Quarterly report pursuant to Section 13 or 15(d)

Stockholders Equity

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Stockholders Equity
3 Months Ended
Mar. 31, 2022
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS EQUITY

NOTE 5 – STOCKHOLDERS EQUITY

 

  A. Share Capital:

 

At-the-market Sales Agreement:

 

In December 2020, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on December 11, 2020, the Company entered into an Open Market Sales Agreement (“ATM Agreement”) with Jefferies LLC. (“Jefferies”), which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell shares of Common Stock with an aggregate offering price of up to $50,000, with Jefferies acting as sales agent. During the three months ended March 31, 2022, the Company sold 27,171 shares of Common Stock under the ATM Agreement, at an average price of $1.36 per share, raising aggregate net proceeds of approximately $37, after deducting an aggregate commission of $1.

 

Maruho Agreement:

 

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

 

CFF Agreement:  

 

In December 2021, the Company entered into a Securities Purchase Agreement with the Cystic Fibrosis Foundation (“CF Foundation”), an organization that historically played a role in supporting the development of innovative therapies for patients suffering from cystic fibrosis (CF). Under the terms of the agreement, the Company will receive up to $5,000 in two tranches. In the first tranche, which closed and fully received on December 21, 2021, the CF Foundation invested $3,000 as an initial equity investment based on a share price of $2.57. Upon completion of patient dosing in Part 1 of the Company’s Phase 1b/2a study of BX004, the Company would have the right to receive the second tranche of $2,000, also as an equity investment. In the event that the average closing price of the Common Stock for the ten trading days prior to the second tranche completion is less than $2.57, the Company shall have the right in its sole discretion to waive the second tranche payment and in such event the CF Foundation shall not have any right to receive additional shares. The Company concluded that the second tranche is a freestanding financial instrument. The Company also concluded that since the instrument will be predominantly settled in a variable number of shares at a fixed monetary amount, the second tranche is in the scope of ASC 480 and should be accounted for at fair value with subsequent changes in fair value recognized in the statements of operations in each period. The Company further determined that due to the settlement mechanism, the fair value of the second tranche is negligible, both at inception and on March 31, 2022.

 

Preferred Stock:

 

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors (the “Board”). 

 

Warrants:

 

As of March 31, 2022, the Company had the following outstanding warrants to purchase Common Stock issued to stockholders:

 

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

 

  B. Stock-based Compensation:

  

On March 29, 2022, the Board of Directors approved the grant of 1,153,500 options to 89 employees, three senior officers, one consultant, and five directors under the Company’s 2019 Equity Incentive Plan, without consideration. Options were granted at an exercise price of $1.41 per share with a vesting period of four years. Directors and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.

 

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

 

    Three Months Ended
March 31,
 
    2022     2021  
Underlying value of Common Stock ($)     1.41       7.02  
Exercise price ($)     1.41       7.02  
Expected volatility (%)     85.3       85.0  
Expected terms of the option (years)     6.11       6.11  
Risk-free interest rate (%)     2.50       1.17  

 

The cost of the benefit embodied in the options granted during the three months ended March 31, 2022, based on their fair value as at the grant date, is estimated to be approximately $1,307. These amounts will be recognized in statements of operations over the vesting period.

 

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

 

    For the Three Months Ended
March 31, 2022
 
    Number of
Options
    Weighted
Average
Exercise Price
    Aggregate
Intrinsic
Value
 
Outstanding at the beginning of period     4,084,549     $ 3.95     $              671  
Granted     1,153,500     $ 1.41          
Forfeited     (88,399 )   $ 6.38          
Exercised     -     $ -          
Outstanding at the end of period     5,149,650     $              3.34     $ 888  
Exercisable at the end of period     2,801,390                  
Weighted average remaining contractual life of outstanding options – years as of March 31, 2022     7.25                  

   

Warrants:

 

As of March 31, 2022, the Company had the following outstanding compensation related warrants to purchase Common Stock:

 

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

 

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

 

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

 

    Three Months Ended
March 31,
 
    2022     2021  
Research and development expenses, net     258       331  
General and administrative     357       199  
      615       530