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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. Through March 31, 2022, the Company received NIS 4,284 (approximately $1,347) from the IIA with respect to these programs.
In August 2021, the IIA approved an application for an aggregate budget of NIS 5,737 (approximately $1,778). The IIA committed to fund 50% of the approved budget. The program is for the period beginning July 2021 through June 2022. The program does not bear royalties. Through March 31, 2022, the Company received NIS 1,004 (approximately $313) from the IIA with respect to this program.
In March 2022, the IIA approved an application
for a total budget of NIS 13,004 (approximately $4,094). The IIA committed to fund 30% of the approved budget. The program is for the
period beginning January 2022 through December 2022. As of March 31, 2022, the Company did not receive funding from the IIA with respect
to this program.
According to the agreement with the IIA, excluding the August 2021 program, BiomX Israel will pay royalties of 3% to 3.5% of future sales up to an amount equal to the accumulated grant received including annual interest of LIBOR linked to the dollar. BiomX Israel may be required to pay additional royalties upon the occurrence of certain events as determined by the IIA, that are within the control of BiomX Israel. No such events have occurred or were probable of occurrence as of the balance sheet date with respect to these royalties. Repayment of the grant is contingent upon the successful completion of the BiomX Israel’s R&D programs and generating sales. BiomX Israel has no obligation to repay these grants if the R&D program fails, is unsuccessful or aborted or if no sales are generated. The Company had not yet generated sales as of March 31, 2022; therefore, no liability was recorded in these condensed consolidated financial statements. IIA grants are recorded as a reduction of R&D expenses, net.
Through March 31, 2022, total grants approved from the IIA aggregated to approximately $8,403 (NIS 28,683). Through March 31, 2022, the Company had received an aggregate amount of $6,297 (NIS 21,361) in the form of grants from the IIA. Total grants subject to royalties’ payments aggregated to approximately $5,977. As of March 31, 2022, the Company had a contingent obligation to the IIA in the amount of approximately $6,122 including annual interest of LIBOR linked to the dollar.
The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021. Even though the IIA has not declared the alternative benchmark rate to replace the LIBOR, the Company does not except it will have significant impact on its financial statements.