| COMMITMENTS AND CONTINGENCIES |
NOTE 3 – 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 budget of NIS 8,565 (approximately $2,588). The IIA committed to fund 30% of the approved budgets. The programs are for the period beginning January 2021 through December 2021. Through June 30, 2022, the Company received NIS 4,284 (approximately $1,347) from the IIA with respect to these programs. |
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| | | 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 is for the period beginning July 2021 through June 2022. The program does not bear royalties. Through June 30, 2022, the Company received NIS 1,004 (approximately $313) from the IIA with respect to this program. See Note 8A regarding received funds with respect to this program. |
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| | | 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 is for the period beginning January 2022 through December 2022. Through June 30, 2022, the Company received NIS 1,365 (approximately $395) 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 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 June 30, 2022; therefore, no liability was recorded in these condensed consolidated financial statements. Received IIA grants are recorded as a reduction of R&D expenses, net. |
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| | | Through June 30, 2022, total grants approved from the IIA aggregated to approximately $8,403 (NIS 28,683). Through June 30, 2022, the Company had received an aggregate amount of $6,693 (NIS 22,726) in the form of grants from the IIA. Receipt of the remaining grants from approved programs depends on the actual utilization of approved budgets. Total grants subject to royalties’ payments aggregated to approximately $6,380. As of June 30, 2022, the Company had a contingent obligation to the IIA in the amount of approximately $6,547 including annual interest of LIBOR linked to the dollar. |
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| | | The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021. Even though the IIA has not declared the alternative benchmark rate to replace LIBOR, the Company does not expect it will have a significant impact on its financial statements. |
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| | B. | On June 23, 2022 (“Effective Date”), BiomX Israel entered into a new research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration to identify biomarkers for inflammatory bowel disease (“IBD”). Under the agreement, BiomX Israel is eligible to receive fees totalling $1,411 to cover costs to be incurred by BiomX Israel in conducting the research plan under the collaboration. The fees will be paid in instalments 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. Unless terminated earlier, this agreement will remain in effect until (a) a period of eighteen (18) months thereafter or (b) completion of the project plan and submission and approval of the final report, whichever occurs sooner, unless otherwise extended. During the six months ended June 30, 2022, no consideration was received regarding this agreement. See Note 8C. |
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| | C. | On May 24, 2022, the Company notified Massachusetts Institute of Technology of the termination of the Patent License Agreement between the parties. The termination is expected to become effective 90 days after the notice date, on August 22, 2022. During the notice period the Company is required to pay license maintenance fees. |
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| | D. | In October 2019, BiomX Israel entered into a loan agreement in the amount of $19 with a stockholder of the Company. The loan is secured by shares of Common Stock of the Company. The granting of the loan and the restrictions imposed on the related shares of Common Stock until repayment of the loan and transfer of the shares of Common Stock back to the stockholder were accounted as an acquisition of treasury stock by the Company at an amount equal to the loan. During the six months ended June 30, 2022, the loan was repaid by the stockholder to the Company and was accounted as proceeds on account of shares in the statements of changes in stockholders’ equity as the shares of Common Stock were not transferred to the stockholder as of June 30, 2022. |
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