of the fully-diluted, outstanding equity interests of the Company immediately following the Acquisition and the Private Placement (after giving effect to the conversion of the Private Placement Preferred Stock and the Acquisition Preferred Stock and the exercise of the Warrants), or 78,000,000 shares; and

 

The Board has adopted the A&R Plan, subject to approval by our stockholders. If the proposed A&R Plan is not approved, the 2019 Plan will remain as-is.

 

The closing price of our Common Stock, as reported on NYSE American as of May 23, 2024, the latest practicable date prior to the filing of this proxy statement, was $0.34.

 

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Reasons for the Proposal

 

As discussed above, pursuant to the Merger Agreement, the Company has agreed to submit to its stockholders for their consideration the approval of the A&R Plan, pursuant to which shares of Common Stock equal to 15% of the fully-diluted outstanding equity interests of the Company immediately following the Acquisition and the Private Placement (after giving effect to the conversion of the Private Placement Preferred Stock and the Acquisition Preferred Stock and the exercise of the Warrants) will be reserved for issuance to the Company’s employees, directors, consultants and other service providers.

 

We are asking our stockholders to approve the A&R Plan because, among other things, we believe that the A&R Plan is in the best interests of us and our stockholders because of the continuing need to grant equity awards to attract and retain qualified personnel and to respond to relevant market changes in equity compensation practices. If our stockholders do not approve the A&R Plan, we will be limited in our ability to continue to issue awards under the A&R Plan in numbers sufficient to attract and motivate the highly skilled employees we need to recruit and retain.

 

Equity compensation is a critical element of our compensation program. Offering a broad-based equity compensation program is vital to attracting and retaining highly skilled people in the highly competitive life sciences industry. We use equity awards to provide increased incentives to the eligible employees, non-employee directors and consultants who provide significant services to us and our affiliates. We believe that providing an equity stake in the future success of our business encourages our employees to be highly motivated to achieve our long-term business goals and to increase stockholder value. Their innovation and productivity are critical to our success. Accordingly, approving the A&R Plan is in the best interest of our stockholders because equity awards help us to:

 

attract, motivate and retain talented employees, directors and consultants;

 

align the interests of employees, non-employee directors and consultants with stockholder interests; and

 

link employee compensation to Company performance.

 

We strongly believe that approval by stockholders of the A&R Plan will assist us in our goals of attracting and retaining our most valuable asset: our employees.

 

Material Features of the A&R Plan

 

The following description of certain material features of the A&R Plan is intended to be a summary only. This summary is qualified in its entirety by the full text of the A&R Plan; therefore, the Company encourages its stockholders to review the A&R Plan for full details pertaining to its terms and conditions. For convenience, the material features of the A&R Plan are as follows:

 

Awards. The A&R Plan permits the issuance of stock options to acquire shares of our Common Stock (“Options”), through outright awards of stock with or without restrictions (“Stock Grants”), or through the award of rights to receive shares of our Common Stock or cash equivalents upon satisfaction of certain restrictions (“Restricted Stock Units” or “RSUs”). We refer to the various equity compensation awards available under the A&R Plan as “Awards.” Awards under the A&R Plan are granted by, and at the discretion of, the Board or any of its committees as will be administering the A&R Plan (the “Administrator”). The Administrator has the authority to determine the terms of each Award, including any exercise or purchase price, duration and vesting conditions. Awards are documented in each case by an applicable agreement, and the individual to whom an Award is granted shall be referred to as a “Recipient”.

 

Options. An Option gives the holder the right to purchase Common Stock at a price specified in the Option for a certain period of time. This allows the holder to participate in the increase in value of the Common Stock to which the Option relates without having to make an investment to purchase the Common Stock. Until an investment is made, the holder is not a stockholder with respect to the Common Stock underlying the Option and therefore cannot exercise voting rights or participate in dividends.

 

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If the Common Stock increases in value above the exercise price specified in the Option, the holder will benefit, after exercise, to the extent of the difference between the current fair market value of the Common Stock and the exercise price, multiplied by the number of shares that can be acquired under the Option. The holder will also obtain, after exercise, the voting and dividend rights of a stockholder. If the value of the Common Stock never increases above the exercise price, then the holder loses nothing, because he or she has not made any investment in the Common Stock.

 

ISO and NQO. Under the A&R Plan, the Administrator may issue incentive stock options (“ISOs”) and non-qualified stock options (“NQOs”). ISOs and NQOs are both types of stock options, but they have different U.S. federal income tax consequences upon exercise and upon a subsequent disposition of the shares. In the case of an ISO, no regular income tax applies upon exercise, and appreciation of the shares in excess of the exercise price will qualify for favorable capital gains rates provided various requirements are satisfied, including a requirement that the shares be held for at least two years after the grant of the ISO and one year after its exercise. These requirements are sometimes referred to as the ISO holding period requirements. Only an employee of the Company, certain of its parents and subsidiaries, is eligible to obtain the tax advantages of an ISO. Upon the exercise of an NQO, regular income tax applies, and only appreciation after exercise is eligible for capital gains rates. See the section below captioned “U.S. Federal Income Tax Consequences” for a more detailed discussion of U.S. tax issues.

 

Exercise Price of an Option. The exercise price is the price that is paid for each share of Common Stock acquired upon the exercise of an Option. The Administrator will specify the exercise price in the Award agreement evidencing the grant of the Option (the “Stock Option Agreement”) that accompanies each Option grant. In no event will the exercise price be less than the fair market value, or, if greater, the par value, of our Common Stock on the date of grant; provided that, the exercise price of an ISO granted to any employee who owns more than 10% of the voting power of all classes of stock in the Company or a parent or subsidiary shall not be less than 110% of the fair market value of our Common Stock.

 

Expiration of Options. The duration of an Option will be specified in the Stock Option Agreement but, in any case, will not be more than 10 years from the date of grant; provided that, an ISO granted to any employee who owns more than 10% of the voting power of all classes of stock in the Company or a parent or subsidiary shall not be more than five years from the date of grant. The Administrator may, in its discretion, specify a shorter duration and, in general, a termination of employment or other service relationship will result in an accelerated expiration date. Options granted under the A&R Plan typically expire on the date of termination if the termination was for Cause (as defined in the Stock Option Agreement or the A&R Plan, as applicable), one year after the date of termination in the case of death or disability, and 90 days after the date of termination if the termination occurred for any other reason, but never later than the original expiration date.

 

Stock Grants. A Stock Grant is the issuance of shares of Common Stock, with or without restrictions. If restrictions are imposed, such as vesting or forfeiture restrictions, they will be set forth in the Award agreement. The vesting or forfeiture restrictions, if any, may be performance related, and the terms and conditions of the grant will be reflected in the Award agreement. A Recipient who has been issued Common Stock subject to restrictions has all of the rights of a stockholder, including the right to vote the Common Stock and the right to receive any cash dividends, unless the Administrator determines otherwise.

 

Restricted Stock Units. RSUs represent the right to receive a stated number of shares of Common Stock, or the cash equivalent, at a future time. RSUs granted under the A&R Plan will be represented by an Award agreement, which may contain a vesting schedule. Because the Recipient of an RSU is not the actual owner of the underlying Common Stock until shares are delivered at settlement, the Recipient will not ordinarily be entitled to receive dividends unless a dividend equivalent is also awarded. Like an RSU, a dividend equivalent may be paid in Common Stock, cash or a combination of both, but no payment will be made prior to the time of settlement.

 

Performance Conditions Imposed With Respect to Stock Grants or RSUs. The Administrator may, in its discretion, provide that the Recipient’s rights to an Award are contingent upon meeting certain pre-established performance goals during a set performance period of a minimum of 12 months. The Administrator has the sole discretion to determine which performance goals may apply to an Award. At the end of the performance period, the Administrator will determine whether or not the performance goals have been met. The Administrator may provide that less than an entire Award is payable if the goals are not fully achieved or that additional Common Stock may be awarded if the performance goals are exceeded.

 

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The Administrator may also provide for additional vesting or holding restrictions on an Award following the end of the performance period. The following business criteria measured in the aggregate or on a per share basis (if appropriate) are available to the Administrator and approved by our stockholders for use under the A&R Plan: (i) earnings, including, but not limited to, operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per share of Common Stock (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow(s); (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) regulatory achievements; and implementation, completion or attainment of measurable objectives with respect to research, development, products or projects, production volume levels; (xviii) the filing of a new drug application (“NDA,”) or the approval of the NDA by the FDA, the achievement of a launch of a new drug, and research and development milestones; (xix) entry into a collaboration, development, joint venture or licensing agreement relating to product candidates or to commercialization of products; and (xx) any combination of any of the foregoing.

 

Terms and Conditions Applicable to Awards. The Administrator may specify other terms and conditions applicable to an Award in the underlying Award agreement, and, in any event, all Awards are subject to the terms of the A&R Plan. Neither the A&R Plan nor any Award agreement gives a Recipient the right to continue in employment or to continue to provide services to the Company. The A&R Plan and any Award agreement does not give the Company the right to require continued employment or service of the Recipient. The maximum annual total compensation, including the value of any Awards made pursuant to the A&R Plan (determined as of the date of grant) that may be paid or granted to a Recipient who is a member of the Board but who is not an employee during any one-year period for service on the Board is $500,000 dollars, except that limit is $750,000 during the Board member’s first year of service.

 

Change in Our Capitalization. The number and kind of shares of Common Stock covered by any outstanding Awards under the A&R Plan and the exercise or purchase price (if applicable) will be appropriately adjusted for any increase or decrease in the number and kind of outstanding shares or securities resulting from a reorganization, recapitalization, exchange of shares, stock split, reverse stock split, stock dividend, combination or reclassification of shares, spin-off or other similar change in capitalization event including, without limitation, an extraordinary dividend or distribution but excluding an ordinary cash dividend. Any adjustment made by the Administrator will be conclusive and binding upon all affected persons, including the Company and all Recipients.

 

Change of Control. On a Change in Control then the Administrator may provide for any combination of the following:

 

Provide for the Award to be assumed or a substantially equivalent Award to be substituted;

 

Provide for accelerated vesting, exercisability and/or delivery, as applicable, immediately prior to the Change in Control and a lapse of the Award upon occurrence of the Change in Control; and/or

 

Provide for a cash payment equivalent to what a holder of Common Stock would receive as a result of the Change in Control with respect to the Award (less any exercise or purchase price, or base amount, and any applicable withholdings) in exchange for a cancellation of the Award.

 

Duration of the A&R Plan. Awards may not be granted under the A&R Plan after October 23, 2029. The A&R Plan may be terminated at any time by action of the Board, but without the consent of a Recipient (as defined below), a termination of the A&R Plan will not adversely affect a Recipient’s awards outstanding as of the date of termination.

 

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Exchange Offers. Subject to the stockholder approval requirements of NYSE American, the Board has the authority to grant, at its discretion, to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having an exercise price equal to, lower than or higher than the exercise price of the original Option so surrendered and canceled, or another Award, and containing such other terms as the Board may prescribe in accordance with the provisions of the A&R Plan.

 

Administration. Although the Board has the authority to administer the A&R Plan, the Board may also delegate its authority to the Committee. Each member of the Committee is a “non-employee director,” as that term is defined from time to time in Rule 16b-3 under the Exchange Act. The Administrator determines to whom Awards are granted under the A&R Plan, whether in the case of an option the Award is granted as an ISO or NQO, the number of shares of Common Stock that may be subject to an Award and such other terms and conditions as the Administrator shall require. The Administrator has the authority to adopt, amend and rescind any rules and regulations relating to the administration of the A&R Plan. All questions of interpretation and application of such rules and regulations of the A&R Plan and of Awards transferred or granted thereunder are subject to the determination of the Administrator, which is final and binding. With respect to Recipients subject to Section 16 of the Exchange Act, transactions under the A&R Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of the A&R Plan or action by the Administrator fails to so comply, it will be deemed to be modified so as to be in compliance with such Rule, or, if such modification is not possible, it will be deemed to be null and void, to the extent permitted by law and deemed advisable by the Administrator.

 

Shares and Adjustments. The A&R Plan provides that the total number of shares of our Common Stock that may be issued under it may not exceed 78,000,000 shares. Pursuant to the A&R Plan, the number of shares of our Common Stock made available under the A&R Plan will automatically increase on January 1 of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to 4% of the total number of shares of our Common Stock outstanding on December 31 of the preceding calendar year. Shares issued under the A&R Plan may be authorized but unissued shares or may be treasury shares. Common Stock delivered by a Recipient to the Company in connection with the settlement of an Award or to satisfy tax withholding shall not be available for future grant, but Common Stock underlying unexercised or unvested Awards that are forfeited may generally again be available for grant under the A&R Plan. Proceeds of the sale of Common Stock under the A&R Plan will be used by us for general corporate purposes.

 

Amendment or Termination of the A&R Plan. The Board may amend, suspend or terminate the A&R Plan in whole or in part at any time, subject to stockholder and/or the approval of any affected Recipient, under the rules applicable to ISOs, or otherwise pursuant to the A&R Plan or under NYSE American or other applicable securities exchange rules.

 

U.S. Federal Income Tax Consequences

 

The following is a summary of the principal U.S. federal income tax consequences of certain transactions under the A&R Plan. It does not describe all federal tax consequences under the A&R Plan nor does it describe state, local or foreign tax consequences. This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations issued thereunder, and judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.

 

Law Affecting Deferred Compensation. In 2004, Section 409A was added to the Code to regulate all types of deferred compensation. If the requirements of Section 409A of the Code are not satisfied, deferred compensation and earnings thereon will be subject to tax as it vests, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain performance awards, stock options, stock awards, and restricted stock units are subject to Section 409A of the Code.

 

ISOs. ISOs are intended to qualify for treatment as such under Section 422 of the Code. An ISO does not result in income recognition to the optionee or a deduction to us at the time it is granted or exercised, provided that no disposition is made by the optionee of the shares acquired pursuant to the option within two years after the date of grant of the option nor within one year after the date of issuance of shares to the optionee (referred to as the “ISO holding period”). However, the difference between the fair market value of the shares on the date of exercise and the exercise price generally will be an item of tax preference includible in “alternative minimum taxable income” of the optionee. Upon disposition of the shares after the expiration of the ISO holding period, the optionee will generally recognize long-term capital gain or loss based on the difference between the disposition proceeds and the exercise price paid for the shares. If the shares are disposed of prior to the expiration of the ISO holding period (referred to as a “disqualifying disposition”), the optionee will recognize ordinary income, and we will be entitled (subject to the limitations of Section 162(m) of the Code, discussed below) to a corresponding deduction, in the year of the disposition, generally equal to the excess of the fair market value of the shares on the date of exercise of the option (or the sale price of the shares sold, if less) over the exercise price. Any additional gain or loss realized on the disposition will be capital gain or loss.

 

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Non-Qualified Stock Options. Options that are not ISOs (designated as such at grant or options that would otherwise have qualified (but in fact fail to qualify) as ISOs, because, for example, the aggregate fair market value of shares with respect to which such options are first exercisable by an individual in any calendar year exceeds $100,000 based on the fair market value of the shares on the date of grant) are considered to be “non-qualified” stock options, not ISOs.

 

A non-qualified stock option ordinarily will not result in income recognition to the optionee or deduction to us at the time of grant. The optionee will recognize ordinary income at the time of exercise of a non-qualified stock option in an amount equal to the excess of the then fair market value of the shares over the exercise price per share. Compensation income of optionees will be subject to withholding (if the optionee is an employee) and employment or self-employment taxes, and a deduction (subject to the limitations of Section 162(m) of the Code, discussed below) will be allowable to us in an amount equal to the optionee’s compensation income.

 

An optionee’s initial basis in shares so acquired will be the amount paid on exercise of the non-qualified stock option plus the amount of any corresponding ordinary income. Any gain or loss as a result of a subsequent disposition of the shares so acquired will be capital gain or loss depending upon how long the optionee has held the shares (short-term or long-term, as applicable).

 

Special Rule if Option Price is Paid for in Shares. If an optionee pays the option price of a non-qualified stock option with previously-owned shares and the transaction is not a disqualifying disposition of shares previously acquired under an ISO, the shares received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The optionee’s tax basis and holding period for these shares received will be equal to the optionee’s tax basis and holding period for the shares surrendered. The shares received in excess of the number of shares surrendered will be treated as compensation taxable as ordinary income to the optionee to the extent of their fair market value. The optionee’s tax basis in these shares will be equal to their fair market value on the date of exercise, and the optionee’s holding period for such shares will begin on the date of exercise.

 

If the use of previously acquired shares to pay the exercise price of a non-qualified stock option constitutes a disqualifying disposition of shares previously acquired under an ISO, the optionee will have ordinary income as a result of the disqualifying disposition (as discussed above) in an amount equal to the excess of the fair market value of the shares surrendered, determined at the time such shares were originally acquired on exercise of the ISO, over the aggregate option price paid for such shares. The other tax results from paying the exercise price with previously-owned shares are as described above, except that the optionee’s tax basis in the shares that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary income recognized by the optionee as a result of the disqualifying disposition.

 

Stock Grants. With respect to stock grants that are made without any restrictions, the grantee must generally recognize ordinary income equal to the excess of the fair market value of shares received over the amount paid (if any). Compensation income of the grantee will be subject to withholding (if the grantee is an employee) and employment or self-employment taxes. We will be entitled to a deduction (subject to the limitations of Section 162(m) of the Code, discussed below) in an amount equal to the compensation income recognized by the grantee.

 

If a stock grant award is subject to restrictions, the grantee generally will not recognize compensation income at the time of the award, but will instead recognize ordinary income equal to the excess of the fair market value of the shares received over the amount paid (if any) when restrictions on transferability or that otherwise constitute a substantial risk of forfeiture lapse. A grantee may elect (by filing a so-called Code Section 83(b) election with the Internal Revenue Service (the “IRS”) within 30 days of the receipt of the shares) to instead recognize ordinary income at the time of the receipt of the shares, rather than upon the lapse of restrictions on transferability or substantial risk of forfeiture, but if the grantee subsequently forfeits such shares, the grantee would not be entitled to a tax deduction for the amount of previously recognized compensation income. The grantee will only be entitled to a capital loss for the amount paid, if any, for the shares. Compensation income of the grantee will be subject to withholding (if the grantee is an employee) and employment or self-employment taxes. We will be entitled to a deduction (subject to the limitations of Section 162(m) of the Code, discussed below) in an amount equal to the compensation income recognized by the grantee.

 

When the shares are subsequently sold, the grantee generally will recognize capital gain or loss (short-term or long-term, as applicable) equal to the difference between the amount realized upon the sale of the shares and the grantee’s tax basis (generally the amount paid plus any compensation income recognized). The capital gain or loss will be long-term if the shares were held for more than one year or short-term if held for a shorter period.

 

RSUs. As noted above, the A&R Plan provides for the award of RSUs. The grantee recognizes no income until the issuance of the shares at or shortly after vesting, provided that the award is exempt from or complies with Section 409A of the Code. At that time, the grantee must generally recognize compensation income equal to the fair market value of the shares received less the amount paid (if any). Compensation income of the grantee will be subject to withholding (if the grantee is an employee) and employment or self-employment taxes. We generally will be entitled to a deduction (subject to the limitations of Section 162(m) of the Code, discussed below) in an amount equal to the compensation income recognized by the grantee.

 

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When the shares are subsequently sold, the grantee generally will recognize capital gain or loss (short-term or long-term, as applicable) equal to the difference between the amount realized upon the sale of the shares and his or her tax basis (generally the amount paid plus any compensation income recognized). The capital gain or loss will be long-term if the shares were held for more than one year or short-term if held for a shorter period.

 

Additional federal tax. After an Award under the A&R Plan has settled, the individual holding our stock may be required to pay a 3.8% tax with respect to his or her net investment income, including dividends on and gains from the sale or other disposition of our stock, to the extent that his or her total adjusted income exceeds applicable thresholds.

 

Federal Tax Withholding. Any ordinary income realized by a grantee upon the exercise of an award under the A&R Plan is subject to withholding of U.S. federal, state, and local income tax and to withholding of the grantee’s share of tax under the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. To satisfy our federal income tax withholding requirements, we will have the right to require that, as a condition to delivery of any certificate for shares of Common Stock or the registration of the shares in the grantee’s name, the grantee remit to us an amount sufficient to satisfy the withholding requirements. Alternatively, we may withhold a portion of the shares (valued at fair market value) that otherwise would be issued to the grantee to satisfy all or part of the withholding tax obligations or may, if we consent, accept delivery of shares (that the grantee has not acquired from us within six months prior to the date of exercise) with an aggregate fair market value that equals or exceeds the required tax withholding payment. Withholding does not represent an increase in the grantee’s total income tax obligation, since it is fully credited toward his or her tax liability for the year. Additionally, withholding does not affect the grantee’s tax basis in the shares. Compensation income realized and tax withheld will be reflected on Forms W-2 supplied by us to employees by January 31 of the succeeding year. Deferred compensation that is subject to Section 409A of the Code will be subject to certain federal income tax withholding and reporting requirements.

 

Tax Consequences to Us. To the extent that a participant recognizes ordinary income in the circumstances described above, we will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of the Code. While deductibility of executive compensation for federal income tax purposes is among the factors the Board and Committee consider when structuring executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of the Company.

 

Million Dollar Deduction Limit and Other Tax Matters. We may not deduct compensation of more than $1,000,000 that is paid to “covered employees” (as defined in Section 162(m) of the Code), which include (i) an individual (or, in certain circumstances, his or her beneficiaries) who, at any time during the taxable year, is either our principal executive officer or principal financial officer; (ii) an individual who is among our three highest compensated officers for the taxable year (other than an individual who was either our principal executive officer or principal financial officer at any time during the taxable year); or (iii) anyone who was a covered employee for purposes of Section 162(m) of the Code for any tax year beginning on or after January 1, 2018. This limitation on deductions (x) only applies to compensation paid by a publicly-traded corporation (and not compensation paid by non-corporate entities) and (z) may not apply to certain types of compensation, such as qualified performance-based compensation that is payable pursuant to a written, binding contract that was in effect as of November 2, 2018, so long as the contract is not materially modified after that date.

 

The A&R Plan authorizes the Board or the Compensation Committee to grant compensation that is partially or wholly nondeductible. As a result, it is expected that certain of our compensation arrangements will result in non-deductible compensation when the total exceeds $1,000,000, except certain historical awards that meet transition rules for continued deductibility as provided above.

 

If an individual’s rights under the A&R Plan are accelerated as a result of a change in control and the individual is a “disqualified individual” under Section 280G of the Code, the value of any such accelerated rights received by such individual may be included in determining whether or not such individual has received an “excess parachute payment” under Section 280G of the Code, which could result in (i) the imposition of a 20% federal excise tax (in addition to federal income tax) payable by the individual on the value of such accelerated rights, and (ii) the loss by us of a compensation deduction.

 

Israeli Tax Aspects

 

The following is a summary of the Israeli tax consequences associated with the A&R Plan with regard to the granting of awards, including, Options (i.e., the right to purchase shares of stock at an exercise price) and Full Value Awards (i.e., shares of stock or a right to receive shares of stock in the future) (the “Stock Awards”) to holders of Stock Award who are subject to Israeli tax. This summary is general and does not purport to be comprehensive. Generally, the A&R Plan provides for the granting of Stock Awards to employees, directors and consultants under either Section 102 or Section 3(i) of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Participants” and “Tax Ordinance”, respectively). The Stock Awards granted under the A&R Plan to employees and office holders, who are not controlling shareholders (as defined in the Tax Ordinance) are subject to the “capital gains tax route” under Section 102 of the Tax Ordinance (the “Capital Gains Tax Route”) and the Stock Awards granted to participants in the A&R Plan who do not qualify to receive Stock Awards under the Capital Gains Tax Route, including consultants, service providers and controlling shareholders, are subject to Section 3(i) of the Tax Ordinance.

 

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The Capital Gains Tax Route generally provides, in connection with Stock Awards, for a reduced tax rate of 25% (and an additional 3% excess tax, if applicable) on gains realized upon the sale of its underlying shares (or, if earlier, the date of the release of such underlying shares from trust, as described herein), subject to the fulfillment of certain procedures and conditions including the deposit of such Stock Awards (or shares issued upon their exercise) for a requisite period of time, with a trustee approved by the Israel Tax Authority (currently, 24 months from the date of grant) for the benefit of the Participants. Notwithstanding the above, in any event where the exercise price of the underlying shares subject to the Stock Awards is less than the fair market value of the underlying shares at the time of grant of the Stock Awards (calculated as the average value of a company’s shares on the 30 trading days preceding the date of grant), such amount will be deemed ordinary income of the Stock Award holder, taxed at the applicable marginal tax rate (up to 50% in 2024, that is, up to a 47% marginal tax rate and an additional 3% excess tax, if applicable) together with health insurance and social security insurance payments, on the date of sale of the underlying shares and/or the date of the release of such underlying shares from trust. In the event the requirements of Section 102 of the Tax Ordinance for the allocation of Stock Awards according to the Capital Gains Tax Route are not met, the benefit attributed to the Stock Award holder as a result of the grant of such Stock Awards will be taxed as ordinary income at applicable marginal income tax rates (together with health insurance and social security insurance payments). Under the Capital Gains Tax Route, a company, or its Israeli employing affiliate, as the case may be, is generally not entitled to recognize a deduction for Israeli tax purposes on the gain recognized by the Stock Award holder upon sale of the shares underlying the Stock Awards (except for such amount that will be deemed ordinary income of the Stock Award holder as explained above, provided that such employing affiliate, if applicable, reimburses the expenses of the issuing corporation with respect to the grant of Stock Awards to Israeli Participants). Such Israeli employing affiliate will be required to withhold applicable tax (and social security and national health insurance charges, if applicable) at the source on behalf of such Stock Award holder.

 

Generally, pursuant to Section 3(i) of the Tax Ordinance, the taxable event of Participants that are not employees (as such term is defined under Section 102 of the Tax Ordinance), with respect to their Stock Award that is not registered for trade, shall take place on the date of exercise of the Stock Award into shares, and the income will be classified as ordinary income subject to marginal tax rates (if the holder is an individual) or corporate tax rates (if the holder is a corporation). The Israeli employing/engaging affiliate will be required to withhold applicable tax (and social security and national health insurance charges, if applicable) at the source on behalf of such Stock Award holder. Any additional gain is subject, at future sale of the underlying shares, to capital gains tax rate of 25% (or 30% if the holder holds 10% or more in any of the Company’s means of control), and 3% excess tax (if applicable).

 

The grant of a Stock Award that is granted pursuant to Section 3(i) of the Tax Ordinance, may be subject to Israeli value-added tax.

 

Consequences of Not Approving the Proposal

 

Our future success depends upon our ability to attract, retain and motivate highly-skilled employees, and if the Incentive Plan Proposal is not approved by our stockholders, the lack of a sufficient number of shares available under the 2019 Plan to provide future equity incentive opportunities could adversely impact our ability to achieve these goals.

 

Without stock options, RSUs or other forms of equity incentives, we would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to our future successes. These cash replacement alternatives could, among other things, reduce the cash available for investment in growth and development and cause a loss of motivation by employees to achieve superior performance over a longer period of time. Equity-based awards also directly align a portion of the compensation of our employees, non-employee directors and consultants with the economic interests of our stockholders. If this Proposal No. 2 is not approved by our stockholders, we believe our ability to attract and retain the talent we need to compete in our industry would be adversely impacted, and this could affect our long-term success.

 

Additionally, if our stockholders do not approve this proposal, we are required pursuant to the Merger Agreement to use our reasonable best efforts to adjourn this Annual Meeting one or more times to a date or dates no more than 30 days after the scheduled date for this Annual Meeting, and to obtain such approval at such time. If this Annual Meeting is not so adjourned, and/or if the approval of this proposal is not then obtained, we are required pursuant to the Merger Agreement to use our reasonable best efforts to obtain such approval as soon as practicable thereafter, and in any event to hold a special meeting of stockholders within four months after this Annual Meeting and to hold an annual meeting or special meeting of our stockholders, at which a vote of the stockholders to approve this proposal will be solicited and taken, at least once every four months until we obtain approval of this proposal.

 

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Interests of Certain Persons in the Proposal

 

When you consider our Board’s recommendation to vote in favor of this proposal, you should be aware that the members of the Board and our officers have certain interests that may present them with conflicts of interest in connection with such proposal. As discussed above, directors and executive officers of the Company are eligible to receive awards under the A&R Plan. The Board recognizes that approval of this proposal may benefit our directors, executive officers and their successors. The BiomX Board anticipates granting restricted stock units with an aggregate value of $156,943 to certain of its officers, as set forth in the table below, following stockholder approval of the Charter Amendment Proposal in recognition of their efforts in connection with the Acquisition.

 

Officer  Proposed Equity Bonus 
Avi Gabay   26,545 
Jonathan Solomon   51,048 
Dr. Merav Bassan   32,058 
Inbal Benjamini Elran   21,236 
Assaf Oron   26,055 
Total   156,943 

 

New Plan Benefits

 

Other than as discussed above under “Interests of Certain Persons in the Proposal, future benefits under the A&R Plan will be made at the discretion of the Board and are not currently determinable. The Company’s management has a financial interest in this proposal because the members of management are potentially eligible for awards under the A&R Plan.

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 2 requires a “FOR” vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question (provided that a lawful quorum of stockholders be there represented in person or by proxy) (subject to the separate tabulation of votes described in “Questions and Answers About the Annual Meeting—How many votes can be cast by all stockholders?”). Abstentions will have the effect of a vote “AGAINST” Proposal No. 2. Broker non-votes will have no effect on Proposal No. 2.

 

THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2019 OMNIBUS LONG-TERM INCENTIVE PLAN

 

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PROPOSAL NO. 3:

 

APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION
(SHARE INCREASE AMENDMENT)

 

Overview

 

Pursuant to the Merger Agreement, the Company has agreed to submit to its stockholders for their consideration the approval of an amendment to the certificate of incorporation of the Company to authorize sufficient shares of Common Stock for (a) the conversion of the Private Placement Preferred Stock and Acquisition Preferred Stock and the exercise of the Merger Warrants, the Private Placement Warrants and the Placement Agent Warrants and (b) the A&R Plan. Shares of Common Stock issuable upon the conversion of the Private Placement Preferred Stock, the Acquisition Preferred Stock, the Merger Warrants, the Private Placement Warrants and the Placement Agent Warrants and under the A&R Plan shall be referred to herein as the “Charter Amendment Shares.”

 

Background of the Proposal

 

Our Certificate of Incorporation currently authorizes the issuance of 120,000,000 shares of Common Stock and 1,000,000 shares of our Preferred Stock. On May 23, 2024, we had 69,806,440 shares of Common Stock and 256,887 shares of Preferred Stock issued and outstanding and 50,193,560 shares of Common Stock reserved for issuance. Accordingly, as of May 23, 2024, we had no unissued and unreserved shares of Common Stock authorized for issuance under the Certificate of Incorporation. In the event the Conversion Proposal is approved, up to an aggregate of 377,035,806 shares of Common Stock will be issuable upon the conversion of the Series X Preferred Stock and the exercise of the Warrants. In the event the Incentive Plan Proposal is approved, up to an aggregate of 78,000,000 shares of Common Stock will be issuable under the A&R Plan. Accordingly, as a condition of the Merger Agreement, we agreed to seek stockholder approval to amend our Certificate of Incorporation to authorize a sufficient number of shares of Common Stock to be issued in connection with the approval of the Conversion Proposal and the Incentive Plan Proposal.

 

The Board has unanimously approved, subject to stockholder approval, an amendment to our Certificate of Incorporation to effect an increase the number of authorized shares of Common Stock from 120,000,000 to 750,000,000 (the “Authorized Share Increase”). The Board has not approved an increase in the shares of Preferred Stock. The additional shares of Common Stock authorized by the Authorized Share Increase, if and when issued, would have the same rights and privileges as the shares of Common Stock previously authorized. A copy of the certificate of amendment for the Authorized Share Increase (the Share Increase Amendment) to the Certificate of Incorporation is attached hereto as Annex A.

 

The Board has recommended that the proposed Share Increase Amendment for the Authorized Share Increase be presented to our stockholders for approval.

 

Reasons for the Proposal

 

On the Record Date, 69,806,440 shares of our Common Stock were outstanding out of the 120,000,000 authorized in our Certificate of Incorporation. In addition to the reasons discussed above, the additional shares of Common Stock authorized by the Authorized Share Increase could be issued at the discretion of the Board from time to time for any proper corporate purpose, including, without limitation, the acquisition of other businesses, the raising of additional capital for use in our business, including in connection with the issuance and exercise of warrants, a split of or dividend on then outstanding shares or in connection with any employee stock plan or program. Except to the extent required by applicable law or regulation, any future issuances of authorized shares of Common Stock may be approved by the Board without further action by the stockholders. The availability of additional shares of Common Stock would be particularly important in the event that the Board needs to undertake any of the foregoing actions on an expedited basis in order to avoid the time and expense of seeking stockholder approval in connection with the contemplated issuance of Common Stock, where such approval might not otherwise be required.

 

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The Board believes that the benefits of providing it with the flexibility to issue shares without delay for any proper business purpose, including as an alternative to an unsolicited business combination opposed by the Board, outweigh the possible disadvantages of dilution and discouraging unsolicited business combination proposals and that it is prudent and in the best interests of stockholders to provide the advantage of greater flexibility which will result from the Authorized Share Increase.

 

Anti-Takeover and Dilutive Effects

 

The shares of Common Stock that are authorized but unissued provide the Board with flexibility to effect, among other transactions, public or private financings, including the issuance and exercise of warrants, acquisitions, stock dividends, stock splits and the granting of equity incentive awards. However, these authorized but unissued shares may also be used by the Board, consistent with and subject to its fiduciary duties, to deter future attempts to gain control of us or make such actions more expensive and less desirable. The Authorized Share Increase would continue to give our Board authority to issue additional shares from time to time without delay or further action by the stockholders except as may be required by applicable law or regulations. The Authorized Share Increase is not being recommended in response to any specific effort of which we are aware to obtain control of us, nor does our Board have any present intent to use the authorized but unissued Common Stock to impede a takeover attempt.

 

Except for our obligation to issue the Charter Amendment Shares, to issue Common Stock upon the exercise or settlement of outstanding equity awards, options or warrants, including the Warrants, and to issue up to 2,000,000 shares of Common Stock to our stockholders on a pro rata basis if certain stock price milestones are met prior to January 1, 2026, we have no specific plan, commitment, arrangement, understanding or agreement, either oral or written, regarding the issuance of Common Stock subsequent to the Authorized Share Increase at this time, and we have not allocated any specific portion of the authorized number of shares to any particular purpose.

 

Procedure for Effecting the Authorized Share Increase

 

Upon stockholder approval of the Authorized Share Increase, we will promptly file the Share Increase Amendment with the Secretary of State of the State of Delaware to amend our existing Certificate of Incorporation. The Authorized Share Increase will become effective on the date of filing the Share Increase Amendment.

 

The description of the Share Increase Amendment set forth above is qualified in its entirety by reference to the text of the Share Increase Amendment, which is attached as Annex A to this proxy statement. The text of the Share Increase Amendment is subject to modification to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as the Board deems necessary and advisable to effect the Authorized Share Increase.

 

Consequences of Not Approving the Proposal

 

If the Charter Amendment Proposal is not approved by our stockholders, our financing alternatives will be limited by the lack of any available unissued and unreserved authorized shares of Common Stock, and stockholder value may be harmed by this limitation. In addition, our future success depends upon our ability to attract, retain and motivate highly-skilled employees, and if the Charter Amendment Proposal is not approved by our stockholders, the lack of any available unissued and unreserved authorized shares of Common Stock to provide future equity incentive opportunities could adversely impact our ability to achieve these goals. In short, if our stockholders do not approve the Charter Amendment Proposal, we may not be able to access the capital markets, complete corporate collaborations, partnerships or other strategic transactions, attract, retain and motivate employees, and pursue other business opportunities integral to our growth and success.

 

If our stockholders do not approve the Charter Amendment Proposal, we will not be able to effect the conversion of the Series X Preferred Stock or the exercise of the Warrants. If the Series X Preferred Stock is not convertible within 150 days of the initial issuance of the Series X Preferred Stock as a result of a failure to implement the Conversion Proposal, then upon written request by the Requisite Holders, we will be required to pay to each holder of Series X Preferred Stock an amount in cash equal to the fair value of the shares of Series X Preferred Stock held by such holder, as described in the Certificate of Designation. We do not expect that we would have sufficient liquidity to settle a significant amount of the Series X Preferred Stock if required to do so.

 

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Additionally, if our stockholders do not approve this proposal, we are required pursuant to the Merger Agreement to use our reasonable best efforts to adjourn this Annual Meeting one or more times to a date or dates no more than 30 days after the scheduled date for this Annual Meeting, and to obtain such approval at such time. If this Annual Meeting is not so adjourned, and/or if the approval of this proposal is not then obtained, we are required pursuant to the Merger Agreement to use our reasonable best efforts to obtain such approval as soon as practicable thereafter, and in any event to hold a special meeting of stockholders within four months after this Annual Meeting and to hold an annual meeting or special meeting of our stockholders, at which a vote of the stockholders to approve this proposal will be solicited and taken, at least once every four months until we obtain approval of this proposal.

 

Approval of the Charter Amendment Proposal is a condition to the implementation of both the Conversion Proposal and the Incentive Plan Proposal. In the event the Charter Amendment Proposal is not approved, BiomX will not be able implement the actions proposed under the Conversion Proposal or the Incentive Plan Proposal.

 

Interests of Certain Persons in the Proposal

 

When you consider our Board’s recommendation to vote in favor of this proposal, you should be aware that certain of our directors and existing stockholders may have interests that may be different from, or in addition to, the interests of other of our stockholders. In particular, CFF, Deerfield, AMR Action Fund, L.P., Telmina and an affiliate of OrbiMed, each of whom beneficially owns more than 5% of our Common Stock, received Warrants and shares of Series X Preferred Stock in connection with the Merger and/or the Private Placement. Additionally, Jonathan Leff, one of our directors, is an affiliate of Deerfield. The approval of the Charter Amendment Proposal is a condition to the implementation of the Conversion Proposal. Accordingly, such parties will not be able to convert their shares of Series X Preferred Stock or exercise their Warrants if this proposal is not approved by our stockholders. None of these parties will, by virtue of the issuance of shares of Common Stock to which each is entitled upon conversion of their respective shares of Series X Preferred Stock and exercise of their Warrants, acquire rights to a majority of the voting power of the Company, based on the number of shares of Common Stock outstanding as of the Record Date and giving effect to the conversion of the Series X Preferred Stock and exercise of the Warrants held by such parties. Additionally, as discussed above, directors and executive officers of the Company are eligible to receive awards under the A&R Plan, and the approval of the Charter Amendment Proposal is a condition to the implementation of the Incentive Plan Proposal. The Board recognizes that approval of this proposal may benefit our directors, executive officers and their successors. Additionally, the BiomX Board anticipates granting restricted stock units with an aggregate value of $156,943 to certain of its officers, as set forth in the table below, following stockholder approval of the Charter Amendment Proposal in recognition of their efforts in connection with the Acquisition.

 

Officer  Proposed Equity Bonus 
Avi Gabay   26,545 
Jonathan Solomon   51,048 
Dr. Merav Bassan   32,058 
Inbal Benjamini Elran   21,236 
Assaf Oron   26,055 
Total   156,943 

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 3 requires that the votes cast “FOR” Proposal No. 3 exceed the votes cast “AGAINST” Proposal No. 3 (subject to the separate tabulation of votes described in “Questions and Answers About the Annual Meeting—How many votes can be cast by all stockholders?”). Abstentions will have no effect on Proposal No. 3. Broker non-votes will have no effect on Proposal No. 3.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM ONE HUNDRED AND TWENTY MILLION (120,000,000) SHARES, PAR VALUE $0.0001 PER SHARE, TO SEVEN HUNDRED FIFTY MILLION (750,000,000) SHARES OF COMMON STOCK, PAR VALUE $0.0001 PER SHARE.

 

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PROPOSAL NO. 4:

 

ELECTION OF DIRECTORS

 

Our Board currently consists of eight directors. Our Certificate of Incorporation provides for a classified Board consisting of three classes of directors. Currently, Class I consists of two directors, Class II consists of three directors and Class III consists of three directors. We are currently seeking to elect directors to serve in Class I, whose such terms expire in 2024.

 

Our Certificate of Incorporation provides that at the Annual Meeting, directors will be elected to succeed those directors whose terms expire. Such elected directors shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Accordingly, the Class I directors shall be elected by our stockholders to serve until the 2027 Annual Meeting of Stockholders, and until their successors have been duly elected and qualified or until their earlier death, resignation or removal. Each class is elected to serve a staggered three-year term. All nominees are currently serving on our Board and have consented to be named in this proxy statement and to serve if elected.

 

If any nominee is unable or does not qualify to serve, you or your proxy may vote for another nominee proposed by the Board. If, for any reason, these nominees prove unable or unwilling to stand for election or cease to qualify to serve as directors, the Board will nominate alternates or reduce the size of the Board to eliminate the vacancies. The Board has no reason to believe that any of the nominees would prove unable to serve if elected.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
EACH OF THE CLASS I DIRECTOR NOMINEES IN PROPOSAL NO. 4

 

Nominees   Age   Term
Expires
    Position(s) Held   Director
Since
 
Class I           2024              
Alan Moses     76           Director     2020  
Edward Williams     68           Director     2023  
Class II           2025              
Gregory Merril     58           Director     2024  
Jesse Goodman     72           Director     2024  
Susan Blum     52           Director     2024  
Class III           2026              
Russell Greig     71           Chairman     2019  
Jonathan Solomon     47           Chief Executive Officer and Director     2019  
Jonathan Leff     55           Director     2024  

 

Information about the Board

 

The principal occupation, business experience and education of each nominee for election as a director are set forth below. Unless otherwise indicated, principal occupations shown for each director have extended for five or more years.

 

Nominees for Election

 

Dr. Alan Moses has served as a director of the Company since October 2020. Dr. Moses has been a Board member of Chemomab Therapeutics, Ltd. (Nasdaq: CMMB) since March 2021. Dr. Moses served as the Global Chief Medical Officer of Novo Nordisk A/S from 2013 until his retirement in 2018. Prior to that he served in various roles at Novo Nordisk A/S since 2004, beginning as Associate Vice President of Medical Affairs in the United States. Throughout his career, Dr. Moses has specialized in developing novel therapeutics and diagnostics for diabetes mellitus. He co-founded and directed the Clinical Investigator Training Program at Beth Israel Deaconess-Harvard Medical School-MIT. From 1998 to 2004, Dr. Moses served as Senior Vice President and Chief Medical Officer of the Joslin Diabetes Center with specific responsibility for the Joslin Clinic.  He now serves as a member of the Board of Joslin Diabetes Center since December 2021. He also serves as Chairman of the Board of the nonprofit diaTribe Foundation and is a member of the Board of the Greater New England Chapter of the Juvenile Diabetes Research Foundation. Dr. Moses earned his MD from the Washington University School of Medicine in St. Louis, worked for three years at the National Institutes of Health, completed his clinical endocrine/diabetes training at Tufts New England Medical Center, and studied Health Care Strategy at Harvard Business School.

 

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We believe that Dr. Moses’s qualifications to sit on our Board include his extensive leadership experience in clinical development in the pharmaceutical industry.

 

Edward Williams has served as a director of the Company since October 2023. Mr. Williams has served as a member of the board of directors of BioAtla, Inc. (Nasdaq: BCAB), a publicly traded biotechnology company focusing on oncology, since December 2021. From January 2018 to December 2022, he served as a member of the board of directors of Catalyst Biosciences Inc. (Nasdaq: CBIO), a publicly traded biopharmaceutical company. From March 2020 to September 2022, Mr. Williams held the positions of Special Advisor to the Chief Executive Officer and Interim Chief Commercial Officer of Ascendis Pharma, Inc. (“Ascendis”). Prior to Ascendis, from 2006 to January 2017, Mr. Williams served as Senior Vice President and General Manager of Novo Nordisk, Inc. (“Novo”), a multinational pharmaceutical and biotech company. Prior to Novo, from 2003 to 2006, Mr. Williams served as Vice President of Sales at the Respiratory and Dermatology Business Unit at Novartis Pharmaceuticals Corporation. Mr. Williams started his career in 2000 at Pharmacia & Upjohn, where he served as Vice President of Sales until July 2001 and then as Regional Vice President of Sales of Northeast Region, from July 2001 until May 2003. Mr. Williams holds a B.S. in Biology and Chemistry from the Marshall University, Huntington, WV, and the Grambling State University, Grambling, LA.

 

We believe that Mr. Williams’s qualifications to sit on our Board include his extensive board and leadership experience in clinical development in the pharmaceutical industry.

 

Other Currently Serving Directors

 

Susan Blum has served as a director of the Company since April 2024. Ms. Blum is the Chief Financial Officer of Melinta Therapeutics, LLC. (“Melinta”). She previously served as Melinta’s Vice President of Finance & Chief Accounting Officer from 2018 to 2021 and as its Controller from 2016 to 2018. Melinta filed for Chapter 11 bankruptcy in December 2019 and successfully emerged from bankruptcy under a plan of reorganization in April 2020 as a private company. Prior to joining Melinta, Ms. Blum served as Corporate Controller at Textura Corporation from 2013 to 2016. Ms. Blum also served as Director of External Reporting and Technical Accounting at Orbitz Worldwide, Inc. (NYSE: OWW) from 2011 to 2013. Ms. Blum began her career in public accounting at Ernst & Young, where she spent nearly seven years, and then spent seven years at Facet Biotech Corporation and PDL BioPharma, Inc. (Nasdaq: PDLI) before joining Orbitz. Ms. Blum holds a B.S. in Business Commerce, concentration in Accounting, from Santa Clara University and is a Certified Public Accountant.

 

We believe that Ms. Blum’s qualifications to sit on our Board include her finance leadership and extensive management experience in the biotech industry.

 

Gregory Merril has served as a director of the Company since March 2024. Mr. Merril founded APT in October 2016, and served as its Chief Executive Officer until October 2023 and served on its board of directors until March 2024. Currently, he lends his expertise to various startups, serving in capacities ranging from advisor to executive director. Mr. Merril served as Chief Executive Officer of Yost Labs, a developer of inertial motion sensors used in fields such as physical rehabilitation and drone navigation, from August 2015 to December 2017. Between 2011 and August 2015, he founded and led Brain Sentry, a company dedicated to developing wearable sensors to detect head impacts risking traumatic brain injury in sports including football, hockey, and lacrosse. From October 2009 to February 2011, he served as chief operating officer of Decision Technologies, which supported the U.S. Navy and the Missile Defense Agency with technology acquisitions and deployments. Earlier, as the founding chief executive officer and chair of Interaction Laboratories from March 2002 to October 2009, Merril worked on patents and products that enhanced physical activity in video games and military simulations. Before this, he was the founding Chief Executive Officer of HT Medical Systems, a company focusing on surgical training simulators, which merged with Immersion Corp (NASDAQ: IMMR) in July 2000. Merril is credited as inventor with 22 issued patents and holds a B.A. in psychobiology from McDaniel College.

 

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We believe that Mr. Merril’s qualifications to sit on our Board include his experience in drug research and development in the pharmaceutical industry.

 

Dr. Jesse Goodman has served as a director of the Company since March 2024. Dr. Goodman has been the director of the Center on Medical Product Access, Safety and Stewardship, and professor of medicine and attending physician in infectious diseases, at Georgetown University since March 2014. Dr. Goodman also is an infectious disease physician at the Washington DC Veterans Affairs and Walter Reed Medical Centers. He serves on the board of directors of GlaxoSmithKline plc, a multinational pharmaceutical company, which he joined in 2016, and chaired that board’s science committee until early 2023, and he has served on the board of directors of Intellia Therapeutics, Inc., a publicly traded biotechnology company, since October 2018. Prior to the Merger Agreement, Dr. Goodman served on the board of directors of APT. he also has served as a president (2015 to 2020) and member (2015 to present) of the board of trustees of the United States Pharmacopeia. From 2009 until February 2014, Dr. Goodman served as the chief scientist of the FDA. Dr. Goodman also served as deputy commissioner for science and public health at the FDA from 2009 through 2012. Prior to that, Dr. Goodman was the director of the FDA’s Center for Biologics Evaluation and Research from 2003 to 2009 and a senior advisor to the FDA commissioner from 1998 through 2000. Prior to his government service, Dr. Goodman was professor of medicine and chief of infectious diseases at the University of Minnesota. Dr. Goodman has served on numerous advisory boards and committees for national and international health care organizations, including the CDC, the National Institute of Health, the World Health Organization and the Coalition on Epidemic Preparedness Innovations. Dr. Goodman received a B.S. in biology from Harvard College, a master’s in public health from the University of Minnesota and an M.D. from the Albert Einstein College of Medicine, and did his residency and fellowship training in medicine, infectious diseases and oncology at the Hospital of the University of Pennsylvania and at the University of California in Los Angeles, where he was also chief medical resident. He has been elected to the Institute of Medicine of the National Academy of Sciences.

 

We believe that Dr. Goodman’s qualifications to sit on our Board include his extensive board and leadership experience in clinical development in the pharmaceutical industry and regulation.

 

Dr. Russell Greig has served as a director and chairman of the Board of the Company since October 2019. Dr. Greig has more than 44 years of experience in the pharmaceutical industry, with knowledge and expertise in research and development, business development and commercial operations. He spent the majority of his career at GlaxoSmithKline, or GSK, where he held a number of positions including GSK’s President of Pharmaceuticals International from 2003 to 2008 and Senior Vice President Worldwide Business Development. From 2008 to 2010, Dr. Greig was also President of SR One, GSK’s corporate venture group. He is currently Chairman of Cardior (Germany), Nucleome Therapeutics (UK) and BiomX (NYSE). In addition, Dr. Greig previously served on the boards of Sanifit (Spain) (acquired by Vifor Pharma AG (SWX: VIFN), Tigenix N.V. (acquired by Takeda Pharmaceutical Company Limited), Ablynx N.V. (acquired by Sanofi, France) and Merus N.V. (Nasdaq: MRUS). He was previously Chairman of Syntaxin Ltd (UK) (acquired by Ipsen), Novagali Pharma S.A. (France) (acquired by Santen Pharmaceutical Co., Ltd.), and Isconova AB (Sweden) (acquired by Novavax, Inc. (Nasdaq: NVAX). He served as acting Chief Executive Officer at Genocea Biosciences (Nasdaq: GNCA) and Isconova AB for an interim period. He was also a member of the Scottish Scientific Advisory Committee, reporting to the First Minister of Scotland.

 

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We believe that Dr. Greig’s qualifications to sit on our Board include his extensive board and leadership experience in business development and in drug research and development in the pharmaceutical industry.

 

Jonathan Solomon has served as the Chief Executive Officer and as a director of the Company since October 2019. Mr. Solomon has served as Board member of BiomX Ltd., or BiomX Israel, from February 2016 and also as Chief Executive Officer from February 2017 to October 2019. From July 2007 to December 2015, Mr. Solomon was a co-founder, President, and Chief Executive Officer of ProClara Biosciences Inc. (formerly NeuroPhage Pharmaceuticals Inc.), a biotechnology company pioneering an approach to treating neurodegenerative diseases. Prior to joining ProClara, he served for ten years in a classified military unit of the Israeli Defense Forces. Mr. Solomon holds B.Sc. magna cum laude in Physics and Mathematics from the Hebrew University, an M.Sc. summa cum laude in Electrical Engineering from Tel Aviv University, and an MBA with honors from the Harvard Business School.

 

We believe that Mr. Solomon’s qualifications to sit on our Board include his extensive board and management experience in the biotech industry.

 

Jonathan Leff has served as a director of the Company since March 2024. Mr. Leff is a Partner at Deerfield Management Company, L.P. and Chairman of the Deerfield Institute. He joined Deerfield in 2013 and focuses on venture capital and structured investments in biotechnology and pharmaceuticals. Prior thereto, Mr. Leff served as Managing Director at Warburg Pincus LLC from 2000 to 2012, where he led the firm’s investment efforts in biotechnology and pharmaceuticals. Mr. Leff also previously served as a member of the Executive Committee of the Board of Directors of the National Venture Capital Association (“NVCA”) and led NVCA’s life sciences industry efforts as Chair of NVCA’s Medical Innovation and Competitiveness Coalition. He also served on the Emerging Companies Section Board of the Biotechnology Industry Organization. Mr. Leff is involved in the governance of several not-for-profit organizations, including serving as a member of the board of directors of the Spinal Muscular Atrophy Foundation and sitting on the Columbia University Medical Center Board of Advisors. He currently serves on the board of directors of Larimar Therapeutics, Inc., a publicly traded biotechnology company. Mr. Leff also previously served on the boards of several other publicly traded biotechnology and pharmaceutical companies, including ARS Pharmaceuticals, Inc., from 2022 to 2023, Proteon Therapeutics, Inc. from 2017 to 2019, AveXis, Inc. from 2014 to 2017 and Nivalis Therapeutics, Inc. from 2014 to 2016. He currently serves on the boards of several private biopharmaceutical companies and has previously served on the boards of other privately held biopharmaceutical companies. Mr. Leff received his A.B. from Harvard University, MBA from the Stanford University Graduate School of Business and M.S. in Biotechnology from Johns Hopkins University.

 

We believe that Mr. Leff’s qualifications to sit on our Board include his extensive board and leadership experience in capital markets and the pharmaceutical and biotech industries.

 

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THE BOARD AND ITS COMMITTEES

 

Board Composition and Leadership Structure

 

As of May 23, 2024, the Board is comprised of eight members. The Board has a flexible policy with respect to the combination or separation of the offices of Chairman of the Board and Chief Executive Officer. Currently, Dr. Russell Greig serves as our independent Chairman, and Mr. Jonathan Solomon serves as our Chief Executive Officer. The Board believes that by having separate roles, the Chief Executive Officer is able to focus on the day-to-day business and affairs of the Company and the Chairman is able to focus on key strategic issues, board leadership and communication. While the Board believes this leadership structure is currently in the best interests of the Company and its stockholders, the Board also recognizes that future circumstances could lead it to combine these roles.

 

Director Independence

 

NYSE American requires that a majority of the Board be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the Company or its subsidiaries or any other individual having a relationship that, as determined by the Board, would interfere with the exercise of his or her objective judgment and will meet the required standards for independence, as established by the applicable rules and regulations of NYSE American and the SEC.

 

Dr. Russell Greig, Ms. Susan Blum, Dr. Alan Moses, Mr. Edward Williams, Mr. Jonathan Leff, Dr. Jesse Goodman and Mr. Gregory Merril are our independent directors. Our independent directors have regularly scheduled meetings at which only independent directors are present.

 

At least annually, the Board evaluates all relationships between us and each director considering relevant facts and circumstances for the purposes of determining whether a material relationship exists that might signal a potential conflict of interest or otherwise interfere with such director’s ability to satisfy his or her responsibilities as an independent director. Based on this evaluation, our Board will make an annual determination of whether each director is independent within the meaning of NYSE American and the SEC independence standards.

 

Board Meetings and Attendance

 

The Board held 22 meetings, including actions by written consent, during the fiscal year ended December 31, 2023. Each of the incumbent directors attended at least 75% the meetings of the Board and the committees of the Board on which he or she served during the fiscal year ended December 31, 2023, including actions by written consent (in each case, which were held during the period for which he or she was a director and/or a member of the applicable committee). We have no policy regarding attendance of our directors at the Annual Meeting. None of our directors (who were directors at the time of our 2023 annual meeting of stockholders) attended our 2023 annual meeting of stockholders.

 

Board Committees

 

The Board has established three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which is composed solely of independent directors, and is described more fully below. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee operates pursuant to a written charter and each committee reviews and assesses the adequacy of its charter and submits its charter to the Board for approval. The charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are all available on our website, www.biomx.com. The inclusion of our website address here and elsewhere in this proxy statement does not include or incorporate by reference the information on our website into this proxy statement.

 

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Audit Committee

 

Our Audit Committee engages the Company’s independent accountants: reviews their independence and performance; reviews the Company’s accounting and financial reporting processes and the integrity of its financial statements; reviews the audits of the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s independent auditors; reviews the Company’s compliance with legal and reviews regulatory requirements; and reviews the performance of the Company’s internal audit function and internal control over financial reporting. In addition to the above and to the responsibilities detailed in its charter, our Audit Committee is also responsible for cybersecurity oversight, which includes reviewing our policies with respect to cybersecurity risks and relevant contingent liabilities and risks that may be material to us, including risks from third parties and business partners. The Audit Committee held six meetings, including actions by written consent, during 2023.

 

The members of the Audit Committee are Dr. Russell Greig, Ms. Susan Blum and Mr. Edward L. Williams, each of whom is an independent director under NYSE American’s listing standards and satisfies the additional independence requirements of Rule 10A-3 of the Exchange Act. Dr. Greig is the Chairperson of the Audit Committee. The Board has determined that Ms. Blum qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the SEC.

 

Compensation Committee

 

Our Compensation Committee reviews annually the Company’s corporate performance goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of such goals and objectives, determines and approves the Chief Executive Office’s compensation level based on this evaluation; makes recommendations to the Board regarding approval, disapproval, modification, or termination of existing or proposed employee benefit plans; makes recommendations to the Board with respect to the compensation of our executive officers, other than the Chief Executive Officer, and directors; and administers the Company’s incentive-compensation plans and equity-based plans, as well as the Company’s clawback policy. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. The Chief Executive Officer of the Company may not be present during voting or deliberations of the Compensation Committee with respect to his compensation. The Company’s executive officers do not play a role in suggesting their own salaries. The Compensation Committee held eight meetings, including actions by written consent, during 2023.

 

The members of the Compensation Committee are Dr. Alan Moses, Dr. Russell Greig and Mr. Jonathan Leff, each of whom is an independent director under NYSE American’s listing standards. Dr. Moses is the Chairperson of the Compensation Committee.

 

The Compensation Committee retained Aon Solutions UK Limited or Aon, an independent compensation consultant, to provide advice with respect to option exchange and repricing of options under the 2019 Plan and the 2015 Plan (as defined below), respectively. Aon’s primary responsibilities for the fiscal year ended December 31, 2023 included identifying the methodology of the repricing and option exchange and providing recommendations to the Compensation Committee, which the Compensation Committee considered among the factors it reviewed when determining such repricing and exchange of options.

 

Nominating and Corporate Governance Committee

 

Our Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board. Specifically, the Nominating and Corporate Governance Committee makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the director nomination process and screens and recommends candidates for election to the Board. On an annual basis, the Nominating and Corporate Governance Committee recommends for approval by the Board certain desired qualifications and characteristics for Board membership. Additionally, the Nominating and Corporate Governance Committee establishes and oversees the annual assessment of the performance of the Board as a whole and its individual members. The Nominating and Corporate Governance Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the Board. Although the Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity identifying nominees, the Nominating and Corporate Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific needs of the Board that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of Board members. The Nominating and Corporate Governance Committee does not distinguish among nominees recommended by stockholders and other persons. The Nominating and Corporate Governance Committee held two meetings, including actions by written consent, during 2023.

 

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The members of the Nominating and Corporate Governance Committee are Dr. Russell Greig, Dr. Jesse Goodman and Mr. Gregory Merril, each of whom is an independent director under NYSE American’s listing standards. Dr. Greig is the Chairperson of the Nominating and Corporate Governance Committee.

 

Non-Management Director Meetings

 

In addition to the meetings of the committees of the Board described above, in connection with the Board meetings, the independent directors met seven times in executive sessions during the fiscal year ended December 31, 2023. The Chairman of the Board presides at these executive sessions.

 

The Board’s Role in Risk Oversight

 

Although our management is primarily responsible for managing our risk exposure on a daily basis, the Board oversees the risk management processes. The Board, as a whole, determines the appropriate level of risk for our Company, assesses the specific risks that we face, and reviews management’s strategies for adequately mitigating and managing the identified risks. Although the Board administers this risk management oversight function, the Audit Committee supports the Board in discharging its oversight duties and addresses risks inherent in its area of oversight.

 

Code of Business Conduct and Ethics

 

We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The Code of Business Conduct and Ethics is available on our website at www.biomx.com. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code to any director or executive officer, we will promptly disclose the nature of the amendment or waiver on our website.

 

Insider Trading, Prohibition Against Pledging, and Anti-Hedging Policies

 

Our insider trading policy limits the timing and types of transactions in our securities by our directors, officers, including our Named Executive Officers, and other employees. These persons are prohibited from trading during blackout periods (during the period from and including the time the market closes on the twentieth (20th) calendar day of the third month of any calendar quarter until the time the market opens on the date of the release of quarterly financial information) and, in the case of our directors and officers, without the clearance of our Chief Legal Officer or such person serving in such capacity, or his/her designee. In addition, the policy provides that none of our directors, officers or other employees may engage in the following transactions:

 

  engaging in “short sales” and “selling against the box” (a variation of selling short) with respect to securities of the Company;

 

  trading in puts, calls, straddles and options for the Company’s securities;

 

  trading in securities of the Company on a short-term basis;

 

  holding Company securities in a margin account; and

 

  entering into hedging or similar transactions with respect to Company securities.

  

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Stockholder Communications with Our Board

 

The Board has adopted a formal process by which stockholders may communicate with the Board or any individual director by sending correspondence to c/o BiomX Inc., 22 Einstein Street, 4th Floor, Ness Ziona 7414003, Israel, Attn: Marina Wolfson.

 

Each communication must set forth:

 

  the name and address of the stockholder on whose behalf the communication is sent;

 

  the number of shares of Common Stock that are owned beneficially by such stockholder as of the date of the communication; and

 

  the reason for the communication, any request being made and the rationale supporting such request.

 

Each communication will be reviewed to determine whether it is appropriate for presentation to the Board or such individual director. Examples of inappropriate communications include advertisements, solicitations, hostile communications or communications that do not relate to appropriate company business.

 

Communications determined to be appropriate for presentation to the Board or such individual director will be submitted prior to the next meeting of the Board.

 

AUDIT COMMITTEE REPORT

 

The audit committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2023 with the management of the Company. The audit committee has discussed with our independent registered public accounting firm, Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited. (“PwC”), the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The audit committee has also received the written disclosures and the letter from PwC required by applicable requirements of the PCAOB regarding its communications with the audit committee concerning independence, and has had discussions with PwC regarding the firm’s independence. Based on the foregoing, the audit committee recommended to the Board that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC.

 

Audit Committee

 

Susan Blum, Chair

Dr. Russell Greig

Edward Williams

 

Vote Required; Recommendation of Board

 

Director nominees will be elected by a plurality of votes cast, which means that the director nominees receiving the highest number of votes will be elected. Only “FOR” and “WITHHOLD” votes will affect the outcome. Abstentions are not applicable to Proposal No. 4. Broker non-votes will have no effect on Proposal No. 4.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE

“FOR” THE ELECTION OF EACH OF THE CLASS I DIRECTOR NOMINEES.

 

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PROPOSAL NO. 5:

 

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking our stockholders to approve, on an advisory or nonbinding basis, the compensation of our Named Executive Officers as disclosed in this proxy statement. The vote on this matter is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the policies and practices described in this proxy statement.

 

Our Board and the Compensation Committee believe that we maintain a compensation program that is tied to performance, aligns with stockholder interests and merits stockholder support. Accordingly, we are asking our stockholders to approve the compensation of our Named Executive Officers as disclosed in this proxy statement by voting “FOR” the following resolution:

 

“NOW, THEREFORE, BE IT RESOLVED, that the stockholders hereby approve, on a nonbinding advisory basis, the compensation paid to the named executive officers of the Company, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and the narrative discussion related thereto.”

 

Although this vote is nonbinding, the Board and the Compensation Committee value the views of our stockholders and will review the results. If there are a significant number of negative votes, we will take steps to understand those concerns that influenced the vote, and evaluate whether any actions are necessary to address the concerns of stockholders.

 

If our stockholders approve “EVERY THREE YEARS” with respect to Proposal No. 6 (as recommended by our Board), the next stockholder advisory vote to approve executive compensation will occur at the 2027 annual meeting of stockholders.

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 5 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question. Abstentions will have the effect of a vote “AGAINST” Proposal No. 5. Broker non-votes will have no effect on Proposal No. 5.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE

“FOR” THE APPROVAL OF COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING THE COMPENSATION TABLES AND THE NARRATIVE DISCUSSION RELATED THERETO.

 

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PROPOSAL NO. 6:

 

ADVISORY VOTE ON THE FREQUENCY OF FUTURE

ADVISORY VOTES ON EXECUTIVE COMPENSATION

 

Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking our stockholders to recommend, on an advisory basis, whether the advisory stockholder vote on the compensation of our Named Executive Officers should occur every one, two or three years. While this vote is a nonbinding advisory vote, we value the opinions of stockholders and will consider the outcome of the vote when determining the frequency of future advisory votes on executive compensation.

 

Our Board has considered the frequency of the advisory vote and determined that holding an advisory vote on executive compensation every three years is the most appropriate policy for the Company, and recommends that stockholders vote for future say-on-pay advisory votes to occur every three years (a triennial vote). We believe that this frequency is appropriate for a number of reasons. Most significantly, our compensation programs are designed to reward long-term performance. Thus, we encourage our stockholders to evaluate our executive compensation programs over a multi-year horizon and to review the compensation of our Named Executive Officers over the past two years, as reported in the Summary Compensation Table of this proxy statement. In addition, we believe that a triennial advisory vote on executive compensation reflects the appropriate time frame to enable the Compensation Committee and the Board to evaluate the results of the most recent advisory vote on executive compensation, to discuss the implications of that vote, to develop and implement any adjustments to our executive compensation programs that may be appropriate in light of a past advisory vote on executive compensation, and for stockholders to see and evaluate any such adjustments to our executive compensation programs.

 

The Board is aware of and took into account views in support of conducting an annual advisory vote on executive compensation. We are aware that some stockholders believe that annual advisory votes will enhance or reinforce accountability. We have been in the past and will in the future continue to be open in our communications with our stockholders on a number of topics and various forums. Thus, we view the advisory vote on executive compensation as an additional, but not exclusive, means for our stockholders to communicate with us regarding their views on the Company’s executive compensation programs. In addition, because our executive compensation programs are designed to operate over the long-term and to enhance long-term performance, we are concerned that an annual advisory vote on executive compensation could lead to a near-term perspective inappropriately bearing on our executive compensation programs. Finally, although we currently believe that holding an advisory vote on executive compensation every three years will reflect the right balance of considerations in the normal course, we will periodically reassess that view and can provide for an advisory vote on executive compensation on a more frequent basis if changes in our compensation programs or other circumstances suggest that such a vote would be appropriate.

 

Vote Required; Recommendation of Board

 

The frequency of future advisory votes on executive compensation will be approved by a plurality vote of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the question, such that the option receiving the most votes will be considered the recommendation of the stockholders. Abstentions will have no effect on Proposal No. 6. Broker non-votes will have no effect on Proposal No. 6.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE

FOR THE OPTION TO HOLD FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY THREE YEARS.

 

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PROPOSAL NO. 7:

 

AUTHORIZATION OF OUR BOARD TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT ANY RATIO BETWEEN 1-FOR-5 AND 1-FOR-10

 

Our Board proposes that our stockholders approve a proposal to authorize our Board to effect a reverse stock split of all outstanding shares of our Common Stock, at any ratio between 1-for-5 and 1-for-10 at such time as our Board shall determine, in its sole discretion (the “Reverse Stock Split”), any time before [●]5, 2025, which is the one-year anniversary of the date of the Annual Meeting, in order to, among other reasons, assist the Company’s potential capital-raising efforts and cause the Common Stock to trade at a price high enough for investors with price minimums to invest. Further, although NYSE American does not require listed securities to trade at a minimum price per share, our Board believes that increasing the share price through the Reverse Stock Split could help maintain BiomX’s listing on NYSE American. If this proposal is approved, our Board would have the authority to effect one Reverse Stock Split. Our Board believes that approval of a proposal providing our Board with this generalized grant of authority with respect to setting the split ratio, rather than mere approval of a pre-defined reverse stock split, will give our Board the flexibility to set the ratio in accordance with current market conditions and therefore allow our Board to act in the best interests of the Company and our stockholders.

 

Identical proposals to this Proposal No. 7 were made by the Board at the Company’s Annual Meetings of Stockholders for 2022 and 2023 and were approved by our stockholders on August 24, 2022 and August 28, 2023. Accordingly, until August 28, 2024, the date on which its authority would lapse, the Board is authorized to effect a Reverse Stock Split. The Board has not exercised its authority to effect such Reverse Stock Split. However, the Board believes that there still exists a need to grant the Board the authority to potentially effect a Reverse Stock Split as proposed herein for an additional year.

 

In determining the ratio following the receipt of stockholder approval, our Board of Directors may consider, among other things, factors such as:

 

  the historical trading price and trading volume of our Common Stock;

 

  the then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock;

 

  the number of shares of our Common Stock then outstanding, and the number of shares of Common Stock issuable upon exercise of options and warrants then outstanding;

 

  the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and

 

  prevailing general market and economic conditions.

 

If our stockholders grant our Board the authority to effect a Reverse Stock Split, we would file a Certificate of Amendment to the Company’s Certificate of Incorporation, as amended (“Reverse Stock Split Amendment”), with the Delaware Secretary of State to effect the proposed Reverse Stock Split, in substantially the form attached to this proxy statement as Annex B, the text of which may be altered for any changes required by the Delaware Secretary of State and changes deemed necessary or advisable by our Board. Our Board has unanimously approved and declared advisable the proposed Reverse Stock Split Amendment. If the proposed Reverse Stock Split is implemented, then the number of issued and outstanding shares of our Common Stock would be reduced. However, the Board will retain the authority not to effect the Reverse Stock Split even if we receive stockholder approval. If the Reverse Stock Split Amendment is not filed with the Secretary of State of the State of Delaware prior to [●], 2025, the Reverse Stock Split will be abandoned, without any further effect. Thus, subject to stockholder approval, the Board, at its discretion, may cause the filing of the Reverse Stock Split Amendment to effect a Reverse Stock Split or abandon it and effect no reverse stock split if it determines that such action is not in the best interests of our Company and stockholders.

 

 

5To be one year from the date of the Annual Meeting.

 

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Purpose of Proposed Reverse Stock Split

 

We are submitting this proposal to our stockholders for approval to help attract institutional investors with minimum trading price requirements. We believe increasing the trading price of our Common Stock will also assist in our capital-raising efforts by making our Common Stock more attractive to a broader range of investors. Accordingly, we believe that the Reverse Stock Split is in our stockholders’ best interests.

  

In addition, an increase in the per share trading value of our Common Stock would be beneficial because it may:

 

  improve the perception of our Common Stock as an investment security;

 

  reset our stock price to more normalized trading levels in the face of potentially extended market dislocation;

 

  decrease price volatility for our Common Stock, as small price movements currently may cause relatively large percentage changes in our stock price;

 

  appeal to a broader range of investors to generate greater investor interest in us;

 

  reduce stockholder transaction costs for our investors because brokerage commissions, as a percentage of the total transaction, tend to be higher for lower-priced stocks;

 

  help us attract and retain employees because some potential employees are less likely to work for a company with a low stock price, regardless of our market capitalization; and

 

  provide us with the flexibility to consider and respond to future business opportunities and needs as they arise, including equity offerings and other issuances, mergers, business combinations or other strategic transactions, asset acquisitions, stock dividends, stock splits and other corporate purposes.

 

You should consider that, although our Board believes that a Reverse Stock Split will in fact increase the price of our Common Stock, in many cases, because of variables outside of a company’s control (such as market volatility, investor response to the news of a proposed Reverse Stock Split and the general economic environment), the market price of a company’s shares of Common Stock may in fact decline in value after a Reverse Stock Split. You should also keep in mind that the implementation of a Reverse Stock Split does not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership in our Company. However, should the overall value of our Common Stock decline after the proposed Reverse Stock Split, then the actual or intrinsic value of the shares of our Common Stock held by you will also proportionately decrease as a result of the overall decline in value.

 

Potential Effects of the Proposed Reverse Stock Split

 

If this proposal is approved and the Reverse Stock Split is implemented, the Reverse Stock Split will be realized simultaneously and in the same ratio for all of our issued and outstanding shares of Common Stock. The immediate effect of a Reverse Stock Split would be to reduce the number of shares of our Common Stock outstanding and to increase the trading price of our Common Stock.

 

However, we cannot predict the effect of any Reverse Stock Split upon the market price of our Common Stock over an extended period, and in many cases, the market value of a company’s Common Stock following a Reverse Stock Split declines. We cannot assure you that the trading price of our Common Stock after the Reverse Stock Split will rise in inverse proportion to the reduction in the number of shares of our Common Stock outstanding as a result of the Reverse Stock Split. Also, we cannot assure you that a Reverse Stock Split would lead to a sustained increase in the trading price of our Common Stock. The trading price of our Common Stock may change due to a variety of other factors, including our operating results and other factors related to our business and general market conditions.

 

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Examples of Potential Reverse Stock Split at Various Ratios. The table below provides examples of reverse stock splits at various ratios between 1-for-5 and 1-for-10, without giving effect to the treatment of fractional shares. The actual number of shares outstanding after giving effect to the Reverse Stock Split, if implemented, will depend on the actual ratio that is determined by our Board.

 

Shares outstanding at
May 23, 2024
  Reverse Stock
Split Ratio
  Shares
outstanding
after Reverse
Stock Split
  Reduction in
Shares
outstanding
 
69,806,440   1-for-5   13,961,288     80 %
69,806,440   1-for-7.5   9,307,526     87 %
69,806,440   1-for-10   6,980,644     90 %

 

The resulting decrease in the number of shares of our Common Stock outstanding could potentially adversely affect the liquidity of our Common Stock, especially in the case of larger block trades.

 

Effects on Ownership by Individual Stockholders. If we implement a Reverse Stock Split, the number of shares of our Common Stock held by each stockholder would be reduced by multiplying the number of shares held immediately before the Reverse Stock Split by the appropriate ratio and then rounding up to the nearest whole share. The Reverse Stock Split would not affect any stockholder’s percentage ownership interest in our Company or proportionate voting power, except to the extent that interests in fractional shares would change resulting from the adjustment for fractional shares.

 

Effect on Options and Warrants. In addition, we would adjust all outstanding shares underlying any options and warrants entitling the holders to purchase our Common Stock as a result of the Reverse Stock Split, as required by the terms of these securities. In particular, we would increase the exercise price in accordance with the terms of each instrument proportionately based on the ratio of the Reverse Stock Split. Also, we would reduce the number of shares reserved for issuance under our 2015 Plan, reduce the number of shares reserved for issuance under the Incentive Plan (or the A&R Plan if Proposal No. 2 is approved) and reduce the 2,000,000 shares reserved for issuance pursuant to the terms of our 2019 recapitalization in which we agreed to issue additional shares of Common Stock if certain stock price thresholds are met, in each case proportionately based on the ratio of the Reverse Stock Split. A Reverse Stock Split would not otherwise affect any of the rights currently accruing to holders of our Common Stock, or options or warrants exercisable for our Common Stock, except that the number of shares of Common Stock issuable upon exercise or vesting of outstanding equity awards and warrants will be rounded up to the nearest whole share and no cash payment will be made in respect of such rounding.

 

Other Effects on Outstanding Shares. If we implement a Reverse Stock Split, the rights pertaining to the outstanding shares of our Common Stock would be unchanged after the Reverse Stock Split. Each share of our Common Stock issued following the Reverse Stock Split would be fully paid and nonassessable.

 

The Reverse Stock Split would result in some stockholders owning “odd-lots” of less than 100 shares of our Common Stock. Brokerage commissions and other costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lots” of even multiples of 100 shares.

 

After the effective time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for shares of Common Stock with the new CUSIP number by following the procedures described below. However, until such exchange is made, the old stock certificates will automatically represent the new, post-split number of shares. After the Reverse Stock Split, we will continue to file periodic and current reports and comply with other requirements of the Exchange Act. We expect our Common Stock to continue to be listed on NYSE American under the symbol “PHGE”.

 

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Authorized Shares of Stock

 

The Reverse Stock Split would affect all issued and outstanding shares of Common Stock and outstanding rights to acquire shares of our Common Stock. However, upon the effectiveness of the Reverse Stock Split, the number of authorized shares of Common Stock that are not issued or outstanding would increase due to the reduction in the number of shares of Common Stock issued and outstanding as a result of the Reverse Stock Split.

 

As of May 23, 2024, we had (i) 120,000,000 shares of authorized Common Stock, par value $0.0001 per share, of which 69,806,440 shares of Common Stock were issued and outstanding, and (ii) 1,000,000 shares of authorized preferred stock, par value $0.0001 per share, of which 256,888 shares are designated as Series X Preferred Stock, 256,887 of which are issued and outstanding. If we issue additional shares, the ownership interest of holders of Common Stock will be diluted.

 

We will reserve for issuance any authorized but unissued shares of Common Stock that would be made available as a result of the proposed Reverse Stock Split.

 

We do not have any plans, arrangements or understandings for the remaining portion of the authorized but unissued shares that will be available following the Reverse Stock Split, with the exception of our current commitments, including our obligations to issue shares of Common Stock upon exercise of outstanding warrants or options.

 

Procedure for Effecting the Proposed Stock Split and Exchange of Stock Certificates

 

If stockholders approve the proposal, we will file with the Delaware Secretary of State the Reverse Stock Split Amendment to our Certificate of Incorporation, as amended. The Reverse Stock Split will become effective at the time and on the date of filing of, or at such later time as is specified in, the Reverse Stock Split Amendment, which we refer to as the “effective time” and “effective date,” respectively. Beginning at the effective time, each certificate representing shares of Common Stock will be deemed for all corporate purposes to evidence ownership of the number of whole shares into which the shares previously represented by the certificate were combined pursuant to the Reverse Stock Split.

 

Upon a Reverse Stock Split, we intend to treat stockholders holding our Common Stock in “street name,” through a bank, broker or other nominee, in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. If you hold your shares with a bank, broker or other nominee and if you have any questions in this regard, we encourage you to contact your nominee.

 

Following any Reverse Stock Split, stockholders holding physical certificates must exchange those certificates for new certificates.

 

Our transfer agent will advise registered stockholders of the procedures to be followed to exchange certificates in a letter of transmittal to be sent to stockholders. No new certificates will be issued to a stockholder until the stockholder has surrendered the stockholder’s outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the transfer agent. Any old shares submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will automatically be exchanged for new shares. Stockholders should not destroy any stock certificate(s) and should not submit any certificate(s) until requested to do so.

 

Fractional Shares

 

No fractional shares will be issued. Any fractional share resulting from the Reverse Stock Split will be rounded up to the next whole share.

 

No Appraisal Rights

 

No appraisal rights are available under the Delaware General Corporation Law or under our Certificate of Incorporation or bylaws with respect to the Reverse Stock Split. There may exist other rights or actions under state law for stockholders who are aggrieved by reverse stock splits generally.

 

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Accounting Consequences

 

The par value of our Common Stock would remain unchanged at $0.0001 per share after the Reverse Stock Split. Also, our capital account would remain unchanged, and we do not anticipate that any other material accounting consequences would arise as a result of the Reverse Stock Split.

 

No Going Private Transaction

 

Notwithstanding the decrease in the number of outstanding shares following the Reverse Stock Split, our Board does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 under the Exchange Act.

 

Potential Anti-Takeover Effect

 

This proposal, if adopted and implemented, will result in a relative increase in the number of authorized but unissued shares of our Common Stock vis-à-vis the outstanding shares of our Common Stock and could, under certain circumstances, have an anti-takeover effect, although that is not the purpose or intent of our Board. A relative increase in our authorized shares could have other effects on our stockholders, depending upon the exact nature and circumstances of any actual issuances of authorized shares. A relative increase in our authorized shares could potentially deter takeovers, including takeovers that our Board has determined are not in the best interest of our stockholders, in that additional shares could be issued (within the limits imposed by applicable law and NYSE American) in one or more transactions that could make a change in control or takeover more difficult. The Reverse Stock Split could make the accomplishment of a given transaction more difficult even if it is favorable to the interests of stockholders. For example, we could issue additional shares of Common Stock without further stockholder approval so as to dilute the stock ownership or voting rights of persons seeking to obtain control without our agreement. Similarly, the issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. The Reverse Stock Split therefore may have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts, the Reverse Stock Split may limit the opportunity for our stockholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal.

 

We have not proposed the Reverse Split with the intention of using the additional authorized shares for anti-takeover purposes, but we would be able to use the additional shares to oppose a hostile takeover attempt or delay or prevent changes in our control or our management. Although the Reverse Stock Split has been prompted by business and financial considerations and not by the threat of any known or threatened hostile takeover attempt, stockholders should be aware that the effect of the Reverse Stock Split could facilitate future attempts by us to oppose changes in our control and perpetuate our management, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices. We cannot provide assurances that any such transactions will be consummated on favorable terms or at all, that they will enhance stockholder value, or that they will not adversely affect our business or the trading price of our Common Stock.

 

Material U.S. Federal Income Tax Consequences of the Reverse Stock Split

 

The following summary of the material U.S. federal income tax consequences of the Reverse Stock Split is based on existing law and is limited to U.S. holders of our shares. For purposes of this discussion, a U.S. holder is any beneficial owner of our shares that is:

 

  an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal tax laws;

 

  an entity treated as a corporation for federal tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

  an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

  a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;

 

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whose status as a U.S. holder is not overridden by an applicable tax treaty.

  

This summary is based on the Code, the Treasury regulations promulgated thereunder, and administrative rulings and court decisions in effect as of the date of this document, all of which may be subject to change, possibly with retroactive effect. This summary only addresses U.S. holders who hold their shares as capital assets within the meaning of the Code and does not address all aspects of U.S. federal income taxation that may be relevant to holders subject to special tax treatment, such as banks, insurance companies, regulated investment companies, personal holding companies, partnerships, broker-dealers and tax-exempt entities. persons holding shares as part of a straddle, hedge, conversion transaction or other integrated investment, U.S. holders subject to the alternative minimum tax or the unearned income Medicare tax and U.S. holders whose functional currency is not the U.S. dollar. In addition, this summary does not consider the effects of any applicable state, local, foreign or other tax laws.

  

We have not sought and will not seek any ruling from the IRS, or an opinion from counsel with respect to the U.S. federal income tax consequences discussed below. There can be no assurance that the tax consequences discussed below would be accepted by the IRS or a court. The tax treatment of the Reverse Stock Split to U.S. holders may vary depending upon a holder’s particular facts and circumstances.

 

We urge holders to consult with their own tax advisors as to any U.S. federal, state, local or foreign tax consequences applicable to them that could result from the Reverse Stock Split.

 

In general, the receipt of Common Stock in the Reverse Stock Split should not result in any taxable gain or loss to a holder for U.S. federal income tax purposes. The aggregate tax basis of the Common Stock received by a holder as a result of the Reverse Stock Split will be equal to the aggregate basis of the existing Common Stock exchanged for such stock. A holder’s holding period for the Common Stock received in the Reverse Stock Split will include the holding period of the Common Stock exchanged therefor.

 

Board Discretion to Implement the Reverse Stock Split

 

If the proposed Reverse Stock Split is approved at the Meeting, our Board, in its sole discretion, may determine to implement the Reverse Stock Split at any time as the Board shall determine before [●]6, 2025. Notwithstanding the approval of the Reverse Stock Split amendment at the Meeting, our Board, in its sole discretion, may determine not to implement the Reverse Stock Split.

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 7 requires that the votes cast “FOR” Proposal No. 7 exceed the votes cast “AGAINST” Proposal No. 7. Abstentions will have no effect on Proposal No. 7. Proposal No. 7 is a “routine” matter and therefore brokers will have discretionary authority to vote on Proposal No. 7 absent instructions from the beneficial owners of the shares.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE AUTHORIZATION OF OUR BOARD TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT ONE REVERSE STOCK SPLIT OF OUR OUTSTANDING COMMON STOCK AT ANY RATIO BETWEEN 1-FOR-5 AND 1-FOR-10 AT SUCH TIME AS OUR BOARD SHALL DETERMINE, IN ITS SOLE DISCRETION, ANY TIME BEFORE [●]7, 2025

 

 

6To be one year from the date of the Annual Meeting.
7To be one year from the date of the Annual Meeting.

 

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PROPOSAL NO. 8:

 

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2024

 

Our Audit Committee has selected Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, as our independent registered public accounting firm (the “Independent Auditors”), for the current fiscal year, subject to ratification by our stockholders at the Meeting. We do not expect to have a representative of the Independent Auditors attend the Meeting.

 

Our organizational documents do not require that the stockholders ratify the re-election of the Independent Auditors as our independent registered public accounting firm. We request such ratification as a matter of good corporate practice. If the stockholders fail to ratify the re-election, the Audit Committee will reconsider whether or not to retain the Independent Auditors. Even if the re-election is ratified, the Audit Committee in its discretion may decide to appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of us and our stockholders.

 

Pre-Approval Policies and Procedures

 

The Audit Committee approves all audit and pre-approves all non-audit services provided by our independent registered public accounting firm before it is engaged by us to render audit and non-audit services. These services may include audit-related services, tax services and other services.

 

The pre-approval requirement set forth above does not apply with respect to non-audit services if:

 

 

all such services do not, in the aggregate, amount to more than 5% of the total fees paid by us to our independent registered public accounting firm during the fiscal year in which the services are provided;

  

  such services were not recognized as non-audit services at the time of the relevant engagement; and

 

 

such services are promptly brought to the attention of and approved by the Audit Committee (or its delegate) prior to the completion of the annual audit.

 

Independent Registered Public Accounting Firm Fees

 

The following is a summary and description of fees billed by us to Kesselman & Kesselman, Certified Public Accountants (Isr.) for the fiscal years ended December 31, 2023 and December 31, 2022.

 

   Fiscal year
ended December 31,
2023
   Fiscal year
ended December 31,
2022
 
Audit fees(1)  $126,000   $126,000 
Audit-related fees(2)  $97,000   $24,969 
Tax fees(3)  $3,393   $- 
All other fees  $-   $- 
Total fees  $226,393   $150,969 

 

(1) Audit Fees include fees for professional services rendered for the quarterly reviews of the interim consolidated financial statements and the annual audit of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

(2) Audit-Related Fees include fees for services that were reasonably related to the performance of the audit of the annual consolidated financial statements for the fiscal year, other than Audit Fees, such as for services in connection with the Sale Agreement, our February 2023 PIPE and a registration statement filed for the resale of certain shares of Common Stock by selling stockholders.

 

(3) Tax Fees include fees for tax compliance and tax advice.

 

Vote Required; Recommendation of Board

 

Stockholder approval of this Proposal No. 8 requires the affirmative vote of the holders of a majority of the stock of the Company which is represented in person or by proxy at the Annual Meeting and entitled to vote on the question. Abstentions will have the effect of a vote “AGAINST” Proposal No. 8. Proposal No. 8 is a “routine” matter and therefore brokers will have discretionary authority to vote on Proposal No. 8 absent instructions from the beneficial owners of the shares.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE SELECTION OF KESSELMAN & KESSELMAN, CERTIFIED PUBLIC ACCOUNTANTS (ISR.), A MEMBER FIRM OF PRICEWATERHOUSECOOPERS INTERNATIONAL LIMITED, AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2024

 

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PROPOSAL NO. 9:

APPROVAL OF ADJOURNMENT OF THE ANNUAL MEETING

 

General

 

If we fail to receive a sufficient number of votes to approve Proposals No. 1 through 8, we may propose to adjourn or postpone the Annual Meeting. We currently do not intend to propose adjournment or postponement at the Annual Meeting if there are sufficient votes to approve Proposals No. 1 through 8.

 

Vote Required; Recommendation of Board

 

The affirmative vote of a majority of the stockholders present in person or represented by proxy at the meeting and entitled to vote, though less than a quorum, is required for approval of Proposal No. 9 (for the purpose of soliciting additional proxies to approve Proposals No. 1 through 8). Abstentions will have the effect of a vote “AGAINST” Proposal No. 9. Broker non-votes will have no effect on Proposal No. 9.

 

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR”

PROPOSAL NO. 9 TO ADJOURN THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT

ADDITIONAL PROXIES.

 

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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

 

Executive Officer Compensation

 

Summary Compensation Table

 

The following table presents information regarding the total compensation awarded to, earned by, and paid to our Named Executive Officers for services rendered to us in all capacities for the years indicated.

 

Name and Principal Position   Year     Salary
($)(1)
    Bonus
($)(1)
    Option Awards(2)
 
($)(2)
    All Other
Compensation
($)(1)(3)
    Total
($)(1)
 
Jonathan Solomon     2023       412,135       201,234       404,174       100,998       1,118,541  
Chief Executive Officer     2022       424,581       -       512,974       103,987       1,041,542  
Marina Wolfson     2023       214,727       76,209       90,742       46,578       428,256  
Chief Financial Officer     2022       231,414       -       116,827       48,002       396,243  
Dr. Merav Bassan     2023       264,105       101,145       153,218       72,463       590,931  
Chief Development Officer     2022       280,213       -       206,332       76,373       562,948  

 

(1) All payments were originally made in NIS and were translated into USD using the annual average USD/NIS exchange rate for each fiscal year.

 

(2) Amounts in this column represent the grant date fair value of the option awards as computed in accordance with ASC 718, not including any estimates of forfeitures related to service-based vesting conditions. See note 12.B. to our Consolidated Financial Statements for the year ended December 31, 2023 for a discussion of assumptions made by the Company in determining the grant date fair value of our option awards for the fiscal years ended December 31, 2023 and 2022. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the Named Executive Officers upon the vesting of the stock options, the exercise of the stock options, or the sale of the Common Stock underlying such stock options.

 

(3) Amounts in this column represent additional payments for welfare benefits, disability insurance and other customary or mandatory social benefits to employees in Israel.

 

Narrative Disclosure to the Summary Compensation Table

 

Option Awards

 

Prior to the Business Combination, option awards were granted to our Named Executive Officers under our 2015 Employee Stock Options Plan for Key Employees (the “2015 Plan”). Option awards granted to our Named Executive Officers after the closing of the Business Combination are granted pursuant to the 2019 Plan. In each case, one fourth of the options vest and become exercisable on the first anniversary of the grant date, and the remainder of the options vest and become exercisable in 12 equal quarterly instalments, subject to the Named Executive Officer’s continued employment; provided that the options will vest and become exercisable in the event the Named Executive Officer is terminated within the twelve (12) month period following the occurrence of a Change in Control (as defined in the applicable grant agreement) as a result of an involuntary termination without Cause (as defined in the applicable grant agreement) or a voluntary termination with Good Reason (as defined in the applicable grant agreement). Subject to the terms of any employment agreement, the unexercised portion of these awards is generally forfeited by a participant on the date his or her employment is terminated other than due to death or disability. In the event of death or disability, the options become fully exercisable and remain exercisable for a period specified in the applicable award agreement.

 

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Bonus Awards

 

We have an annual corporate and individual goal-setting and review process for our Named Executive Officers that is the basis for the determination of potential annual bonuses. Each of our Named Executive Officers is eligible for annual performance-based bonuses of up to a specific percentage of their salary, ranging from 35% to 50% subject to approval by the Board or the Compensation Committee. The performance-based bonus is tied to a set of specified corporate and/or individual goals and objectives reviewed and approved by the Board, such as clinical and development milestones, meeting budget and strategic goals, and we conduct an annual performance review to determine the attainment of such goals and objectives. Our management may propose bonus awards to the Board primarily based on such review process. The Compensation Committee makes the final determination of the achievement of both the specified corporate and strategic objectives and the eligibility requirements for and the amount of such bonus awards and recommends a bonus award payout to the Board for approval. For fiscal year 2023, bonuses were accrued based on advancing or development plans, the satisfaction of certain product candidate development milestones and strategic objectives.

 

Employment Agreements

 

Below are descriptions of our employment agreements with our Named Executive Officers.

 

Jonathan Solomon

 

Pursuant to an employment agreement dated February 1, 2016, by and between BiomX Israel and Mr. Solomon, as the Chief Executive Officer of BiomX Israel, Mr. Solomon is entitled to a base salary of NIS 64,000, or approximately $19,500, per month, and an additional gross payment of NIS 16,000, or approximately $4,900, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Mr. Solomon’s Salary). Starting April 1, 2023, Mr. Solomon is entitled to a base salary of NIS 100,000, or approximately $27,778, per month, and overtime payment of NIS 25,000 or approximately $6,944, per month.

 

BiomX Israel also makes customary contributions on Mr. Solomon’s behalf to a pension fund or a managers insurance company, at Mr. Solomon’s election, in an amount equal to 8.33% of his Salary, allocated to a fund for severance pay, and an additional amount equal to 5.00% of the Salary in case Mr. Solomon is insured through a managers insurance policy, or 6.50% of Mr. Solomon’s Salary in case Mr. Solomon is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Mr. Solomon chooses to allocate his pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure him under a work disability insurance policy at the rate required to insure 100% of Mr. Solomon’s Salary and for this purpose will contribute an amount of up to 2.50% of Mr. Solomon’s Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are intended to be in lieu of statutory severance pay that Mr. Solomon would otherwise be entitled to receive from BiomX Israel in accordance with Severance Pay Law 5723-1963, or the Severance Pay Law. BiomX Israel also contributes 7.50% of Mr. Solomon’s monthly salary to a recognized educational fund. BiomX Israel also reimburses Mr. Solomon for automobile maintenance and transportation expenses of NIS 2,000, or $556 per month. Mr. Solomon is also entitled to non-statutory 12 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Mr. Solomon waives all claims and continues to comply with the other terms of his employment agreement.

 

Marina Wolfson

 

Pursuant to an employment agreement dated December 1, 2019, by and between BiomX Israel and Ms. Wolfson, she serves as our Chief Financial Officer. Ms. Wolfson is entitled to a base salary of NIS 39,600, or approximately $11,400, per month, and an additional gross payment of NIS 7,400, or approximately $2,130, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Ms. Wolfson’s Salary. Starting May 1, 2020, Ms. Wolfson’s base salary was NIS 40,000 or approximately $11,458, per month, and an additional gross payment of NIS 10,000 or approximately $2,865, per month. Starting April 1, 2023, Ms. Wolfson’s base salary is NIS 54,080 or approximately $15,022, per month, and an additional gross payment of NIS 13,520 or approximately $3,756, per month.

 

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BiomX Israel also makes customary contributions on Ms. Wolfson’s behalf to a pension fund or a managers insurance company, at Ms. Wolfson’s election, in an amount equal to 8.33% of Ms. Wolfson’s Salary, allocated to a fund for severance pay, and an additional amount equal to 5.00% of Ms. Wolfson’s Salary in case Ms. Wolfson is insured through a managers insurance policy, or 6.50% of Ms. Wolfson’s Salary in case Ms. Wolfson is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Ms. Wolfson chooses to allocate her pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure her under a work disability insurance policy at the rate required to insure 75% of Ms. Wolfson’s Salary and for this purpose will contribute an amount of up to 2.50% of Ms. Wolfson’s Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are in lieu of statutory severance pay that Ms. Wolfson would otherwise be entitled to receive from BiomX Israel in accordance with the Severance Law. BiomX Israel also contributes 7.50% of Ms. Wolfson’s monthly Salary (not to exceed NIS 15,712, or approximately $4,364) to a recognized educational fund. The Company reimburses Ms. Wolfson for automobile maintenance and transportation expenses of NIS 2,500, or approximately $694, per month. Ms. Wolfson is also entitled to non-statutory 9 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Ms. Wolfson waives all claims and continues to comply with the other terms of his employment agreement.

 

Dr. Merav Bassan

 

Pursuant to an employment agreement dated August 26, 2019, by and between BiomX Israel and Dr. Bassan, as the Chief Development Officer of BiomX Israel, Dr. Bassan is entitled to a base salary of NIS 56,000, or approximately $17,230, per month, and an additional gross payment of NIS 14,000, or approximately $4,307, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Dr. Bassan’s Salary. Starting April 1, 2023, Dr. Bassan is entitled to a base salary of NIS 62,800, or approximately $17,444, per month, and an additional gross payment of NIS 15,700 or approximately $4,361, per month.

 

BiomX Israel also makes customary contributions on Dr. Bassan’s behalf to a pension fund or a managers insurance company, at Dr. Bassan’s election, in an amount equal to 8.33% of Dr. Bassan’s Salary, allocated to a fund for severance pay, and an additional amount equal to 7.30% of Dr. Bassan’s Salary in case Dr. Bassan is insured through a managers insurance policy, or 6.50% of Dr. Bassan’s Salary in case Dr. Bassan is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Dr. Bassan chooses to allocate her pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure her under a work disability insurance policy at the rate required to insure 75% of Dr. Bassan’s Salary and for this purpose will contribute an amount of up to 2.50% of the Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are in lieu of statutory severance pay that Dr. Bassan would otherwise be entitled to receive from BiomX Israel in accordance with the Severance Law. BiomX Israel also contributes 7.50% of Dr. Bassan’s monthly Salary to a recognized educational fund. The Company reimburses Dr. Bassan for automobile maintenance and transportation expenses of NIS 2,500, or approximately $694, per month. Dr. Bassan is also entitled to non-statutory 9 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Dr. Bassan waives all claims and continues to comply with the other terms of her employment agreement.

 

45

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table provides information regarding equity awards held by the Named Executive Officers that were outstanding as of December 31, 2023:

 

Option Awards
Name  Grant Date  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1) (#)
   Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(1) (#)
   Option
Exercise
Price ($)
   Option
Expiration
Date
Jonathan Solomon  11/13/2016   167,434    -    0.54   01/07/2027
   03/26/2017 (2)   182,133    -    0.275   03/26/2027
   05/22/2018 (2)   201,718    -    0.275   05/21/2028
   03/29/2019 (2)   284,701    -    0.275   03/29/2029
   03/25/2020 (3)   35,527    2,368    0.275   03/25/2030
   03/30/2021 (3)   27,500    12,500    0.275   03/30/2031
   03/29/2022 (3)   64,063    82,366    0.275   03/29/2032
   08/22/2022   31,250    68,750    0.66   08/22/2032
   03/01/2023        410,000    0.4   03/01/2033
                      
Dr. Merav Bassan  10/10/2019 (2)   189,997    -    0.275   10/10/2029
   03/30/2021 (3)   8,593    3,907    0.275   03/30/2031
   03/29/2022 (3)   31,250    40,179    0.275   03/29/2032
   08/22/2022   23,438    51,562    0.66   08/22/2032
   03/01/2023   -    100,000    0.4   03/01/2033
                      
Marina Wolfson  03/25/2020 (3)   8,882    592    0.275   03/25/230
   03/30/2021 (3)   6,017    2,733    0.275   03/30/2031
   03/29/2022 (3)   15,625    20,090    0.275   03/29/2032
   08/22/2022   23,438    51,562    0.66   08/22/2032
   03/01/2023   -    100,000    0.4   03/01/2033
   29/10/2023   -    59,800    0.275   10/29/2033

 

(1)

Unless otherwise indicated, options vest and become exercisable as follows: 25% of the options on the first anniversary of the “vesting commencement date” (as defined in the applicable notice of option grant) and, thereafter, in 12 equal quarterly installments of 6.25% each.

   
(2)

On October 29, 2023, the Board approved a reduction in the exercise price of each outstanding option to purchase shares of the Company’s Common Stock currently held by employees of the Company with an original exercise price above $0.69 per share granted under the 2015 Plan to $0.275 per share. Other than the exercise price, no other terms of grant of the repriced options were changed; however, the options may not be exercised until one year after the repricing date.

   
(3)

On November 9, 2023, the Company filed with the SEC a Tender Offer Statement defining the terms and conditions of a one-time voluntary stock option exchange of certain eligible options for its employees, or the Option Exchange granted under the 2019 Plan. The Company offered to exchange certain out-of-the-money stock options for new stock options at an exchange ratio of between 1.4 and 3.8 surrendered options for one new option exercisable for shares of common stock with a lower exercise price. On December 11, 2023, the completion date of the Option Exchange, the stock options were tendered by eligible employees, and the Company granted new options at an exercise price of $0.275.

 

46

 

 

Director Compensation

 

We maintain a non-employee director compensation policy, pursuant to which each non-employee director receives an annual retainer of $35,000. In addition, our non-employee directors receive the following cash compensation for board services, as applicable:

 

the chairman of the Board receives an annual retainer of $100,000 (inclusive of annual committee chairmanship and membership);

 

each member of our Audit, Compensation and Nominating and Corporate Governance Committees, other than the chairperson, receives an additional annual retainer of $7,500, $5,000 and $4,000, respectively; and

 

each chairperson of our Audit, Compensation and Nominating and Corporate Governance Committees receives an additional annual retainer of $15,000, $10,000 and $8,000, respectively.

 

We pay all amounts in quarterly installments. We also reimburse each of our directors for their reasonable travel, lodging and other out-of-pocket expenses incurred relating to their attendance at Board and committee meetings.

 

Each non-employee director also receives an annual award of options to purchase our Common Stock. One-fourth of each Annual Option Award vests on the first anniversary of the date of grant, and the remainder of the annual option award vests in 12 equal quarterly installments, subject to such director’s continued service on the Board. The Company’s policy is to grant options based, among other things, on the recommendations of a compensation consultant. In 2023, the Company granted 41,000 options to each non-employee director and 82,000 to the Chairman of the Board.

 

The following table sets forth information concerning compensation accrued or paid to our independent, non-employee directors during the year ended December 31, 2023 for their service on our Board. Mr. Jonathan Solomon, a director who is also our employee, received no additional compensation for his service as a director and is not set forth in the table below:

 

Name  Fees earned or
paid in cash
($)
   Option
Awards(2)(3)
   All other
compensation
   Total
($)
 
Dr. Russell Greig   100,500    61,077         -    161,577 
Michael Dambach(1)   27,205    2,449    -    29,654 
Jason Marks(1)   25,605    2,449    -    28,054 
Dr. Alan Moses   47,560    33,873    -    81,433 
Edward Williams   7,704    1,085    -    8,789 
Lynne Sullivan(1)   54,000    30,538    -    84,538 
    262,574    131,471    -    394,045 

 

(1) Effective as of March 15, 2024, the director resigned and no longer serves on the Board.
   
(2)

Amounts in this column represent the grant date fair value of the option awards as computed in accordance with ASC 718, not including any estimates of forfeitures related to service-based vesting conditions. See note 12.B. of the notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of assumptions made by the Company in determining the grant date fair value of our option awards for the fiscal years ended December 31, 2022 and 2023. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the non-employee directors upon the vesting of the stock options, the exercise of the stock options, or the sale of the Common Stock underlying such stock options.

 

47

 

 

(3)

As of December 31, 2023, we had outstanding grants to our non-executive directors aggregating 493,800 options of which 134,675 were exercisable or vested, as the case may be, as follows:

 

Name  Total of
options
granted
   Total of options
exercisable and vested
 
Russell Greig   185,400    68,839 
Michael Dambach   41,000    - 
Jason Marks   41,000    - 
Dr. Alan Moses   92,700    31,418 
Edward Williams   41,000    - 
Lynne Sullivan   92,700    34,418 
Total   493,800    134,675 

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

We have two equity incentive plans, the 2015 Plan and the 2019 Plan. Although no shares of our Common Stock are available for future issuance under the 2015 Plan, the 2015 Plan will continue to govern outstanding awards granted thereunder. As of December 31, 2023, options to purchase 2,055,840 shares of our Common Stock remained outstanding under the 2015 Plan.

 

The 2019 Plan was adopted by the Board and approved by our stockholders in connection with the Business Combination. As of December 31, 2023, there were 1,011,104 shares of our Common Stock available for issuance under the 2019 Plan. The aggregate number of shares of our Common Stock available for issuance pursuant to the 2019 Plan automatically increases on January 1 of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to 4% of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. Accordingly, on January 1, 2024, 1,839,197 additional shares of our Common Stock were made available for issuance pursuant to the 2019 Plan.

 

For additional information regarding the 2015 Plan and the 2019 Plan, as of December 31, 2023, please see Part II – Item 8 – Financial Statements and Supplemental Data – Notes to consolidated financial statements – note 12B – Stock-Based Compensation of our Form 10-K filed with the SEC on April 4, 2024.

 

   Equity Compensation Plan Information 
   December 31, 2023 
Plan category  Number of
securities
to be
issued upon
exercise of
outstanding
options and
restricted
stock
(a)
   Weighted-
average
exercise
price of
outstanding
options and
restricted
stock
(b)
   Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)
 
Equity compensation plans approved by security holders   3,224,871    0.68    1,011,104 
Equity compensation plans not approved by security holders   2,055,840    0.32      
Total   5,280,711    0.54    1,011,104 

  

48

 

 

PAY VERSUS PERFORMANCE

 

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid to our Chief Executive Officer, who is our principal executive officer (“PEO”), and our other named executive officers ( “Non-PEO NEOs”) and certain financial performance of the Company for each of the fiscal year ended December 31, 2023 (“2023”) and the fiscal year ended December 31, 2022 (“2022”).

 

Fiscal Year
(a)
  Summary
Compensation

Table Total
for PEO

(b)
    Compensation
Actually Paid
to PEO (1)(2)
(c)
    Average
Summary

Compensation
Table Total

for Non-PEO
NEOs
(d)
    Average
Compensation

Actually Paid
to Non-PEO
NEOs (1)(2)

(e)
    Value of
Initial Fixed
$100

Investment
Based on

Total
Shareholder
Return

(f)
    Net (Loss)
Income
(thousands)
(h)
 
2023   $ 1,118,541     $ 839,568     $ 509,594     $ 430,871     $ 11.69     $ 26,169  
2022   $ 1,041,542     $ 329,655     $ 479,686     $ 280,043     $ 17.50     $ 28,317  

 

(1) Our PEO for 2023 and 2022 was Mr. Jonathan Solomon. Our Non-PEO NEOs for 2023 and 2022 were Dr. Merav Bassan, our Chief Development Officer, and Ms. Marina Wolfson, our Chief Financial Officer. As determined under SEC rules, the amounts reported in the “Compensation Actually Paid to PEO” and “Compensation Actually Paid to Non-PEO NEOs” columns do not reflect the actual compensation paid to or realized by our PEO or our Non-PEO NEOs during each applicable year. The calculation of compensation actually paid for purposes of this table includes point-in-time fair values of stock awards and these values will fluctuate based on our stock price, various accounting valuation assumptions and projected performance related to our performance awards. See “Summary Compensation Table” above for certain other compensation of our PEO and our Non-PEO NEOs for each applicable fiscal year.
(2) The compensation actually paid amounts reported in 2023 also include the incremental fair value of option awards to our PEO and Non-PEO NEOs that were repriced and exchanged in October and November 2023, computed as the excess fair value of the modified award over the fair value of the original award at the repricing and exchange date.

 

Compensation actually paid to our PEO represents the total compensation reported in the Summary Compensation Table for the applicable fiscal year, adjusted as follows:

 

Adjustments to Determine Compensation “Actually Paid” to our PEO  2023   2022 
Total Compensation in the Summary Compensation Table  $1,118,541   $1,041,542 
Deduction for Amounts Reported under “Option Awards” Column in the Summary Compensation Table  $(404,174)  $(512,974)
Increase for Fair Value of Awards Granted During Fiscal Year that Remain Unvested as of Year End, Determined as of Applicable Fiscal Year End(1)  $90,191   $33,756 
Increase for Fair Value of Awards Granted During Fiscal Year that Vested during Applicable Fiscal Year, Determined as of Vesting Date(1)  $-   $- 
Increase/deduction for Change in Fair Value of Awards Granted During Prior Fiscal Year that were Outstanding and Unvested as of Applicable Fiscal Year End(1)  $25,349   $(134,177)
Increase/deduction for Change in Fair Value of Awards Granted During Prior Fiscal Year that Vested During Applicable Fiscal Year(1)  $9,661   $98,493 
Total Adjustments  $(278,973)  $(711,887)
Compensation Actually Paid to the CEO  $839,568   $329,655 

 

(1) All fair value amounts are computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718.

 

Adjustments to Determine Compensation “Actually Paid” to our Non-PEO NEOs  2023   2022 
Average Total Compensation in the Summary Compensation Table  $509,594   $479,596 
Deduction for Amounts Reported under “Option Awards” Column in the Summary Compensation Table  $(121,980)  $(161,580)
Increase for Fair Value of Awards Granted During Fiscal Year that Remain Unvested as of Year End, Determined as of Applicable Fiscal Year End(1)  $29,002   $17,280 
Increase for Fair Value of Awards Granted During Fiscal Year that Vested during Applicable Fiscal Year, Determined as of Vesting Date(1)  $-   $- 
Increase/deduction for Change in Fair Value of Awards Granted During Prior Fiscal Year that were Outstanding and Unvested as of Applicable Fiscal Year End(1)  $10,404   $(41,226)
Increase/deduction for Change in Fair Value of Awards Granted During Prior Fiscal Year that Vested During Applicable Fiscal Year(1)  $3,852   $(14,027)
Total Adjustments  $(78,722)  $(199,553)
Compensation Actually Paid to the Non-PEO NEOs  $430,871   $280,043 

 

(1)All fair value amounts are computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718.

 

49

 

 

Relationship Between Financial Performance Measures

 

In accordance with Item 402(v) of Regulation S-K, the graphs below compare the compensation actually paid to our PEO and the average of the compensation actually paid to our Non-PEO NEOs, with (i) our Total Shareholder Return (“TSR”), and (ii) our net income (net loss), in each case, for the fiscal years ended December 31, 2022 and December 31, 2023. TSR amounts reported in the graphs assume an initial fixed investment of $100 and that all dividends, if any, were reinvested.

 

Compensation Actually Paid and Company TSR

 

 

 

Compensation Actually Paid and Net Loss

 

 

 

All information provided above under the “Pay-Versus-Performance” heading will not be deemed to be incorporated by reference into any of BiomX’s filings under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent BiomX specifically incorporates such information by reference.

 

50

 

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Policies and Procedures Regarding Transactions with Related Parties

 

Our Related-Person Transactions Policy requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board (or the Audit Committee). For as long as the Company qualifies as a “smaller reporting company” as defined under Rule 12b-2 under the Exchange Act, a related-person transaction is defined under our Related-Person Transactions Policy as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any Related Person (as defined in the policy) are, were or will be participants in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any Related Person had or will have a direct or indirect material interest. If the Company ceases to be a smaller reporting company, a related-person transaction will be defined as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any Related Person are, were or will be participants in which the amount involved exceeds $120,000, and in which any Related Person had or will have a direct or indirect material interest. Transactions involving compensation for services provided to us as an employee, consultant or director are not considered related-person transactions under this policy.

 

In the event that the Company proposes to enter into, or materially amend, a related-person transaction, management of the Company shall present such related-person transaction to the Audit Committee for review, consideration and approval or ratification. The presentation must include, to the extent reasonably available, a description of (a) all of the parties thereto, (b) the interests, direct or indirect, of any Related Person(s) in the transaction in sufficient detail so as to enable the Audit Committee to fully assess such interests, (c) the purpose of the transaction, (d) all of the material facts of the proposed related-person transaction, including the proposed aggregate value of such transaction, or, in the case of indebtedness, the amount of principal that would be involved, (e) the benefits to the Company of the proposed related-person transaction, (f) if applicable, the availability of other sources of comparable products or services, (g) an assessment of whether the proposed related-person transaction is on terms that are comparable to the terms available to or from, as the case may be, unrelated third parties that would have been negotiated at arm’s length, and (h) management’s recommendation with respect to the proposed related-person transaction knowing that there is a potential or actual conflict that will arise of the matter proceeds to fruition. In the event the Audit Committee is asked to consider whether to ratify an ongoing related-person transaction, in addition to the information identified above, the presentation must include (i) a description of the extent of work performed and remaining to be performed in connection with the transaction, (ii) an assessment of the potential risks and costs of termination of the transaction, and (iii) where appropriate, the possibility of modification of the transaction.

 

The Committee, in approving or rejecting the proposed related-person transaction, will consider all the relevant facts and circumstances deemed relevant by and available to the Committee, including but not limited to (a) the risks, costs and benefits to the Company, (b) the impact on a director’s independence in the event the Related Person is a director, immediate family member of a director or an entity with which a director is affiliated, (c) the terms and timing of the transaction, (d) the availability of other sources of comparable services or products, (e) the terms available to or from, as the case may be, unrelated third parties, and (f) how the related-person transaction was realized and communicated to the Audit Committee as required under the Related-Person Transactions Policy. The Audit Committee will approve only those related-person transactions that, in light of known circumstances, are in, or are not inconsistent with, the best interests of the Company and its stockholders, as the Audit Committee determines in the good faith exercise of its discretion.

 

Other than compensation, termination, change in control and other arrangements, which are described herein under “Executive Officer and Director Compensation”, our only related-person transactions since January 1, 2023 consisted of the following: (i) a Securities Purchase Agreement we entered into on February 22, 2023 with accredited and non-U.S. investors, including CFF, OrbiMed, and Nimble Ventures LLC, our stockholders, each of which holds more than 5% of our outstanding Common Stock, relating to a private placement of an aggregate of 15,997,448 shares of our Common Stock and 14,610,714 pre-funded warrants, at a purchase price of $0.245 per Share and $0.244 per pre-funded warrant. The gross proceeds from this offering are approximately $7.4 million, before deducting issuance costs. The pre-funded warrants became exercisable on May 4, 2023, at an exercise price of $0.001 per share of Common Stock and have no expiration date. Of these proceeds, an aggregate of 3,385,000 shares of Common Stock and 4,778,265 pre-funded warrants were sold to CFF for gross proceeds of $2 million, an aggregate of 1,740,000 shares of Common Stock and 9,280,408 pre-funded warrants were sold to OrbiMed for gross proceeds of $2.7 million and an aggregate of 4,550,000 shares of Common Stock and 552,041 pre-funded warrants were sold to Nimble Venture LLC for gross proceeds of $1.25 million, and (ii) the Purchase Agreement, which we entered into on March 6, 2024 with certain investors, including CFF, OrbiMed and Telmina, our stockholders, each of which hold more than 5% of our outstanding Common Stock, pursuant to which we sold an aggregate of 216,417 shares of Series X Preferred Stock and Private Placement Warrants to purchase up to an aggregate of 108,208,500 shares of Common Stock, at a combined purchase price of $231.10 per share of Series X Preferred Stock and accompanying Private Placement Warrant. The aggregate gross proceeds from the Private Placement were approximately $50 million. Of these proceeds, an aggregate of 21,635 shares of Series X Preferred Stock and 10,817,500 Private Placement Warrants were sold to CFF for gross proceeds of $5 million, an aggregate of 4,327 shares of Series X Preferred Stock and 2,163,500 Private Placement Warrants were sold to OrbiMed for gross proceeds of $1 million and an aggregate of 2,596 shares of Series X Preferred Stock and 1,298,000 Private Placement Warrants were sold to Telmina for gross proceeds of $0.6 million.

 

51

 

 

PRINCIPAL STOCKHOLDERS

 

The following table sets forth information, to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our Common Stock as of May 23, 2024 by:

 

  each of our directors;

 

  each of our Named Executive Officers;

 

  all of our directors and executive officers as a group; and

 

  each person, or group of affiliated persons, who is known by us to beneficially owner of greater-than-5.0% of our Common Stock.

 

The column entitled “Shares Beneficially Owned” is based on a total of 69,806,440 shares of our Common Stock outstanding as of May 23, 2024.

 

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our Common Stock. Shares of our Common Stock subject to options that are currently exercisable or exercisable within 60 days of May 23, 2024 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of our Common Stock beneficially owned by them, subject to community property laws, where applicable. Except as otherwise indicated in the table below, addresses of named beneficial owners are in care of BiomX Inc., 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel.

 

Name and Address of Beneficial Owner(1)  Amount and
Nature of
Beneficial
Ownership
   Percent of
Class
 
OrbiMed Israel GP Ltd. (2)  89 Medinat Hayehudim St. Building E Herzliya 4614001 Israel   13,923,653    19.9%
Cystic Fibrosis Foundation (3) 4550 Montgomery Ave. Suite 1100N Bethesda, MD 20814   9,330,580    13.4%
Nimble Ventures, LLC (4) 1 Letterman Drive, Building A, Suite 4900, San Francisco, CA 94129(2)   5,102,041    7.3%
Deerfield Healthcare Innovations Fund II, L.P. (5) 345 Park Avenue South, 12th Floor, New York, New York 10010   3,055,049    4.4%
Deerfield Private Design Fund V, L.P. (6) 345 Park Avenue South, 12th Floor, New York, New York 10010   3,055,049    4.4%
AMR Action Fund, L.P. (7) 225 Franklin Street, Suite 1750, Boston, MA 02110   3,054,870    4.4%
Telmina Limited (8) 34 Rue de l’athenee, PO Box 393, 1211 Geneva 12, Switzerland   2,839,714    4.1%
Directors and Named Executive Officers          
Jonathan Solomon(9)    1,204,373    1.7%
Marina Wolfson (10)   107,3012    * 
Dr. Merav Bassan(11)   304,395    * 
Susan Blum   0    - 
Dr. Russell Greig(12)   11,953    * 
Dr. Jesse Goodman   0    - 
Jonathan Leff   0    - 
Gregory Merril   0    - 
Dr. Alan Moses(13)   60,444    * 
Edward Williams   0    - 
All directors and executive officers as a group (12 persons)   2,104,488    3.01%

 

* Less than 1%.
   
(1) Unless otherwise indicated, the business address of each of the individuals is c/o BiomX Inc., 22 Einstein St., 4th Floor, Ness Ziona 7414003, Israel.

 

52

 

 

(2) This stockholder, together with its affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliated, including OrbiMed Israel BioFund GP Limited Partnership, Carl L. Gordon and Erez Chimovits beneficially own 13,923,653 shares of Common Stock. Excludes (x) 4,327 shares of Series X Preferred Stock, (y) warrants to acquire up to 140,781 shares of Common Stock and (z) warrants to acquire up to 2,538,500 shares of Common Stock. Such warrants each contain an issuance limitation that prohibits the holder from exercising such warrants to the extent that after giving effect to such issuance after exercise, the holder (together with the holder’s affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliated, including OrbiMed Israel BioFund GP Limited Partnership, Carl L. Gordon and Erez Chimovits) would beneficially own in excess of 19.9% of the Shares outstanding immediately after giving effect to the issuance of the Shares upon exercise of the warrants, or the Beneficial Ownership Limitation. Each share of Series X Preferred Stock is automatically convertible into 1,000 Shares following approval by the Issuer’s stockholders of such conversion, subject to the Beneficial Ownership Limitation. Based on information contained in the Schedule 13D/A filed with the SEC on March 19, 2024, the Form 4 filed with the SEC on May 20, 2024 and on the Company’s records.
   
(3) Consists of 9,330,580 shares of Common Stock. Excludes (i) 21,635 shares of Series X Preferred Stock, and (ii) 10,817,500 shares of Common Stock issuable upon exercise of a warrant, as the Series X Preferred Stock and such warrant will only become convertible or exercisable, as applicable, following approval by the Company’s stockholders. Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock following approval by the Company’s stockholders of such conversion, subject to a beneficial ownership limitation. Based solely on information contained in a Form 4 filed with the SEC on May 17, 2024 and on the Company’s records.
   
(4) Consists of 5,102,041 shares of Common Stock. John H. Burbank III is the control person of Nimble Ventures and, in such capacity, may be deemed to indirectly beneficially own the Shares that Nimble Ventures directly beneficially owns. Based on information contained in the Schedule 13G filed with the SEC on June 23, 2023 and on the Company’s records.
   
(5) Does not include (i) an aggregate of 53,840,000 shares of Common Stock underlying 53,840 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 20,897,175 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13D filed with the SEC on March 22, 2024 and on the Company’s records.
   
(6) Does not include (i) an aggregate of 53,840,000 shares of Common Stock underlying 53,840 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 20,897,175 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13D filed with the SEC on March 22, 2024 and on the Company’s records.

  

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(7) Does not include (i) an aggregate of 42,337,000 shares of Common Stock underlying 42,337 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 15,145,647 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13G filed with the SEC on March 25, 2024 and on the Company’s records.
   
(8) Consists of 2,839,714 shares of Common Stock. Based solely on information contained in a Schedule 13G filed with the SEC on September 29, 2023 and on the Company’s records.

 

(9) Consists of 25,000 shares of Common Stock, 25,000 warrants (entitling the holder to acquire up to 18,750 shares of Common Stock), 1,123,346 options that are exercisable and 37,277 additional options that will become exercisable within 60 days of May 23, 2024.
   
(10) Consists of 3,750 shares of Common Stock, 3,750 warrants (entitling the holder to acquire up to 2,813 shares of Common Stock), 91,709 options that are exercisable and 9,029 additional options that will become exercisable within 60 days of May 23, 2024.
   
(11) Consists of 292,900 options that are exercisable and 11,495 additional options that will become exercisable within 60 days of May 23, 2024.
   
(12) Consists of 3,750 shares of Common Stock, 3,750 warrants (entitling the holder to acquire up to 2,813 shares of Common Stock), 95,802 options that are exercisable and 9,588 additional options that will become exercisable within 60 days of May 23, 2024.
   
(13) Consists of 5,000 shares of Common Stock, 5,000 warrants (entitling the holder to acquire up to 3,750 shares of Common Stock), 45,900 options that are exercisable and 5,794 additional options that will become exercisable within 60 days of May 23, 2024.

 

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THE MERGER

 

This section and the section entitled “The Merger Agreement” beginning on page 73 of this proxy statement describe the material aspects of the Acquisition, including the Merger Agreement. While BiomX believes that this description covers the material terms of the Acquisition and the Merger Agreement, it may not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the Merger Agreement, which is attached as Annex E to this proxy statement, and the other documents to which BiomX has referred you. For a more detailed description of where you can find those other documents, please see the section entitled “Where You Can Find Additional Information” beginning on page 102 of this proxy statement.

 

Background of the Acquisition

 

The following chronology summarizes the key meetings and events that led to the consummation of the Acquisition and related matters. The following chronology does not purport to catalogue every conversation among the BiomX Board, any BiomX Board committees, members of BiomX management or BiomX’s representative and other parties related to the Acquisition or related matters detailed herein.

 

Prior to consummating the Acquisition and the Private Placement, the BiomX Board and BiomX’s management from time to time evaluated various strategic business initiatives intended to strengthen its business and enhance stockholder value, including fundraising as an independent company and potentially out-licensing its main clinical program in cystic fibrosis (“CF”).

 

On October 24, 2023, APT reached out to BiomX to suggest a meeting to provide an update by both companies and discuss potential collaboration or strategic business transactions.

 

On October 30, 2023, APT and BiomX held a meeting where each company provided an update on its clinical programs, financial status, and the parties discussed potential collaboration and strategic business transactions.

 

On December 5, 2023 APT and BiomX held a meeting. The parties discussed the recent clinical results published by BiomX, synergies of a potential merger transaction and the clinical development plans of each company.

 

On December 8, 2023 APT and BiomX held a meeting. The parties discussed synergies of a potential merger transaction, clinical development plans and financial needs of a potential merged company and structure of a possible transaction.

 

On December 19, 2023, BiomX held a Board meeting. The meeting included an update on the discussions with APT on a potential merger transaction and deal structure.

 

On January 5, 2023, APT and BiomX held a meeting to discuss the clinical development plans of each company.

 

On January 8, 2024, BiomX met with Jonathan Leff, an investor in and board member of APT, to discuss a potential transaction. BiomX and Mr. Leff discussed the synergies, timing and possible structure of a potential transaction.

 

On January 19, 2024, the BiomX Board met to discuss the potential transaction.

 

Between January 22 and January 24, 2024, BiomX held several meetings in New York with APT and Deerfield to discuss the potential transaction. Meetings included discussions on deal structure, due diligence of both parties, prospective funding requirements for the post-combination company and related matters.

 

On January 24, 2024, BiomX met with Haynes and Boone, LLP (“Haynes and Boone”) to discuss structure and timing of the potential transaction.

 

On January 26, 2024, the BiomX Board met to discuss the potential transaction.

 

On January 29 and 31, 2024 and February 1, 2024, BiomX met with APT and Deerfield to discuss the potential transaction. Discussions in this meeting addressed deal structure, due diligence and review of the related investor presentation.

 

On January 29 and 31, 2024 and February 1, 2024 BiomX met with Haynes and Boone to prepare for the meetings with APT and Deerfield described above.

 

On February 2, 2024, the BiomX Board met to discuss the potential transaction.

 

On February 5, 2024, BiomX met with RBC and Laidlaw regarding the Private Placement.

 

On February 6, 2024, BiomX, APT, and each of their advisors met for a transaction kick-off meeting to outline the process and timeline of the potential transaction.

 

On February 7, 2024, BiomX met with Haynes and Boone regarding the status of the potential transaction.

 

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On February 8, 2024, BiomX met with APT to discuss the status of the potential transaction, due diligence and investor meetings.

 

On February 9, 2024, BiomX met with Haynes and Boone to discuss structure and timing of the potential transaction, as well as potential related material issues.

 

Throughout February and early March 2024, BiomX held more than 20 meetings with various investors related to the Acquisition and the Private Placement.

 

On February 11, 2024, BiomX met with Haynes and Boone to discuss updates to the legal documentation and timing of the potential transaction.

 

On February 12, 2024, BiomX, APT and each of their advisors met in the first of various twice-weekly all hands meetings to discuss the timeline of the potential transaction, status and any related material items. Such meetings occurred regularly thereafter on a twice-weekly basis and addressed similar updates.

 

During the week of February 19 and the week of February 26, 2024, BiomX met with Haynes and Boone multiple times to draft and revise BiomX’s disclosure schedules to the Merger Agreement and discuss due diligence responses.

 

On February 22, 2024, legal advisors to APT shared APT’s February 22, 2024 draft of the Merger Agreement with BiomX.

 

On February 26, 2024, Haynes and Boone shared with APT’s legal advisors BiomX’s February 26, 2024 draft of the Merger Agreement.

 

On February 27, 2024, Haynes and Boone shared with APT’s legal advisors BiomX’s February 27, 2024 draft of the Merger Agreement.

 

On February 28, 2024, BiomX met with APT to discuss the potential transaction. Discussions included progress on the Merger Agreement, related agreements, due diligence and progress in investor meetings.

 

On February 29, 2024, BiomX met with APT and Deerfield to discuss the potential transaction. Discussions included deal structure, progress on the Merger Agreement, related agreements and due diligence.

 

On February 29, 2024, the BiomX Board met and listened to management presentations on BiomX’s financial matters, including its levels of available cash in the event that the potential transactions were not consummated. BiomX management provided an update on the potential transaction as well as status of interest in the Private Placement. The BiomX Board discussed the likely allocation of BiomX Board seats should the potential transaction be consummated.

 

From March 1 through March 6, 2024, the parties and their respective advisors held daily calls on the status of the transaction documents, due diligence, and investor meeting progress, including discussions of investor commitments to participate in the Private Placement and other related items.

 

On March 1, 2024, legal advisors to APT shared APT’s March 1, 2024 draft of the Merger Agreement with BiomX.

 

On March 2, 2024, Haynes and Boone shared with APT’s legal advisors BiomX’s March 2, 2024 draft of the Merger Agreement.

 

On March 4, 2024, legal advisors to APT shared APT’s March 4, 2024 draft of the Merger Agreement with BiomX.

 

On March 5, 2024, the parties finalized the material terms of the Merger Agreement.

 

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On March 5, 2024, the BiomX Board met to discuss the potential transaction. After receiving Wainwright’s fairness presentation and Wainwright’s oral opinion that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described herein, as of March 5, 2024, the Merger Consideration was fair, from a financial point of view, to BiomX and after a presentation by Haynes and Boone, the BiomX Board went into executive session. The BiomX Board then voted unanimously to approve the Acquisition.

 

On March 6, 2024, BiomX entered into the Merger Agreement and the Purchase Agreement.

 

From March 7 through March 15, 2024, the parties and their respective advisors held various regular status meetings to coordinate the consummation of the Acquisition and the Private Placement.

 

On March 15, 2024, BiomX consummated the Acquisition and the Private Placement.

 

BiomX’s Reasons for the Acquisition

 

In the course of its evaluation of the Acquisition, the Merger Agreement and related agreements, the BiomX Board held numerous meetings, consulted with its management, legal counsel and its financial advisor and reviewed a significant amount of information and, in reaching its decision to approve the merger and the Merger Agreement, the BiomX Board considered a number of factors, including, among others, the following factors:

 

  the BiomX Board believes that, as a result of arm’s length negotiations with APT, BiomX negotiated a favorable equity split for BiomX stockholders, and that the terms of the Merger Agreement include the most favorable terms to BiomX in the aggregate that were mutually agreeable to APT;

 

  the BiomX Board believes, after a thorough review of strategic alternatives and discussions with BiomX senior management, advisors and legal counsel, that the Acquisition is more favorable to BiomX’s stockholders than the potential value that might have resulted from other strategic options available to BiomX, including potential licensing transactions, the sale of existing assets or a liquidation of BiomX and the distribution of any available cash;

 

  the BiomX Board believes, based in part on a scientific and business diligence and analysis process conducted over several weeks by BiomX’s management and reviewed with the BiomX Board, that APT’s Diabetic Foot Osteomyelitis (“DFO”) program represents a sizeable potential market opportunity, and may thereby create value for the stockholders of the combined organization and an opportunity for BiomX stockholders to participate in the potential growth of the combined company;

 

  the BiomX Board also reviewed with BiomX management the current plans for clinical development of its existing product candidate, BX004, for treating chronic infections in cystic fibrosis and APT’s product candidate for treating DFO to confirm the likelihood that the combined company would possess sufficient financial resources to allow the management team to make progress in the clinical development of both programs;
     
  the BiomX Board also considered the possibility that the combined company would be able to take advantage of the potential benefits resulting from the combination of the technological platforms and infrastructure of both BiomX and APT;

 

  the BiomX Board also considered the strength of the balance sheet of the combined company, which includes the cash that BiomX and APT held prior to the Acquisition plus the gross proceeds from the concurrent Private Placement of approximately $50 million; and

 

  the BiomX Board considered Wainwright’s opinion to the BiomX Board that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in its written, as of March 5, 2024, the Merger Consideration was fair, from a financial point of view, to BiomX, as more fully described below under the caption “The Acquisition—Opinion of BiomX’s Financial Advisor.”

 

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The BiomX Board also reviewed various reasons impacting the financial condition, results of operations and prospects of BiomX, including:

 

  the BiomX Board having undertaken a comprehensive and thorough process of reviewing and analyzing the potential merger transaction to identify the opportunity that would, in the BiomX Board’s opinion, create the most value for its stockholders;

 

  the BiomX Board’s belief that, as a result of arm’s length negotiations with APT, BiomX negotiated a favorable equity split for BiomX stockholders, and that the terms of the Merger Agreement include the most favorable terms to BiomX in the aggregate that were mutually agreeable to APT; and

 

  the BiomX Board’s belief, after a thorough review of strategic alternatives and BiomX’s discussions with its financial advisors and legal counsel, as well as BiomX management’s discussions with APT’s senior management, that, compared to the Acquisition, no alternatives or other strategic options that may have been available to BiomX, including remaining a standalone public company, were reasonably likely to create greater value for BiomX’s stockholders.

 

In the course of its deliberations, the BiomX Board also considered a variety of risks and other countervailing factors related to entering into the Acquisition, including:

 

  the substantial expenses to be incurred in connection with the Acquisition, including the potential costs associated with any related litigation;

 

  the possible volatility of the trading price of BiomX Common Stock resulting from the announcement of the Acquisition;

 

  the possibility of disruptive stockholder litigation following announcement of the Acquisition; and

 

  various other risks associated with the combined company and the Acquisition, including those described in the section entitled “Risk Factors” beginning on page 89 of this proxy statement.

 

The foregoing information and factors considered by the BiomX Board are not intended to be exhaustive but are believed to include all of the material factors considered by the BiomX Board. In view of the wide variety of reasons considered in connection with its evaluation of the Acquisition and the complexity of these matters, the BiomX Board did not find it useful to attempt, and did not attempt, to quantify, rank or otherwise assign relative weights to these reasons. In considering the reasons described above, individual members of the BiomX Board may have given different weight to different reasons. The BiomX Board conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, BiomX’s management team, the legal and financial advisors of BiomX, and considered the reasons overall to be favorable to, and to support, its determination.

 

Overview of APT

 

APT was formed in 2016 as a Delaware corporation headquartered in Gaithersburg, Maryland. APT was a clinical-stage company focused on advancing therapies addressing multi-drug resistant infections. APT’s approach leveraged a library of systematically discovered, selected, catalogued, and curated phages, with the goal of providing broad coverage against many of the world’s highest priority antibiotic-resistant bacteria. APT’s technology was originally developed at the National Institutes of Health by APT co-founder Carl R. Merril, MD CAPT USPHS (ret.), and further advanced within a biodefense program of U.S. Department of Defense.

 

APT’s most advanced program prior to the Acquisition was BX211, a personalized phage treatment now being developed by BiomX for the treatment of diabetic foot osteomyelitis (“DFO”) associated with S. aureus. The personalized phage treatment tailors a specific phage selected from a proprietary phage-bank according to the specific strain of S. aureus biopsied and isolated from each patient. At the time of the Acquisition, APT was in the process of conducting a randomized, double-blind, placebo-controlled, multi-center Phase 2 study investigating the safety, tolerability, and efficacy of BX211 for subjects with DFO associated with S. aureus.

 

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From the time of its inception until the Acquisition, APT devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff and raising capital, and financed its operations through the issuance of common and preferred stock, long-term debt and proceeds from research grants and government contracts. APT did not generate any revenue from the sale of any products.

 

Prior to the Acquisition, APT was a privately held company, and there was no established public trading market for its securities. APT never paid cash dividends to its stockholders.

 

Regulatory Matters

 

Neither BiomX nor APT was required to make any filings or to obtain approvals or clearances from any antitrust regulatory authorities in the United States or other countries to consummate the Acquisition. In the United States, BiomX must comply with applicable federal and state securities laws and the NYSE American rules in connection with the issuance of shares of Common Stock, Series X Preferred Stock and Warrants in the Acquisition and the Private Placement, including the filing with the SEC of this proxy statement.

 

OPINION OF BIOMX’S FINANCIAL ADVISOR

 

BiomX retained Wainwright on March 2, 2024 to render an opinion to the BiomX Board as to the fairness, from a financial point of view, to BiomX of the Merger Consideration (as defined in the Merger Agreement) to be paid by BiomX pursuant to the Merger Agreement.

 

On March 5, 2024, Wainwright rendered its oral opinion to the BiomX Board (which was subsequently confirmed in writing by delivery of Wainwright’s written opinion dated the same date) to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described herein, as of March 5, 2024, the Merger Consideration was fair, from a financial point of view, to BiomX.

 

Wainwright’s opinion was prepared for the information of the BiomX Board and only addressed the fairness, from a financial point of view, to BiomX of the Merger Consideration. Wainwright was not requested to opine as to, and Wainwright’s opinion did not address, the relative merits of the Acquisition or any alternatives to the Acquisition, BiomX’s underlying decision to proceed with or effect the Acquisition, or any other aspect of the Acquisition. Wainwright’s opinion does not address the fairness of the Acquisition to the holders of any class of securities, creditors or other constituencies of BiomX. Wainwright did not express an opinion about the fairness of the amount or nature of any compensation payable or to be paid to any of the officers, directors or employees, of BiomX, whether or not relative to the Acquisition.

 

The summary of Wainwright’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex D to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Wainwright in preparing its opinion. Wainwright’s opinion was prepared for the information of the BiomX Board for its use in connection with its consideration of the Acquisition. Neither Wainwright’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and they do not constitute, a recommendation to any stockholder of BiomX as to how such stockholder should vote with respect to any matter relating to the Acquisition or any other matter.

 

In connection with rendering the opinion described above and performing its related financial analyses, Wainwright, among other things, reviewed:

 

the financial terms of the Acquisition described in a draft of the Merger Agreement dated March 2, 2024;

 

financial forecasts, relating to the business, earnings, cash flow, assets, liabilities, cash flow and prospects of BiomX, APT and the combined company furnished to Wainwright, and prepared by, BiomX’s management for purposes of Wainwright’s analysis;

 

relevant market sizing projections for the assets and liabilities that would be acquired by BiomX;

 

management of BiomX’s assessment of the strategic rationale for, and the potential benefits of, the Acquisition;

 

the past and current operations and financial condition and future prospects of BiomX;

 

the reported price and trading activity for BiomX’s Common Stock;

 

certain publicly available information, including, but not limited to, BiomX’s recent filings with the SEC and the financial statements set forth therein;

 

the financial terms, to the extent publicly available, of certain acquisition and financing transactions that Wainwright deemed relevant; and

 

such other analyses and such other factors as Wainwright deemed relevant or appropriate for the purpose of rendering its opinion.

 

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For purposes of its opinion, with the approval of the BiomX Board and without independent verification, Wainwright assumed that:

 

49.6 million shares of Common Stock would be issued in the Acquisition and the Private Placement (assuming approval of the Conversion Proposal and assuming no applicable Beneficial Ownership Limitation);

 

the holders of the outstanding Common Stock immediately prior to the Acquisition would own 17.9% of the outstanding equity of BiomX on a fully diluted basis immediately following the Acquisition Closing and after giving effect to the Private Placement and the conversion (the “Convertible Note Conversion”) of certain convertible promissory notes (the “Convertible Notes”);

 

the holders of the outstanding APT common stock immediately prior to the Acquisition (including the holders of the Convertible Notes) would own 14.6% of the outstanding equity of BiomX on a fully diluted basis immediately following the Acquisition Closing and after giving effect to the Private Placement and the Convertible Note Conversion; and

 

the investors in the Private Placement would own 67.5% of the outstanding equity of BiomX on a fully diluted basis immediately following the Acquisition Closing and after giving effect to the Private Placement and the Convertible Note Conversion.

 

For purposes of its opinion, Wainwright assumed, with the consent of the BiomX Board, that the Private Placement would be consummated in accordance with its terms, that BiomX would receive aggregate proceeds of $48 million pursuant thereto and that the Conversion Proposal would be approved.

 

In connection with its opinion, Wainwright assumed and relied upon, without verifying independently, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to Wainwright or discussed with or reviewed by or for Wainwright for the purposes of preparing its opinion (and did not assume responsibility or liability for any independent verification of such information), and further assumed that the financial information provided to Wainwright had been prepared by the management of BiomX on a reasonable basis in accordance with industry practice, and that the management of BiomX was not aware of any information or facts that would make any information provided to Wainwright incomplete or misleading.

 

With respect to the financial forecasts, estimates and other forward-looking information reviewed by Wainwright, Wainwright assumed that such information had been reasonably prepared by the management of BiomX based on assumptions reflecting its best currently available estimates and good faith judgments as to the expected future results of operations and financial condition of BiomX and the combined company, respectively. Wainwright was not engaged to assess the achievability of any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based, and Wainwright expressed no opinion as to such information or assumptions. In addition, Wainwright did not assume any responsibility for, and did not perform, any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of BiomX or APT, nor was Wainwright furnished or provided with any such appraisals or valuations. Without limiting the generality of the foregoing, Wainwright was not engaged to, and did not undertake, any independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which BiomX, APT and or any of their respective affiliates is a party or may be subject, and at the direction of the BiomX Board and with its consent, Wainwright’s opinion made no assumption concerning, and did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

 

Wainwright relied upon and assumed, without independent verification, that the representations and warranties of all parties set forth in the Merger Agreement and all related documents and instruments that are referred to therein are true and correct, that each party to the Merger Agreement would fully and timely perform all of the covenants and agreements required to be performed by such party, that the Acquisition would be consummated pursuant to the terms of the Merger Agreement, without amendments thereto, and that all conditions to the consummation of the Acquisition, including completion of the Private Placement and the Convertible Note Conversion would be satisfied without waiver by any party of any conditions or obligations thereunder. Wainwright further assumed that the Merger Agreement was in all material respects identical to the draft of the Merger Agreement provided to Wainwright. Finally, Wainwright also assumed that all the necessary regulatory approvals and consents required for the Acquisition, the Private Placement and the Convertible Note Conversion would be obtained in a manner that would not adversely affect BiomX.

 

In connection with its opinion, Wainwright assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it. Wainwright’s opinion does not address any legal, tax, accounting or regulatory matters. Wainwright’s fairness opinion was approved by its fairness opinion committee prior to delivering it to the BiomX Board.

 

Wainwright’s opinion is necessarily based upon the information available to Wainwright and facts and circumstances as they existed and were subject to evaluation as of March 5, 2024, which is the date of Wainwright’s opinion. Although events occurring after the date of Wainwright’s opinion could materially affect the assumptions used in preparing the opinion, Wainwright does not have any obligation to update, revise or reaffirm its opinion and Wainwright expressly disclaims any responsibility to do so. Wainwright did not express any opinion as to the value of the shares of Common Stock to be issued in the Acquisition or the prices at which shares of Common Stock may trade following announcement of the Acquisition or at any future time nor did Wainwright express any opinion regarding the fairness, from a financial point of view, to BiomX of the Private Placement.

 

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The terms of the Acquisition, the consideration to be paid in the Acquisition, and the related transactions were determined through arm’s length negotiations between BiomX and APT and were approved unanimously by the BiomX Board. Wainwright did not determine the consideration to be paid by BiomX in connection with the Acquisition. Wainwright’s opinion and its presentation to the BiomX Boards was one of many factors taken into consideration by the BiomX Board in deciding to approve, adopt and authorize the Merger Agreement. Consequently, the analyses as described herein should not be viewed as determinative of the opinion of the BiomX Board with respect to the consideration to be paid by BiomX in the Acquisition or of whether the BiomX Board would have been willing to agree to different consideration.

 

The following is a summary of the material financial analyses performed by Wainwright in connection with the preparation of its fairness opinion, which opinion was rendered orally to the BiomX Board (and subsequently confirmed in writing by delivery of Wainwright’s written opinion dated the same date) on March 5, 2024. The preparation of analyses and a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to summary description and this summary does not purport to be a complete description of the analyses performed by Wainwright or the delivery of Wainwright’s opinion to the BiomX Board. This summary includes information presented in tabular format. In order to fully understand the financial analyses presented by Wainwright, the tables must be read together with the text of each analysis summary and considered as a whole. The tables alone do not constitute a complete summary of the financial analyses. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Wainwright’s opinion.

 

In furnishing its opinion, Wainwright did not attempt to combine the analyses described herein into one composite valuation range, nor did Wainwright assign any quantitative weight to any of the analyses or the other factors considered. Furthermore, in arriving at its opinion, Wainwright did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor in light of one another, although Wainwright did state its belief that its discounted cash flow analysis should be given greater weight in evaluating the Acquisition because BiomX’s public comparable companies and precedent transaction analyses do not account for (i) the significant dilution that BiomX would need to take on to fund future operations, (ii) BiomX’s high cost of capital, and (iii) the inability of BiomX to access the capital markets. Wainwright has stated that it believes that its analyses must be considered as a whole and that considering any portion of its analyses, without considering all of the analyses, could create a misleading or incomplete view of the process underlying its opinion or the conclusions to be drawn therefrom.

 

In conducting the analysis as to the fairness, from a financial point of view, to BiomX of the Merger Consideration to be paid by BiomX pursuant to the Merger Agreement, Wainwright evaluated the implied equity value of BiomX compared to the $12.7 million equity valuation of BiomX implied by the terms of the Merger Agreement. Wainwright then evaluated the implied equity value of the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition compared to the $12.7 million equity valuation of BiomX implied by the terms of the Merger Agreement.

 

The results of the application by Wainwright of each of the valuation methodologies utilized in connection with its fairness opinion are summarized below.

 

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BiomX Implied Valuation -- Standalone

 

Wainwright determined a range of implied valuations for BiomX using the following valuation metrics, each of which is described further below.

 

Discounted Cash Flow Analysis

 

The discounted cash flow analysis is a “forward looking” methodology and is based on projected future cash flows to be generated by the combined company which are then discounted back to the present. This methodology has three primary components: (1) the present value of projected unlevered cash flows for a determined period; (2) the present value of the terminal value of cash flows (representing firm value beyond the time horizon on the projections) or a perpetuity growth calculation based on terminal free cash flow; and (3) the weighted average cost of capital (“WACC”) used to discount such future cash flows and terminal value or perpetuity value back to the present. The future cash flows plus the terminal value or perpetual value of such cash flows are discounted by the combined company’s risk-adjusted cost of capital, the WACC, to derive a present value.

 

BiomX’s management provided to Wainwright a probability weighted projection of BiomX’s expected future cash flows as shown in the following table.

 

$ in millions

 

 

Source: Company Management

 

Note: Numbers throughout DCF were adjusted based on the Probability of Success of applicable phase associated with an Respiratory company according to Bio, QLS Advisors and Informa UK’s Clinical Development Success Rates and Contributing Factors: 2011-2020; projected phase of development provided by BiomX.

 

(1)Assumes that the Company would need to raise $30 million in equity capital at a 30% discount with 100% warrant coverage at current market levels

 

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Wainwright estimated a perpetuity growth rate of between (8.0)% and (12.0)%. Wainwright also assumed a Weighted Average Cost of Capital (WACC or discount rate) range of 11.1% to 15.1%. Based on these inputs, Wainwright determined an equity value range for BiomX of between $3.0 million and $12.0 million. The tables provided below show these calculations and the WACC calculated by Wainwright.

 

 

BiomX WACC Analysis

 

$ in millions

 

 

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Source: BiomX, Bloomberg & FactSet; market data as of 2/29/2024

(1)Based on fully diluted shares outstanding provided by company and share price from FactSet as of 2/29/2024
(2)Based on yield of 5-year treasury bond as published by FactSet on 2/29/2024
(3)Three-year historical adjusted beta for BiomX per FactSet as of 2/29/2024
(4)Long-term U.S.A. ERP as of 1/5/2024 as published by Aswath Damodaran
(5)Kroll ‘s International Guide to Cost of Capital 2022 Summary Edition
(6)All numbers taken from BiomX 10-Q filed 11/14/2023 representing Q3-23

 

Based on these inputs, Wainwright calculated an equity value range of BiomX of between $5.0 million and $9.0 million using the perpetuity growth methodology, compared to the $12.7 million equity value attributable to BiomX pursuant to the Merger Agreement.

 

Comparable Public Company Analysis

 

Wainwright also evaluated the implied equity valuation of BiomX using a comparable company analysis. The comparable company analysis uses data based on current equity values of public companies that Wainwright viewed as comparable to BiomX to develop a measure of current equity value for BiomX. Wainwright reviewed the total enterprise values of selected publicly traded, clinical-stage biopharmaceutical companies focused on respiratory indications that Wainwright viewed as operating in an area of focus similar to BiomX. The selected comparable public companies shown in the table below had an equity value range of between $10.0 million (25th percentile) and $108.0 million (75th percentile). Wainwright did not exclude any companies meeting the criteria described above.

 

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$ in millions

 

 

 

Source: FactSet as of 2/29/2024

 

 

 

Source: FactSet as of 2/29/2024

 

Based on the analysis described above, Wainwright estimated that the equity value of BiomX ranged between $10.0 million and $108.0 million, compared to the implied $12.7 million equity value attributable to BiomX pursuant to the Merger Agreement.

 

Precedent M&A Transactions

 

The precedent M&A analysis uses data based on the values acquirers have previously placed on comparable companies in a merger or acquisition to develop a measure of current value for BiomX. Wainwright examined precedent transactions, from July 3, 2018 through February 15, 2023, involving publicly traded, clinical-stage life biopharmaceutical companies focused on respiratory indications that Wainwright viewed as operating in an area of focus similar to BiomX. Wainwright used only the upfront consideration paid in these transactions and did not consider any contingent value rights or other contingent consideration. The transactions shown in the table below had upfront consideration values ranging between $12.0 million (25th percentile) and $61.0 million (75th percentile). Wainwright did not exclude any companies meeting the criteria described above.

 

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$ in millions

 

 

 

Based on the analysis described above, Wainwright estimated that the equity value of BiomX ranged between $12.0 million and $61.0 million, compared to the implied $12.7 million equity value attributable to BiomX pursuant to the Merger Agreement.

 

BiomX Implied Valuation – Combined Company

 

Wainwright determined a range of implied valuations for the combined company using the following valuation metrics, each of which is described further below. Wainwright then calculated the implied equity value of the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition and compared it to the $12.7 million valuation of BiomX implied by the terms of the Merger Agreement.

 

Discounted Cash Flow Analysis

 

The discounted cash flow analysis is a “forward looking” methodology and is based on projected future cash flows to be generated by the combined company which are then discounted back to the present. This methodology has three primary components: (1) the present value of projected unlevered cash flows for a determined period; (2) the present value of the terminal value of cash flows (representing firm value beyond the time horizon on the projections) or a perpetuity growth calculation based on terminal free cash flow; and (3) the WACC used to discount such future cash flows and terminal value or perpetuity value back to the present. The future cash flows plus the terminal value or perpetual value of such cash flows are discounted by the combined company’s risk-adjusted cost of capital, the WACC, to derive a present value.

 

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BiomX’s management provided to Wainwright a probability weighted projection of the combined company’s expected future cash flows as shown in the following table.

 

$ in millions

 

 

 

Source: BiomX Management

 

Note: Numbers throughout DCF were adjusted based on the Probability of Success of applicable phase associated with an Infectious Disease company according to Bio, QLS Advisors and Informa UK’s Clinical Development Success Rates and Contributing Factors: 2011-2020; projected phase of development provided by Company

 

(1)Assumes that BiomX would own 17% of the combined company Source: BiomX Management

 

 

 

Wainwright estimated a perpetuity growth rate of between (8.0)% and (12.0)%. Wainwright also assumed a Weighted Average Cost of Capital (WACC or discount rate) range of 10.2% to 14.2%. Based on these inputs, Wainwright determined an equity value range of between $12.0 million and $41.0 million for the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition. The tables provided below show these calculations and the WACC calculated by Wainwright.

 

 

 

Combined Company WACC Analysis

 

$ in millions

 

 

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Source: Company, Bloomberg & FactSet; market data as of 2/29/2024

(1)Based on fully diluted shares outstanding for BiomX provided by BiomX and BiomX share price from FactSet as of 2/29/2024
(2)Based on yield of 5-year treasury bond as published by FactSet on 2/29/2024
(3)Three-year historical adjusted beta for BiomX per FactSet as of 2/29/2024
(4)Long-term U.S.A. ERP as of 1/5/2024 as published by Aswath Damodaran
(5)Kroll ‘s International Guide to Cost of Capital 2022 Summary Edition
(6)Assuming all debt paid off upon transaction close

 

Based on these inputs, Wainwright calculated an equity value range between $17.0 million and $31.0 million for the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition and compared it to the $12.7 million equity valuation of BiomX implied by the terms of the Merger Agreement.

 

Comparable Public Company Analysis

 

Wainwright also evaluated the implied equity valuation of the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition using a comparable company analysis. The comparable company analysis uses data based on current equity values of public companies that Wainwright viewed as comparable to the combined to develop a measure of current equity value for the combined company. Wainwright reviewed the total equity values of selected publicly traded, clinical-stage biopharmaceutical companies focused on respiratory or infectious disease indications that Wainwright viewed as operating in an area of focus similar to the combined company. The selected comparable public companies shown in the table below had an equity valuation range of between $17.0 million (25th percentile) and $151.0 million (75th percentile). Wainwright did not exclude any companies meeting the criteria described above.

 

$ in millions

 

 

Source: FactSet as of 3/27/24

 

Based on the analysis described above, Wainwright estimated that the implied equity value of the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition ranged between $3.0 million and $27.0 million, compared to the $12.7 million equity valuation of BiomX implied by the terms of the Merger Agreement.

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Precedent M&A Transactions

 

The precedent M&A analysis uses data based on the values acquirers have previously placed on comparable companies in a merger or acquisition to develop a measure of current value for the combined company. Wainwright examined precedent transactions, from July 3, 2018 through June 6, 2023, involving publicly traded, clinical-stage biopharmaceutical companies focused on respiratory or infectious disease indications that Wainwright viewed as operating in an area of focus similar to the combined company. Wainwright used only the upfront consideration paid in these transactions and did not consider any contingent value rights or other contingent consideration. The transactions shown in the table below had upfront consideration values ranging between $12.0 million (25th percentile) and $331.0 million (75th percentile). Wainwright did not exclude any companies meeting the criteria described above.

 

$ in millions

 

 

 

Source: SEC Edgar, Press Releases, Pitchbook and FactSet as of 2/29/2024

 

Based on the analysis described above, Wainwright estimated that the implied equity value of the 17.9% of the combined company to be owned by the stockholders of BiomX immediately after giving effect to the Acquisition ranged between $2.1 million and $59.2 million, compared to the $12.7 million equity valuation of BiomX implied by the terms of the Merger Agreement.

 

General

 

Wainwright is a nationally recognized investment banking firm that provides financial advisory services and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. BiomX retained Wainwright to render an opinion to the BiomX Board as to the fairness, from a financial point of view, to BiomX of the Merger Consideration based upon the foregoing qualifications, experience and expertise.

 

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BiomX paid Wainwright a cash fee of  $250,000 for rendering its fairness opinion delivered in connection with the Acquisition. The opinion fee was not contingent in whole or in part on the success of the Acquisition, or on the results of Wainwright’s evaluation and analysis or upon the conclusions reached in Wainwright’s opinion. In addition, BiomX agreed to reimburse Wainwright for its reasonable, documented, out-of-pocket expenses, including reasonable documented fees and disbursements of its counsel. BiomX has also agreed to indemnify Wainwright against certain liabilities and other items that may arise out of BiomX’s engagement of Wainwright. The BiomX Board did not limit Wainwright in any way in the investigations it made or the procedures it followed in rendering its opinion.

 

In the ordinary course of business, Wainwright and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of BiomX, and, accordingly, may at any time hold a long or a short position in such securities. Except as described below, Wainwright has not had a material relationship with, nor otherwise received fees from, BiomX or APT during the two years preceding the date of Wainwright’s opinion. On December 7, 2023, BiomX and Wainwright entered into an At the Market Offering Agreement (the “Offering Agreement”) pursuant to which Wainwright agreed to act as BiomX’s exclusive sales agent for the sale of up to $7,500,000 of Common Stock. Pursuant to the terms of the Offering Agreement, Wainwright is entitled to a placement fee of 3.0% of the gross sales price of the shares sold pursuant to the Offering Agreement and to the reimbursement of certain expenses. As of the date of its opinion, Wainwright had received less than $1,000 in fees under the Offering Agreement and had received $50,000 in expense reimbursement. In the future, Wainwright may provide financial advisory and investment banking services to BiomX or its affiliates for which Wainwright would expect to receive compensation.

 

Consistent with applicable legal and regulatory requirements, Wainwright has adopted policies and procedures to establish and maintain the independence of its research departments and personnel. As a result, Wainwright’s research analysts may hold views, make statements or investment recommendations and/or publish research reports with respect to BiomX and/or the Acquisition that differ from the views of its investment banking personnel

 

Pursuant to the engagement letter between H.C. Wainwright and BiomX, H.C. Wainwright received a Fairness Opinion fee of $250,000 upon delivery of its Fairness Opinion, which fee was not contingent on the successful completion of the Acquisition. Additionally, BiomX agreed to reimburse H.C. Wainwright for its reasonable out-of-pocket expenses and agreed to indemnify H.C. Wainwright against certain liabilities. The terms of the fee arrangement with H.C. Wainwright, which are customary in transactions of this nature, were negotiated at arm’s length between BiomX and H.C. Wainwright, and the BiomX Board was aware of the arrangement.

 

Interests of BiomX’s Directors and Executive Officers in the Acquisition

 

In considering the recommendation of the Board of Directors that you vote in favor of the proposals outlined herein, you should be aware that in addition to their interests as BiomX stockholders, the directors and executive officers of BiomX had interests in the Acquisition that were different from, or in addition to, those of other BiomX stockholders generally. Members of the Board of Directors were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Acquisition. See the section entitled “BiomX’s Reasons for the Acquisition” on page 57 of this proxy statement. BiomX stockholders should take these interests into account in deciding whether to vote in favor of the proposals outlined herein. These interests, which are described in more detail below, include the fact that the directors and executive officers of BiomX and APT remain entitled to continued indemnification and insurance coverage following the Acquisition under the Merger Agreement. Please see the section of this proxy statement titled “The Merger Agreement—Indemnification of Directors and Officers”. As discussed above, the Acquisition has already been completed, and the approval of BiomX stockholders was not, and is not now, required for the Acquisition. BiomX is not seeking stockholder approval of, and you are not being asked to vote on, the Acquisition.

 

As of March 15, 2024, BiomX’s Named Executive Officers were as set forth below. BiomX’s management team did not change as a result of the Acquisition.

 

Name   Position
Jonathan Solomon   Chief Executive Officer
Marina Wolfson   Chief Financial Officer
Merav Bassan   Chief Development Officer

 

In connection with the Acquisition, certain of BiomX’s directors retired from service as directors on the Board of Directors. In connection with the Merger Agreement, Russell Greig, Jonathan Solomon, Alan Moses and Edward L. Williams remained as members of the Board of Directors while Gregory Merril, Jesse Goodman, Jonathan Leff were appointed to the Board of Directors. Mr. Merril, Mr. Goodman and Mr. Leff were each directors of APT prior to the Acquisition. Mr. Leff is also an affiliate of Deerfield, which beneficially owned more than 5% of APT’s common stock on an as-converted basis prior to the Acquisition and which owns more than 5% of BiomX’s Common Stock following the Acquisition.

 

Director and Officer Indemnification.

 

BiomX’s directors and executive officers remain entitled to continued indemnification and insurance coverage following the Acquisition under the Merger Agreement. Please see the section of this proxy statement titled “The Merger Agreement—Indemnification of Directors and Officers.”

 

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The Merger Agreement provides for indemnification of directors and officers pursuant to the following terms.

 

From the First Merger Effective Time through the sixth anniversary of the First Merger Effective Time, each of BiomX and Second Merger Sub shall indemnify and hold harmless each person who has been at any time prior to the First Merger Effective Time, a director or officer of Company or APT or any of their respective Subsidiaries, respectively (the “D&O Indemnified Parties”), against all claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the D&O Indemnified Party is or was a director or officer of BiomX or APT, or any Subsidiary thereof, asserted or claimed prior to the First Merger Effective Time, in each case, to the fullest extent permitted under applicable Law. Except in the case of fraud and willful misconduct, each D&O Indemnified Party will be entitled to advancement of expenses incurred in the defense of any such claim, action, suit, proceeding or investigation from each of BiomX or APT, jointly and severally, upon receipt by BiomX or APT from the D&O Indemnified Party of a request therefor; provided that any such person to whom expenses are advanced provides an undertaking to BiomX, to the extent then required by the DGCL or DLLCA, as applicable, to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

 

The provisions of the certificate of incorporation and bylaws of BiomX with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers of BiomX that are presently set forth in the certificate of incorporation and bylaws of BiomX shall not be amended, modified or repealed for a period of six years from the First Merger Effective Time in a manner that would adversely affect the rights thereunder of individuals who, at or prior to the First Merger Effective Time, were officers or directors of BiomX, unless such modification is required by applicable Law. The certificate of formation and limited liability BiomX agreement of Second Merger Sub contains provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers as those presently set forth in the certificate of incorporation and bylaws of BiomX.

 

From and after the First Merger Effective Time, (i) Second Merger Sub shall fulfill and honor in all respects the obligations of APT to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under APT’s Organizational Documents and pursuant to any indemnification agreements between APT and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Merger Effective Time and (ii) BiomX shall fulfill and honor in all respects the obligations of BiomX to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under BiomX’s Organizational Documents and pursuant to any indemnification agreements between BiomX and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Merger Effective Time.

 

From and after the First Merger Effective Time, BiomX shall continue to maintain directors’ and officers’ liability insurance policies, with an effective date as of the Closing Date, on commercially available terms and conditions and with coverage limits customary for U.S. public companies similarly situated to BiomX. From and after the First Merger Effective Time, BiomX shall pay all expenses, including reasonable attorneys’ fees, that are incurred by the persons referred to in Section 5.5 of the Merger Agreement in connection with their successful enforcement of the rights provided to such persons in Section 5.5 of the Merger Agreement.

 

The provisions of Section 5.5 of the Merger Agreement are in addition to the rights otherwise available to the current and former officers and directors of BiomX and APT by Law, charter, statute, bylaw or agreement, and shall operate for the benefit of, and shall be enforceable by, each of the D&O Indemnified Parties, their heirs and their representatives.

 

In the event BiomX or Second Merger Sub or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of BiomX or Second Merger Sub, as the case may be, shall succeed to the obligations set forth in Section 5.5 of the Merger Agreement. BiomX shall cause Second Merger Sub to perform all of the obligations of Second Merger Sub under Section 5.5 of the Merger Agreement.

 

Deal Bonus

 

Following the Acquisition, BiomX approved cash bonuses in the aggregate amount of $191,683 to certain of its officers, as set forth in the table below, in recognition of their efforts in connection with the Acquisition. In addition, the BiomX Board further anticipates granting restricted stock units with an aggregate value of $156,943 to certain of its officers, as set forth in the table below, following stockholder approval of the Charter Amendment Proposal.

 

Officer  Cash Bonus   Proposed Equity Bonus 
Avi Gabay   26,545    26,545 
Jonathan Solomon   51,048    51,048 
Dr. Merav Bassan   32,058    32,058 
Inbal Benjamini Elran   21,236    21,236 
Assaf Oron   60,795    26,055 
Total   191,683    156,943 

 

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Federal Securities Law Consequences; Resale Restrictions

 

The issuance of Common Stock, Series X Preferred Stock and Merger Warrants in connection with the Acquisition and the issuance of Series X Preferred Stock, Private Placement Warrants and Placement Agent Warrants in connection with the Private Placement were effected by means of private placements, which were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder and such shares will be “restricted securities.” The shares of Common Stock issued in connection with the Acquisition were not registered under the Securities Act upon issuance and are not freely transferable. Holders of such shares may not sell their respective shares unless the shares are registered under the Securities Act or an exemption is available under the Securities Act. Additionally, the shares of Common Stock issued in the Acquisition to APT’s stockholders are subject to resale restrictions under certain lock-up agreements entered into with BiomX and APT (the “Lock-up Agreements”), as further described in the section “The Merger Agreement—Lock-up Agreements” beginning on page 77 of this proxy statement. The Series X Preferred Stock issued in connection with the Acquisition and the Private Placement is not listed on any exchange. Following stockholder approval of the Conversion Proposal, each share of Series X Preferred Stock is convertible at any time at the option of the holder into 1,000 shares of Common Stock, subject to certain limitations, including that a holder of Series X Preferred Stock is prohibited from converting shares of Series X Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 0% and 19.99%) of the total number of shares of Common Stock outstanding or deemed to be outstanding as of the applicable measurement date. Holders of the shares of Common Stock issued upon conversion of the Series X Preferred Stock may not sell their respective shares unless the shares are registered under the Securities Act or an exemption is available under the Securities Act. In connection with the Purchase Agreement, BiomX entered into the Registration Rights Agreement (as defined below) with the Investors, pursuant to which BiomX prepared and filed a resale registration statement on Form S-3 (the “Registration Statement”) with the SEC within 45 calendars day following the consummation of the Private Placement, as further described in the section “The Private Placement—Registration Rights Agreement”).

 

Material U.S. Federal Income Tax Considerations of the Acquisition

 

The following discussion summarizes certain material U.S. federal income tax considerations of the Acquisition that would be expected to apply generally to U.S. holders of our Common Stock. This summary is based upon current provisions of the Code, existing Treasury Regulations under the Code and current administrative rulings and court decisions, all of which are subject to change or different interpretation. Any change, which may or may not be retroactive, could alter the tax consequences to us or our stockholders as described in this summary. No ruling from the U.S. Internal Revenue Service, or the IRS, has been or will be requested in connection with the Acquisition and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or a court would not sustain any such challenge.

 

No attempt has been made to comment on all U.S. federal income tax consequences of the Acquisition that may be relevant to particular U.S. Holders, including holders: (i) who are subject to special tax rules such as dealers, brokers and traders in securities, mutual funds, regulated investment companies, real estate investment trusts, insurance companies, banks or other financial institutions or tax-exempt entities; (ii) who acquired their shares in connection with stock options, stock purchase plans or other compensatory transactions; (iii) who hold their shares as a hedge or as part of a hedging, straddle, “conversion transaction,” “synthetic security,” integrated investment or any risk reduction strategy; (iv) who are partnerships, limited liability companies that are not treated as corporations for U.S. federal income tax purposes, S corporations, or other pass-through entities or investors in such pass-through entities; (v) who do not hold their shares as capital assets for U.S. federal income tax purposes (generally, property held for investment within the meaning of Section 1221 of the Code); (vi) who hold their shares through individual retirement or other tax-deferred accounts; or (vii) who have a functional currency for United States federal income tax purposes other than the U.S. dollar.

 

In addition, the following discussion does not address state, local or foreign tax consequences of the Acquisition, the Medicare tax on net investment income, U.S. federal estate and gift tax, the alternative minimum tax, the rules regarding qualified small business stock within the meaning of Section 1202 of the Code, or any other aspect of any U.S. federal tax other than the income tax. The discussion generally assumes that for U.S. federal income tax purposes, none of the Acquisition will be integrated or otherwise treated as part of a unified transaction with any other transaction.

 

Acquisition

 

Each of BiomX and APT agreed to use its commercially reasonable efforts to cause the Acquisition to qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Code, and not to permit or cause any affiliate of BiomX or APT to, take any action, or fail to take or cause to be taken any action, which would reasonably be expected to prevent or impede the Acquisition from qualifying as a reorganization under Section 368(a)(1)(A) of the Code.

 

HOLDERS OF OUR COMMON STOCK ARE ADVISED AND EXPECTED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF THE ACQUISITION UNDER STATE, LOCAL AND FOREIGN TAX LAWS.

 

Vote Required

 

The Acquisition has already been completed, and the approval of our stockholders was not, and is not now, required for the Acquisition. As discussed above, the Company is not seeking stockholder approval of, and you are not being asked to vote on, the Acquisition.

 

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THE MERGER AGREEMENT

 

The following is a summary of the material provisions of the Merger Agreement, which is attached as Annex E to this proxy statement. You should refer to the full text of the Merger Agreement for details about the transaction and the terms and conditions of the Merger Agreement, and carefully read this entire proxy statement and the other documents to which we have referred you. You should also review the section entitled “Where You Can Find Additional Information.”

 

The representations and warranties of the Company, APT, First Merger Sub and Second Merger Sub contained in the Merger Agreement have been made solely for the benefit of the parties to the Merger Agreement. In addition, such representations and warranties (a) have been made only for purposes of the Merger Agreement, (b) have been qualified by certain documents filed with, or furnished to, the SEC by the Company prior to the date of the Merger Agreement, (c) are subject to important qualifications, limitations and supplemental information agreed to by the Company, APT, First Merger Sub and Second Merger Sub in connection with negotiating the terms of the Merger Agreement, (d) are subject to materiality qualifications contained in the Merger Agreement which may differ from what may be viewed as material by investors, (e) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement and (f) have been included in the Merger Agreement for the purpose of allocating risk between APT, on the one hand, and the Company, First Merger Sub and Second Merger Sub, on the other hand, rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties or any descriptions thereof as characterization of the actual state of facts or condition of the Company or APT or their respective subsidiaries or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

 

The representations and warranties in the Merger Agreement and the description of them in this proxy statement should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings the Company publicly files with the SEC. Such information can be found elsewhere in this proxy statement and in the public filings the Company makes with the SEC, as described in the section entitled “Where You Can Find Additional Information.”

 

The Acquisition

 

Upon the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL and Delaware Limited Liability Company Act (“DLLCA”), at the effective time of the First Merger (the “First Merger Effective Time”), First Merger Sub merged with and into APT, with APT being the surviving corporation and becoming a wholly owned subsidiary of the Company. Immediately following the First Merger, APT merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity, with Second Merger Sub renaming itself “Adaptive Phage Therapeutics, LLC” pursuant to the terms of the Second Merger.

 

Closing and Effective Time of the Acquisition

 

The Acquisition Closing occurred remotely on March 15, 2024. At the Acquisition Closing, the parties caused the First Merger to be consummated by executing and filing with the Secretary of State of the State of Delaware a certificate of merger with respect to the First Merger. Immediately after, the parties caused the Second Merger to be consummated by executing and filing with the Secretary of State of the State of Delaware a certificate of merger with respect to the Second Merger.

 

Consideration Received in the Acquisition

 

The aggregate merger consideration paid by the Company for all of the outstanding shares of APT capital stock was (a) 9,164,968 shares of Common Stock, which shares represented a number of shares equal to no more than 19.9% of the outstanding shares of Common Stock as of immediately before the First Merger Effective Time (the “Common Stock Consideration Cap”), (b) 40,470 shares of Series X Preferred Stock and (c) Merger Consideration Warrants exercisable for an aggregate of 2,166,497 shares of Common Stock. In addition, the Company issued the Landlord Warrant, exercisable for 250,000 shares of Common Stock, to the Landlord in connection with the Lease Amendment by and between APT and the Landlord. Each share of Series X Preferred Stock will be convertible into 1,000 shares of Common Stock and each Merger Warrant will be exercisable for one share of Common Stock at an exercise price of $5.00 per share, in each case subject to and contingent upon stockholder approval of Proposal No. 1 and Proposal No. 3 at this Annual Meeting. The Merger Warrants and shares of Common Stock and Series X Preferred Stock were allocated among the stockholders of APT as set forth on the allocation certificate delivered pursuant to the Merger Agreement.

 

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Treatment of Equity Awards

 

At the First Merger Effective Time, each APT option that was outstanding and unexercised immediately prior to the First Merger Effective Time under the APT 2017 Equity Incentive Plan (the “APT Plan”), whether vested or not vested, was automatically cancelled and forfeited for no consideration in accordance with the terms of the APT Plan. APT terminated the APT Plan as of the Acquisition Closing and following such termination no participant has any right to acquire any securities of APT or any subsidiary thereof.

 

Proxy Statement; Company Stockholder Meeting;

 

BiomX is obligated under the Merger Agreement to, as promptly as practicable after the Acquisition Closing, prepare and file with the SEC a proxy statement and call, give notice of and hold a meeting of its stockholders for the purposes of voting on the Transaction Proposals.

 

Incentive Plan

 

BiomX is obligated under the Merger Agreement to adopt a new stock incentive plan, or amend the 2019 Plan, pursuant to which shares of Common Stock comprising an amount equal to 15% of the fully-diluted, outstanding equity interests of BiomX immediately following the Acquisition and Private Placement (after giving effect to the conversion of the Private Placement Preferred Stock and the Acquisition Preferred Stock and the exercise of the Warrants) will be reserved for issuance by BiomX pursuant to, and in accordance with, the terms and conditions of such stock incentive plan, to employees, directors, consultants and other service providers of BiomX and its subsidiaries.

 

Amendment to the Company’s Certificate of Incorporation

 

Stockholders of record of BiomX’s capital stock on the Record Date will be asked to approve the Authorized Share Increase in order to authorize a sufficient number of shares of BiomX Common Stock to be issued in connection with (A) the conversion of the Series X Preferred Stock issued pursuant to the Merger Agreement and the Purchase Agreement; (B) the exercise of the Warrants; and (C) the A&R Plan.

 

Representations and Warranties

 

The Merger Agreement contains customary representations and warranties of the Company and APT for a transaction of this type relating to, among other things:

 

corporate organization and power, and similar corporate matters;

 

subsidiaries;

 

authority to enter into the Merger Agreement and the binding nature thereof;

 

the requisite vote required to approve the transaction;

 

typical non-contravention and third party consent representations;

 

capitalization;

 

financial statements;

 

absence of changes/material events;

 

absence of undisclosed liabilities;

 

title to assets;

 

real property and leaseholds;

 

intellectual property and privacy;

 

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material contracts;

 

compliance with laws and permits;

 

health care regulatory matters;

 

legal proceedings and orders;

 

tax matters;

 

employee and labor matters;

 

benefit plans;

 

environmental matters;

 

insurance;

 

absence of brokers/financial advisors;

 

affiliate transactions;

 

anti-bribery;

 

net cash;

 

with respect to the Company, its SEC filings;

 

  with respect to the Company, the fairness opinion delivered by Wainwright; and

 

with respect to the Company, certain grants from the State of Israel.

 

The representation and warranties are, in many respects, qualified by materiality and knowledge, and did not survive past the First Merger Effective Time, but their accuracy formed the basis of the conditions of the obligation of the Company and APT to complete the Acquisition.

 

Conditions to the Completion of the Acquisition

 

Each party’s obligation to complete the Acquisition was subject to the satisfaction or waiver by each of the parties, at or prior to the Acquisition, of various conditions, which include the following, each of which was satisfied prior to the Acquisition Closing:

 

there must not have been issued, and remain in effect, any temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Acquisition or any of the other transactions contemplated by the Merger Agreement by any court of competent jurisdiction or other governmental entity of competent jurisdiction, and no law, statute, rule, regulation, ruling or decree shall be in effect which has the effect of making the consummation of the Acquisition or any of the other transactions contemplated by the Merger Agreement illegal;

 

BiomX’s Common Stock must have been continually listed on NYSE American through date of the Acquisition Closing;

 

the Certificate of Designation must have been filed by the Company with the Secretary of State of the State of Delaware; and

 

the Purchase Agreement must have been in full force and effect with cash proceeds of not less than $50,000,000.

 

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In addition, the obligation of the Company, First Merger Sub and Second Merger Sub to complete the Acquisition was further subject to the satisfaction or waiver, prior to the Acquisition, of the following conditions, each of which was satisfied prior to the Acquisition Closing:

 

the receipt of the consent of the members of the board of directors of APT adopting and approving the Merger Agreement;

 

the affirmative vote (or written consent) of (a) the holders of a majority of the outstanding shares of APT’s capital stock, voting as a single class on an as converted to common stock basis, (b) the majority of the outstanding shares of APT’s Series B-1 Preferred Stock, which majority must include Deerfield (the “Largest Lead Investor”) and (c) the majority of the outstanding shares of APT’s Series B Preferred Stock, which majority must include the Largest Lead Investor, adopting and approving the Merger Agreement;

 

the receipt of an allocation certificate, setting forth each holder of APT common stock, APT preferred stock and APT convertible notes along with the number and type of stock held as of immediately prior to the First Merger Effective Time;

 

the receipt of a fully executed FIRPTA Certificate from APT;

 

the receipt of fully executed Lock-up Agreements from each of the Company Signatories (as defined in the Merger Agreement); and

 

the representations and warranties set forth in Article II of the Merger Agreement must have been true and correct in all material respects as of the date of Closing.

 

Finally, the obligation of APT to complete the Acquisition was further subject to the satisfaction or waiver, prior to the Acquisition, of the following conditions, each of which was satisfied prior to the Acquisition Closing:

 

the receipt of a certificate setting forth (i) the number of shares of BiomX’s Common Stock outstanding as of March 4, 2024 and (ii) each record holder of BiomX’s Common Stock, warrants or options, along with the number of shares of Common Stock underlying any such warrants or options as of the First Merger Effective Time;

 

the receipt of resolutions of the BiomX Board adopting and approving the Merger Agreement;

 

the receipt of written resignations of certain directors of Company who would not continue as directors after Acquisition Closing;

 

the receipt of fully executed Lock-Up Agreements from the Parent Signatories (as defined in the Merger Agreement);

 

the receipt of fully executed Support Agreement (as defined below) from certain stockholders of BiomX;

 

the receipt of notices from certain holders of the Company’s pre-funded warrants that the beneficial ownership limitation of such pre-funded warrants shall be eliminated to the maximum extent permitted and that such pre-funded warrants shall be exercised pursuant to their terms;

 

the representations and warranties set forth in Article III of the Merger Agreement must have been true and correct in all material respects as of the date of Closing, which APT represented as such on March 15, 2024; and

 

each designee of APT, as previously agreed upon between APT and Company, must have been appointed to the Company Board of Directors, the approval of which was obtained via written consent of the Company Board on March 15, 2024 and each must have entered into indemnification agreements, which were obtained on March 15, 2024. 

 

Indemnification of Directors and Officers

 

From the First Merger Effective Time through the sixth anniversary of the First Merger Effective Time, each of Company and Second Merger Sub shall indemnify and hold harmless the D&O Indemnified Parties against all claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the D&O Indemnified Party is or was a director or officer of Company or APT, or any Subsidiary thereof, asserted or claimed prior to the First Merger Effective Time, in each case, to the fullest extent permitted under applicable Law. Except in the case of fraud and willful misconduct, each D&O Indemnified Party will be entitled to advancement of expenses incurred in the defense of any such claim, action, suit, proceeding or investigation from each of Company or APT, jointly and severally, upon receipt by Company or APT from the D&O Indemnified Party of a request therefor; provided that any such person to whom expenses are advanced provides an undertaking to Company, to the extent then required by the DGCL or DLLCA, as applicable, to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

 

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The provisions of the Certificate of Incorporation and Bylaws of Company with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers of Company that are presently set forth in the Certificate of Incorporation and Bylaws of BiomX shall not be amended, modified or repealed for a period of six years from the First Merger Effective Time in a manner that would adversely affect the rights thereunder of individuals who, at or prior to the First Merger Effective Time, were officers or directors of Company, unless such modification is required by applicable Law. The certificate of formation and limited liability company agreement of Second Merger Sub shall contain, and Company shall cause the certificate of formation and limited liability company agreement of Second Merger Sub to so contain, provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers as those presently set forth in the Certificate of Incorporation and Bylaws of Company.

 

From and after the First Merger Effective Time, (i) Second Merger Sub shall fulfill and honor in all respects the obligations of APT to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under APT’s Organizational Documents and pursuant to any indemnification agreements between APT and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Merger Effective Time and (ii) Company shall fulfill and honor in all respects the obligations of Company to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under Company’s Organizational Documents and pursuant to any indemnification agreements between Company and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Merger Effective Time.

 

From and after the First Merger Effective Time, Company shall continue to maintain directors’ and officers’ liability insurance policies, with an effective date as of the Closing Date, on commercially available terms and conditions and with coverage limits customary for U.S. public companies similarly situated to Company. From and after the First Merger Effective Time, Company shall pay all expenses, including reasonable attorneys’ fees, that are incurred by the persons referred to in Section 5.5 of the Merger Agreement in connection with their successful enforcement of the rights provided to such persons in Section 5.5 of the Merger Agreement.

 

The provisions of Section 5.5 of the Merger Agreement are in addition to the rights otherwise available to the current and former officers and directors of Company and APT by Law, charter, statute, bylaw or agreement, and shall operate for the benefit of, and shall be enforceable by, each of the D&O Indemnified Parties, their heirs and their representatives.

 

In the event Company or Second Merger Sub or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of Company or Second Merger Sub, as the case may be, shall succeed to the obligations set forth in Section 5.5 of the Merger Agreement. Company shall cause Second Merger Sub to perform all of the obligations of Second Merger Sub under Section 5.5 of the Merger Agreement.

 

Support Agreements

 

In connection with the execution of the Merger Agreement, BioMX and APT entered into stockholder support agreements (the “Support Agreements”) with certain of the Company’s stockholders who constituted a majority of the voting stockholders of the Company. The Support Agreements provide that, among other things, each of the parties thereto shall vote or cause to be voted all of the shares of capital stock owned by such stockholder in favor of the Transaction Proposals at this Annual Meeting.

 

Lock-up Agreements

 

Concurrently and in connection with the execution of the Merger Agreement, (i) all of the directors and officers and a majority of the stockholders of BiomX and (ii) all of the directors and officers and certain of the stockholders of APT entered into the Lock-Up Agreements with BiomX and APT, pursuant to which each such stockholder is subject to a 180-day lockup from the date of the Acquisition Closing, on the sale or transfer of shares of Common Stock, Series X Preferred Stock or any securities convertible into or exercisable or exchangeable for Common Stock held by each such stockholder at the Acquisition Closing, including those shares received by APT stockholders in the Acquisition.

 

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Other Agreements

 

Pursuant to the Merger Agreement, BiomX and APT agreed that:

 

The Company shall file the Registration Statement pursuant to the terms of the Registration Rights Agreement;

 

The Company shall, at all times after the approval of the Transaction Proposals, as long as the Series X Preferred Stock or Merger Warrants remain outstanding, reserve and keep available, free from preemptive rights, enough shares of Common Stock for the conversion or exercise thereof.

 

The Company shall use reasonable best efforts to ensure that each former APT employee who remains employed by the Company shall be credited with his or her years of service to APT or its predecessors, provide such employees with base salary or hourly wage not less than was in effect as if immediately prior to the First Merger Effective Time through December 31, 2024.

 

From the First Merger Effective Time through the sixth anniversary of the date of the First Merger Effective Time, each of the Company and Second Merger Sub shall indemnify and hold harmless past and current as of the First Merger Effective Time directors and officers of Company or APT against all claims, closes, liabilities, damages, judgments, fines and reasonable fees, costs and expenses (including attorneys’ fees) incurred in connection with claims, actions, suits, proceeding or investigations arising out of or pertaining to the fact the individual was a director or officer of Company or APT, asserted or claimed prior to the First Merger Effective Time. Company agrees not to amend such provisions in the Certificate of Incorporation or Bylaws of Company with respect to indemnification of present or former directors or officers of Company, and Surviving Company shall fulfil the obligation of director and officer indemnification by APT under its certificate of incorporation and/or bylaws.

 

The Company shall, from and after the First Merger Effective Time, continue to maintain directors’ and officers’ liability insurance policies with an effective date as of the Closing, on commercially available terms and conditions and with coverage limits customary to companies similarly situation to Company.

 

The parties shall take all necessary action such that immediately after the Acquisition Closing, the BiomX Board is comprised of seven members, consisting of four directors designated by BiomX and three directors designated by APT.

 

The Company shall, within six months of Closing, establish and maintain commercially reasonable systems of internal controls to provide reasonable assurances regarding compliance with the Federal Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act, or other applicable anti-corruption law.

 

The Company shall, at the Acquisition Closing, issue the Landlord Warrant to the Landlord in fulfillment of its obligations pursuant to the Lease Amendment.

 

Amendment

 

The Merger Agreement may be amended with the approval of the board of directors of Merger Sub II and the BiomX Board.

 

Specific Performance

 

The parties to the Merger Agreement agreed that they will be entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement, this being in addition to any other remedy to which they are entitled at law or in equity.

 

Governing Law

 

The Merger Agreement is governed by and construed in accordance with the laws of the State of Delaware.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

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

 

On March 6, 2024, BiomX Inc. (“the Company’), entered into the Merger Agreement (the “Merger Agreement”) with BTX Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), BTX Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and APT. Pursuant to the Merger Agreement, First Merger Sub merged with and into APT, with APT being the surviving corporation and becoming a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, APT merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity. APT was a U.S.-based privately-held, clinical-stage biotechnology company pioneering the development of phage-based therapies to combat bacterial infection. As a result of the Acquisition, the Company is expected to have a pipeline that includes two Phase 2 assets each aimed at treating serious infections with unmet medical needs.

 

On March 15, 2024, the effective time of the Acquisition (the “Closing Date”), APT’s former stockholders were issued an aggregate of 9,164,968 shares of the Company’s Common Stock, 40,470 Redeemable Convertible Preferred Shares and Warrants to purchase up to an aggregate of 2,166,497 shares of the Company Common Stock (the “Merger Warrants”). Each share of Redeemable Convertible Preferred Shares is convertible into an aggregate of 1,000 shares of Common Stock. The Merger Warrants will be exercisable at any time after the BiomX Stockholder Meeting (as defined below) at an exercise price of $5.00 per share and will expire on January 28, 2027. In the event the Redeemable Convertible Preferred Shares are not converted by the earlier to occur of (i) the Stockholders Meeting (as defined below) or (ii) five months after the initial issuance of the Redeemable Convertible Preferred Shares, the Company may be required to pay to each holder of the Redeemable Convertible Preferred Shares an amount in cash equal to the fair value of the Redeemable Convertible Preferred Shares at the time of such redemption.

 

Pursuant to the Merger Agreement, the Company has agreed to hold a stockholders’ meeting (the “Stockholders’ Meeting”) to submit the following matters to its stockholders for their consideration: (i) the approval of the conversion of the Series X Preferred Stock into shares of Common Stock in accordance with the rules of NYSE American, and (ii) the approval of an amendment to the certificate of incorporation of the Company to authorize an increase of the Company’s authorized shares and certain other matters.

 

Concurrently with the consummation of the Acquisition, the Company consummated a private placement (the “March 2024 PIPE”) with certain investors, pursuant to which such investors purchased an aggregate of 216,417 Redeemable Convertible Preferred Shares (the “PIPE Preferred Shares”), each PIPE Preferred Share is convertible into an aggregate of 1,000 shares of Common Stock and private placement warrants to purchase up to an aggregate of 108,208,500 shares of the Company’s Common Stock (the “Private Placement Warrant”). Each unit of one PIPE Preferred Share and 500 Private Placement Warrant sold at a combined price of $231.10. The PIPE Preferred Shares and the Private Placement Warrants were issued in a private placement pursuant to an exemption from registration requirements under the Securities Act for aggregate gross proceeds of $50,000. Each Private Placement Warrant’s exercise price equals to $0.2311, subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, will become exercisable at any time after the Stockholders Meeting and will expire within two years after the approval date.

 

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The following unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2024 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023  gives effect to the Acquisition, and the related financing transactions (the March 2024 PIPE), as if they had been completed on January 1, 2023, the beginning of the earliest period presented. The historical financial results of APT are presented separately prior to the Closing Date and are included in the results of BiomX beginning on the Closing Date and thereafter.

 

The unaudited pro forma condensed combined financial information herein has been prepared to illustrate the effects of the Acquisition in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to Article 11 of Regulation S-X. Information regarding these pro forma adjustments is subject to risks and uncertainties that could cause actual results to differ materially from those presented in the unaudited pro forma condensed consolidated financial information herein. In our opinion, all adjustments necessary to reflect the effects of the Acquisition as described above have been included and are based upon currently available information and assumptions that the Company believes are reasonable as of the date of this report; however, such adjustments are subject to change. Any of the factors underlying these estimates and assumptions may change or prove to be materially different than expected.

 

The following unaudited pro forma condensed consolidated financial information and related notes present our historical financial information and that of APT, adjusted to give pro forma effect to events that are (i) directly attributable to the acquisition and (ii) factually supportable. The unaudited pro forma condensed consolidated financial information should be read in conjunction with our and APT’s separate audited financial statements, and our separate unaudited condensed consolidated financial statements and the related respective notes.

 

Since the Acquisition is already reflected in BiomX’s consolidated financial statements as of March 31, 2024, this pro forma financial information contains only a pro forma of the statements of operations.

 

The unaudited pro forma condensed combined financial statements do not necessarily represent what the Company’s financial condition or results of operations would have been had the Acquisition occurred on the dates indicated. The unaudited pro forma combined financial information also may not be useful in predicting the future financial condition and results of the Company’s operations. Additionally, the unaudited pro forma condensed combined financial statements do not give effect to synergies, operating efficiencies or cost savings that may be achieved with respect to the Acquisition, other than the lease modification which was conditional on the closing of the Acquisition and described in Note BB below. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the three months ended March 31, 2024
(USD in thousands, except share and per share data)

 

   BiomX Consolidated
(Historical, U.S. GAAP)
   APT
(Historical, U.S. GAAP)(*)
   Pro-Forma Adjustments   Related Financing Transaction (March 2024 PIPE)   Accounting Policy Adjustments   Notes  Pro Forma Combined 
Revenue       1,232            (1,232)  DD   0 
                                  
Research and development (“R&D”) expenses, net   4,105    2,729    (33)            AA   5,517 
              (52)            BB     
                        (1,232)  DD     
                                  
General and administrative expenses   2,680    2,980    (54)            AA   3,443 
              (80)            BB     
              (2,083)            GG     
Operating loss   6,785    4,477    (2,302)        -       8,960 
Other expenses (income)   (88)   (845)                     (933)
Interest expenses   850    37                      887 
Interest income        (1)                     (1)
Loss from change in fair value of Private Placement Warrants   8,010                           8,010 
Finance income, net   1,765    0    (1,795)   (112)       GG   (142)
Loss before tax   17,322    3,668    (4,097)   (112)           16,781 
Tax expenses   5    -                      5 
Net Loss   17,327    3,668    (4,097)   (112)           16,786 
Basic and diluted loss per share (USD)   0.28                       HH   0.24 
Weighted average number of shares of Common Stock outstanding, basic and diluted   62,292,277                           69,824,944 

 

(*) Includes APT’s results between January 1, 2024 and March 15, 2024, prior to the Acquisition

 

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended December 31, 2023

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

 

   BiomX Consolidated
(Historical, U.S. GAAP)
   APT
(Historical, U.S. GAAP)
   Pro-Forma Adjustments   Related Financing Transaction (March 2024 PIPE)   Accounting Policy Adjustments   Notes  Pro Forma Combined 
Revenue       14,093                  217 
                        (13,876)  DD     
Research and development (“R&D”) expenses, net   16,698    24,458                      27,903 
              835             BB     
                        (13,876)  DD     
              (212)            AA     
General and administrative expenses   8,650    6,843    741             EE   15,397 
              (545)            BB     
              (292)            AA     
Operating loss   25,348    17,208    527                 43,083 
Change in fair value of preferred stock tranche rights liabilities        (1,200)   1,200             CC   - 
Other expenses (income)   (357)   5                      (352)
Interest expenses   2,404    23                      2,427 
Interest income        (18)                     (18)
Finance income, net   (1,249)        1,795    112        FF   658 
Loss before tax   26,146    16,018    3,522    112            45,798 
Tax expenses   23                           23 
Net Loss   26,169    16,018    3,522    112            45,821 
Basic and diluted loss per share (USD)   0.51                       HH   0.76 
Weighted average number of shares of Common Stock outstanding, basic and diluted   51,330,324                           60,495,292 

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Acquisition and related financing transaction and has been prepared for informational purposes only.

 

We and APT did not have any historical relationship prior to the Business Combination.

 

(1) Basis of Preparation

 

The unaudited pro forma condensed combined financial information for the three months ended March 31, 2024 and for the year ended December 31, 2023  has been prepared in accordance with SEC Regulation S-X Article 11 and by using the acquisition method of accounting in accordance with the business combination accounting guidance set forth in Accounting Standards Codification 805, Business Combinations (“ASC 805”).

 

The pro forma adjustments represent management’s estimates based on information available as of the date of this report and are subject to change as additional information becomes available and additional analyses are performed. Management considers this basis of presentation to be reasonable under the circumstances.

 

The unaudited pro forma condensed combined financial information does not give effect to the potential impact of synergies, operating efficiencies or cost savings associated with the Acquisition, except for APT’s pre-Acquisition lease modification (see Note BB below).

 

The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of the results of operations in future periods or the results that would have been realized had BiomX and APT been a combined company during the period presented.

 

Since the Acquisition is already reflected in BiomX’s consolidated financial statements as of March 31, 2024, this pro forma financial information contains only a pro forma of the statements of operations.

 

(2) Accounting policies

 

The accounting policies used in the preparation of the unaudited pro forma condensed combined financial information are those set out in our audited financial statements as of and for the year ended December 31, 2023. Management performed a comprehensive review of the accounting policies between the two entities. Management is not aware of any significant accounting policy differences, except for the one mentioned in note DD below, and has therefore not made any other adjustments to the pro forma condensed combined financial information.

 

(3) Notes to adjustments to unaudited pro forma condensed combined financial information

 

Note (AA)   To reflect the elimination of all of APT's stock-based compensation expenses. The awards were forfeited and were not replaced as part of the Acquisition as a result of APT's equity waterfall structure.
Note (BB)   To reflect a change in lease expenses as a result of (i) pre-Acquisition modification of APT's operating leases, which was conditional on the closing of the Acquisition, as well as (ii) fair value adjustments to APT's operating right of use assets.
Note (CC)   To reflect the elimination of the change in fair value of preferred stock tranche rights liabilities that was incurred by APT as the convertible instruments that were issued by APT were canceled prior to the Acquisition.

Note (DD)

 

 

 

 

In August 2019, APT was awarded a cost reimbursement contract from the U.S. Army Medical Research Acquisition Activity (“USAMRAA”) and the U.S. Army Medical Research & Development Command (“USAMRDC”) to advance personalized phage therapy from niche to broad use. The competitive award was granted by USAMRAA and USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”). Under the cost reimbursement contract, MTEC reimburses APT for approved incurred costs that are based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study utilizing APT’s PhageBank to treat patients with urinary tract infections (“UTI”). In September 2019, APT entered into a contract modification to include an additional grant to perform pre-clinical activities to advance the Diabetic Foot Ulcer (“DFU”) clinical program. In July 2020, APT entered into its second contract modification to include an additional grant to expand the activities under the contract to include activities to advance potential bacteriophage-based vaccines against COVID-19 and also to include additional funding for APT’s UTI program. In September 2021, APT entered into its third contract modification to include additional funding to support additional activities for APT’s UTI and DFU clinical programs and for additional development work for APT’s potential bacteriophage-based vaccine candidates against COVID-19. In September 2022, APT entered into its fourth contract modification to support additional activities for APT’s DFU clinical program.

 

APT accounted for the MTEC contract as a government grant which analogizes from International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance.

 

BiomX's accounting policy is to present government grant income as a deduction of R&D expenses, rather than under the revenue line item. Therefore, this pro forma condensed combined forma financial information reflects such an accounting policy alignment.

 

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  Note (EE)

 

 

  To reflect costs related to executing the Acquisition.

  Note (FF)

 

 

  To reflect issuance costs attributed to liability-classified PIPE warrants.

Note (GG)

 

 

  To reflect the elimination of issuance and merger costs in a total of $741 that were incurred by BiomX, which are assumed to be incurred on January 1, 2023 in   this pro forma condensed combined forma financial information; and elimination of merger costs in a total of $1,342 that were incurred by APT prior to the Acquisition.
Note (HH)    

The pro forma basic net income per share attributable to common stock is calculated using (i) the historical basic weighted average shares of the Company’s Common Stock outstanding and (ii) the issuance of shares in connection with the Acquisition; and (iii) the issuance of shares in connection with the March 2024 PIPE. Pro forma diluted net income per share attributable to common stock is equal to   basic net income per share, as the impact of all convertible instruments is anti-dilutive.

 

The Company considers its redeemable convertible preferred shares to be participating securities as the holders of the redeemable convertible preferred shares would be entitled to dividends that would be distributed to the holders of ordinary shares, on a pro-rata basis assuming conversion of all redeemable convertible preferred shares into ordinary shares. However, these participating securities do not contractually require the holders of such shares to participate in the Company’s losses. As such, net loss for the periods presented was not allocated to the Company’s participating securities.

 

The pro forma basic and diluted weighted average shares outstanding are as follows: 

 

Description (in USD thousand)  For the
three months
ended
March 31,
2024
   For the
 year ended
December 31,
2023
 
Numerator:          
Pro forma net loss attributable to common stock  $16,786   $45,821 
Denominator:          
Historical BiomX weighted average shares outstanding – basic   62,292,277    51,330,324 
Issuance of BiomX shares to APT stockholders pursuant to the Acquisition   7,532,667    9,164,968 
Pro forma weighted average shares – basic   69,824,944    60,495,292 
           
Pro forma net income per share attributable to common stock:          
Basic and diluted  $0.24   $0.76 

 

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(4) Purchase Price Allocation

 

The following sets forth the fair value of acquired identifiable assets and assumed liabilities of APT which includes preliminary adjustments to reflect the fair value of intangible assets acquired as of March 15, 2024:

 

   Amounts 
Cash and cash equivalents   509 
Restricted cash   154 
Other current assets   1,780 
Property, plant and equipment   3,748 
Operating lease right-of-use asset   7,953 
IPR&D assets and Goodwill   15,788 
Total assets   29,932 
      
Trade accounts payable   (3,667)
Other accounts payable   (2,595)
Operating lease liability   (7,819)
Total liabilities   (14,081)
Total consideration   15,851 

 

The following table summarizes the fair value of the consideration transferred to APT shareholders for the Acquisition:

 

   Amounts 
Common Stock   3,041 
Redeemable Convertible Preferred Shares   12,610 
Merger Warrants   200 
    15,851 

 

The fair value of shares of Common Stock issued by the Company was determined using the Company’s closing trading price on the Closing Date adjusted by a discount for lack of marketability (“DLOM”) of 9.4% as a registration statement will be filed within 45 days. The fair value of Redeemable Convertible Preferred Shares was determined using the Company’s closing trading price on the Closing Date adjusted by a DLOM of 14.9% as the conversion of the Redeemable Convertible Preferred Shares to shares of Common Stock is subject to the stockholder approval which is expected take place in July 2024. The Company determined the fair value of the Merger Warrants using the Black-Scholes model as of the Closing Date. The main assumptions used are as follows:

 

   Three months Ended
March 31,
 
   2024   2023 
Underlying value of Common Stock ($)   0.37    - 
Exercise price ($)   5.0    - 
Expected volatility (%)   117.7    - 
Expected terms (years)   2.87    - 
Risk-free interest rate (%)   4.5    - 

 

The fair value estimate for all identifiable assets and liabilities assumed is preliminary and is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). This preliminary fair value estimate could include assets that are not intended to be used, may be sold, or are intended to be used in a manner other than their best use. Such estimates are subject to change during the measurement period, which is not expected to exceed one year. Any adjustments identified during the measurement period will be recognized in the period in which the adjustments are determined.

 

The Company recognized intangible assets related to the Acquisition, which consist of IPR&D valued at $15,287 using the Multi-Period Excess Earnings Method valuation method and of goodwill valued at $501. The goodwill is primarily attributed to the expected synergies from combining the operations of APT with the Company’s operations and to the assembled workforce of APT. The Company considered the criteria in ASC 350-30-35 and determined the estimated useful life of the IPR&D to be 20 years and will be amortized on a straight-line basis over its estimated useful life, starting from the date the IPR&D efforts will be completed. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful life. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets. In case the Company reduces the estimated useful life for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.

 

These intangible assets are classified as Level 3 measurements within the fair value hierarchy.

 

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THE PRIVATE PLACEMENT

 

The following is a summary of the material provisions of the Purchase Agreement and the Private Placement, but does not purport to describe all of the terms thereof and may not contain all of the information about the Purchase Agreement and the Private Placement that is important to you. The following summary is qualified in its entirety by reference to the complete text of the Purchase Agreement, which is attached as Annex F to this proxy statement. You should refer to the full text of the Purchase Agreement for details about the transaction and the terms and conditions of the Purchase Agreement, and carefully read this entire proxy statement and the other documents to which we have referred you. You should also review the section entitled “Where You Can Find Additional Information.

 

On March 6, 2024, the Company entered into a Securities Purchase Agreement with the Investors, pursuant to which the Company agreed to sell (i) an aggregate of 216,417 shares of Series X Preferred Stock and (ii) Private Placement Warrants exercisable for an aggregate of 108,208,500 shares of Common Stock (collectively with such shares of Series X Preferred Stock issued in the Private Placement, the “Private Placement Securities”), at a combined purchase price of $231.10 per share of Series X Preferred Stock and accompanying Private Placement Warrant, for aggregate gross proceeds to the Company of approximately $50,000,000 before deducting placement agent fees and other offering expenses. The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series X Preferred Stock are set forth in the Certificate of Designation, which is attached as Annex G to this proxy statement. The closing of the Private Placement occurred on March 15, 2024 (the “Private Placement Closing Date”).

 

RBC and Laidlaw acted as Placement Agents for the Private Placement. As partial compensation for their services as placement agents, the Company issued warrants to the Placement Agents exercisable for up to an aggregate of 9,523,809 shares of Common Stock (the “Placement Agent Warrants”) to the Placement Agents exercisable for up to an aggregate of 9,523,809 shares of Common Stock. The terms of the Placement Agent Warrants are substantially the same as those of the Private Placement Warrants, except that the Placement Agent Warrants may, at the election of the holders thereof, be exercised either for cash or on a cashless basis, without regard to whether the shares underlying the Placement Agent Warrants have been registered for issuance or resale under the Securities Act.

 

The consummation of the Private Placement was subject to the satisfaction or waiver of, among other customary closing conditions, the accuracy of the representations and warranties in the Purchase Agreement, the compliance by the parties with the covenants in the Purchase Agreement, the absence of any legal order barring the Private Placement, no suspension in the trading of the Common Stock and the occurrence of the Acquisition Closing. The parties were also provided with customary termination rights, and the Purchase Agreement was subject to automatic termination in the event that (i) the Private Placement had not been consummated on or prior to 5:00 P.M., New York City time, on the 15th day following the date of the Purchase Agreement or (ii) the Merger Agreement was terminated in accordance with is terms.

 

Under the Purchase Agreement, the Company made representations and warranties customary for transactions of a similar nature, including representations and warranties with respect to the Company’s organization and qualification, subsidiaries, authorization, capitalization, non-contravention, financial statements, the non-occurrence of certain events from the date of the latest balance sheet of the Company, the Merger Agreement, litigation, title to assets, intellectual property, tax matters, regulatory matters, insurance and compliance with laws.

 

In addition, under the Purchase Agreement, each of the Investors made representations and warranties customary for transactions of a similar nature, including with respect to organization, authorization, non-contravention, investment intent, accredited investor status, certain trading activities, brokers and finders and the independent evaluation of the decision to purchase the Series X Preferred Stock.

 

Certain representations of the Company and the Investors are qualified in whole or in part by a materiality standard for purposes of determining whether a breach of such representations and warranties has occurred. Moreover, certain representations and warranties in the Purchase Agreement were used for the purpose of allocating risk among the parties, rather than establishing matters of facts. Accordingly, investors and securityholders should not rely on the representations and warranties in the Purchase Agreement as characterizations of actual state of facts about the parties.

 

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The Company made certain covenants under the Purchase Agreement, including, among others the following:

 

the Company was required to timely file a Form D with respect to the Private Placement Securities sold pursuant to the Purchase Agreement and the underlying securities;

 

the Company may not effect any conversion of the Series X Preferred Stock or exercise of the Private Placement Warrants that would result in the holder thereof beneficially owning a number of shares of Common Stock in excess of its respective beneficial ownership limitation (“Beneficial Ownership Limitation”), to initially be set at the discretion of each Investor to a percentage between 0% and 19.999% of the number of shares of the Common Stock outstanding or deemed to be outstanding as of the applicable measurement date, and to be set at 19.999% for any Investor that does not make such designation;

 

  the Company is required to hold a special meeting of stockholders within 150 days of the Private Placement Closing Date for the purpose of obtaining stockholder approval of (i) the conversion of all issued and outstanding shares of Series X Preferred Stock into shares of Common Stock and (ii) the exercise of all Private Placement Warrants and Placement Agent Warrants into Common Stock, in each case in accordance with the rules of NYSE American, and use its reasonable best efforts to solicit its stockholders’ approval of such resolution and to cause the Board to recommend to the stockholders that they approve such resolution;
     
  the Company is required to indemnify the Investors and  their  directors, officers, stockholders, members,  partners, employees, investment advisers and agents, controlling persons, and the directors, officers,  stockholders, agents, members, partners, investment advisers and employees of such controlling persons from certain liabilities incurred as a result of the Purchase Agreement; and
     
 

The Company may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or securities convertible into or exercisable for Common Stock until 30 days after the later of (i) the date on which the Company’s stockholders approve the conversion of the Series X Preferred Stock and the exercise of the Private Placement Warrants and Placement Agent Warrants and (ii) the Registration Statement Effective Date (as defined below), subject to certain exceptions, and may not effect any variable rate transactions until the date that is the earlier of (a) nine months from the Private Placement Closing Date or (b) the date on which no Private Placement Securities, Placement Agent Warrants or shares of Common Stock underlying Private Placement Securities or Placement Agent Warrants are outstanding.

 

The Investors made certain covenants under the Purchase Agreement, including, among others the following:

 

the Private Placement Securities, Placement Agent Warrants or shares of Common Stock underlying Private Placement Securities or Placement Agent Warrants may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable U.S. state and federal securities laws; and

 

each Investor may not effect any conversion of its Series X Preferred Stock or exercise of its Private Placement Warrants to the extent that, after giving effect to such attempted conversion or exercise, such Investor would beneficially own a number of shares of Common Stock in excess of such Investor’s Beneficial Ownership Limitation, as may be increased or decreased by the Investor from time to time to any other percentage not in excess of 19.999%, subject to the requirements set forth in the Purchase Agreement and the Certificate of Designation.

 

The Private Placement was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. The Investors have acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends have been affixed to the securities issued in this transaction.

 

The Private Placement has already been completed, and the approval of our stockholders was not, and is not now, required for the Private Placement. As discussed above, the Company is not seeking stockholder approval of, and you are not being asked to vote on, the Private Placement.

 

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Registration Rights Agreement

 

On March 6, 2024, in connection with the Private Placement, BiomX entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors. The following summary is qualified in its entirety by reference to the complete text of the form of Registration Rights Agreement, the form of which is attached as Annex K to this proxy statement. You should refer to the full text of the form of Registration Rights Agreement for details about the transaction and the terms and conditions of the Registration Rights Agreement, and carefully read this entire proxy statement and the other documents to which we have referred you. You should also review the section entitled “Where You Can Find Additional Information.

 

Pursuant to the Registration Rights Agreement, BiomX is required to prepare and file a resale registration statement (the “Registration Statement”) with the SEC with respect to (i) the Merger Warrants, shares of Common Stock and Series X Preferred Stock issued in the Merger, (ii) the Private Placement Securities and (iii) any shares of Common Stock issued upon (a) exercise of Private Placement Warrants or Merger Warrants or (b) conversion of shares of Series X Preferred Stock (the “Registrable Securities”) within 45 calendar days following the Private Placement Closing Date (the “Filing Deadline”) and to use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC within 45 calendar days of the Filing Deadline (or within 75 calendar days if the SEC comments on the registration statement) (the “Registration Statement Effective Date”).

 

Pursuant to the Registration Rights Agreement, BiomX is obligated to pay certain liquidated damages in the event that (i) the Registration Statement is not filed on or prior to the Filing Deadline, (ii) following receipt of stockholder approval of the Conversion Proposal, (A) the Registration Statement is not declared effective prior to the Effectiveness Deadline or (B) after the Registration Statement has been declared effective, (1) it ceases to remain continuously effective as to sell all Registrable Securities, (2) the holders of Registrable Securities are not permitted to utilize the prospectus therein to resell such Registrable Securities (other than during certain permitted suspensions), or (3) a permitted suspension exceeds the length set forth for such suspension, or (iii) if the Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason, the Company fails to make and keep adequate current public information available or to file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act, as a result of which any of the holders of Registrable Securities are unable to sell Registrable Securities without restriction under Rule 144.

 

BiomX also agreed, among other things, to indemnify the Investors, their officers, directors, members, managers, partners, stockholders, affiliates, investment advisers, employees and agents from certain liabilities and pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incidental to BiomX’s obligations under the Registration Rights Agreement, and each Investor agreed to indemnify BiomX and its directors, officers, agents and employees, each person who controls the Company and any directors, officers, agents or employees of any such controlling person from certain liabilities. BiomX filed the Registration Statement on April 29, 2024, in advance of the Filing Deadline.

 

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RISK FACTORS

 

There have been no material changes to the risk factors identified in our Annual Report on Form 10-K, filed on April 4, 2024, except as set forth below:

 

The Authorized Share Increase would increase our number of authorized but unissued shares of stock, which could negatively impact our investors.

 

If approved, the Authorized Share Increase will increase the number of authorized shares of Common Stock and, as a result, the Board’s ability to issue authorized and unissued shares without further stockholder action. The issuance of additional shares of Common Stock may have a dilutive effect on earnings per share and relative voting power and may cause a decline in the trading price of our Common Stock. We could use the shares that are available for future issuance in dilutive equity financing transactions, or to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. We may seek additional financing in the future.

 

Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our Common Stock.

 

On May 23, 2024, we received a notification (the “Notice”) from NYSE American that we are no longer in compliance with NYSE American’s continued listing standards. Specifically, the letter states that we are not in compliance with the continued listing standards set forth in Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide. Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years. Section 1003(a)(iii) requires a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years. We reported a total stockholders’ capital deficiency of $9,544,000 as of March 31, 2024, and losses from continuing operations and/or net losses in our five most recent fiscal years ended December 31, 2023.

 

The Notice further provides that we must submit a plan of compliance (the “Compliance Plan”) by June 22, 2024, addressing how we intend to regain compliance with the continued listing standards by November 23, 2025. The Compliance Plan is required to include specific milestones, quarterly financial projections and details related to any strategic initiatives we plan to complete.

 

If the Compliance Plan is not submitted, or not accepted, or is accepted but we are not in compliance with the continued listing standards by November 23, 2025, or if we do not make progress consistent with the Compliance Plan during the Compliance Plan period, we will be subject to delisting procedures as set forth in the NYSE American Company Guide. There can be no assurance that we will be able to achieve compliance with NYSE American’s continued listing standards within the required timeframe. If our Common Stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of our Common Stock; (ii) reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.

  

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BIOMX’S BUSINESS

 

The description of the Company herein describes the post-Acquisition Company and reflects the integration of APT’s business.

 

Overview

 

We are a clinical stage product discovery company developing products using both natural and engineered phage technologies designed to target and kill specific harmful bacteria associated with chronic diseases, such as CF and diabetic foot osteomyelitis, or DFO. Bacteriophage or phage are bacterial, species-specific, strain-limited viruses that infect, amplify and kill the target bacteria and are considered inert to mammalian cells. By utilizing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology, we develop phage-based therapies intended to address both large-market and orphan diseases.

 

Based on the urgency of treating the infection (whether acute or chronic), the susceptibility of the target bacteria to phage (e.g. the ability to identify a phage cocktail that would target a broad range of bacterial strains) and other considerations, we offer two phage-based product types:

 

(1)Fixed cocktail therapy - in this approach a single product containing a fixed number of selected phages is developed to cover a wide range of bacterial strains, thus allowing treatment of broad patient populations with the same product. Fixed cocktails are developed using our proprietary BOLT platform, in which high throughput screening, directed evolution, and bioinformatic approaches are leveraged to produce an optimal phage cocktail.

 

(2)Personalized therapy - in this approach a large library of phages is developed, of which single optimal phages are personally matched to treat specific patients. Matching optimal phages with patients is carried out using a proprietary phage susceptibility testing, or PST, where multiple considerations are analyzed simultaneously - allowing for an efficient screen of the phage library while maintaining short turnaround times.

 

In our therapeutic programs, we focus on using phage therapy to target specific strains of pathogenic bacteria that are associated with diseases. Our phage-based product candidates are developed utilizing our BOLT proprietary research and development platform. 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. The cocktail contains phage with complementary features and is optimized for multiple characteristics such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing.

 

Our goal is to develop multiple products based on the ability of phage to precisely target harmful bacteria and on our ability to screen, identify and combine different phage, both naturally occurring and created using synthetic engineering, to develop these treatments.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Set forth below is BiomX’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the quarter ended March 31, 2024. BiomX’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2023 is incorporated by reference to BiomX’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

References herein to “the Company”, “BiomX”, “we”, “us” or “our”, mean BiomX Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto for the quarter ended March 31, 2024. The analysis of the financial condition and results of operations includes Adaptive Phage Therapeutics LLC, a Delaware limited liability company (formerly Adaptive Phage Therapeutics Inc., a Delaware corporation), or APT from the date that we acquired it March 15, 2024. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors discussed herein and in our other filings with the U.S. Securities and Exchange Committee, or the SEC.

 

General 

 

We are a clinical stage product discovery company developing products using both natural and engineered phage technologies designed to target and kill specific harmful bacteria associated with chronic diseases, such as cystic fibrosis, or CF and diabetic foot osteomyelitis, or DFO. Bacteriophage or phage are bacterial, species-specific, strain-limited viruses that infect, amplify and kill the target bacteria and are considered inert to mammalian cells. By utilizing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology, we develop phage-based therapies intended to address both large-market and orphan diseases.

 

Based on the urgency of treating the infection (whether acute or chronic), the susceptibility of the target bacteria to phage (e.g. the ability to identify a phage cocktail that would target a broad range of bacterial strains) and other considerations, we offer two phage-based product types:

 

(1)Fixed cocktail therapy – in this approach a single product containing a fixed number of selected phage is developed to cover a wide range of bacterial strains, thus allowing treatment of broad patient populations with the same product. Fixed cocktails are developed using our proprietary BOLT platform, in which high throughput screening, directed evolution, and bioinformatic approaches are leveraged to produce an optimal phage cocktail.

 

(2)Personalized therapy – in this approach a large library of phage is developed, of which a single optimal phage is personally matched to treat specific patients. Matching optimal phage with patients is carried out using a proprietary phage susceptibility testing, where multiple considerations are analyzed simultaneously – allowing for an efficient screen of the phage library while maintaining short turnaround times.

 

In our therapeutic programs, we focus on using phage therapy to target specific strains of pathogenic bacteria that are associated with diseases. 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. The cocktail contains phage with complementary features and is optimized for multiple characteristics such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing.

 

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Our goal is to develop multiple products based on the ability of phage to precisely target harmful bacteria and on our ability to screen, identify and combine different phage, both naturally occurring and created using synthetic engineering, to develop these treatments.

 

On March 6, 2024, we entered into a merger agreement with APT and certain other parties, as a result of which APT became our wholly-owned subsidiary, effective as of March 15, 2024, or the Acquisition. The Acquisition was structured as a stock-for-stock transaction whereby all outstanding equity interests of APT were exchanged in a merger for an aggregate of 9,164,968 shares of BiomX common stock, 40,470 shares of Series X Preferred Stock, or Redeemable Convertible Preferred Shares, convertible upon stockholder approval into 40,470,000 shares of BiomX common stock, and warrants, or the Merger Warrants, exercisable for 2,166,497 shares of BiomX common stock. Upon the consummation of the Acquisition, a successor-in-interest of APT became a wholly-owned subsidiary of BiomX. The Merger Warrants will be exercisable at any time after the date of the receipt of BiomX stockholder approval of their exercise at an exercise price of $5.00 per share and will expire on January 28, 2027.

 

Concurrently with the consummation of the Acquisition, we entered into a securities purchase agreement or the March 2024 PIPE with certain investors, pursuant to which such investors purchased an aggregate of 216,417 Redeemable Convertible Preferred Shares and warrants to purchase up to an aggregate of 108,208,500 shares of Common Stock, or the Private Placement Warrants, for aggregate gross proceeds of approximately $50 million.

 

Immediately following the Acquisition, and without taking into account the Redeemable Convertible Preferred Shares issued in the March 2024 PIPE, and assuming conversion of all of the Redeemable Convertible Preferred Shares into Common Stock, our stockholders (including holders of the Pre-Funded Warrants, as defined below) prior to the Acquisition owned approximately 55% of the share capital of the Company and APT’s stockholders prior to the Acquisition owned approximately 45% of the share capital of the Company.

 

Clinical and Pre-Clinical Developments  

 

Ongoing Programs

 

Cystic Fibrosis

 

BX004 is our therapeutic phage product candidate under development for chronic pulmonary infections caused by Pseudomonas aeruginosa, or P. aeruginosa, a main contributor to morbidity and mortality in patients with CF. Enhanced resistance to antibiotics develops, particularly in CF patients, due to extensive drug use consisting of prolonged and repeated broad-spectrum antibiotic courses often beginning in childhood, and leading to the appearance of multidrug-resistant strains. In preclinical in vitro studies, BX004 was shown to be active against antibiotic resistant strains of P. aeruginosa and demonstrated the ability to penetrate biofilm, an assemblage of surface-associated microbial cells enclosed in an extracellular polymeric substance and one of the leading causes for antibiotic resistance.

 

The Phase 1b/2a trial in CF patients with chronic respiratory infections caused by P. aeruginosa. is comprised of two parts. The study design is based on recommendations from the Cystic Fibrosis Therapeutic Development Network.

 

In February 2023, we announced positive results from Part 1 of the Phase 1b/2a trial evaluating BX004. Part 1 evaluated the safety, tolerability, pharmacokinetics, and microbiologic activity of BX004 over a 7-day ascending treatment period in nine CF patients (7 on BX004, 2 on placebo) with chronic P. aeruginosa pulmonary infection in a single ascending dose and multiple dose design.

 

Results from Part 1 of the Phase 1b/2a trial included the following findings: No safety events related to treatment with BX004 occurred; Mean P. aeruginosa colony forming units, at Day 15 (compared to baseline): -1.42 log (BX004) vs. -0.28 log (placebo). This reduction was seen on top of standard of care inhaled antibiotics; Phage were detected in all patients treated with BX004 during the dosing period, including in several patients up to Day 15 (one week after end of therapy); no phage were detected in patients receiving placebo; there was no evidence of treatment-related resistance to BX004 during or after treatment , compared to placebo; and as expected due to the short duration of treatment, there was no detectable effect on % predicted forced expiratory volume in 1 second, or FEV1.

 

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In November 2023, we announced positive topline results from Part 2 of the Phase 1b/2a trial evaluating BX004. The objectives of Part 2 of the Phase 1b/2a trial were to evaluate the safety and tolerability of BX004 in a larger number of CF patients dosed for a longer treatment duration than Part 1 of the study. In Part 2, 34 CF patients were randomized in a 2:1 ratio with 23 CF patients receiving BX004 and 11 patients receiving placebo via nebulization twice daily for 10 days.

 

Highlights from the Part 2 data of the Phase 1b/2a study included:

 

Study drug was safe and well-tolerated, with no related SAEs (serious adverse events) or related APEs (acute pulmonary exacerbations) to study drug.