UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly periodquarter ended September 30, 2020March 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-38762
BiomX Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 82-3364020 | |
(State or other jurisdiction of
| (I.R.S. Employer
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: +972 723942377
Former name, former address and former fiscal year, if changed since last report: n/a
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Units, each consisting of one share of common stock, $0.0001 par value, and one Warrant entitling the holder to receive one half share of common stock | PHGE.U | NYSE American | ||
| Common stock, $0.0001 par value, included as part of the units | PHGE | NYSE American | ||
| Warrants included as part of the units | PHGE.WS | NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 9, 2020, 23,177,922May 20, 2021, 24,326,719 shares common stock, par value $0.0001 per share, were issued and outstanding.
BIOMX INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020MARCH 31, 2021
TABLE OF CONTENTS
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This quarterly report on Form 10-Q, (the “Quarterly Report”)or the Quarterly Report, includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”),or the Exchange Act, and other securities laws. The statements contained herein that are not purely historical, are forward-looking statements. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. For example, we are making forward-looking statements when we discuss operations, cash flows, financial position, business strategy and plans, potential acquisitions, market growth, our clinical and pre-clinical development program, including timing and milestones thereof as well as the design thereof, including acceptance of regulatory agencies of such design, the potential opportunities for and benefits of the BacteriOphage Lead to Treatment, or BOLT, platform, as described below, the potential of our product candidates, the potential effect of the coronavirus disease 2019, (“COVID-19”)or COVID-19, on our business and levels of expenses, sufficiency of financial resources and financial needs. These statements include words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. However, you should understand that these statements are not guarantees of performance or results, and there are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed in the forward-looking statements, including, among others:
| ● | the ability to generate revenues, and raise sufficient financing to meet working capital requirements; |
| ● | the unpredictable timing and cost associated with our approach to developing product candidates using phage technology; |
| ● | the continued impact of |
| ● | the U.S. Food and Drug Administration’s, |
| ● | obtaining FDA acceptance of any non-U.S. clinical trials of product candidates; |
| ● | the ability to pursue and effectively develop new product opportunities and acquisitions and to obtain value from such product opportunities and acquisitions; |
| ● | penalties and market withdrawal associated with any unanticipated problems with product candidates and failure to comply with labeling and other restrictions; |
| ● | expenses associated with compliance with ongoing regulatory obligations and successful continuing regulatory |
| ● | market acceptance of our product candidates and ability to identify or discover additional product candidates; |
| ● | our ability to obtain high titers for specific phage cocktails necessary for preclinical and clinical testing; |
| ● | the availability of specialty raw materials; |
| ● | the ability of our product candidates to demonstrate requisite safety and tolerability for cosmetics, safety and efficacy for drug products, or safety, purity and potency for biologics without causing adverse effects; |
| ● | the success of expected future advanced clinical trials of our product candidates; |
| ● | our ability to obtain required regulatory |
| ● | our ability to enroll patients in clinical trials and achieve anticipated development milestones when expected; |
| ● | delays in developing manufacturing processes for our product candidates; |
ii
| ● | competition from similar technologies, products that are more effective, safer or more affordable than our product candidates or products that obtain marketing approval before our product candidates; | |
| ● | the impact of unfavorable pricing regulations, third-party reimbursement practices or health care reform initiatives on our ability to sell product candidates or therapies profitably; | |
| ● | protection of our intellectual property rights and compliance with the terms and conditions of current and future licenses with third parties; | |
| ● | infringement on the intellectual property rights of third parties and claims for remuneration or royalties for assigned service invention rights; | |
| ● | our ability to acquire, in-license or use proprietary rights held by third parties necessary to our product candidates or future development candidates; | |
| ● | ethical, legal and social concerns about synthetic biology and genetic engineering that may adversely affect market acceptance of our product candidates; | |
| ● | reliance on third-party collaborators; | |
| ● | our ability to manage the growth of the business; | |
| ● | our ability to attract and retain key employees or to enforce the terms of noncompetition agreements with employees; | |
| ● | the failure to comply with applicable laws and | |
| ● | potential security breaches, including cybersecurity incidents; | |
| ● | political, economic and military instability in the State of Israel; and | |
| ● | other factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, |
For a detailed discussion of these and other risks, uncertainties and factors, see Part I, Item 1A—1A “Risk Factors” of our 20192020 Annual Report and in Part II, Item 1A of this Quarterly Report. All forward-looking statements contained in this Quarterly Report speak only as of the date hereof. Except as required by law, we are under no duty to (and expressly disclaim any such obligation to) update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report. Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, and should be viewed only as historical data.
iii
PART I - FINANCIAL INFORMATION
INDEX TO FINANCIAL STATEMENTS
1
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(USD in thousands, except share and per share datadata)
(unaudited)
| As of | As of | |||||||||||||||||||
| Note | September 30, | December 31, 2019 | Note | March 31, 2021 | December 31, 2020 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | 53,302 | 72,256 | 39,411 | 36,477 | ||||||||||||||||
| Restricted cash | 855 | 154 | 976 | 763 | ||||||||||||||||
| Short-term deposits | 3 | 10,390 | 10,003 | 13,205 | 19,851 | |||||||||||||||
| Related party | 9 | - | 50 | |||||||||||||||||
| Other current assets | 755 | 2,068 | 2,943 | 3,576 | ||||||||||||||||
| Total current assets | 65,302 | 84,531 | 56,535 | 60,667 | ||||||||||||||||
| Non-current assets | ||||||||||||||||||||
| Lease deposit | - | 5 | ||||||||||||||||||
| Property and equipment, net | 2,062 | 1,881 | 3,531 | 2,228 | ||||||||||||||||
| In-process research and development (“R&D”), net | 6 | 3,419 | 4,556 | |||||||||||||||||
| Intangible assets, net | 2,658 | 3,038 | ||||||||||||||||||
| Operating lease right-of-use assets | 4 | 4,370 | 1,148 | 4,338 | 4,430 | |||||||||||||||
| Total non-current assets | 9,851 | 7,590 | 10,527 | 9,696 | ||||||||||||||||
| 75,153 | 92,121 | 67,062 | 70,363 | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
BIOMX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands, except share and per share data)
(unaudited)
| As of | ||||||||||
| Note | March 31, 2021 | December 31, 2020 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities | ||||||||||
| Trade account payables | 2,685 | 2,320 | ||||||||
| Other account payables | 4,350 | 3,978 | ||||||||
| Current portion of operating lease liabilities | 763 | 863 | ||||||||
| Total current liabilities | 7,798 | 7,161 | ||||||||
| Non-current liabilities | ||||||||||
| Operating lease liabilities, net of current portion | 4,738 | 5,032 | ||||||||
| Contingent considerations | 572 | 701 | ||||||||
| Total non-current liabilities | 5,310 | 5,733 | ||||||||
| Commitments and Contingent Considerations | 4 | |||||||||
| Stockholders’ equity | 5 | |||||||||
| Preferred stock, $0.0001 par value; Authorized - 1,000,000 shares as of March 31, 2021 and December 31, 2020. No shares issued and outstanding as of March 31, 2021 and December 31, 2020. | - | - | ||||||||
| Common stock, $0.0001 par value; Authorized - 60,000,000 shares as of March 31, 2021 and December 31, 2020. Issued - 24,247,040 shares as of March 31, 2021 and 23,270,337 shares as of December 31, 2020. Outstanding - 24,241,340 shares as of March 31, 2021 and 23,264,637 shares as of December 31, 2020. | 2 | 2 | ||||||||
| Additional paid in capital | 134,612 | 129,725 | ||||||||
| Accumulated deficit | (80,660 | ) | (72,258 | ) | ||||||
| Total stockholders’ equity | 53,954 | 57,469 | ||||||||
| 67,062 | 70,363 | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
BIOMX INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD in thousands, except share and per share data)
(unaudited)
| Three Months Ended March 31, | ||||||||||
| Note | 2021 | 2020 | ||||||||
| Research and development (“R&D”) expenses, net | 5,794 | 3,529 | ||||||||
| Amortization of intangible assets | 379 | 379 | ||||||||
| General and administrative expenses | 2,497 | 2,058 | ||||||||
| Operating loss | 8,670 | 5,966 | ||||||||
| Finance income, net | (271 | ) | (65 | ) | ||||||
| Loss before tax | 8,399 | 5,901 | ||||||||
| Tax expenses | 3 | - | ||||||||
| Net loss | 8,402 | 5,901 | ||||||||
| Basic and diluted loss per share of Common Stock | 6 | 0.35 | 0.26 | |||||||
| Weighted average number of shares of Common Stock outstanding, basic and diluted | 23,944,573 | 22,897,723 | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
BIOMX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(USD in thousands, except share and per share data)
(unaudited)
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of January 1, 2021 | 23,264,637 | 2 | 129,725 | (72,258 | ) | 57,469 | ||||||||||||||
| Exercise of stock options | 12,646 | * | 23 | 23 | ||||||||||||||||
| Exercise of warrants (**) | 362,383 | * | - | - | ||||||||||||||||
| Issuance of Common Stock under Open Market Sales Agreement, net of $134 issuance costs | 601,674 | * | 4,334 | 4,334 | ||||||||||||||||
| Stock-based compensation expenses | 530 | 530 | ||||||||||||||||||
| Net loss | (8,402 | ) | (8,402 | ) | ||||||||||||||||
| Balance as of March 31, 2021 | 24,241,340 | 2 | 134,612 | (80,660 | ) | 53,954 | ||||||||||||||
| (*) | Less than $1. |
| (**) | See Note 5B. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
BIOMX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(USD in thousands, except share and per share data)
(unaudited)
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of January 1, 2020 | 22,862,835 | 2 | 126,626 | (42,172 | ) | 84,456 | ||||||||||||||
| Exercise of stock options | 57,325 | * | 106 | 106 | ||||||||||||||||
| Stock-based compensation expenses | 337 | 337 | ||||||||||||||||||
| Net loss | (5,901 | ) | (5,901 | ) | ||||||||||||||||
| Balance as of March 31, 2020 | 22,920,160 | 2 | 127,069 | (48,073 | ) | 78,998 | ||||||||||||||
| (*) | Less than $1. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
BIOMX INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(USD in thousands, except share and per share data)
(unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS – OPERATING ACTIVITIES | ||||||||
| Net loss | (8,402 | ) | (5,901 | ) | ||||
| Adjustments required to reconcile cash flows used in operating activities: | ||||||||
| Depreciation and amortization | 555 | 501 | ||||||
| Stock-based compensation | 530 | 337 | ||||||
| Finance expense (income), net | 26 | (179 | ) | |||||
| Revaluation of contingent considerations | (129 | ) | 56 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | 633 | 388 | ||||||
| Trade account payables | 365 | (1,838 | ) | |||||
| Other account payables | 372 | (216 | ) | |||||
| Operating lease liabilities, net | (302 | ) | (48 | ) | ||||
| Related parties | - | 50 | ||||||
| Net cash used in operating activities | (6,352 | ) | (6,850 | ) | ||||
| CASH FLOWS – INVESTING ACTIVITIES | ||||||||
| Investment in short-term deposits | (34 | ) | (49 | ) | ||||
| Proceeds from short-term deposits | 6,680 | - | ||||||
| Purchases of property and equipment | (1,478 | ) | (280 | ) | ||||
| Net cash provided by (used in) investing activities | 5,168 | (329 | ) | |||||
| CASH FLOWS – FINANCING ACTIVITIES | ||||||||
| Issuance of Common Stock under Open Market Sales Agreement, net of issuance costs | 4,334 | - | ||||||
| Outflows in connection with current assets and liabilities acquired in reverse recapitalization | - | (75 | ) | |||||
| Exercise of stock options | 23 | 106 | ||||||
| Net cash provided by financing activities | 4,357 | 31 | ||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | 3,173 | (7,148 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (26 | ) | 179 | |||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 37,240 | 72,410 | ||||||
| Cash and cash equivalents and restricted cash at the end of the period | 40,387 | 65,441 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
USD in thousands, except share and per share data
| As of | ||||||||||||
| Note | September 30, 2020 | December 31, 2019 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Trade account payables | 1,301 | 3,253 | ||||||||||
| Other account payables | 2,814 | 2,596 | ||||||||||
| Current portion of lease liabilities | 4 | 594 | 375 | |||||||||
| Total current liabilities | 4,709 | 6,224 | ||||||||||
| Non-current liabilities | ||||||||||||
| Lease liabilities, net of current portion | 4 | 3,905 | 856 | |||||||||
| Contingent liabilities | 5,7 | 701 | 585 | |||||||||
| Total non-current liabilities | 4,606 | 1,441 | ||||||||||
| Commitments and Contingent Liabilities | 7 | |||||||||||
| Shareholders’ equity | ||||||||||||
| Common stock, $0.0001 par value (“Common Stock”); Authorized - 60,000,000 shares as of September 30, 2020 and December 31, 2019. Issued - 23,173,378 as of September 30, 2020 and 22,862,835 as of December 31, 2019. Outstanding - 23,167,678 shares as of September 30, 2020 and 22,862,835 as of December 31, 2019 | 8 | 2 | 2 | |||||||||
| Additional paid in capital | 128,950 | 126,626 | ||||||||||
| Accumulated deficit | (63,114 | ) | (42,172 | ) | ||||||||
| Total shareholders’ equity | 65,838 | 84,456 | ||||||||||
| 75,153 | 92,121 | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
USD in thousands, except share and per share data
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
| Note | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Research and development expenses, net | 6,436 | 2,858 | 14,441 | 8,458 | ||||||||||||||
| General and administrative expenses | 2,394 | 1,797 | 6,749 | 3,987 | ||||||||||||||
| Operating loss | 8,830 | 4,655 | 21,190 | 12,445 | ||||||||||||||
| Financial expenses (income), net | 5 | (395 | ) | (248 | ) | (1,182 | ) | |||||||||||
| Net Loss | 8,835 | 4,260 | 20,942 | 11,263 | ||||||||||||||
| Basic and diluted loss per share of Common Stock | 10 | 0.38 | 2.69 | 0.91 | 7.37 | |||||||||||||
| Weighted average number of shares of Common Stock outstanding, basic and diluted | 23,150,253 | 2,035,625 | 23,013,790 | 2,015,349 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
USD in thousands, except share and per share data
| Common Stock | Additional paid | Accumulated | Total shareholders’ | |||||||||||||||||
| Shares | Amount | in capital | deficit | equity | ||||||||||||||||
| Balance as of December 31, 2019 | 22,862,835 | 2 | 126,626 | (42,172 | ) | 84,456 | ||||||||||||||
| Exercise of options | 57,325 | (* | ) | 106 | - | 106 | ||||||||||||||
| Share-based payment | - | - | 337 | - | 337 | |||||||||||||||
| Net loss | - | - | - | (5,901 | ) | (5,901 | ) | |||||||||||||
| Balance as of March 31, 2020 | 22,920,160 | 2 | 127,069 | (48,073 | ) | 78,998 | ||||||||||||||
| Exercise of options | 220,104 | (* | ) | 52 | - | 52 | ||||||||||||||
| Share-based payment | - | - | 677 | - | 677 | |||||||||||||||
| Net loss | - | - | - | (6,206 | ) | (6,206 | ) | |||||||||||||
| Balance as of June 30, 2020 | 23,140,264 | 2 | 127,798 | (54,279 | ) | 73,521 | ||||||||||||||
| Exercise of options | 27,414 | - | 38 | - | 38 | |||||||||||||||
| Share-based payment | - | - | 1,114 | - | 1,114 | |||||||||||||||
| Net loss | - | - | - | (8,835 | ) | (8,835 | ) | |||||||||||||
| Balance as of September 30, 2020 | 23,167,678 | 2 | 128,950 | (63,114 | ) | 65,838 | ||||||||||||||
The accompanying notes are an integral part of theseunaudited condensed consolidated financial statements.
5F-6
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
USD in thousands, except share and per share data
| Common Stock | Preferred A Shares (pre-merger- | Preferred B Shares (pre-merger- | Additional paid in | Accumulated | Total shareholders’ | |||||||||||||||||||||||||||||||
| Shares (**) | Amount | Shares (**) | Amount | Shares (**) | Amount | capital | deficit | equity | ||||||||||||||||||||||||||||
| Balance as of December 31, 2018 | 2,307,871 | (* | ) | 7,543,831 | 1 | 5,170,357 | 1 | 64,410 | (21,609 | ) | 42,803 | |||||||||||||||||||||||||
| Issuance of shares | - | - | - | - | 308,628 | (* | ) | 1,800 | - | 1,800 | ||||||||||||||||||||||||||
| Share-based payment | - | - | - | - | - | - | 304 | - | 304 | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (3,225 | ) | (3,225 | ) | |||||||||||||||||||||||||
| Balance as of March 31, 2019 | 2,307,871 | (* | ) | 7,543,831 | 1 | 5,478,985 | 1 | 66,514 | (24,834 | ) | 41,682 | |||||||||||||||||||||||||
| Share-based payment | - | - | - | - | - | - | 327 | - | 327 | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (3,778 | ) | (3,778 | ) | |||||||||||||||||||||||||
Balance as of June 30, 2019 | 2,307,871 | (* | ) | 7,543,831 | 1 | 5,478,985 | 1 | 66,841 | (28,612 | ) | 38,231 | |||||||||||||||||||||||||
| Share-based payment | - | - | - | - | - | - | 249 | - | 249 | |||||||||||||||||||||||||||
| Exercise of options | 41,200 | (* | ) | - | - | - | - | 43 | - | 43 | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (4,260 | ) | (4,260 | ) | |||||||||||||||||||||||||
| Balance as of September 30, 2019 | 2,349,071 | (* | ) | 7,543,831 | 1 | 5,478,985 | 1 | 67,133 | (32,872 | ) | 34,263 | |||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
(formerly known as Chardan Healthcare Acquisition Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
USD in thousands
For the nine months ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS – OPERATING ACTIVITIES | ||||||||
| Net loss | (20,942 | ) | (11,263 | ) | ||||
| Adjustments required to reconcile cash flows used in operating activities | ||||||||
| Depreciation and amortization | 1,618 | 259 | ||||||
| Share-based compensation | 2,128 | 880 | ||||||
| Revaluation of contingent liabilities | 116 | 20 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | 1,318 | 21 | ||||||
| Trade account payables | (1,877 | ) | (119 | ) | ||||
| Other account payables | 218 | (151 | ) | |||||
| Operating lease liabilities | 46 | - | ||||||
| Related party | 50 | (150 | ) | |||||
| Net cash used in operating activities | (17,325 | ) | (10,503 | ) | ||||
| CASH FLOWS – INVESTING ACTIVITIES | ||||||||
| Decrease (Increase) in short-term deposits | (387 | ) | 12,618 | |||||
| Purchase of property and equipment | (662 | ) | (987 | ) | ||||
| Net cash provided by (used in) investing activities | (1,049 | ) | 11,631 | |||||
| CASH FLOWS – FINANCING ACTIVITIES | ||||||||
| Issuance of preferred shares, net | - | 1,800 | ||||||
| Outflows in connection with current assets and liabilities acquired in Recapitalization Transaction | (75 | ) | - | |||||
| Exercise of stock options | 196 | 43 | ||||||
| Net cash provided by financing activities | 121 | 1,843 | ||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | (18,253 | ) | 2,971 | |||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 72,410 | 8,693 | ||||||
| Cash and cash equivalents and restricted cash at the end of the period | 54,157 | 11,664 | ||||||
| Supplemental non-cash transactions: | ||||||||
| Recognition of right-of-use asset and lease liability upon adoption of ASU 2016-02 | - | 645 | ||||||
| Assets acquired under operating leases | 3,551 | 599 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE 1 | – | GENERAL |
| A. | General information: |
BiomX Inc. (formerly known as Chardan Healthcare Acquisition Corp., individually prior to BiomX Inc.’s acquisition of 100% of the Recapitalization Transaction (as defined below)outstanding shares of BiomX Israel Ltd. (the “Recapitalization Transaction”, “BiomX Israel” respectively), and together with its subsidiaries, BiomX Ltd. and RondinX Ltd., after the Recapitalization Transaction, the “Company” or “BiomX”) was incorporated as a blank check company on November 1, 2017, under the laws of the state of Delaware, for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.
On July 16, 2019, the Company entered into a merger agreement with BiomX Ltd. (“BiomX Israel”), a company incorporated under the laws of Israel, CHAC Merger Sub Ltd. (“Merger Sub”) and Shareholder Representative Services LLC (“SRS”), as amended on October 11, 2019, pursuant to which, among other things, BiomX Israel merged with Merger Sub, with BiomX Israel being the surviving entity in accordance with the Israeli Companies Law, 5759-1999, as a wholly owned direct subsidiary of BiomX Inc.
On October 28, 2019, the Company consummated the acquisition of 100% of the outstanding shares of BiomX Israel (the “Recapitalization Transaction”). Pursuant to the aforementioned merger agreement, in exchange for all of the outstanding shares of BiomX Israel, the Company issued to the shareholders of BiomX Israel a total of 15,069,058 shares of the Company’s Common Stock representing approximately 65% of the total shares issued and outstanding after giving effect to the Recapitalization Transaction. As a result of the Recapitalization Transaction, BiomX Israel became a wholly owned subsidiary of the Company. As the shareholders of BiomX Israel received the largest ownership interest in the Company, BiomX Israel was determined to be the “accounting acquirer” in the Recapitalization Transaction. As a result, the historical financial statements of the Company were replaced with the financial statements of BiomX Israel for all periods presented.
Following the Recapitalization Transaction, the Company retained $60.1 thousand held in a trust account, after redemptions of a portion of shares of Common Stock issued in the initial public offering of the Company and held by certain shareholders.
The numbers of shares and instruments convertible into shares included within these financial statements have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
On October 28, 2019, the Company was renamed BiomX Inc. and the Company’s shares of Common Stock, units, and warrants began trading inon the NYSE American under the symbols PHGE, PHGE.U, and PHGE.WS, respectively.
On February 6, 2020, the Company’s Common Stock also began trading on the Tel AvivTel-Aviv Stock Exchange.
To date, the Company has not generated revenue from its operations. As of September 30, 2020,March 31, 2021, the Company had a cash and cash equivalents and restricted cash balance of approximately $54 thousand$40,387 and short-term deposits of approximately $10 thousand,$13,205, which management believes is sufficient to fund its operations for more than 12 months from the date of issuance of these condensed consolidated financial statements and sufficient to fund its operations necessary to continue development activities of its current proposed products.
Consistent with its continuing R&Dresearch and development activities, the Company expects to continue to incur additional losses for the foreseeable future. The Company plans to continue to fund its current operations, as well as other development activities relating to additional product candidates, through future issuances of debt and/or equity securities and possibly additional grants from the Israel Innovation Authority (“IIA”) orand other government or non-for-profit institutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, the market demand for the Company’s Common Stock, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to it.
F-7
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE 2 | – |
| A. | Unaudited Condensed Financial Statements |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for condensed financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, theyinformation. They do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
The financial information contained in this report should be read in conjunction with the annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, that the Company filed with the U.S. Securities and Exchange Committee (the “SEC”) on March 26, 2020.31, 2021.
| B. | Principles of Consolidation |
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.
| C. | Use of |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the amounts of expenses during the reported years. Actual results could differ from those estimates.
| Reclassification |
Certain prior year amounts have been reclassified to conform to the current year presentation.
|
The significant accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are identical to those applied in the preparation of the latest annual audited financial statements with the exception of the following:
In August 2018,June 2016, the Financial AccountingAccountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements,” which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements and is effective for the Company beginning on January 1, 2020. This standard did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808),” which clarifies the interaction between Topic 808 and Topic 606, “Revenue from Contracts with Customers”. The Company adopted this standard in the first quarter of fiscal year 2020. This standard did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses”,Losses,” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU No. 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. This guidance is effective for the Company beginning on January 1, 2023, with early adoption permitted. The Company does not expect that the adoption of this standard will have a significant impact on its condensed consolidated financial statements and related disclosures.
In December 2019,August 2020, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Income Taxes” (“Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU 2019-12”), which is intended to simplify various aspects related tosimplifies accounting for income taxes.convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU 2019-12 removes certain exceptionssettlement conditions that are required for equity contracts to qualify for the general principlesderivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in Topic 740 and also clarifies and amends existing guidance to improve consistent application. Thiscertain areas. The new guidance is effective for the Companyannual and interim periods beginning on January 1,after December 15, 2021, withand early adoption permitted.is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company does not expect that the adoption of this standard will have a significant impact on its condensed consolidated financial statements and related disclosures.
F-8
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE 2 | – | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| F. |
|
The Company uses foreign exchange contracts (mainly option and forward contracts) to hedge cash flows from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, the Company recognizes gains or losses that offset the revaluation of the cash flows also recorded under financial expenses (income), net in the condensed consolidated statements of operations. As of September 30, 2020,March 31, 2021, the Company had outstanding foreign exchange contracts in the amount of approximately $3.5 thousand.$5,219. As of September 30, 2019,March 31, 2020, the Company had no outstanding foreign exchange contracts.
Fair |
The Company accounts forfair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”).Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
Fair value, as defined in ASC 820, establishesis the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy that prioritizesof an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the inputs to valuationrisk of nonperformance, which includes, among other things, the Company’s credit risk.
Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value. The hierarchy givesvalue under ASC 820 must maximize the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)use of observable inputs and minimize the lowest priority touse of unobservable inputs (Level 3 measurements). The three levels of theinputs. ASC 820 also provides fair value hierarchy under ASC 820 are described below:for inputs and resulting measurement as follows:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Quoted prices in non-active markets or in active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data.
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
There were no changes in the fair value hierarchy levelling during the period ended September 30, 2020March 31, 2021 and year ended December 31, 2019.2020.
F-9
BIOMX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE 2 | – | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
The following table summarizestables present the Company’s fair value of our financialhierarchy for its assets and liabilities that were accounted forare measured at fair value on a recurring basis, by level within the fair value hierarchy:basis:
| September 30, 2020 | March 31, 2021 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||||||||
| Money market funds | 30,000 | - | - | 30,000 | 30,000 | - | - | 30,000 | ||||||||||||||||||||||||
| 30,000 | - | - | 30,000 | 30,000 | - | - | 30,000 | |||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Contingent liabilities | - | - | 701 | 701 | ||||||||||||||||||||||||||||
| Contingent considerations | - | - | 572 | 572 | ||||||||||||||||||||||||||||
| - | - | 701 | 701 | - | - | 572 | 572 | |||||||||||||||||||||||||
| December 31, 2019 | December 31, 2020 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||||||||
| Money market funds | - | - | - | - | 30,000 | - | - | 30,000 | ||||||||||||||||||||||||
| - | - | - | - | 30,000 | - | - | 30,000 | |||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Contingent liabilities | - | - | 585 | 585 | ||||||||||||||||||||||||||||
Contingent considerations | - | - | 701 | 701 | ||||||||||||||||||||||||||||
| - | - | 585 | 585 | - | - | 701 | 701 | |||||||||||||||||||||||||
Financial instruments with carrying values approximating fair value include cash and cash equivalents, restricted cash, short-term deposits, other current assets, trade accounts payable and other current liabilities, due to their short-term nature.
10
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE 3 |
Short-term deposits represent time deposits placed with banks with original maturities of greater than three months but less than one year. Interest earned is recorded as financial income in the condensed consolidated statements of operations during the periods for which the Company held short-term deposits.
As of September 30, 2020, the Company had deposits dominated in New Israeli Shekels (“NIS”) and in USD at Leumi Bank (Israel) and BHI USA with various fixed annual interest rates in the range of 0.5% - 1.58% per year. As of September 30, 2019, the Company had deposits at Leumi Bank (Israel) and BHI USA with various fixed annual interest rates in the range of 2.4% - 3.6% per year.
On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842)” using the modified retrospective approach for all lease arrangements at the beginning period of adoption. The Company leases office space under operating leases. As of September 30, 2020, the Company’s right-of-use assets and lease liabilities for operating leases totaled $4,370 and $4,499, respectively.
In May 2017, BiomX Israel entered into a lease agreement for office space in Ness Ziona, Israel for five years, beginning on June 1, 2017, with an option to extend for an additional five years. Monthly lease payments under the agreement are approximately $18. As part of the agreement, the Company has obtained a bank guarantee in favor of the property owner in the amount of approximately $95, representing four monthly lease and related payments. Lease expenses recorded in the condensed consolidated statements of operations were $55 and $163 for the three and nine months ended September 30, 2020, respectively. Lease expenses recorded in the condensed consolidated statements of operations were $48 and $96 for the three and nine months ended September 30, 2019, respectively.
In September 2019, BiomX Israel entered into a lease agreement for office space in Ness Ziona, Israel for five years beginning on September 8, 2019, with an option to extend for an additional period until July 14, 2027. Monthly lease payments under the agreement are approximately $12. As part of the agreement, BiomX Israel obtained a bank guarantee in favor of the property owner in the amount of approximately $59, representing four monthly lease and related payments. Lease expenses recorded in the condensed consolidated statements of operations were $35 and $105 for the three and nine months ended September 30, 2020, respectively. Lease expenses recorded in the condensed consolidated statements of operations were $8 for the three and nine months ended September 30, 2019, respectively.
In September 2020, BiomX Israel entered into a lease agreement for office space in Ness Ziona, Israel for five years beginning on September 1, 2020, with an option to extend for an additional period until November 30, 2030. This agreement supersedes the above-mentioned May 2017 and September 2019 lease agreements and sets the prior lease agreements’ end date to March 31, 2021. Monthly lease payments under the new lease agreement are approximately $50. As part of the agreement, BiomX Israel is exempt from monthly payments under the new agreement until January 15, 2021. BiomX Israel undertook to obtain a bank guarantee in favor of the property owner in the amount of approximately $208, representing four monthly lease and related payments.
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
Supplemental cash flow information related to operating leases was as follows:
| Three months ended September 30, 2020 | Nine months ended September 30, 2020 | |||
| Cash payments for operating leases | 90 | 268 |
As of September 30, 2020, the Company’s operating leases had a weighted average remaining lease term of 10. 2 years and a weighted average discount rate of 6%. Future lease payments under operating leases as of September 30, 2020 were as follows:
| Operating Leases | ||||
| Remainder of 2020 | $ | 95 | ||
| 2021 | $ | 651 | ||
| 2022 | $ | 580 | ||
| 2023 | $ | 580 | ||
| 2024 | $ | 580 | ||
| 2025 | $ | 580 | ||
| 2026 | $ | 580 | ||
| 2027 | $ | 580 | ||
| 2028 | $ | 580 | ||
| 2029 | $ | 580 | ||
| 2030 | $ | 532 | ||
| Total future lease payments | $ | 5,918 | ||
| Less imputed interest | (1,419 | ) | ||
| Total lease liability balance | $ | 4,499 | ||
12
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| – | ACQUISITION OF SUBSIDIARY |
In November 2017, BiomX Israel signed a share purchase agreement with the shareholders of RondinX Ltd. In accordance with the share purchase agreement, BiomX Israel acquired 100% control and ownership of RondinX Ltd. for consideration valued at $4.5 thousand.$4,500. The consideration included the issuance of 250,023 Preferred A Shares, the issuance of warrants to purchase an aggregate of 4,380 Series A-1 preferred shares, and additional contingent consideration. As part of the Recapitalization Transaction the Company issued shares of Common Stock in exchange for outstanding ordinary shares and all the preferred shares of BiomX Israel. The number of shares prior to the Recapitalization Transaction has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction. The contingent consideration is based on the attainment of future clinical, developmental, regulatory, commercial and strategic milestones relating to product candidates for the treatment of primary sclerosing cholangitis or entry into qualifying collaboration agreements with certain third parties. The contingent considerationparties and may require the Company to issue 567,729 shares of Common Stock upon the attainment of certain milestones, as well as make future cash payments and/or issue additional shares of the most senior class of the Company’s shares authorized or outstanding as of the time the payment is due, or a combination of both of up to $32 thousand$32,000 within ten years from November 2017, the closing of the share purchase agreement. The contingent consideration may also requireagreement, and/or the Company to pay a qualifying up-front fee upon entering of agreements with certain third parties or their affiliates that include a qualifying up-front fee and is entered into within three years from the closing of the share purchase agreement. No such agreement was entered into within three years from the closing. The Company has the discretion of determining whether milestone payments will be made in cash or by issuance of shares.shares of Common Stock.
The contingent consideration is accounted for at fair value (Level 3). There were no changes in the fair value hierarchy leveling during the nine monthsquarter ended September 30, 2020 or 2019.March 31, 2021 and year ended December 31, 2020.
The changecondensed consolidated financial statements as of March 31, 2021 and December 31, 2020 include a liability with respect to this agreement in the fair valueamount of the contingent consideration as of September 30, 2020$79 and 2019 was as follows:$83, respectively.
F-10
BIOMX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD and NIS in thousands, except share and per share data)
| NOTE 4 | – | |||
COMMITMENTS AND CONTINGENT CONSIDERATIONS | ||||
| A. | ||||
In April 2019, the IIA approved an application for a total budget of NIS 4,221 (approximately $1,185). The IIA funded 30% of the approved budget. The program was for the period beginning from July 2018 through June 2019. As of March 31, 2021, BiomX Israel has received all funds with respect to this program. In December | ||||
| NIS 10,794 (approximately $3,123). The IIA funded 30% of the approved budget. The program was for the period beginning from July 2019 through December 2019. As of | ||||
In April 2020, the IIA approved an application for a total budget of NIS 15,562 (approximately $4,287). The IIA committed to fund 30% of the approved budget. The program was for the period beginning January 2020 through December 2020. As of March 31, 2021, the Company received NIS 1,634 (approximately $450) from the IIA with respect to this program. BiomX Israel has not yet submitted the final report to the IIA for this program. In March 2021, the IIA approved two new applications for a total budget of NIS 19,444 (approximately $5,874). The IIA committed to fund 30% of the approved budget. The program is for the period beginning January 2021 through December 2021. As of March 31, 2021, BiomX Israel had not yet received funds from the IIA with respect to the programs. According to the agreement with the IIA, BiomX Israel will pay royalties of 3% to 3.5% of future sales up to an amount equal to the accumulated grant received including annual interest of LIBOR linked to the dollar. BiomX Israel may be required to pay additional royalties upon the occurrence of certain events as determined by the IIA, that are within the control of BiomX Israel. No such events have occurred or were probable of occurrence as of the balance sheet date with respect to these royalties. Repayment of the grant is contingent upon the successful completion of the BiomX Israel’s R&D programs and generating sales. BiomX Israel has no obligation to repay these grants if the R&D program fails, is unsuccessful or aborted or if no sales are generated. The Company had not yet generated sales as of March 31, 2021; therefore, no liability was recorded in these condensed consolidated financial statements. Through March 31, 2021, total grants approved from the IIA aggregated to approximately $6,212 (NIS 21,863). Through March 31, 2021, the Company had received an aggregate amount of $2,691 (NIS 9,757) in the form of grants from the IIA. As of March 31, 2021, the Company had a contingent obligation to the IIA in the amount of approximately $3,338 including annual interest of LIBOR linked to the dollar. |
Intangible assets acquired in the RondinX Ltd. acquisition (see Note 5) were determined to be in-process R&D. In accordance with ASC 350-30-35-17A (“Intangible assets with indefinite lives”), R&D assets acquired in a business combination are considered an indefinite-lived intangible asset until completion or abandonment of the associated R&D efforts. On January 1, 2020, the in-process R&D efforts were completed. The Company had determined the useful life of the R&D assets for three years and began amortizing these assets accordingly in the financial statements. Amortization expenses recorded in the condensed consolidated statements of operations were $379 and $1,137 for the three and nine months ended September 30, 2020, respectively. Based on management’s analysis, there was no impairment for the three and nine months ended September 30, 2020 and 2019.
F-11
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE | – | COMMITMENTS AND CONTINGENT |
In December 2019, the IIA approved a new application for a total budget of NIS 10.8 thousand (approximately $3.1 thousand). IIA committed to funding 30% of the approved budget. The program is for the period beginning July 2019 through December 2019. BiomX Israel has not yet submitted the final report to the IIA for this program.
During April 2020, the IIA approved a new application for a total budget of NIS 15.6 thousand (approximately $4.4 thousand). The IIA committed to funding 30% of the approved budget. The program is for the period beginning January 2020 through December 2020. As of September 30, 2020, the Company received NIS 1.6 thousand (approximately $0.5 thousand) from the IIA with respect to this program.
According to the agreement with the IIA, BiomX Israel will pay royalties of 3% to 3.5% of future sales up to an amount equal to the accumulated grant received, including annual interest of LIBOR linked to the USD. BiomX Israel may be required to pay additional royalties upon the occurrence of certain events as determined by the IIA, that are within the control of the Company. No such events have occurred or were probable of occurrence as of the balance sheet date with respect to these royalties. Repayment of the grant is contingent upon the successful completion of the Company’s R&D programs and generating sales. The Company has no obligation to repay these grants if the R&D program fails, is unsuccessful or aborted or if no sales are generated. The Company had not yet generated sales as of September 30, 2020, therefore, no liability was recorded in these condensed consolidated financial statements.
As of September 30, 2020, the Company had a contingent liability to the IIA in the amount of approximately $2.3 thousand including annual interest of LIBOR linked to the USD.
In July 2019, the Company and Yeda amended the 2015 License Agreement and the 2017 License Agreement with Yeda. See Note 7H regarding the Yeda Amendment.
14
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
|
| ||
| On September 1, 2020 (“Effective Date”), BiomX Israel entered into a research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration on biomarker discovery for |
15
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE | – |
| A. | Share Capital: |
Common Stock:At-the-market Sales Agreement:
The Company is authorizedIn December 2020, pursuant to issue 60,000,000 shares of Common Stock. Holders ofa registration statement on Form S-3 declared effective by the Company’s Common Stock are entitled to one vote for each share. As of September 30,Securities and Exchange Commission on December 11, 2020, the Company had 23,173,378 issued sharesentered into an Open Market Sales Agreement (“ATM Agreement”) with Jefferies LLC. (“Jefferies”), which provides that, upon the terms and 23,167,678 outstanding shares of Common Stock.
Share Exchange:
As detailedsubject to the conditions and limitations in Note 1, as part of the Recapitalization Transaction on October 28, 2019,ATM Agreement, the Company issued 15,069,058may elect, from time to time, to offer and sell shares of Common Stock in exchange for approximately 65%with an aggregate offering price of up to $50,000, with Jefferies acting as sales agent. During the issued and outstanding ordinary shares and all the preferred shares of BiomX Israel. The number of shares prior to the Recapitalization Transaction has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
In addition,three months ended March 31, 2021, the Company also agreed to issue the following number of additionalsold 601,674 shares of Common Stock inunder the aggregate, to Chardan Healthcare Acquisition Corp. shareholders on a pro rata basis, subject to the Company’s achievementATM Agreement, at an average price of the conditions specified below following the Recapitalization Transaction (all with respect to the Company’s shares of Common Stock traded on NYSE American):
Preferred Stock:
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001$7.20 per share, with such designation, rights and preferences as may be determined from time to time by the Company’s Boardraising aggregate net proceeds of Directors.approximately $4,334, after deducting an aggregate commission of $134.
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| B. |
|
In 2015, the Board of Directors of BiomX Israel approved a plan for the allocation of options to employees, service providers and officers (the “2015 Plan”). The options represented a right to purchase one ordinary share of BiomX Israel in consideration of the payment of an exercise price. The options were granted in accordance with the “capital gains route” under section 102 and section 3(i) of the Israeli Income Tax Ordinance and section 409A of the Israeli Internal Revenue Code.
The original 2015 Plan was adjusted following the Recapitalization Transaction on October 28, 2019 such that each outstanding option entitles its holder to purchase one share of Common Stock of the Company. As a result, the number of options and exercise price per share were adjusted in a technical manner such that there was no change in the fair value of the awards under the adjusted 2015 Plan. The number of outstanding options and exercise prices in this Note have been restated to reflect the adjusted 2015 Plan. As of September 30, 2020, there are no shares remaining for issuance under the 2015 Plan.
During 2019, the Board approved the grant of 704,669 options to 22 employees and 79,630 options to two consultants, without consideration. 527,716 of the options granted are to the executive officers of the Company. These options were granted under the 2015 Plan.
During 2019, 74,581 options were exercised to purchase shares of Common Stock at an average exercise price of $1.34 per share.
Certain senior employees and directors are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.
In 2019, the Company adopted a new incentive plan (the “2019 Plan”) to grant 1,000 options, exercisable for Common Stock.
The aggregate number of shares of Common Stock that may be delivered pursuant to the 2019 Plan will automatically increase on January 1 of each year, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year.year (“Evergreen Amount”). Notwithstanding the foregoing, the Board of Directors may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of shares of Common Stock than provided herein.the Evergreen Amount. On January 1, 2020 and January 1, 2021, the number of shares of Common Stock available to grant under the 2019 Plan was increased by 914,741.914,741 and 930,813, respectively, to an aggregate of 1,846,554 shares.
On March 25, 2020,30, 2021, the Board of Directors approved the grant of 814,700985,530 options without consideration to 6594 employees, one consultant, fourincluding five senior officers, (one of whom is a consultant),one consultant, and six directors under the 2019 Plan. These optionsPlan, without consideration. Options were granted at an exercise price of $6.21$7.02 per share with a vesting periods ranging from three toperiod of four years. Directors and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.
On May 5, 2020, the Board of Directors approved the grant of 79,000 options without consideration to four employees, under the 2019 Plan. These options were granted at an exercise price of $5.59 per share with a vesting period of four years.
F-12
As of September 30, 2020, there were 48,041 shares available for issuance under the 2019 Plan. Refer to Note 11A for options granted on October 2, 2020.
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE | – |
| B. |
|
The fair value of each option was estimated as of the date of grant or reporting period using the Black-Scholes option-pricing model, using the following assumptions:
Nine months ended September 30, | Three Months Ended March 31, | |||||||||||||||
| 2020 | 2019 | 2021 | 2020 | |||||||||||||
| Underlying value of share of Common Stock ($) | 5.59-6.21 | 2.03 | ||||||||||||||
| Underlying value of Common Stock ($) | 7.02 | 6.21 | ||||||||||||||
| Exercise price ($) | 5.59-6.21 | 2.03 | 7.02 | 6.21 | ||||||||||||
| Expected volatility (%) | 85.0 | 93.1 | 85.0 | 85.0 | ||||||||||||
| Term of the option (years) | 6.25 | 6.25 | 6.11 | 6.11 | ||||||||||||
| Risk-free interest rate (%) | 0.37-0.52 | 2.23 | 1.17 | 0.52 | ||||||||||||
The cost of the benefit embodied in the options granted during the ninethree months ended September 30, 2020,March 31, 2021, based on their fair value as at the grant date, is estimated to be $3.8 thousand.approximately $5,138. These amounts will be recognized in the condensed consolidated statements of operations over the vesting period.
| (1) | A summary of options granted to purchase the Company’s Common Stock under the Company’s share option plans is as follows: |
| For the nine months ended September 30, 2020 | ||||||||||||
| Number of Options | Weighted average exercise price | Aggregate intrinsic value | ||||||||||
| USD | USD in thousands | |||||||||||
| Outstanding at the beginning of period | 3,143,802 | 1.09 | 25,733 | |||||||||
| Granted | 893,700 | 6.16 | ||||||||||
| Forfeited | (61,110 | ) | 3.47 | |||||||||
| Exercised | (304,843 | ) | 0.70 | |||||||||
| Outstanding at the end of period | 3,671,549 | 3.08 | 12,665 | |||||||||
| Vested at end of period | 1,738,957 | |||||||||||
| Weighted average remaining contractual life – years as of September 30, 2020 | 7.82 | |||||||||||
| For the Three Months Ended March 31, 2021 | ||||||||||||
| Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||
| Outstanding at the beginning of period | 3,569,766 | 3.12 | 12,338 | |||||||||
| Granted | 985,530 | 7.02 | ||||||||||
| Forfeited | (78,854 | ) | 3.86 | |||||||||
| Exercised | (12,646 | ) | 1.84 | |||||||||
| Outstanding at the end of period | 4,463,796 | 3.97 | 14,612 | |||||||||
| Exercisable at the end of period | 2,135,586 | |||||||||||
| Weighted average remaining contractual life of outstanding options – years as of March 31, 2021 | 7.91 | |||||||||||
F-13
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE | – |
| B. |
|
Warrants:
As of September 30, 2020 and DecemberMarch 31, 2019,2021, the Company had the following outstanding warrants to purchase Common Stock as follows:Stock:
| Warrant | Issuance Date | Expiration Date | Exercise Price Per Share (USD) | Number of Shares of Common Stock Underlying Warrants | ||||||||
| Private Warrants issued to Yeda (see 1 below) | May 11, 2017 | May 11, 2025 | (* | ) | 591,382 | |||||||
| Private Warrants issued to founders (see 2 below) | November 27, 2017 | - | 10,589 | |||||||||
| Private Placement Warrants (see 3 below) | IPO (December 13, 2018) | December 13, 2023 | 11.50 | 2,900,000 | ||||||||
| Public Warrants (see 4 below) | IPO (December 13, 2018) | October 28, 2024 | 11.50 | 3,500,000 | ||||||||
| 7,001,971 | ||||||||||||
| Warrant | Issuance Date | Expiration Date | Exercise Price Per Share | Number of Shares of Common Stock Underlying Warrants | ||||||||
| Private Warrants issued to Yeda (see 1 below) | May 11, 2017 | May 11, 2025 | (* | ) | - | |||||||
| Private Warrants issued to scientific founders (see 2 below) | November 27, 2017 | - | 2,974 | |||||||||
| 2,974 | ||||||||||||
| (*) | less than $0.001. |
| 1. | In May 2017, in accordance with a license agreement, the On March 10, 2021, Yeda exercised 362,444 warrants on a cashless basis, resulting in the issuance of 362,383 shares of Common Stock. The remainder of the warrants were cancelled as part of the termination of the license agreement. Expenses and income |
236,552 warrants were fully vested and exercisable on the date of their issuance. The remainder of the warrants will vest and become exercisable subject to achievement of certain milestones specified in the agreement as follows:
236,552 warrants were fully vested and exercisable on the date of their issuance. The remainder of the warrants would have vested and become exercisable subject to achievement of |
During 2020, 236,553 warrants were cancelled following termination of the |
As of December 31, 2020, 118,277 warrants were vested as the |
F-14
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| NOTE | – |
| B. |
|
| 2. | In November 2017, BiomX Israel issued 7,615 warrants to Yeda and 2,974 warrants to its scientific founders. All the warrants were fully vested at their grant date and will expire immediately prior to a consummation of an M&A transaction. The warrants did not expire as a result of the Recapitalization Transaction and have no exercise price. |
The Company may redeem the Public Warrants:
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| (2) | The following table sets forth the total |
Nine months ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Research and development expenses, net | 1,345 | 520 | ||||||
| General and administrative | 783 | 360 | ||||||
| 2,128 | 880 | |||||||
Three months ended September 30, | ||||||||||||||||
| 2020 | 2019 | Three Months Ended | ||||||||||||||
| 2021 | 2020 | |||||||||||||||
| Research and development expenses, net | 843 | 153 | 331 | 192 | ||||||||||||
| General and administrative | 271 | 96 | 199 | 145 | ||||||||||||
| 1,114 | 249 | 530 | 337 | |||||||||||||
| NOTE | – |
On October 31, 2018, BiomX Israel entered into a research collaboration agreement with Janssen Research & Development, LLC (“Janssen”), an affiliate of shareholder Johnson & Johnson Development Corporation, for a collaboration on biomarker discovery for IBD. Under the agreement, BiomX Israel was eligible to receive fees totaling $167 in installments of $50 within 60 days of signing of the agreement, $17 upon completion of data processing and two installments of $50 each upon delivery of Signature Phase I of the Final Study Report (both terms defined within the agreement). This agreement was in effect until 30 days after the parties completed the research program and BiomX Israel provided Janssen with a final study report. The research period started during March 2019 and ended in September 2019. The final report was provided to Janssen in December 2019.
BIOMX INC.
(formerly known as Chardan Healthcare Acquisition Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(USD in thousands, except share and per share data)
| BASIC AND DILUTED LOSS PER SHARE |
The basic and diluted net loss per share and weighted average number of shares of Common Stock used in the calculation of basic and diluted net loss per share are as follows:
Nine months ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Net loss | 20,942 | 11,263 | ||||||
| Interest accrued on preferred shares (pre-merger – BiomX Israel) | - | 3,594 | ||||||
| Net loss used in the calculation of basic net loss per share | 20,942 | 14,857 | ||||||
| Net loss per share | 0.91 | 7.37 | ||||||
| Weighted average number of shares of Common Stock | 23,013,790 | 2,015,349 | ||||||
Three months ended September 30, | Three Months Ended March 31, | |||||||||||||||
| 2020 | 2019 | 2021 | 2020 | |||||||||||||
| Net loss | 8,835 | 4,260 | 8,402 | 5,901 | ||||||||||||
| Interest accrued on preferred shares (pre-merger – BiomX Israel) | - | 1,212 | ||||||||||||||
| Net loss used in the calculation of basic net loss per share | 8,835 | 5,472 | ||||||||||||||
| Net loss per share | 0.38 | 2.69 | 0.35 | 0.26 | ||||||||||||
| Weighted average number of shares of Common Stock | 23,150,253 | 2,035,625 | 23,944,573 | 22,897,723 | ||||||||||||
| NOTE | – | SUBSEQUENT EVENTS |
| A. | In April 2021, BiomX Israel received $992 (NIS 3,238) with respect to the |
| B. |
| C. | In May 2021, BiomX Israel received $625 (NIS 2,042) with respect to the |
22F-15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this Quarterly Report to “we,” “us,” the “Company”“the Company”, “BiomX”, “we”, “us” or similar words refer to the combined company,“our”, mean BiomX Inc. Whenand its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise. References in this Quarterly Report references “BiomX”to “BiomX Ltd.” mean BiomX Ltd., our wholly owned Israeli subsidiary. As further described in our 2020 Annual Report, on October 28, 2019, Chardan Healthcare Acquisition Corp., a special purpose acquisition company, combined with BiomX Ltd. pursuant to a merger agreement dated as of July 16, 2019 and describes the businessamended as of BiomX, it refers to the business of BiomXOctober 11, 2019, among CHAC Merger Sub Ltd., an Israeli company and wholly-ownedwholly owned subsidiary of the Company, and RondinX Ltd., an Israeli company and wholly-owned subsidiary ofwith BiomX Ltd. The financial statements included in this Quarterly Report showcontinuing as the condensed consolidated balancessurviving entity and transactionsa wholly owned subsidiary of the Company, or the Business Combination, and changed its name to BiomX and show comparative financial information of BiomX (the acquirerInc. The Business Combination was treated as a “reverse merger” in a reverse merger for accounting purposes). accordance with GAAP.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Pursuant to a merger agreement dated as of July 16, 2019 and amended as of October 11, 2019, among other things, CHAC Merger Sub Ltd., an Israeli company and wholly owned subsidiary of the Company, merged with and into BiomX, with BiomX continuing as the surviving entity and a wholly-owned subsidiary of the Company (the “Recapitalization Transaction”). The Recapitalization Transaction was treated as a “reverse merger” in accordance with GAAP. For accounting purposes, BiomX was considered to have acquired the Company. Therefore, for accounting purposes, the Recapitalization Transaction was treated as the equivalent of a capital transaction in which BiomX issued stock for the net assets of the Company. The net assets of the Company were stated at historical cost with no goodwill or other intangible assets recorded. The post-acquisition financial statements of the Company show the consolidated balances and transactions of the Company and BiomX as well as comparative financial information of BiomX (the acquirer for accounting purposes).
General
We are a clinical stage microbiome product discovery company developing products using both natural and engineered phage technologies designed to target and destroy bacteria that affect the appearance of skin, as well as harmful bacteria in chronic diseases, such as inflammatory bowel disease, (“IBD”),or IBD, Cystic Fibrosis, (“CF”),or CF, Atopic Dermatitis, (“AD”),or AD, primary sclerosing cholangitis, (“PSC”)or PSC, and colorectal cancer, (“CRC”).or CRC. Bacteriophage or phage are viruses that infect, amplify and kill the target bacteria and are considered inert to mammalian cells. By developing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology, we develop phage-based therapies intended to address large-market and orphan diseases.
Since inception in 2015, we have devoted substantially all our resources to organizing and staffing the company, raising capital, acquiring rights to or discovering product candidates, developing our technology platforms, securing related intellectual property rights, and conducting discovery, research and development activities for our product candidates. We do not have any products approved for sale, our products are still in the preclinical and clinical development stages, and we have not generated any revenue from product sales. As we move our product candidates from preclinical to clinical stage and continue with clinical trials, we expect our expenses to increase.
On November 12, 2020, we announcedOur phage-based product candidates are developed utilizing our new BOLT (“BacteriOphage Lead to Treatment”)proprietary research and development platform. The BOLT platform will enable us to rapidly develop, manufacture and formulate phage therapy candidates targeting particular pathogenic bacteria and incorporates our experience over the past five years with process refinement and implementation of technological advancements.named BOLT. The BOLT platform is unique, employing cutting edge methodologies and capabilities across disciplines including computational biology, microbiology, phage synthetic engineering uniqueof phage and their production bacterial hosts, bioanalytical assay development, manufacturing and formulation, to allow agile and efficient development of natural or engineered phage therapies. For a given indication, the platform will allow for the completion of a clinical proof of concept study in patients, meaning Phase 2 results, within approximately 12-18 months from project initiation (in certain indications the length of clinical proof of concept may be longer depending on the indication, identity of target bacteria, recruitment rate, cohort size and other factors). The ability to move quickly into clinical development is also driven by the strong safety profile of naturally-occurring phage, as corroborated by regulatory guidance we received from the FDA relating to our IBD program, allowing us to bypass preclinical safety studies and studies in healthy volunteers and to proceed directly to patient studies. The platform allows generation of personalized phage treatments, tailored to target specific bacterial strains in a given patient, allowing us to conduct an initial clinical proof of concept study in patients (Phase 2 results) within approximately 12-18 months of project initiation for many indications, and, in parallel, also the development of an optimized phage therapy candidate with a fixed composition optimized for the treatment of a specific indication for the overall patient population. We are initially implementing the ability to complete a clinical proof of concept study in patients within approximately 12-18 months from project initiation in our cystic fibrosis and atopic dermatitis programs.combinations, or cocktails.
BOLT is designed to allow parallel phage cocktail development under two optional paths:
| ● | A personalized approach aimed at conducting a rapid initial clinical proof of concept study in patients (Phase 2 results) within approximately 12-18 months of project initiation. In certain indications the time to clinical proof of concept may be longer depending on the indication, identity of target bacteria, recruitment rate, cohort size and other factors. Under this path we develop an initial phage cocktail or cocktails of naturally-occurring phage designed to target the bacterial strains isolated from each study subject participating in the clinical proof of concept study. This phage cocktail or cocktails may differ from the final optimized phage cocktail to be commercialized, if approved. The ability to move quickly into clinical development is also driven by the strong safety profile of naturally-occurring phage, which we believe will allow us to bypass GLP toxicity studies and safety studies in healthy volunteers based on feedback from the FDA in connection with our IBD development program, and to proceed directly to Phase 2 proof of concept. |
2
| ● | Development of the final optimized fixed phage cocktail to be commercialized – the optimized cocktail targets a broad patient population and may be comprised of naturally-occurring or synthetically engineered phage. The cocktail contains phage with complementary features and is further optimized for multiple characteristics such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing. Development of the optimized phage cocktail is anticipated to require 1-2 years and will be conducted in parallel to developing the personalized product candidates and executing the clinical proof of concept studies described above. |
Clinical and Pre-Clinical Developments
On March 31, 202024, 2021, we announced positive top line results from a randomized, double-blind, dose-finding, placebo-controlled single centerthat we have completed enrollment of 140 patients under our Phase 12 cosmetic clinical study of BX001, a topical gel comprised of a cocktail of naturally-occurring phage targeting Cutibacterium acnes (“, or C. acnes”)acnes, to improve the appearance of acne-prone skin in subjects with acne-prone skin. C. acnes are bacteria implicated in the pathophysiology of acne vulgaris. The 75 enrolledstudy is a 12-week randomized, single center, double-blind, placebo-controlled trial with 140 individuals with mild-to-moderate acne werevulgaris. Subjects enrolled are randomized into one of three cohorts: a high dose cohort, a low dose cohort, and a placebo cohort (vehicle). The study met its primary endpoint of safety and tolerability for both doses of BX001, as well as a statistically significant (p=0.036) reduction of C. acnes levels for the high dose of BX001 compared to placebo.
The Phase 2 cosmetic clinical study of BX001 is planned to be a 12-week randomized, double-blind, placebo-controlled trial in 100 individuals with mild-to-moderate acne. Enrolled individuals will be randomized into one of two cohorts: BX001 or placebo (vehicle). We plan in a 1:1 ratio and will self-administer BX001 or placebo twice daily. The key endpoints will evaluate the safety, tolerability and efficacy of BX001. Results from the 8-week time point are expected to initiate the Phase 2 cosmetic clinical study of BX001be available in the firstthird quarter of 2021 and results arethe full analysis including the 12-week time point is expected in the second quarter of 2021.
On November 3, 2020, the first subject has been dosed in a Phase 1a study of BX002, a phage therapy candidate for the treatment of IBD. The therapy targets strains of Klebsiella pneumoniae that cause strong TH1 immune stimulation and colitis in mouse models of disease and are known to be present at a higher prevalence and abundance in IBD patients relative to healthy individuals. The randomized, single-blind, multiple-dose, placebo-controlled study in 18 healthy volunteer subjects is designed to evaluate the safety and tolerability of orally administered BX002 as the primary endpoint, with detection of viable phage in stool as a key exploratory endpoint. The study is being conducted in the U.S. under a novel investigational new drug application approved by the FDA. Results from the study are expected in the first quarter of 2021.
On November 12, 2020, we announced the consolidation of two phage-therapy programs in IBD and PSC. We now have one improved, broad host range product candidate, BX003, targeting Klebsiella pneumoniae, a potential pathogen implicated in both diseases to be developed for both indications. The consolidation of these programs results in an updated timeline for Phase 1b/2a results with BX003, expected in mid-2022.
On November 12, 2020, we announced initiation of a new phage therapy program in CF addressing chronic respiratory infections caused by Pseudomonas aeruginosa, a main contributor to morbidity and mortality in these patients. Phase 2 results of a proof of concept clinical study evaluating safety and efficacy in patients are expectedavailable in the fourth quarter of 2021.
On February 2, 2021, we announced positive results of a randomized, single-blind, multiple-dose, placebo-controlled Phase 1a pharmacokinetic study of BX002, our product candidate for IBD and PSC, conducted under an investigational new drug, or IND, application submitted to the FDA. The study evaluated the safety and tolerability of orally administered BX002 in 18 healthy volunteers. Subjects were randomized to receive orally either BX002 or placebo, twice daily for three days. Subjects were monitored for safety for seven days in a clinical unit, with follow-up monitoring for safety assessments conducted at 14 and 28 days after completion of dosing. BX002 was demonstrated to be safe and well-tolerated, with no serious adverse events and no adverse events leading to discontinuation. In addition, the study met its objective of delivering high concentrations of viable phage to the gastrointestinal tract of approximately 1010 PFU, or plaque forming units. This equals approximately 1,000 times more viable phage compared to the bacterial burden of K. pneumoniae in IBD and PSC patients as measured in stool. Based on the Phase 1a study results, we plan to advance to a Phase 1b/2a study evaluating the efficacy of BX003 for the reduction of K. pneumoniae in individuals that carry the target bacteria. Results from the Phase 1b/2a study are expected in the second quarter of 2022.
On November 12, 2020, we alsoannounced consolidation of our IBD and PSC programs into a single broad host range product candidate, named BX003, under development for both indications. Prior to November 2020, we had two separate phage product candidates for IBD and for PSC, with our IBD product candidate named BX002 and PSC product candidate named BX003. After the consolidation, the current BX003 product candidate is now under development to treat both IBD and PSC, targeting bacterial strains of Klebsiella pneumoniae, or K. pneumoniae, a potential pathogen implicated in both diseases. Prior to the consolidation, our Phase 1a clinical study was conducted only on BX002, and future clinical studies are planned to be conducted on BX003 for both IBD and PSC.
On March 31, 2021, we announced the initiationselection of the phage cocktail for BX004, our therapeutic phage product candidate under development for chronic respiratory infections caused by Pseudomonas aeruginosa, or P. aeruginosa, a new programmain contributor to morbidity and mortality in patients with CF. Based on recommendations from the Cystic Fibrosis Therapeutic Development Network, BiomX is updating its Phase 2 proof-of-concept study design and timelines to a Phase 1b/2a trial in CF patients with chronic respiratory infections caused by P. aeruginosa. The Phase 1b/2a trial will be comprised of two parts. Part 1 will evaluate the safety, pharmacokinetics and microbiologic/clinical activity of BX004 in eight CF patients in a single ascending dose and multiple ascending dose design. Results from Part 1 are expected in the first quarter of 2022. Part 2 of the Phase 1b/2a trial will evaluate the safety and efficacy of BX004 in 21 CF patients randomized to a treatment or placebo cohort in a 2:1 ratio. Results from Part 2 are expected by the second quarter of 2022.
3
On March 31, 2021, we announced the selection of the phage cocktail for development of a topically administered phage-basedBX005, our topical phage product candidate targeting Staphylococcus aureus, or S. aureus, a bacterium linked toassociated with the development and exacerbation of inflammation in atopic dermatitis. By reducing S. aureus burden, BX005 is designed to shift the skin microbiome composition to its “pre-flare” state to potentially result in clinical improvement. Results from a Phase 2 results of a proof of concept clinical studyproof-of-concept trial evaluating the safety and efficacy of BX005 in atopic dermatitis patients are expected in the first half of 2022.
For our CRC program, we are exploring phage mediated delivery of therapeutic payloads to Fusobacterium nucleatum bacteria residing in the tumors of patients with colorectal cancer. Preclinical results from animal studies evaluating use of phage therapy in combination with checkpoint inhibitors are expected in the second quarterand third quarters of 2021.
For more information regarding our product candidates, see Part I, Item 1 “Business—Overview of BiomX”“Business” of our 20192020 Annual Report.
COVID-19
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China and has since spread rapidly throughout many countries, and, onOn March 12, 2020, the World Health Organization declared COVID-19 a global pandemic. In an effort to contain and mitigate the spread of COVID-19, many countries have imposed unprecedented restrictions on travel, and there have beenmandatory business closures and other measures designed to mitigate the spread, leading to a substantial reduction in economic activities in countries that have had significant outbreaks of COVID-19. around the world, resulting in certain disruptions to our business throughout 2020 and in 2021.
WeIn response to the pandemic, we have implemented the mandatory as well as recommended measures to safeguard the health and safety of our employees and clinical trial participants, and the continuity of our business operations.operations, including social distancing in our offices, a work from home policy for all employees who are able to perform their duties remotely and restricting all nonessential travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, clinical trial participants and others in light of COVID-19. As of November 9, 2020, theMay 20, 2021, COVID-19 pandemic has not had a material impact on our results of operation.operations. However, uncertainty remains as to the potential impact of the COVID-19 pandemic on our future research and development activities and duringthe potential for a material impact on the Company increases the longer the virus impacts certain aspects of economic activity around the world. The full extent to which COVID-19 will directly or indirectly impact our business, results of operations and financial condition, including our ability to fulfill our clinical trial enrollment needs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets, the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, the effectiveness of vaccines and vaccine distribution efforts and the effectiveness of other actions taken in the United States and other countries to contain and treat the disease. During the second quarter of 2020, we updated our guidance on the timing of certain clinical milestones partly due to the health and safety precautions we havehad taken and challenges we continue to face in clinical trial enrollment due to the COVID-19 pandemic.COVID-19. It is not currently possible to predict how long the pandemic will last, what the long-term global effects will be, or the time that it will take for economic activity to return to priorpre-pandemic levels, and we do not yet know the full impact on our business and operations. We will continue to monitor the COVID-19 pandemic closely and follow health and safety guidelines as they evolve.
4
Consolidated Results of Operations
Comparison of the Three Months Ended September 30,March 31, 2021 and 2020 and 2019
The following table summarizes our consolidated results of operations for the three months ended September 30, 2020March 31, 2021 and 2019:2020:
| Three Months ended September 30, | ||||||||||||||||
| 2020 | 2019 | Three Months ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||||
| USD in thousands | USD in thousands | |||||||||||||||
| Research and development (“R&D”) expenses, net | 6,436 | 2,858 | 5,794 | 3,529 | ||||||||||||
| Amortization of intangible assets | 379 | 379 | ||||||||||||||
| General and administrative expenses | 2,394 | 1,797 | 2,497 | 2,058 | ||||||||||||
| Operating loss | 8,830 | 4,655 | 8,670 | 5,966 | ||||||||||||
| Financial expenses (income), net | 5 | (395 | ) | |||||||||||||
| Net Loss | 8,835 | 4,260 | ||||||||||||||
| Financial income, net | (271 | ) | (65 | ) | ||||||||||||
| Loss before tax | 8,399 | 5,901 | ||||||||||||||
| Tax expenses | 3 | - | ||||||||||||||
| Net loss | 8,402 | 5,901 | ||||||||||||||
| Basic and diluted loss per share of Common Stock | 0.38 | 2.69 | 0.35 | 0.26 | ||||||||||||
| Weighted average number of shares of Common Stock outstanding, basic and diluted | 23,150,253 | 2,035,625 | 23,944,573 | 22,897,723 | ||||||||||||
R&D expenses, net (net of grants received from the Israel Innovation Authority, (“IIA”)or the IIA, and considerationconsiderations from research collaborations) were $6.4$5.8 million for the three months ended September 30, 2020,March 31, 2021, compared to $2.9$3.6 million for the three months ended September 30, 2019.March 31, 2020. The increase of $3.5$2.2 million, or 121%61%, is primarily due to an increase in stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees which resulted in an increaseR&D and clinical activities and expenses related to conducting pre-clinical and clinical trials of salaries and related expenses and due to an increase in depreciation and amortization expenses. The Companyour product candidates. We did not receive grants from the IIA during the three months ended September 30, 2020March 31, 2021 or September 30, 2019.March 31, 2020.
General and administrative expenses were $2.4$2.5 million for the three months ended September 30, 2020,March 31, 2021, compared to $1.8$2.1 million for the three months ended September 30, 2019.March 31, 2020. The increase of $0.6$0.4 million, or 33%19%, is primarily due to an increase in stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees and an increase in expenses associated with operating as a public company, such as directors’ and officers’ insurance, filing and legal and accounting expenses.insurance.
Financial expenses,income, net were $0.1was $0.3 million for the three months ended September 30, 2020,March 31, 2021, compared to financial income, net of $0.4$0.07 million for the three months ended September 30, 2019.March 31, 2020. The increase in financial expenses, net of $0.5$0.2 million, or 328%, is primarily due to NIS/USDthe USD/NIS exchange rate differences and the revaluation of contingent consideration revaluation.considerations, which were partially offset by the decrease in interest rates on bank deposits and money market funds.
Basic and diluted loss per share of Common Stock was $0.38$0.35 for the three months ended September 30, 2020,March 31, 2021, compared to $2.69$0.26 for the three months ended September 30, 2019.March 31, 2020. The decreaseincrease in diluted loss per shares of $2.31,$0.09, or 86%35%, is primarily due to the significant increase in the number of our shares of Common Stock as compared to the number of ordinary shares of BiomX Ltd. before the Recapitalization Transaction,R&D expense which does not take into account BiomX Ltd. preferred shares, partially offset by the substantial increaseresulted in a higher net loss.
Comparison of the Nine Months Ended September 30, 2020Liquidity and 2019Capital Resources
The following table summarizesWe believe our consolidatedcash and cash equivalents on hand will be sufficient to meet our working capital and capital expenditure requirements until at least mid-2022. In the future we will likely require or desire additional funds to support our operating expenses and capital requirements or for other purposes, such as acquisitions, and may seek to raise such additional funds through public or private equity or debt financings or collaborative agreements or from other sources, as well as under the ATM Agreement discussed below. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations for the nine months ended September 30, 2020 and 2019:
| Nine Months ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| USD in thousands | ||||||||
| Research and development expenses, net | 14,441 | 8,458 | ||||||
| General and administrative expenses | 6,749 | 3,987 | ||||||
| Operating loss | 21,190 | 12,445 | ||||||
| Financial income, net | (248 | ) | (1,182 | ) | ||||
| Net Loss | 20,942 | 11,263 | ||||||
| Basic and diluted loss per share of Common Stock | 0.91 | 7.37 | ||||||
| Weighted average number of shares of Common Stock outstanding, basic and diluted | 23,013,790 | 2,015,349 | ||||||
R&D expenses, net (net of grants received from IIA and consideration from research collaborations) were $14.4 million for the nine months ended September 30, 2020, compared to $8.4 million for the nine months ended September 30, 2019. The increase of $6.0 million, or 71%, is primarily due to growth in the number of employees which resulted in an increase of salaries and related expenses. In addition, the increase is also due to the manufacturing of BX001 and BX002, the Company’s product candidates for acne-prone skin and IBD, respectively, for clinical trial and testing purposes as well as expenses relating to the BX001 Phase 1 cosmetic clinical study. We received $0.5 million and $0.3 million in grants from the IIA during the nine months ended September 30, 2020 and 2019, respectively.could be adversely affected.
General and administrative expenses were $6.7 million for the nine months ended September 30, 2020, compared to $4.0 million for the nine months ended September 30, 2019. The increase of $2.7 million, or 68%, is primarily due to salaries and related expenses and due to expenses associated with operating as a public company, such as directors’ and officers’ insurance, filing and legal and accounting expenses.
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Financial income, net was $0.3 million for the nine months ended September 30, 2020, compared to $1.2 million for the nine months ended September 30, 2019. The decrease of $0.9 million, or 75%, is primarily due to NIS/USD exchange rate differences.
Basic and diluted loss per share of Common Stock was $0.91 for the nine months ended September 30, 2020, compared to $7.37 for the nine months ended September 30, 2019. The decrease of $6.46, or 88%, is primarily due to the significant increase in the number of our shares of Common Stock as compared to the number of ordinary shares of BiomX Ltd. before the Recapitalization Transaction, which does not take into account BiomX Ltd. preferred shares, partially offset by the substantial increase in net loss.
Liquidity and Capital Resources
Cash Flows
The following table summarizes our sources and uses of cash for the ninethree months ended September 30, 2020March 31, 2021 and 2019:2020:
| Nine Months Ended September 30, | ||||||||||||||||
| 2020 | 2019 | Three Months Ended March 31, | ||||||||||||||
| 2021 | 2020 | |||||||||||||||
| USD in thousands | USD in thousands | |||||||||||||||
| Net cash used in operating activities | (17,325 | ) | (10,503 | ) | (6,352 | ) | (6,850 | ) | ||||||||
| Net cash provided by (used in) investing activities | (1,049 | ) | 11,631 | 5,168 | (329 | ) | ||||||||||
| Net cash provided by financing activities | 121 | 1,843 | 4,357 | 31 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (26 | ) | 179 | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | (18,253 | ) | 2,971 | 3,147 | (6,969 | ) | ||||||||||
Operating Activities
Net cash used in operating activities for the ninethree months ended September 30, 2020March 31, 2021 was $17.3$6.4 million and included ourprimarily due to a net loss of $20.9$8.4 million, mostly due tooffset by changes in our R&Doperating assets and general and administrative expenses.liabilities of $1.1 million. Net changes in our operating activitiesassets and liabilities for the ninethree months ended September 30, 2020March 31, 2021 consisted primarily of depreciation and amortization expenses in the amount of $1.6$0.6 million and share-basedstock-based compensation expenses in the amount of $2.1$0.5 million, partially offset by a decrease in accounts payable in the amount of $1.9$1.4 million.
Net cash used in operating activities for the ninethree months ended September 30, 2019March 31, 2020 was $10.5$6.8 million and included our net loss of $5.9 million. Net changes in our operating assets and liabilities for the ninethree months ended September 30, 2019March 31, 2020 consisted primarily of $11.3 million net loss, mostly due to our R&D and general and administrative expenses, partially offset by $0.9 milliondecrease in share-based compensation.trade account payables of $1.8 million.
Investing Activities
During the ninethree months ended September 30, 2020,March 31, 2021, net cash used inprovided by investing activities was $1.0$5.2 million, mainlyprimarily as a result of an increase in bankliquidation of short-term deposits, andpartially offset by purchases of property and equipment.
During the ninethree months ended September 30, 2019,March 31, 2020, net cash provided byused in investing activities was $11.7$0.3 million, mainlyprimarily as a result of a decrease in short-term bank deposits.purchases of property and equipment.
We have invested, and plan to continue to invest, our existing cash in short-term investments in accordance with our investment policy. These investments may include money market funds and investment securities consisting of U.S. Treasury notes, and high quality, marketable debt instruments of corporations and government sponsored enterprises. We use foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, we recognizerecord gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses, net.net in our condensed consolidated statements of operations. As of September 30, 2020,March 31, 2021, we had outstanding foreign exchange contracts in the amount of approximately $3.5$5.2 million. As of September 30, 2019,March 31, 2020, we had no outstanding foreign exchange contracts.
Financing Activities
During the ninethree months ended September 30,March 31, 2021, net cash provided by financing activities was $4.4 million, primarily from issuance of Common Stock pursuant to the Open Market Sales Agreement referred to below. In December 2020, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on December 11, 2020, we entered into an Open Market Sales Agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, we may elect, from time to time, to offer and sell shares of Common Stock having an aggregate offering price of up to $50,000,000 through Jefferies acting as sales agent. We are not obligated to make any sales of Common Stock under the ATM Agreement. From January 1, 2021 through March 31, 2021, we issued an aggregate of 601,674 shares of Common Stock under the ATM Agreement for aggregate gross proceeds of $4,465,032. From April 1, 2021 through May 20, 2021, we issued an aggregate of 79,679 shares of Common Stock pursuant to the ATM Agreement for aggregate gross proceeds of $503. We may continue to sell shares under the ATM Agreement and otherwise to use our shelf registration statement to raise additional funds from time to time.
During the three months ended March 31, 2020, net cash provided by financing activities was $0.1$0.03 million, mainly as a resultconsisting of exercise of stock options of $0.2 million, partially offset by outflows in connection with current assets and liabilities acquired in the Recapitalization Transaction of $0.1 million.Transaction.
During the nine months ended September 30, 2019, net cash provided by financing activities was $1.8 million, as a result of the issuance of preferred shares, net of expenses.
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Outlook
We have accumulated a deficit of $63.1$80.6 million since our inception. To date, we have not generated revenue from our operations and we do not expect to generate any significant revenues from sales of products in the next twelve months. Our cash needs may increase in the foreseeable future. We expect to generate revenues, from the sale of licenses to use our technology or products, but in the short and medium terms any amounts generated are unlikely to exceed our costs of operations. According to our estimates, our liquidity resources as of September 30, 2020,March 31, 2021, which consisted primarily of cash, cash equivalents and restricted cash of approximately $54$40.4 million and short-term deposits of approximately $10$13.2 million, will be sufficient to fund our operations into at least the second quarter of fiscal year 2022.mid-2022.
Consistent with our continuing R&D activities, we expect to continue to incur additional losses in the foreseeable future. To the extent we require funds above our existing liquidity resources in the medium and long term, we plan to fund our operations, as well as other development activities relating to additional product candidates, through future issuances of equity securities, including under our ATM Agreement, debt and possibly additional grants from the Israel Innovation AuthorityIIA or other government or non-profit institutions. Our ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, the market demand for our securities, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to the Company.
Off-Balance Sheet Arrangements
As of September 30, 2020,March 31, 2021, we did not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting PoliciesWe entered into forward and Significant Judgments and Estimates
Our condensed consolidated financial statements are preparedoption contracts to hedge against the risk of overall changes in accordance with GAAP. The preparationfuture cash flow from payments of our condensed consolidated financial statementssalaries and related disclosures requires us to make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income and net income,expenses, as well as on the valueother expenses denominated in NIS, for a period of certain assets and liabilities on our condensed consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis.less than one year.
Due toAs of March 31, 2021, the COVID-19 pandemic, there has been uncertainty and disruptionCompany had outstanding foreign exchange contracts in the global economy and financial markets. We are not awareamount of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying valueapproximately $5.2 million. As of our assets or liabilities as of November 9,March 31, 2020, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Our actual results may differ from these estimates under different assumptions or conditions. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2019 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have beenCompany had no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, costs and expenses, or the disclosure of contingent assets and liabilities in our condensed consolidated financial statements during the nine months ended September 30, 2020.outstanding foreign exchange contracts.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to make disclosures under this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
DisclosureWe maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervisionEvaluation of Disclosure Controls and Procedures
Our management, with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation, as of the end of the period covered by this Quarterly Report, of the effectiveness of our disclosure controls and procedures, during the period covered by this Quarterly Report, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2020.March 31, 2021.
Changes in Internal Control over Financial Reporting
Except as described below, there haveThere has been no changeschange in our internal control over financial reporting, as that occurredterm is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter to which this report relatesthree months ended March 31, 2021 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
Following the Recapitalization Transaction, management has begun to take steps to strengthen the Company’s internal control over financial reporting, including during the quarter ended September 30, 2020, including the hiring of experienced accounting and finance staff and adopting new policies and procedures, and intends to take additional steps during the remainder of 2020.
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Item 1A. Risk Factors.2. Unregistered Sales of Equity Securities and Use of Proceeds.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual ReportOn March 10, 2021, Yeda Research and Development Company Limited exercised 362,444 warrants on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition or future results.
There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 26, 2020, except as noted below.
The COVID-19 pandemic may adversely affect our business, including our clinical trials.
In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. This virus was declared a pandemic by the World Health Organization in March 2020cashless basis and continues to spread globally, including the United States and Israel. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. In response to the spread of COVID-19, we temporarily closed our executive offices with our administrative employees continuing their work outsidereceived 362,383 of our offices. In addition, we have modified our business practices, including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences. As a resultshares of Common Stock. We issued the warrant shares pursuant to an exemption from registration under Section 4(a)(2) of the COVID-19 pandemic, we have experienced and may continue to experience additional disruptions that could severely impact our business, preclinical studies and clinical trials, including:
The outbreak and the resulting government actions may adversely impact our planned and ongoing clinical trials. Clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff, and patient enrollment may be delayed due to prioritizationSecurities Act of hospital resources toward the COVID-19 pandemic. Some patients may not be willing and/or able to comply with clinical trial protocols due to the COVID-19 pandemic, particularly if quarantines impede patient movement or interrupt healthcare services. Similarly, our ability to recruit and retain patients and principal investigators and site staff who,1933, as healthcare providers, may have heightened exposure to COVID-19 may be impeded, which would adversely impact our clinical trial operations. The diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, including the attention of physicians serving as our clinical trial investigators and hospitals serving as our clinical trial sites, may significantly disrupt our research activities. As a result, the expected timeline for data readouts of our clinical trials and certain regulatory filings will likely be negatively impacted, which would adversely affect and delay our ability to obtain regulatory approvals for our product candidates, increase our operating expenses and have a material adverse effect on our financial condition.amended.
Furthermore, the response to the COVID-19 pandemic may redirect resources with respect to regulatory matters and intellectual property matters in a way that would adversely impact our ability to progress regulatory approvals and protect our intellectual property. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions. For example, the FDA postponed most inspections of foreign manufacturing facilities and products and postponed routine surveillance inspections of domestic manufacturing facilities. Comparable regulatory authorities in other jurisdictions may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and provide guidance regarding the conduct of clinical trials. If global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States Canada, Europe, Israel and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States, Canada, Europe, Israel and other countries to contain and treat the disease. As a result, the COVID-19 pandemic could have a material adverse effect on our business, results of operations, financial condition and prospects and heighten many of our known risks described or referenced in this “Risk Factors” section.
| No. | Description of Exhibit | |
| 3.1 | Composite Copy of Amended and Restated Certificate of Incorporation of the Company, effective on December 11, 2018, as amended to date. (Incorporated by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q filed by the registrant on August 13, 2020) | |
| 3.2 | Amended and Restated Bylaws of the Company, effective as of October 28, 2019 (Incorporated by reference to Exhibit 3.3 to the registrant’s Current Report on Form 8-K filed by the registrant on November 1, 2019) | |
| 31.1* | Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a) | |
| 31.2* | Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a) | |
| 32** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith. |
| ** | Furnished herewith. |
8
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BIOMX INC. | ||
| Date: | By: | /s/ Jonathan Solomon |
| Name: | Jonathan Solomon | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: | By: | /s/ Marina Wolfson |
| Name: | Marina Wolfson | |
| Title: | Senior Vice President of Finance and Operations | |
(Principal Financial Officer and Principal Accounting Officer) | ||
319