Quarterly report pursuant to Section 13 or 15(d)

Shareholders Equity

v3.20.2
Shareholders Equity
9 Months Ended
Sep. 30, 2020
Equity [Abstract]  
SHAREHOLDERS EQUITY

NOTE 8 SHAREHOLDERS EQUITY

 

  A. Share Capital:

 

Common Stock:

 

The Company is authorized to issue 60,000,000 shares of Common Stock. Holders of the Company's Common Stock are entitled to one vote for each share. As of September 30, 2020, the Company had 23,173,378 issued shares and 23,167,678 outstanding shares of Common Stock.

 

Share Exchange:

 

As detailed in Note 1, as part of the Recapitalization Transaction on October 28, 2019, the Company issued 15,069,058 shares of Common Stock in exchange for approximately 65% of the issued and outstanding ordinary shares and all the preferred shares of BiomX Israel. The number of shares prior to the Recapitalization Transaction has been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.

 

In addition, the Company also agreed to issue the following number of additional shares of Common Stock, in the aggregate, to Chardan Healthcare Acquisition Corp. shareholders on a pro rata basis, subject to the Company's achievement of the conditions specified below following the Recapitalization Transaction (all with respect to the Company's shares of Common Stock traded on NYSE American):

 

  A. 2,000,000 additional shares of the Company's Common Stock if the daily volume weighted average price of the Company's Common Stock in any 20 trading days within a 30-trading day period prior to January 1, 2022 is greater than or equal to $16.50 per share.

 

  B. 2,000,000 additional shares of the Company's Common Stock if the daily volume weighted average price of the Company's Common Stock in any 20 trading days within a 30-trading day period prior to January 1, 2024 is greater than or equal to $22.75 per share.

 

  C. 2,000,000 additional shares of the Company's Common Stock if the daily volume weighted average price of the Company's Common Stock in any 20 trading days within a 30-trading day period prior to January 1, 2026 is greater than or equal to $29.00 per share.

 

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.

 

  B. Share-based compensation:

 

In 2015, the Board of Directors of BiomX Israel approved a plan for the allocation of options to employees, service providers and officers (the "2015 Plan"). The options represented a right to purchase one ordinary share of BiomX Israel in consideration of the payment of an exercise price. The options were granted in accordance with the "capital gains route" under section 102 and section 3(i) of the Israeli Income Tax Ordinance and section 409A of the Israeli Internal Revenue Code.

 

The original 2015 Plan was adjusted following the Recapitalization Transaction on October 28, 2019 such that each outstanding option entitles its holder to purchase one share of Common Stock of the Company. As a result, the number of options and exercise price per share were adjusted in a technical manner such that there was no change in the fair value of the awards under the adjusted 2015 Plan. The number of outstanding options and exercise prices in this Note have been restated to reflect the adjusted 2015 Plan. As of September 30, 2020, there are no shares remaining for issuance under the 2015 Plan.

 

During 2019, the Board approved the grant of 704,669 options to 22 employees and 79,630 options to two consultants, without consideration. 527,716 of the options granted are to the executive officers of the Company. These options were granted under the 2015 Plan.

 

During 2019, 74,581 options were exercised to purchase shares of Common Stock at an average exercise price of $1.34 per share.

 

Certain senior employees and directors 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.

 

In 2019, the Company adopted a new incentive plan (the "2019 Plan") to grant 1,000 options, exercisable for Common Stock.

 

The aggregate number of shares of Common Stock that may be delivered pursuant to the 2019 Plan will automatically increase on January 1 of each year, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. Notwithstanding the foregoing, the Board of Directors may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of Common Stock than provided herein. On January 1, 2020, the number of shares of Common Stock available to grant under the 2019 Plan was increased by 914,741.

 

On March 25, 2020, the Board of Directors approved the grant of 814,700 options without consideration to 65 employees, one consultant, four senior officers (one of whom is a consultant), and six directors under the 2019 Plan. These options were granted at an exercise price of $6.21 per share with vesting periods ranging from three to 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.

 

On May 5, 2020, the Board of Directors approved the grant of 79,000 options without consideration to four employees, under the 2019 Plan. These options were granted at an exercise price of $5.59 per share with a vesting period of four years.

 

As of September 30, 2020, there were 48,041 shares available for issuance under the 2019 Plan. Refer to Note 11A for options granted on October 2, 2020.

 

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:

 

   

Nine months ended

September 30, 

 
    2020     2019  
             
Underlying value of share of Common Stock ($)     5.59-6.21       2.03  
Exercise price ($)     5.59-6.21       2.03  
Expected volatility (%)     85.0       93.1  
Term of the option (years)     6.25       6.25  
Risk-free interest rate (%)     0.37-0.52       2.23  

  

The cost of the benefit embodied in the options granted during the nine months ended September 30, 2020, based on their fair value at the grant date, is estimated to be $3.8 thousand. These amounts will be recognized in the condensed consolidated 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 nine months ended
September 30,
2020
 
    Number of Options    

Weighted average exercise

price

    Aggregate intrinsic value  
          USD     USD in thousands  
Outstanding at the beginning of period     3,143,802       1.09       25,733  
Granted     893,700       6.16          
Forfeited     (61,110 )     3.47          
Exercised     (304,843 )     0.70          
Outstanding at the end of period     3,671,549       3.08       12,665  
Vested at end of period     1,738,957                  
Weighted average remaining contractual life – years as of September 30, 2020     7.82                  

 

Warrants:

 

As of September 30, 2020 and December 31, 2019, the Company had the following outstanding warrants to purchase Common Stock as follows:

 

Warrant   Issuance Date   Expiration Date   Exercise Price
Per Share (USD)
    Number of
Shares of
Common Stock
Underlying
Warrants
 
Private Warrants issued to Yeda (see 1 below)   May 11, 2017   May 11, 2025     (* )     591,382  
Private Warrants issued to founders (see 2 below)   November 27, 2017         -       10,589  
Private Placement Warrants (see 3 below)   IPO
(December 13, 2018)
  December 13, 2023     11.50       2,900,000  
Public Warrants (see 4 below)   IPO
(December 13, 2018)
  October 28, 2024     11.50       3,500,000  
                      7,001,971  

 

(*) less than $0.001.

 

  1. In May 2017, in accordance with the 2017 License Agreement (see also Note 7C), BiomX Israel issued 591,382 warrants to Yeda to purchase Common Stock at $0.0001 nominal value, for nominal consideration. No expenses or income were recorded in R&D expenses, net in the condensed consolidated statements of comprehensive loss for the nine months ended September 30, 2020 and 2019.

 

236,552 warrants were fully vested and exercisable on the date of their issuance. The remainder of the warrants will vest and become exercisable subject to achievement of certain milestones specified in the agreement as follows:

 

  a. 177,414 upon the filing of a patent application covering any Discovered Target or a Product (both as defined in the 2017 License Agreement).

 

  b. 118,277 upon achievement of the earlier of the following milestones by the Company:

 

  (i) execution of an agreement with a pharmaceutical company with respect to the commercialization of any of the Company's licensed technology or the Consulting IP or a Product (both defined in the 2017 License Agreement); or

 

  (ii) the filing of a patent application covering any Discovered Target (as defined in the 2017 License Agreement) or a Product.

 

  c. 59,139 upon completion of a Phase 1 clinical trial in respect of a Product (as defined in the 2017 License Agreement).

 

  2. In November 2017, BiomX Israel issued 7,615 warrants to Yeda and 2,974 warrants to its founders. All 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.

 

  3. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Company initial public offering, except that the Private Placement Warrants are exercisable for cash (even if a registration statement covering the shares of Common Stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder's option, and will not be redeemable by the Company, in each case, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company filed a Registration Statement on Form S-1 for the resale of shares underlying the warrants on December 13, 2019, which was declared effective on January 3, 2020.

 

  4. The Public Warrants became exercisable upon the closing of the Recapitalization Transaction. No fractional shares will be issued upon exercise of the Public Warrants. Therefore, Public Warrants must be exercised in multiples of two warrants. The Public Warrants will expire five years after the completion of the Recapitalization Transaction or earlier upon redemption or liquidation. The Company filed a Registration Statement on Form S-1 for the resale of shares underlying the warrants on December 13, 2019, which was declared effective on January 3, 2020.

 

The Company may redeem the Public Warrants:

 

  in whole and not in part;
     
  at a price of $0.01 per warrant;
     
  at any time during the exercise period;
     
  upon a minimum of 30 days' prior written notice of redemption;
     
  if, and only if, the last sale price of the Company's Common Stock equals or exceeds $16.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
     
  if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

 

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis," as described in the warrant agreement. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.

 

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

 

   

Nine months ended

September 30,

 
    2020     2019  
               
Research and development expenses, net     1,345       520  
General and administrative     783       360  
      2,128       880  

 

   

Three months ended

September 30,

 
    2020     2019  
               
Research and development expenses, net     843       153  
General and administrative     271       96  
      1,114       249