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, 2022
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 4, 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. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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, 2022, 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 $18,574,467 based on the closing sale price of the Registrant’s shares of Common Stock on June 30, 2022 (the
last trading day of the fiscal quarter) of $0.73 per share.
The number of shares outstanding of the Registrant’s shares of Common
Stock as of March 24, 2023 was33,181,773.
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 2023 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, 2022.
BIOMX INC.
Annual Report on Form 10-K for the Year Ended
December 31, 2022
part I
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 29
ITEM 1B. UNRESOLVED STAFF COMMENTS 69
ITEM 2. PROPERTIES 69
ITEM 3. LEGAL PROCEEDINGS 69
ITEM 4. MINE SAFETY DISCLOSURES 69
part II
ITEM 6. [RESERVED] 70
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 81
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 81
ITEM 9A. CONTROLS AND PROCEDURES 81
ITEM 9B. OTHER INFORMATION 81
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICIONS THAT PREVENT INSPECTIONS 81
part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 82
ITEM 11. EXECUTIVE COMPENSATION 82
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 83
part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 84
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:
ii
● our ability to obtain required regulatory approvals;
● delays in developing manufacturing processes for our product candidates;
● reliance on third-party collaborators;
● potential security breaches, including cybersecurity incidents;
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.
iii
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:
iv
v
PART I
ITEM 1. BUSINESS
Overview
We are a clinical stage 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. 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.
In our therapeutic programs, we focus on using phage
therapy to target specific strains of pathogenic bacteria that are associated with diseases. 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. The cocktail contains phage with complementary features and is optimized for multiple characteristics
such as broad target host range, ability to prevent resistance, biofilm penetration, stability and ease of manufacturing.
Our goal is to develop multiple products based on the
ability of phage to precisely target harmful bacteria 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.
Ongoing Programs
BX004 – Treatment of Cystic Fibrosis
BX004 is our therapeutic phage product candidate
under development for chronic pulmonary 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.
The Phase 1b/2a trial in CF patients with chronic
respiratory infections caused by P. aeruginosa. is comprised of two parts. The study design is based on recommendations from the
Cystic Fibrosis Therapeutic Development Network.
1
In February 2023, we announced positive results
from Part 1 of the Phase 1b/2a trial evaluating BX004. Part 1 evaluated the safety, tolerability, pharmacokinetics, or PK, and microbiologic
activity of BX004 over a 7-day treatment period in nine CF patients (7 on BX004, 2 on placebo) with chronic P. aeruginosa pulmonary infection
in a single ascending dose and multiple dose design.
Results from Part 1 of the Phase 1b/2a trial included
the following findings: No safety events related to treatment with BX004 occurred; Mean P. aeruginosa colony forming units (CFU) at Day
15 (compared to baseline): -1.42 log (BX004) vs. -0.28 log (placebo). This reduction was seen on top of standard of care inhaled antibiotics;
Phage were detected in all patients treated with BX004 during the dosing period, including in several patients up to Day 15 (one week
after end of therapy); no phage were detected in patients receiving placebo; there was no emerging resistance to BX004 during or after
treatment with BX004; and there was no detectable effect on % predicted FEV1.
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 in
the third quarter of 2023.
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 had the
right to receive the second tranche of $2 million, also as an equity investment. Following the results from Part 1 of the ongoing
Phase 1b/2a trial, the CF Foundation agreed to make its second tranche investment of $2 million through its participation in the Company’s
$7.5 million private placement. 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).
We are currently supporting a range of pre-clinical
activities to move this program forward and working on evaluating timelines for a clinical trial.
On April 8, 2022, the FDA approved the Company’s
IND application for BX005.
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.
2
Programs on hold
BX003 – Treatment of IBD and PSC
In November 2020, we combined our inflammatory bowel
disease, or IBD and primary sclerosing cholangitis, or PSC programs to create a single product candidate called BX003, which targets K.
pneumoniae to treat both diseases. Previously, we had separate candidates named BX002 and BX003. In February 2021, a Phase 1a pharmacokinetic
study of BX002 demonstrated that it was safe and well-tolerated with no serious adverse events, and with high concentrations of viable
phage delivered to the gastrointestinal tract.
On November 15, 2021, we announced that we have paused
development efforts for BX003 due to prioritizing resources towards our CF and AD programs, and we cannot provide guidance on resuming
its development.
CRC
We are developing synthetically engineered phage to
target bacteria found in colorectal tumors. We observed in vitro and in vivo that phage can be used to target Fusobacterium nucleatum,
which is commonly found in colorectal tumors. Our goal is to use phage to deliver payload genes, such as those encoding immunostimulatory
proteins, to tumors and eradicate the bacteria. We have successfully engineered an IL-15 gene into F. nucleatum phage.
On November 15, 2021, we announced that we have paused
development efforts for this program due to prioritizing resources towards our CF and AD programs, and we cannot provide guidance on resuming
its development.
Discontinued programs
BX001 – Treatment of Acne
BX001 is a topical gel developed to modify skin appearance
in a range of skin types, including acne-prone skin, using naturally occurring phage that target Cutibacterium acnes, or C.
acnes. A 4-week Phase 1 clinical study demonstrated that BX001 was safe, well-tolerated, and significantly reduced C. acnes levels for
the high dose compared to the placebo. A 12-week Phase 2 clinical study on 140 women with mild-to-moderate acne vulgaris found that BX001
was well-tolerated, and a statistically significant improvement in the appearance of acne-prone skin was observed. However, there was
no meaningful difference demonstrated compared to the placebo arm of the study. As a result, we decided to discontinue the program.
Our Strategy
Our goal is to develop multiple products based on the
ability of phage to precisely target harmful bacteria 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 the rapid development of
optimized phage cocktails. These cocktails may be comprised of naturally-occurring or synthetically engineered phage. The cocktail contains
phage with complementary features and is optimized for multiple characteristics such as broad target host range, ability to prevent resistance,
biofilm penetration, stability and ease of manufacturing. Pre-clinical 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.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 US patent family with Keio University in Tokyo, Japan, or Keio, one international patent family (United
States, Australia, Brazil, Canada, European Patent Office national filings) with Yeda Research and Development Company Limited, or Yeda,
and one international patent family (United States, Europe) 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 or Keio 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 (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 US patent family and co-own with Keio and Yeda one international patent family (United States, Europe), 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.
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
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.
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 and, among other things, companies must
develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must
be selected and tested, and stability studies must be conducted to demonstrate that the product candidates do not undergo unacceptable
deterioration over their shelf life.
11
FDA Review Process
Following completion of the clinical trials, data
are analyzed to assess whether the investigational product is safe and effective for the proposed indicated use or uses, and also meets
the regulatory requirements for potency and purity. The results of preclinical studies and clinical trials are then submitted to the FDA
as part of a BLA, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data.
The BLA is a request for approval to market the biologic for one or more specified indications and must contain proof of safety, purity
and potency. The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive
findings. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from
a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must
be sufficient in quality and quantity to establish the safety and efficacy in the intended indication, purity and potency of the investigational
product to the satisfaction of the FDA. FDA approval of a BLA must be obtained before a biologic may be marketed in the United States.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a user fee. The FDA adjusts the PDUFA
user fees on an annual basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application
fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for products designated as orphan
drugs, unless the product also includes a non-orphan indication.
The FDA reviews all submitted BLAs before it accepts
them for filing and may request additional information rather than accept the BLA for filing. The FDA must make a decision on accepting
a BLA for filing within 60 days of receipt, and such a decision could include a refusal to file by the FDA. Once the submission is accepted
for filing, the FDA begins an in-depth review of the BLA. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10
months, from the filing date, in which to complete its initial review of an original BLA and respond to the applicant, and six months
from the filing date of an original BLA designated for priority review. The FDA does not always meet its PDUFA goal dates for standard
and priority BLAs, and the review process is often extended by FDA requests for additional information or clarification.
Before approving a BLA, the FDA will conduct a
pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements. The
FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements
and adequate to assure consistent production of the product within required specifications. The FDA also may audit data from clinical
trials to ensure compliance with GCP requirements. Additionally, the FDA may refer applications for novel products or products which present
difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for
review, evaluation and a recommendation as to whether the application should be approved and under what conditions, if any. The FDA is
not bound by recommendations of an advisory committee, but it considers such recommendations when making decisions on approval. The FDA
likely will reanalyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the
review process.
After the FDA evaluates a BLA, it will issue an
approval letter, or a Complete Response Letter. An approval letter authorizes commercial marketing of the biologic with specific prescribing
information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the
application will not be approved in its present form. A Complete Response Letter usually describes all the specific deficiencies in the
BLA identified by the FDA. The Complete Response Letter may require additional clinical data and/or other significant and time-consuming
requirements related to clinical trials, preclinical studies or manufacturing. If a Complete Response Letter is issued, the applicant
may either resubmit the BLA, addressing all the deficiencies identified in the letter, or withdraw the application. Even if such data
and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval. Data obtained from clinical
trials are not always conclusive and the FDA may interpret data differently than the sponsor’s interpretation of the same data.
Orphan Drug Designation
Under the Orphan Drug Act of 1983, or the Orphan
Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is
generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in
the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the
United States for this type of disease or condition will be recovered from sales of the product. Orphan drug designation for a biologic
must be requested before submitting a BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its
potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration
of the regulatory review and approval process.
12
Orphan drug designation entitles a party to financial
incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. If a product that
has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the
product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug
for the same indication for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical
superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety or providing a major contribution
to patient care, or in instances of drug supply issues. Competitors, however, may receive approval of either a different product for the
same indication or the same product for a different indication but that could be used off-label in the orphan indication. Orphan drug
exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do for the
same product, as defined by the FDA, for the same indication we are seeking approval, or if our product is determined to be contained
within the scope of the competitor’s product for the same indication or disease. If one of our products designated as an orphan
drug receives marketing approval for an indication broader than that which is designated, it may not be entitled to orphan drug exclusivity.
Expedited Development and Review Programs
The FDA has a fast-track program that is intended
to expedite or facilitate the process for reviewing new drugs and biologics that meet certain criteria. Specifically, new drugs and biologics
are eligible for fast-track designation if they are intended to treat a serious or life-threatening condition and preclinical or clinical
data demonstrate the potential to address unmet medical needs for the condition. Fast track designation applies to the combination of
the product and the specific indication for which it is being studied. Any product submitted to the FDA for marketing, including under
a fast-track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review
and accelerated approval. A product is eligible for priority review if it treats a serious or life-threatening condition and, if approved,
would provide a significant improvement in safety and effectiveness compared to available therapies. The FDA will attempt to direct additional
resources to the evaluation of an application for a new drug or biologic designated for priority review in an effort to facilitate the
review.
A product may also be eligible for accelerated
approval if it treats a serious or life-threatening condition and demonstrates an effect on a surrogate endpoint that is reasonably likely