UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2021
or
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _________ to _________
Commission
file number: 0001-38762
BIOMX
INC.
(Exact
name of registrant as specified in its charter)
22 Einstein St., Floor 5, Ness Ziona, Israel 7414003
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: +972723942377
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.0001 par value PHGE NYSE American
Securities
registered pursuant to Section 12(g) of the Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging Growth Company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☒
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On
June 30, 2021, the last day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the
Registrant’s shares of Common Stock held by non-affiliates of the Registrant was $119,922,575 based on the closing sale price of
the Registrant’s shares of Common Stock on June 30, 2021 (the last trading day of the fiscal quarter) of $5.46 per share.
The number of shares outstanding of the Registrant’s shares of
Common Stock as of March 25, 2022 was29,779,249.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, relating to the registrant’s 2022 Annual Meeting of Stockholders are incorporated
herein by reference into Part III of this Annual Report on Form 10-K. The definitive proxy statement will be filed with the Securities
and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2021.
BIOMX
INC.
Annual
Report on Form 10-K for the Year Ended December 31, 2021
part I
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 29
ITEM 1B. UNRESOLVED STAFF COMMENTS 68
ITEM 2. PROPERTIES 68
ITEM 3. LEGAL PROCEEDINGS 68
ITEM 4. MINE SAFETY DISCLOSURES 68
part II
ITEM 6. [RESERVED] 69
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 80
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 80
ITEM 9A. CONTROLS AND PROCEDURES 80
ITEM 9B. OTHER INFORMATION 80
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICIONS THAT PREVENT INSPECTIONS 80
part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 81
ITEM 11. EXECUTIVE COMPENSATION 81
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 82
part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 83
i
References
in this Annual Report on Form 10-K (this “Annual Report”) to the Company, BiomX, we, us or our, mean BiomX Inc. and its consolidated
subsidiaries unless otherwise expressly stated or the context indicates otherwise. References in this Annual Report to BiomX Ltd. mean
BiomX Ltd., our wholly owned Israeli subsidiary. As further described elsewhere in this Annual Report, on October 28, 2019, Chardan Healthcare
Acquisition Corp., a special purpose acquisition company, combined with BiomX Ltd. in the Business Combination (as defined below) and
changed its name to BiomX Inc.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or
the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act. The statements contained
in this report that are not purely historical are forward-looking statements. Forward-looking statements include statements about our
expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases
such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,”
“may,” “ongoing,” “plan,” “potential,” “predict,” “project,”
“will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements,
but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements
in this report include, but are not limited to, statements regarding our disclosure concerning our operations, cash flows, financial
position and also regarding our preclinical and clinical development plans, the safety, tolerability and efficacy of our phage therapy
and the conducting, design, aims and timing of its preclinical and clinical studies and announcing results thereof.
Forward-looking
statements appear in a number of places in this report including, without limitation, in the sections entitled “Management’s
Discussion and Analysis of Financial Conditions and Results of Operations,” and “Overview.” The risks and uncertainties
include, but are not limited to:
● our ability to obtain required regulatory approvals;
● delays in developing manufacturing processes for our product candidates;
ii
● reliance on third-party collaborators;
● our ability to manage the growth of the business;
● the failure to comply with applicable laws and regulations;
● potential security breaches, including cybersecurity incidents;
● political, economic and military instability in the State of Israel; and
Forward-looking
statements are subject to known and unknown risks and uncertainties and are based on our management’s potentially inaccurate assumptions
that could cause actual results to differ materially from those expected or implied by the forward-looking statements. While these statements
are based upon information available to us as of the filing date of this Annual Report, and while we believe such information forms a
reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate
that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are
inherently uncertain and investors are cautioned not to unduly rely upon these statements. Actual results could differ materially from
those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in this
Annual Report. Except as may be required by applicable law, we undertake no obligation to publicly revise any forward-looking statement
to reflect circumstances or events after the date of this report or to reflect the occurrence of unanticipated events. You should, however,
review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission, or
the SEC, after the date of this report.
RISK
FACTORS SUMMARY
The
summary below provides an overview of many of the risks the Company faces, and a more detailed discussion of risks can be found in Item
1A. “Risk Factors” below. You should carefully consider these risks and uncertainties when investing in our securities. The
principal risks and uncertainties affecting our business include, but are not limited to, the following:
iii
iv
PART
I
ITEM
1. BUSINESS
Overview
We
are a clinical stage microbiome product discovery company developing products using both natural and engineered phage technologies designed
to target and kill specific harmful bacteria associated with chronic diseases, such as cystic fibrosis, or CF, atopic dermatitis, or
AD, inflammatory bowel disease, or IBD, primary sclerosing cholangitis, or PSC and colorectal cancer, or CRC. Bacteriophage or phage
are bacterial, species-specific, strain-limited viruses that infect, amplify and kill the target bacteria and are considered inert to
mammalian cells. By utilizing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology,
we develop phage-based therapies intended to address both large-market and orphan diseases.
The
microbiome refers to the collection of microorganisms, including phage, that reside on the skin, line the gastrointestinal tract and
reside elsewhere in the body. The vast majority of these microorganisms are not pathogenic and instead exist in a symbiotic state with
the human host, enabling the body to function normally by protecting against proliferation of pathogenic strains, educating the immune
system and assisting in digestion. Imbalances in the composition of the microbiome have been found in multiple diseases.
Our
approach in our therapeutic programs is based on targeting those specific strains of pathogenic bacteria in the microbiome that are strongly
associated with diseases while leaving the rest of the microbiome intact. Our goal is to restore the natural, healthy balance of the
microbiome with rationally designed phage cocktails. Using our proprietary methods, we can generate and screen large libraries of phage,
prioritizing potential candidates based on selectivity and potency as well as a number of other parameters, that are important for drug
development such as safety, stability and manufacturability.
Our
goal is to develop multiple products based on the ability of phage to precisely target components of the microbiome and on our ability
to screen, identify and combine different phage, both naturally occurring and created using synthetic engineering, to develop these treatments.
Our
Product Pipeline
The
chart below identifies our product candidates’ pipeline, their current status and expected timing for the upcoming milestones.
We do not have any products approved or available for sale, our product candidates are still in the preclinical and clinical development
stages, and we have not generated any revenue from product sales.
BX004
– Treatment of Cystic Fibrosis
BX004
is our therapeutic phage product candidate under development for chronic respiratory infections caused by Pseudomonas aeruginosa,
or P. aeruginosa, a main contributor to morbidity and mortality in patients with CF. Enhanced resistance to antibiotics develops,
particularly in CF patients, due to extensive drug use consisting of prolonged and repeated broad-spectrum antibiotic courses often beginning
in childhood, and leading to the appearance of multidrug-resistant strains. In preclinical in vitro studies, BX004 was shown to
be active against antibiotic resistant strains of P. aeruginosa and demonstrated the ability to penetrate biofilm, an assemblage
of surface-associated microbial cells enclosed in an extracellular polymeric substance and one of the leading causes for antibiotic resistance.
1
The Phase 1b/2a trial in CF patients with chronic
respiratory infections caused by P. aeruginosa. will be comprised of two parts. Part 1 will evaluate the safety, pharmacokinetics
and microbiologic/clinical activity of BX004 in eight CF patients in a single ascending dose and multiple ascending dose design. The study
design is based on recommendations from the Cystic Fibrosis Therapeutic Development Network. Results from Part 1 are expected in the third
quarter of 2022. Part 2 of the Phase 1b/2a trial will evaluate the safety and efficacy of BX004 in 24 CF patients randomized to a treatment
or placebo cohort in a 2:1 ratio. Results from Part 2 are expected by the first quarter of 2023.
In September 2021, the FDA allowed us to initiate
the Phase 1b/2a trial of BX004 in CF patients with chronic respiratory infections caused by P. aeruginosa.
In
January 2022, we announced that we received an award of up to $5 million from the Cystic Fibrosis Foundation, or CF Foundation, in two
tranches. The first tranche of $3 million, was received on December 21, 2021, as an equity investment. Upon completion of patient dosing
in Part 1 of our Phase 1b/2a study of BX004 we will have the right to receive the second tranche of $2 million, also as an equity investment.
The funding provided by the CF Foundation will be used to support the development of BX004.
BX005
– Treatment of Atopic Dermatitis
BX005
is our topical phage product candidate targeting Staphylococcus aureus, or S. aureus, a bacterium associated with the development
and exacerbation of inflammation in atopic dermatitis. S. aureus is more abundant on the skin of atopic dermatitis patients
than on the skin of healthy individuals and on lesional skin than non-lesional skin. It also increases in abundance, becoming the dominant
bacteria, when patients experience flares. By reducing the load of S. aureus, BX005 is designed to shift the skin microbiome
composition to its ‘pre-flare’ state and potentially provide a clinical benefit. In preclinical in vitro studies,
BX005 was shown to eradicate over 90% of strains, including antibiotic resistant strains, from a panel of S. aureus strains (120
strains isolated from skin of subjects from the U.S. and Europe).
In October 2021, we entered into a stock purchase
agreement with a subsidiary of Maruho Co. Ltd., or Maruho, a leading dermatology-focused pharmaceutical company in Japan, pursuant to
which we issued to Maruho 375,000 shares of our common stock, par value $0.0001 per share, or Common Stock, at a price of $8.00 per share
for gross proceeds of $3 million. We also granted Maruho a right of first offer to license BX005, in Japan. The right of first offer will
commence following the availability of results from the Phase 1/2 study expected in the fourth quarter of 2022.
BX003
– Treatment of IBD and PSC
On
November 12, 2020, we announced consolidation of our IBD and PSC programs into a single broad host range product candidate, named BX003,
under development for both indications. Prior to November 2020, we had two separate phage product candidates for IBD and for PSC, with
our IBD product candidate named BX002 and PSC product candidate named BX003. After the consolidation, the BX003 product candidate was
under development to treat both IBD and PSC, targeting bacterial strains of Klebsiella pneumoniae, or K. pneumoniae, a
potential pathogen implicated in both diseases. K. pneumoniae strains isolated from IBD patients were shown to be pro-inflammatory
in animal models and may have a role in the onset and aggravation of the disease. Strains of K. pneumoniae isolated from PSC patients
were shown to cause an inflammatory response in the liver of animal models and were shown to induce the formation of pores through monolayer
colonic organoid cultures. Prior to the consolidation, our Phase 1a clinical study was conducted only on BX002, and future clinical studies
are planned to be conducted on BX003.
On February 2, 2021, we announced positive results
of a randomized, single-blind, multiple-dose, placebo-controlled Phase 1a pharmacokinetic study of BX002, our product candidate for IBD
and PSC, conducted under an investigational new drug application, or IND, submitted to the FDA. The study evaluated the safety and tolerability
of orally administered BX002 in 18 healthy volunteers. Subjects were randomized to receive orally either BX002 or placebo, twice daily
for three days. Subjects were monitored for safety for seven days in a clinical unit, with follow-up for safety assessments done at 14
and 28 days after completion of dosing. BX002 was demonstrated to be safe and well-tolerated, with no serious adverse events and no adverse
events leading to discontinuation. In addition, the study met its objective of delivering high concentrations of viable phage to the gastrointestinal
tract of approximately 1010 PFU, or plaque forming units. This equals approximately 1,000 times more viable phage compared
to the bacterial burden of K. pneumoniae in IBD and PSC patients as measured in stool. Based on the Phase 1a study results, we
plan to advance to a Phase 1b/2a study evaluating the efficacy of BX003 for the reduction of K. pneumoniae in individuals that
carry the target bacteria.
On November 15, 2021, we announced that we plan
to temporarily pause the development efforts in BX003 until early 2023.
2
CRC
We are also developing synthetically engineered
phage designed to target strains of bacteria found in CRC tumors. Our CRC program integrates expertise in identifying and validating associations
of specific strains of bacteria with human disease and synthetic biology capabilities enabling design of phage that are expected to deliver
therapeutic payloads to tumors. Only a small percentage of the new cases of CRC respond to immunotherapy. This lack of response is believed
to be due to the lack of novel tumor antigens and scarcity of immune cells in colorectal tumors. We have observed in vitro and
in vivo that phage can be used to target strains of Fusobacterium nucleatum, a bacterial species that is highly enriched
in colorectal tumors and is believed to be pathogenic. We plan to use phage intravenously to deliver payload genes, such as those encoding
immunostimulatory proteins, to tumors while also leading to eradication of these bacteria. We have successfully engineered an IL-15 gene
payload into F. nucleatum phage. On November 15, 2021, we announced that we plan to temporarily pause the development efforts in
CRC until early 2023.
BX001
– Treatment of acne
We
developed BX001, our product candidate to modify the appearance of skin in a range of skin types, including oily and acne-prone skin.
BX001 is a topical gel that includes a combination of naturally occurring phage that specifically target Cutibacterium acnes, or
C. acnes.
On
March 31, 2020, we announced positive topline results from a 4-week randomized, double-blind, dose-finding, placebo-controlled single
center Phase 1 cosmetic clinical study of BX001. The 75 enrolled individuals with mild-to-moderate acne were randomized into one of three
cohorts: a high dose cohort, a low dose cohort, and a placebo cohort (vehicle). The study met its primary endpoints of safety and tolerability
for both doses of BX001, in addition to demonstrating a statistically significant (p=0.036) reduction of C. acnes levels for the high
dose of BX001 compared to placebo.
On October 18, 2021, we announced the results of
a Phase 2 clinical study of BX001. The study was a 12-week randomized, single center, double-blind, placebo-controlled trial in 140 women
with mild-to-moderate acne vulgaris. Subjects were randomized into two cohorts: BX001 or placebo in a 1:1 ratio and self-administered
BX001 or placebo twice daily. Key endpoints from the study evaluated the safety, tolerability and efficacy of BX001. BX001 was well-tolerated
with no treatment-related adverse events. A statistically significant improvement from baseline was observed in appearance of acne-prone
skin but no meaningful difference was demonstrated relative to the placebo arm of the Study. Following such results we decided not to
continue pursuing this program.
Our
Strategy
Our
goal is to develop multiple products based on the ability of phage to precisely target components of the microbiome and on our ability
to screen, identify and optimally combine different phage, both naturally occurring and generated using synthetic engineering, to develop
these treatments. We intend to continue to:
Our
phage discovery platform
Our
approach is driven by the convergence of several factors: a rapidly increasing understanding of phage, including the links between phage
behaviors and their genomes; growing evidence that the presence of specific harmful bacteria may impact chronic diseases, such as CF,
making them in principle, amenable to treatment with phage; and by a growing number of anecdotal reports from different academic centers
of successful compassionate use of phage to treat seriously ill patients who were unresponsive to other therapies. We believe our phage
therapeutic product candidates have the potential to treat conditions and diseases by precisely targeting pathogenic bacteria without
disrupting elements of the healthy microbiota.
3
Our
phage-based product candidates are developed utilizing our proprietary research and development platform named BOLT. The BOLT platform
is unique, employing cutting edge methodologies and capabilities across disciplines including computational biology, microbiology, synthetic
engineering of phage and their production bacterial hosts, bioanalytical assay development, manufacturing and formulation, to allow agile
and efficient development of natural or engineered phage combinations, or cocktails.
BOLT is designed to allow rapid phage cocktails.
The BOLT cocktail targets a broad patient population and may be comprised of naturally-occurring or synthetically engineered phage. The
cocktail contains phage with complementary features and is further optimized for multiple characteristics such as broad target host range,
ability to prevent resistance, biofilm penetration, stability and ease of manufacturing. Development of the optimized phage cocktail is
anticipated to require 1-2 years.
We
combine multiple technologies that originate from the laboratories of our scientific founders and that were developed internally. Technologies
that were developed by its scientific founders are described in leading scientific journals. One of our scientific founders, Professor
Rotem Sorek, a Professor in the Department of Molecular Genetics at the Weizmann Institute of Science, or WIS, is a world leader in phage
genomics and bacterial defense mechanisms. Another scientific founder, Professor Eran Elinav, a Professor in the Department of Immunology
at the WIS, is an expert in investigating the link between the microbiome and human health and disease. Our third scientific founder,
Professor Timothy K. Lu, is a world leader in synthetic biology approaches to engineering gene circuits and phage, leading the Synthetic
Biology Group in the Department of Electrical Engineering and Computer Science and the Department of Biological Engineering at the Massachusetts
Institute of Technology, or MIT. In addition, through the acquisition of the privately held Israel-based company, RondinX Ltd. in 2017,
we gained access to high throughput genomic analyses techniques developed by Professor Eran Segal, a leading computational biologist
from the Department of Computer Science and Applied Mathematics at the WIS. The combination of the technologies and expertise from these
leaders in each of their respective fields is critical in enabling us to focus on treating complex human diseases and conditions by precise
manipulation of the microbiome.
Manufacturing
We
have developed a manufacturing process that utilizes state of the art industrial methods for the manufacturing of our product candidates.
This process is designed to comply with current Good Manufacturing Practice, or cGMP, with the appropriate scale to meet our clinical
study needs, and to fulfill the requirements of regulators for human studies. We currently operate a manufacturing model that combines
an in-house process development and manufacturing suite with the flexibility to outsource to third-party manufacturing organizations
when needed. As such, for BX004 we have engaged an additional third-party provider to supplement our in-house process development activities.
We have selected this organization based on its experience, capability, capacity and regulatory status. Projects are managed by a specialist
team of our internal staff, who assure compliance with the technical aspects and regulatory requirements of the manufacturing process.
4
We
maintain service agreements with multiple manufacturers. These service agreements generally are short-term in nature and can be extended
or renewed. The production amounts identified in our current service agreements are sufficient to support our current clinical study
needs.
In
March 2021, we moved into a new 6,500 square foot manufacturing facility in our headquarters, in Ness Ziona, Israel. Our facility is
designed with the capacity to produce clinical quantities of our product candidates required for future early-stage clinical development.
Our facility consists of two suites for drug substance phage production/development as well as formulation and final drug product production
rooms to support topical, oral, inhaled and injectable phage-based products in a liquid, cream, semi-solid or dry form.
While
we do not have a current need for a commercial scale manufacturing capacity, at the appropriate time we intend to evaluate building large
scale cGMP internal manufacturing capabilities, which may include expansion of our operations.
Intellectual
Property
We
strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patent protection
in the United States and internationally for our product candidates and discovery platform. We also rely on trademarks, trade secrets,
know-how, copyrights, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.
For more information regarding the risks related to our intellectual property, see “Risk Factors — Risks Related to our
Licensed and Co-Owned Intellectual Property.”
We
plan to continue to expand our intellectual property estate by filing patent applications directed to formulations, related methods of
treatment, methods of manufacture or identification from our ongoing development of our product candidates, as well as discovery based
on our proprietary product platform. Our success will depend on our ability to obtain and maintain patent and other proprietary protection
for commercially important technology, inventions and know-how related to our business, defend, and enforce any patents that we may obtain,
preserve the confidentiality of our trade secrets and know-how and operate without infringing the valid and enforceable patents and proprietary
rights of third parties.
Because
patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even
longer, and because publication of discoveries in the scientific or patent literature often lags behind actual discoveries and patent
application filings, we cannot be certain of the priority of inventions covered by pending patent applications. Accordingly, we may not
have been the first to invent the subject matter disclosed in some of its patent applications or the first to file patent applications
covering such subject matter, and we may have to participate in interference proceedings or derivation proceedings declared by the United
States Patent and Trademark Office, or USPTO, to determine priority of invention.
Patent
portfolio
Our
patent portfolio consists of owned patent applications, as well as both licensed and co-owned patent applications (that are also licensed).
See “Risk Factors — Risks Related to our Licensed and Co-Owned Intellectual Property.” For some of these applications,
prosecution has not started, and others are in the early stages of prosecution in the United States and in selected jurisdictions outside
of the United States. We solely own four patent families. We co-own one international patent family (United States, Europe, Australia,
Canada, China and Japan with Keio University in Tokyo, Japan, or Keio, one international patent family (United States, Australia, Brazil,
Canada, China, Japan, Israel, European Patent Office, Korea and India national filings) with Yeda Research and Development Company Limited,
or Yeda, and one international patent family (United States, Europe, Australia, Canada, China and Japan) with both Keio and Yeda. We
have an exclusive license from Yeda and Keio for these co-owned patent applications. We have exclusive licenses from Yeda, Keio, or MIT
for the rest of the patents and patent applications in its portfolio.
5
A
significant portion of our portfolio is directed to our product candidates, specifically: CF, AD, IBD, PSC and CRC, as well as
to our bacterial target discovery and bacteriophage discovery technology platforms. Prosecution has yet to commence for most of the pending
patent applications covering our product candidates. Prosecution is a lengthy process, during which the scope of the claims initially
submitted for examination by the USPTO are often significantly narrowed by the time they issue, if they issue at all. We expect this
to be the case with respect to our licensed and co-owned patent applications, described briefly below.
CF
We
solely own one patent family (PCT stage) containing claims directed to pharmaceutical compositions comprising combinations of bacteriophage
to treat chronic Pseudomonas lung infections, especially common in CF patients, methods of use for these bacteriophage combinations,
and methods of identifying patients who will respond to these bacteriophage combinations. Any United States patents issuing from the
pending application covering our lead bacteriophage combination in this program, if issued, are expected to expire in 2042. Patent term
adjustments or patent term extensions could result in later expiration dates.
AD
We
solely own one patent family (pre-PCT stage) containing claims directed to pharmaceutical compositions comprising combinations of bacteriophage
to treat skin infections, especially common in AD patients, methods of use for these bacteriophage combinations, and methods of identifying
patients who will respond to these bacteriophage combinations. Any United States patents issuing from the pending application covering
our lead bacteriophage combination in this program, if issued, are expected to expire in 2042. Patent term adjustments or patent term
extensions could result in later expiration dates.
IBD
We
solely own one patent family (PCT stage), co-own with Keio one international patent family (United States, Europe, Australia, Canada,
China and Japan) and co-own with Keio and Yeda one international patent family (United States, Europe, Australia, Canada, China and Japan),
containing claims directed to pharmaceutical compositions comprising combinations of bacteriophage useful to treat IBD and other diseases
of the gastrointestinal tract, methods of use for these bacteriophage combinations, methods of identifying patients who will respond
to these bacteriophage combinations, and methods of treating IBD by targeting bacterial strains discovered to cause or contribute to
that disease.
We
also have an exclusive license from Keio for an international patent family including patent applications in the United States, Australia,
Canada, China, Europe and Japan. These applications are directed to methods of use for these bacteriophage combinations, methods of identifying
patients who will respond to these bacteriophage combinations, and methods of treating IBD by targeting a bacterial strain discovered
to cause or contribute to that disease. Any United States patents issuing from the pending applications covering our lead bacteriophage
combination in this program, if issued, are expected to expire in 2037, 2038 or 2042. Patent term adjustments or patent term extensions
could result in later expiration dates.
PSC
We
have an exclusive license to one United States national patent application and two Japanese patent applications with claims directed
to pharmaceutical compositions comprising bacterial strains discovered to be beneficial in the treatment of PSC and methods of using
the same, and to methods of treating PSC by reducing the level of certain bacterial strains discovered to contribute to PSC. Any United
States patents issuing from the pending applications in this program, if issued, are expected to expire in 2038 or 2039. Patent term
adjustments or patent term extensions could result in later expiration dates.
6
CRC
We
solely own one patent family (PCT stage), containing claims directed to pharmaceutical compositions and formulations comprising combinations
of bacteriophage (both synthetic and naturally occurring) useful to treat cancer. Any U.S. patent issuing from the pending application
covering our lead bacteriophage combination in this program, if issued, are expected to expire in 2041. Patent term adjustments or patent
term extensions could result in later expiration dates.
Acne
We
co-own with Yeda one international patent family (United States, Australia, Brazil, Canada, China, Japan, Israel, European Patent Office,
Korea and India national filings), containing claims directed to pharmaceutical compositions and formulations comprising combinations
of bacteriophage useful to treat acne, methods of use for these bacteriophage combinations, and methods of identifying patients who will
respond to these bacteriophage combinations. Any United States patents issuing from the pending application covering our lead bacteriophage
combination in this program, if issued, are expected to expire in 2038. Patent term adjustments or patent term extensions could result
in later expiration dates.
Technology
Platform
We
are exclusively licensed to two United States issued patents, two European Patent Convention applications, and three United States national
applications. These licensed patent families include two issued United States patents and multiple pending patent applications, with
claims directed to methods of producing recombinant bacteriophage in yeast cells, recombinant bacteriophage with broader or altered host
range than the parent strains from which they are derived, and recombinant methods for increasing the lytic efficiency of a bacteriophage.
The patents issuing from the pending applications in the United States directed to our platform, if issued, are expected to expire between
2034 and 2038. Patent term adjustments or patent term extensions could result in later expiration dates.
Patent
term
The
term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries
in which we file patent applications, including the United States, the base term is 20 years from the filing date of the earliest-filed
non-provisional patent application from which the patent claims priority. The term of a United States patent can be lengthened by patent
term adjustment, which compensates the owner of the patent for administrative delays at the USPTO. In some cases, the term of a United
States patent is shortened by a terminal disclaimer that reduces its term to that of an earlier-expiring patent. The term of a United
States patent may be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred
to as the Hatch-Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent
is granted. With regard to a drug for which FDA approval is the first permitted marketing of the active ingredient, the Hatch-Waxman
Act allows for extension of the term of one United States patent that includes at least one claim covering the composition of matter
of such an FDA-approved drug, an FDA-approved method of treatment using the drug and/or a method of manufacturing the FDA-approved drug.
The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent or fourteen years from
the date of the FDA approval of the drug, and a patent cannot be extended more than once or for more than a single product. During the
period of extension, if granted, the scope of exclusivity is limited to the approved product for approved uses. Some foreign jurisdictions,
including Europe and Japan, have analogous patent term extension provisions, which allow for extension of the term of a patent that covers
a drug approved by the applicable foreign regulatory agency.
In
the future, if and when our product candidates receive FDA approval, we expect to apply, if appropriate, for patent term extension on
patents directed to those product candidates, their methods of use and/or methods of manufacture. However, there is no guarantee that
the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should
be granted, and if granted, the length of such extensions.
Trade
Secrets and Know-How
In
addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. We typically rely on trade
secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We
protect trade secrets and know-how by establishing confidentiality agreements and invention assignment agreements with our employees,
consultants, scientific advisors, contractors and collaborators. These agreements provide that all confidential information developed
or made known during the course of an individual’s or entities’ relationship with us must be kept confidential during and
after the relationship. These agreements also provide that all inventions resulting from work performed for us or relating to our business
and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition,
we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of its
proprietary information by third parties.
7
Although
we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants,
third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our
trade secrets or disclose our technology. Thus, we may not be able to meaningfully protect our trade secrets and benefit from the exclusive
use thereof. For more information regarding the risks related to our intellectual property, see “Risk Factors — Risks
Related to Our Licensed and Co-Owned Intellectual Property.”
Competition
The
biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, strong competition and an emphasis on
proprietary products. While we believe that our technology, knowledge and experience provide us with competitive advantages, we face
substantial competition from many different sources, including larger pharmaceutical companies with more resources. Specialty biotechnology
companies, academic research institutions, governmental agencies, as well as public and private institutions are also potential sources
of competitive products and technologies. We believe that the key competitive factors affecting the success of any of our product candidates
will include efficacy, safety profile, time to market, cost, level of promotional activity and intellectual property protection.
We
are aware of a number of biotechnology companies developing bacteriophage products to treat diseases. To our knowledge, several biotechnology
companies, such as Adaptive Phage Therapeutics, Locus Biosciences, Inc., Armata Pharmaceuticals, Inc. and SNIPR Biome, as well as academic
institutions, have discovery stage or clinical programs utilizing naturally occurring phage or synthetic biology approaches. In addition,
we are aware of several investigational and marketed products to treat the indications that we are targeting with our product candidates,
including, but not limited to:
● CF: Trikafta, Symdeco, Pulmozyme, Tobramycin, Aztreonam
● AD: Elidel, Eucrisa, Ruxolitinib, Dupixent
● IBD: Humira, Stelara, Entyvio, Inflectra and Cimzia
Many
of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources
than ours and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory
approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than us in discovering
product candidates, obtaining approval for such product candidates and achieving widespread market acceptance. Our competitors’
products may be more effective, or more effectively marketed and sold, than any product we may commercialize and may render our product
candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates.
We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available.
These
third parties compete with us in recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing and management
personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary
to, or necessary for, our program.
8
Sales
and Marketing
We
intend to pursue the commercialization of our drug product candidates either by building internal sales and marketing capabilities or
through collaborations with others.
In October
2021, we entered into a stock purchase agreement with a subsidiary of Maruho, a leading dermatology-focused pharmaceutical company in
Japan, pursuant to which we issued to Maruho 375,000 shares of our Common Stock, at a price of $8.00 per share for gross proceeds of $3
million. We also granted Maruho a right of first offer to license BX005 in Japan. The right of first offer will commence following the
availability of results from the Phase 1/2 study expected in the fourth quarter of 2022.
Government
Regulation
Government
authorities in the United States and other countries regulate, among other things, the research, development, testing, manufacture, quality
control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting,
marketing and export and import of drug and biological products. Generally, before a new drug or biologic can be marketed, considerable
data demonstrating its quality, safety, efficacy, purity, and/or potency must be obtained, organized into a format specific for each
regulatory authority, submitted for review and approved by the regulatory authority where the product is intended to be marketed.
U.S.
Biological Product Development Process
In
the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations
under the FDCA, the Public Health Service Act, or the PHSA, and their implementing regulations. Both drugs and biologics are also subject
to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance
with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and financial resources.
Failure to comply with applicable U.S. requirements at any time during the product development, approval, or post-marketing process may
subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal
to approve pending applications, withdrawal of an approval or license revocation, a clinical hold, untitled or warning letters, product
recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals
of government contracts, restitution, disgorgement and civil or criminal penalties. Any agency or judicial enforcement action could have
a material adverse effect on us.
Certain
of our current product candidates and future product candidates must be approved by the FDA through a Biologics License Application,
or BLA, process before they may be legally marketed in the United States. The process generally involves the following:
● Submission to the FDA of a BLA;
9
Preclinical
Studies and IND
Preclinical studies include laboratory evaluation
of product chemistry and formulation, as well as in vitro and animal studies to establish a rationale for therapeutic use and in
some cases to assess the potential for adverse events. The conduct of preclinical studies is subject to federal regulations and requirements,
including in some cases GLP regulations for safety/toxicology studies. An IND sponsor must submit the results of the preclinical tests,
together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among
other things, to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational product
to humans, and, must become effective before human clinical trials may begin. Some long-term preclinical testing may continue after the
IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time, the FDA raises
concerns or questions related to one or more proposed clinical trials and places the trial on clinical hold. In such a case, the IND sponsor
and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result
in the FDA allowing clinical trials to commence.
Clinical
Trials
Clinical
trials involve the administration of the biological product candidate to healthy volunteers or disease-affected patients under the supervision
of qualified investigators, generally physicians not employed by, or under, the trial sponsor’s control. Clinical trials are conducted
under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion
criteria, and the parameters to be used to monitor subject safety and efficacy, including stopping rules that assure a clinical trial
will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA
as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP
requirements, including the requirement that all research subjects provide informed consent. Further, each clinical trial must be reviewed
and approved by an IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting
the welfare and rights of study participants and considers such items as whether the risks to individuals participating in the clinical
trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed
consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until
completed. There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public
registries. Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes
for publication on the www.clinicaltrials.gov website.
10
Clinical
trials generally are conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, and may overlap.
Post-approval
trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are conducted
to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may
mandate the performance of Phase 4 clinical trials as a condition of approval of a BLA.
Progress
reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA and written
IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse events, findings from
other studies or animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase
in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.
It
is possible for Phase 1, Phase 2, Phase 3 and other types of clinical trials not to be completed successfully within a specified period,
if at all. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that
the patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial
at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic has
been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of
qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides
authorization for whether a trial may move forward at designated check points based on access to certain data from the trial.
Concurrent
with clinical trials, companies may complete additional animal studies and also must develop additional information about the chemistry
and physical characteristics of the biologic as well as finalize a process for manufacturing the product in commercial quantities in
accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product