| COMMITMENTS AND CONTINGENCIES |
| NOTE 8 - |
COMMITMENTS AND CONTINGENCIES |
| | A. | In May 2021, APT entered into a Collaboration and Option Agreement (the “Oyster Agreement”) with Oyster, a wholly owned subsidiary of Viatris Inc., to collaborate on the use of APT’s proprietary phage technology for the treatment of certain ophthalmic diseases. Upon execution of the Agreement, Oyster paid an upfront payment of $500 to APT, a portion of which APT claims it has spent in the course of performing its obligations under the Oyster Agreement. In April 2022 and September 2023, APT received letters from Oyster and Viatris Inc. raising concerns about APT’s actions, including allegations that APT had breached the Oyster Agreement. On December 18, 2024, APT and Oyster signed a settlement agreement (the “Settlement Agreement”), which includes a payment of $300 from APT to Oyster. As of December 31, 2024, the Company has recorded a provision of $300 as other accounts payable in the consolidated balance sheets. On January 13, 2025, APT paid Oyster $300 according to the Settlement Agreement.
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| | B. | In March 2022, the IIA approved an application for a total budget of NIS 13,004 thousands (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 is for the period beginning January 2022 through December 2022. Through December 31, 2024, the Company received NIS 1,365 thousands (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 thousands (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 is for the period beginning January 2023 through December 2023. Through December 31, 2024, the Company received NIS 2,783 thousands (approximately $768) from the IIA with respect to this program.
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According
to the agreements 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 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 December 31, 2024; therefore,
no liability was recorded in these consolidated financial statements. IIA grants are recorded as a reduction of R&D expenses, net.
Through
December 31, 2024, total grants approved from the IIA aggregated to approximately $9,353 (NIS 32,068 thousands). Through December 31,
2024, BiomX Israel had received an aggregate amount of $8,003 (NIS 27,423 thousands) in the form of grants from the IIA. Total grants
subject to royalties’ payments aggregated to approximately $7,418. As of December 31, 2024, BiomX Israel had a contingent obligation
to the IIA in the amount of approximately $8,330 including annual interest of SOFR applicable to dollar deposits.
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C. |
In
June 2015, BiomX Israel entered into a Research and License Agreement (the “2015 License Agreement”) as amended with Yeda
Research and Development Company Limited (“Yeda”), pursuant to which BiomX Israel received an exclusive worldwide license
to certain know-how and research information related to the development, testing, manufacturing, production and sale of microbiome-based
therapeutic product candidates, including candidates specified in the agreement, as well as patents, research and other rights to phage
product candidates. In return, BiomX Israel is obligated to pay Yeda annual license fees of approximately $10 and royalties on revenues
as defined in the 2015 License Agreement. In July 2019, the Company and Yeda amended the 2015 License Agreement, pursuant to which, following
the closing of the Recapitalization Transaction, the Company is obligated to pay Yeda a one-time payment as described in the amendment
which will not exceed 1% of the consideration received in the event of certain mergers or acquisitions involving the Company. The Merger
Agreement as described in Note 1D, does not constitute a merger or acquisition as defined in the amendment. |
| | D. | Following the assignment thereof from RondinX Ltd., BiomX Israel is a party to a license agreement dated March 20, 2016 with Yeda, pursuant to which the Company has a worldwide exclusive license to Yeda’s know-how, information and patents related to the Company’s meta-genomics target discovery platform. As consideration for the license, the Company is obligated to pay annual license fees of $10, subject to the terms and conditions of the agreement. Either party has the option to terminate the agreement at any time by way of notice to the other party, as outlined in the agreement. In addition, the Company is obligated to pay a royalty in the low single digits based on revenue of products. As the Company has not yet generated revenue from operations, no provision was included in the consolidated financial statements as of December 31, 2024 and 2023 with respect to the agreement. |
| | E. | In December 2017, BiomX Israel signed a patent license agreement with Keio University and JSR in Japan. According to the agreement, BiomX Israel received an exclusive patent license to certain patent rights related to inflammatory bowel disease (“IBD”) In return, the Company will pay an annual license fee of between $15 and $25 subject to the terms and conditions specified in the agreement. Additionally, the Company is obligated to make additional payments based upon the achievement of clinical and regulatory milestones up to an aggregate of $32,100 and royalty payments based on future revenue. As the Company has not yet generated revenue from operations and the achievement of certain milestones is not probable, no provision was included in the consolidated financial statements as of December 31, 2024 and 2023 with respect to the agreement. |
In April 2019, BiomX Israel signed an additional patent
license agreement with Keio University and JSR in Japan. According to the agreement, BiomX Israel received an exclusive sublicense by
JSR to certain patent rights related to the treatment of primary sclerosing cholangitis. In return, the Company is required (i) to pay
a license issue fee of $20 and annual license fees ranging from $15 to $25 (ii) make additional payments based upon the achievement of
clinical and regulatory milestones up to an aggregate of $32,100 and (iii) make tiered royalty payments, in the low single digits based
on future revenue. As the Company has not yet generated revenue from operations and the achievement of certain milestones is not probable,
no provision was included in the consolidated financial statements as of December 31, 2024 and 2023. On January 16, 2025, the Company
notified JSR of the termination of the agreement. Such termination will be effective on April 16, 2025.
| | F. | On June 23, 2022 (the “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 was eligible to receive fees totaling $1,411 to cover costs incurred by BiomX Israel in conducting the research plan under the collaboration. The fees were paid in installments of $500 within 30 days of the Effective Date and three additional installments of $500, $200 and $211 upon completion of certain activities under the research plan. The consideration was recorded as a reduction of R&D expenses, net in the consolidated statements of operations according to the input model method on a cost-to-cost basis. In December 2023, the Company completed its obligations with respect to this agreement, and the last installment of $211 was received in January 2024. As of December 31, 2024, the Company received the entire consideration of $1,411. For the year ended December 31, 2024, the Company did not record any amount in relation to this agreement in the consolidated statements of operations. For the year ended December 31, 2023, the Company recorded $1,124 in the consolidated statements of operations as a reduction of R&D expenses.
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| | G. | In October 2021, the Company entered into a Stock Purchase Agreement
with a subsidiary of Maruho Co. Ltd., (“Maruho”), pursuant to which the Company issued to Maruho shares of Common Stock of
the Company and granted Maruho a right of first offer to license its atopic dermatitis product candidate, BX005, in Japan. The right of
first offer was supposed to commence following the availability of results from the Phase 1/2 study which were expected in 2022. Part
of the consideration paid under the agreements, equal to the grant date fair value of the shares issued to Maruho was attributed to the
issuance of shares. The remainder of $1,976 was attributed to a contract liability, to be recognized once the clinical trials related
to the product candidate are completed. In April 2024, following the Acquisition, the Company decided to pause the development of BX005.
As a result, the parties agreed that the right of first offer to license BX005 is no longer applicable. As a result, the Company reversed
the full amount of the contract liability and recognized $1,976 as other income in the consolidated statements of operations for the year
ended December 31, 2024.
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| | H. | 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. The share purchase agreement included a contingent consideration mechanism. The contingent consideration is based on the attainment of future clinical, developmental, regulatory, commercial and strategic milestones relating to product candidates for treatment of primary sclerosing cholangitis or entry into qualifying collaboration agreements with certain third parties and may require the Company to issue 56,773 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 of Common Stock authorized or outstanding as of the time the payment is due, or a combination of both, up to $32,000 within ten years from the closing of the agreement. The Company has the discretion of determining whether milestone payments will be made in cash or by issuance of shares of Common Stock. The contingent consideration is accounted for at fair value (level 3). There were no changes in the fair value hierarchy levelling during the years ended December 31, 2024 and December 31, 2023. Refer to note 2J. The consolidated financial statements as of December 31, 2024 and 2023 include a liability with respect to this agreement in the amount of $77 and $155, respectively, recorded as other liabilities.
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