| COMMITMENTS AND CONTINGENCIES |
NOTE 7 – COMMITMENTS AND CONTINGENCIES
| | A. | In March 2021, the IIA approved two new applications in relation to the Company’s cystic fibrosis product candidate for an aggregate budget of NIS 10,879 (approximately $3,286) and for the Company’s product candidate for Inflammatory Bowel Disease (“IBD”) and Primary Sclerosing Cholangitis for an aggregate revised budget of NIS 6,753 (approximately $2,118). The IIA committed to fund 30% of the approved budgets. The programs are for the period beginning January 2021 through December 2021. Through March 31, 2024, the Company received NIS 5,289 (approximately $1,622) from the IIA and does not expect to receive additional funds with respect to these programs. In August 2021, the IIA approved an application that supports upgrading the Company’s manufacturing capabilities for an aggregate budget of NIS 5,737 (approximately $1,778). The IIA committed to fund 50% of the approved budget. The program was for the period beginning July 2021 through June 2022. The program does not bear royalties. Through March 31, 2024, the Company received NIS 1,912 (approximately $577) from the IIA with respect to this program. In March 2022, the IIA approved an application for a total budget of NIS 13,004 (approximately $4,094) in relation to the Company’s cystic fibrosis product candidate. The IIA committed to fund 30% of the approved budget. The program was for the period beginning January 2022 through December 2022. Through March 31, 2024, the Company received NIS 1,365 (approximately $395) from the IIA with respect to this program. In March 2023, the IIA approved an application for a total budget of NIS 11,283 (approximately $3,164) in relation to the Company’s cystic fibrosis product candidate. The IIA committed to fund 30% of the approved budget. The program was for the period beginning January 2023 through December 2023. Through March 31, 2024, the Company received NIS 2,783 (approximately $768) from the IIA with respect to this program.
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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 USD. Starting January 2024, the IIA
has notified that the interest has changed to the 12-month Secured Overnight Financing Rate (“SOFR”) as published on the
first trading day of each calendar year. 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, 2024; 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, 2024, total grants approved from the IIA aggregated to approximately $9,353 (NIS 32,068). Through March 31, 2024, the Company had received an aggregate amount of $8,003 (NIS 27,423) in the form of grants from the IIA. Total grants subject to royalties’ payments aggregated to approximately $7,413. As of March 31, 2024, BiomX Israel had a contingent obligation to the IIA in the amount of approximately $8,033 including annual interest of SOFR applicable to dollar deposits.
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| | B. | In August 2019, APT was awarded $9,638 from the U.S. Army Medical Research
Acquisition Activity (“USAMRAA”) and the U.S. Army Medical Research & Development Command (“USAMRDC”) to advance
personalized phage therapy from niche to broad use. This award is intended to lay the groundwork for rapid advancement of personalized
phage therapy to commercialization for the variety of clinical indications and bacterial pathogens representing un-met needs with a focus
on infections with significant military relevance. The competitive award was granted by USAMRAA and USAMRDC in collaboration with the
Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with
the Department of Defense. Under the cost reimbursement contract, MTEC reimburses APT for approved incurred costs that are based upon
the achievement of certain milestones for conduct and completion of a Phase 1/2 study utilizing APT’s PhageBank to treat patients
with urinary tract infections (“UTIs”). Over the course of years, APT entered into certain modifications to the contract to
include additional activities for APT’s UTI program and perform pre-clinical activities to advance the Diabetic Foot Ulcer clinical
program, as well as to include activities to advance potential bacteriophage-based vaccines against COVID-19, for a total contract value
of $36,214. In conjunction with this agreement, APT is subject to a royalty assessment fee of an amount equal to 3% of the total funded
value of the research project award. No liability was recorded in these condensed consolidated statements. During the period between the
Acquisition and March 31, 2024, APT recorded $196 as a reduction of R&D expenses, net. |
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| | C. | On June 23, 2022 (“Effective Date”), BiomX Israel entered into a research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration to identify biomarkers for IBD. Under the agreement, BiomX Israel is eligible to receive fees totaling $1,411 to cover costs to be incurred by BiomX Israel in conducting the research plan under the collaboration. The fees were paid in four installments according to certain activities under the agreement. In December 2023, the Company completed its obligations with respect to this agreement and the last installment of $211 was received on January 18, 2024. The consideration is recorded as a reduction of R&D expenses, net in the condensed consolidated statements of operations according to the input model method on a cost-to-cost basis. |
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