| COMMITMENTS AND CONTINGENT LIABILITIES |
| NOTE 11 - |
COMMITMENTS AND CONTINGENT LIABILITIES
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A. |
During 2015, 2016 and 2017, BiomX Israel submitted
three requests to the IIA for R&D projects for the technological incubators program. The approved budget per year was
NIS 2,700 (approximately $781) per request. According to the IIA directives, the IIA funded 85% of the approved budget and
the rest of the budget was funded by certain shareholders. |
In April 2019, the IIA approved an application for
a total budget of NIS 4,221 (approximately $1,185). IIA funded 30% of the approved budget. The program was for the period beginning
from July 2018 through June 2019. As of December 31, 2020, BiomX Israel has received all funds with respect to this program.
In December 2019, the IIA approved an application for
a total budget of NIS 10,794 (approximately $3,123). IIA funded 30% of the approved budget. The program is for the period beginning
from July 2019 through December 2019. As of December 31, 2020, BiomX Israel has 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 15,562 (approximately $4,287). The IIA committed to funding 30% of the approved budget. The program
was for the period beginning January 2020 through December 2020. As of December 31, 2020, 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.
Refer to note 18C for more information regarding
approved applications in 2021.
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
December 31, 2020, therefore, no liability was recorded in these consolidated financial statements.
Total research and development income recorded in the
consolidated statements of operations was $518 and $299 for the years ended December 31, 2020 and 2019, respectively.
As of December 31, 2020, BiomX Israel had a contingent
obligation to the IIA in the amount of approximately $2,300 including annual interest of LIBOR linked to the dollar.
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B. |
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"), according to which Yeda undertakes to procure the performance of certain research, including proof-of-concept
studies testing in-vivo phage eradication against a model bacteria in germ free mice, development of an IBD model in animals
under germ-free conditions and establishing an in-vivo method for measuring immune induction capability (Th1) of bacteria,
followed by testing several candidate IBD inducing bacterial strains during the research period, as defined in the 2015 License
Agreement and subject to the terms and conditions specified in the 2015 License Agreement. BiomX Israel contributed an aggregate
of approximately $1,800 to the research budget agreed upon in the 2015 License Agreement. In addition, Yeda granted BiomX
Israel an exclusive worldwide license for the development, production and sale of the products, as defined and subject to
the terms and conditions specified in the 2015 License Agreement. 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 addition, in the
event of certain mergers and acquisitions by the Company, Yeda will be entitled to an amount equivalent to 1% of the consideration
received under such transaction (the "Exit Fee"), as adjusted per the terms of the 2015 License Agreement. In
July 2019, the Company and Yeda amended the 2015 License Agreement and the 2017 License Agreement (as defined below) with
Yeda (the "Yeda Amendment"). See Note 11G regarding the Yeda Amendment. As the Company has not yet generated revenue
from operations, no provision was included in the consolidated financial statements as of December 31, 2020 and 2019 with
respect to the 2015 License Agreement. |
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C. |
In May 2017, BiomX Israel signed an additional
agreement with Yeda (the "2017 License Agreement"), according to which Yeda provided a license to the Company.
As consideration for the license, the Company is obligated to pay $10 over the term of the 2017 License Agreement, unless
earlier terminated by either party, and granted Yeda 591,382 warrants to purchase shares of Common Stock. Refer to Note 12
below for the terms of the warrants granted. In addition, the 2017 License Agreement includes additional consideration contingent
upon future sales or sublicensing revenue. As the Company has not yet generated revenue from operations, no provision was
included in the financial statements with respect to the 2017 License Agreement as of December 31, 2020 and 2019. |
In July 2019, the Company and Yeda amended the 2015
License Agreement and the 2017 License Agreement with Yeda. See Note 11G regarding the Yeda Amendment.
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D. |
In April 2017, BiomX Israel signed an exclusive patent
license agreement (the "2017 Patent License Agreement") with the Massachusetts Institute of Technology ("MIT")
covering methods to synthetically engineer phage. According to the agreement, BiomX Israel received an exclusive, royalty-bearing
license to certain patents held by MIT. In return, BiomX Israel paid an initial license fee of $25 during the year ended
2017 and is required to pay certain license maintenance fees of up to $250 in each subsequent year and following the commercial
sale of licensed products. BiomX Israel is also required to make payments to MIT upon the satisfaction of development
and commercialization milestones totaling up to $2,350 in aggregate, as well as royalty payments on future revenues. The
consolidated financial statements as of December 31, 2020 and 2019 include a liability with respect to this agreement
in the amount of $240 and $108, respectively.
In October 2020, the Company and MIT amended the 2017
Patent License Agreement (the "MIT Amendment"). See Note 11I regarding the MIT Amendment.
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E. |
As successor in interest to 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 on revenue of products.
The consolidated financial statements as of December 31, 2020 and 2019 include a liability with respect to this agreement
in the amount of $83 and $260, respectively. Refer to Note 6 regarding contingent liability with respect to the RondinX Ltd.
acquisition. |
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F. |
In December 2017, BiomX Israel signed a patent
license agreement with Keio University and JSR Corporation in Japan. According to the agreement, BiomX Israel received an
exclusive patent license to certain patent rights related to the Company's IBD program. 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 $3,210 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, 2020 and 2019 with respect to the agreement. |
In April 2019, BiomX Israel signed an additional patent
license agreement with Keio University and JSR Corporation in Japan. According to the agreement, BiomX Israel received an exclusive
sublicense by JSR to certain patent rights related to the Company's Primary Sclerosing Cholangitis program. 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 $32,10 and (iii) make tiered royalty
payments, in the low single digits based on future revenue. The consolidated financial statements include liabilities with respect
to this agreement in the amount of $378 and $217 as of December 31, 2020 and 2019, respectively.
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G. |
In July 2019, the Company and Yeda amended the 2015
License Agreement and the 2017 License Agreement with Yeda. Pursuant to the Yeda Amendment, following the closing of the
Recapitalization Transaction, the provisions of the Yeda license agreements related to the Exit Fee were amended so that
the Company is obligated to pay Yeda a one-time payment as described in the Yeda Amendment which will not exceed 1% of
the consideration received in the event of any merger or acquisition involving the Company instead of the Exit Fee, with
respect to each license agreement.
The 2017 license agreement was terminated in 2020.
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H. |
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 IBD. Under the agreement, BiomX Israel is eligible to receive fees totaling
$439 in installments of $50 within 60 days of the Effective Date, $100 upon receipt of the BI materials, $150 upon the
completion of data processing and $139 upon delivery of the Final Report of observations and Results of the Project (as
such terms are defined within the agreement). Unless terminated earlier, this agreement will remain in effect, until one
year after the Effective Date or completion of the Project Plan (as defined in the agreement) and submission and approval
of the Final Report. As of December 31, 2020, consideration of $150 had been received.
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I. |
In October 2020, the Company and MIT amended
the 2017 Patent License Agreement. Pursuant to the MIT Amendment, BiomX Israel will continue to receive an exclusive, royalty-bearing
license to certain patents held by MIT. In return, BiomX Israel is required to pay certain license maintenance fees of up
to $250 in each subsequent year and following the commercial sale of licensed products. BiomX Israel is also required to make
payments to MIT upon the satisfaction of development and commercialization milestones totaling up to $4,700 in aggregate,
as well as royalty payments on future revenues. |
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J. |
Refer to Note 8 for information regarding the
Company's lease commitments. |
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K. |
Refer to Note 10B(1) for information regarding
the Company's commitment to certain shareholders for taxes incurred in Israel as a result of the Recapitalization Transaction. |
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