ITEM 1A. RISK FACTORS
You should carefully consider the risks and
uncertainties described below and the other information in this Annual Report before making an investment in our securities. Our business,
financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks occurs, and
as a result, the market price of our securities could decline and you could lose all or part of your investment. This Annual Report also
contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.”
Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth below.
Risks Related to Our Business, Technology and Industry
Our exploration of strategic alternatives could adversely affect our business and
our stock price.
In December 2025, we announced that our Israeli
subsidiary, BiomX Ltd., commenced insolvency proceedings in Israel. On December 26, 2025, we entered into the 2025 Second SPA. The initiation
of such insolvency process, combined with the potential for the Investor from the 2025 Second SPA to become a majority shareholder upon
stockholder approval, creates risks and uncertainties regarding our strategic direction, including our potential inability to
consummate any proposed strategic alternative resulting from the process due to, among other things, insufficient funding, market,
regulatory and other factors. Such potential change in control, resulting from the 2025 Second SPA, could affect our ability to consummate
proposed strategic alternatives, impact our market price and trading volatility, and potentially lead to a shift in the Company’s business,
strategy, and objectives in accordance with any plans our Board may adopt.
If we fail to obtain stockholder approval required under NYSE
American rules in connection with the 2025 Second SPA, we could be unable to access sufficient financing, and could be required to hold
additional stockholder meetings and incur significant costs, potentially leading to the delisting of our Common Stock.
After extensive efforts to raise capital on more
favorable terms, we believed that the 2025 Second SPA was the only viable financing alternative available to us at the time. Pursuant
to the terms of the 2025 Second SPA, we are required to obtain stockholder approval for this proposal within 60 calendar days from the
closing date. If we fail to obtain such stockholder approval for this proposal, we will be required to incur additional costs in order
to hold additional stockholder meetings every 60 days to seek such approval as is required under the purchase agreement. Further, until
such time as we obtain stockholder approval for this proposal, we will not be able to issue more than 19.99% of our outstanding shares
of Common Stock to the Series Y Preferred Stock and warrant holders in connection with the 2025 Second SPA.
If we are unable to obtain such stockholder approval
on a timely basis, our ability to access sufficient financing on acceptable terms, or at all, could be materially and adversely affected,
and we could be required to further reduce or discontinue our operations, which could materially and adversely affect our business, financial
condition and results of our operations. Additionally, failure to obtain the required stockholder approval could also lead to a determination
by NYSE American that we do not maintain sufficient ongoing business operations, which could result in the delisting of our Common Stock. Moreover,
our inability to obtain such stockholder approval on a timely basis would severely constrain our financial flexibility and could significantly
delay our ongoing efforts to evaluate and pursue strategic alternatives and other business opportunities.
We are a clinical-stage company and have incurred losses since
our inception. Subject to availability of sufficient financial and other resources, we anticipate that we will continue to incur significant
expenses, and we will continue to incur significant losses for the foreseeable future.
We are a clinical-stage biopharmaceutical company
with limited operating history compared to the long time it takes to develop phage based products. We have incurred losses in each year
since BiomX Ltd.’s inception in 2015. As of December 31, 2025, our accumulated deficit was $216.9 million. We do not expect to generate
any revenue from the commercial sales of our product candidates in the near term.
For the years ended December 31, 2025 and 2024,
we had losses from operations of $41.5 million and $44.5 million, respectively. Subject to availability of sufficient financial and other
resources, we anticipate that the level of our expenses will continue to be significant if and as we:
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● maintain, expand and protect our intellectual property portfolio;
We will need to raise additional capital in the future to support
our operations which may not be available at terms that are favorable to us and might cause significant dilution to our stockholders or
increase our debt towards third parties.
As of December 31, 2025, we had cash, cash equivalents
and restricted cash of $5.0 million, and we have had recurring losses from operations and negative operating cash flows since inception.
We will need to raise additional capital in the future to support our operations and product development activities. In the near term,
we expect to continue to fund our operations and other development activities relating to additional product candidates from the cash
held by us, governmental and other grants and through future equity and debt financing. We have explored and raised funds in multiple
manners since our inception. For instance, we filed in December 2023 a shelf registration statement on Form S-3 that was subsequently
declared effective by the SEC and entered into an At the Market Offering Agreement, or the ATM Agreement, with H.C. Wainwright & Co.,
LLC, or Wainwright, as manager, pursuant to which we may issue and sell shares of our Common Stock having an aggregate offering price
of up to $1,765,939 from time to time through Wainwright. We are not obligated to make any sales of Common Stock under the ATM Agreement.
On February 27, 2025, we completed a registered direct offering and a concurrent private placement. Additionally, certain warrant holders
agreed to exercise their warrants following our agreement to reduce the exercise price. Through these transactions, we generated approximately
$12 million. In addition, in March 15, 2024, concurrently with the consummation of the acquisition of APT, we consummated a private placement
of $50 million. Most recently, on January 13, 2026, we completed a private placement of preferred stock and warrants under a Securities
Purchase Agreement, or the 2025 Second SPA, with an investor for gross proceeds of $3.0 million.
We anticipate conducting additional capital raises
in the future. If we enter into a collaboration for one or more of our current or future product candidates at an earlier development
stage, the terms of such a collaboration will likely be less favorable than if we were to enter the collaboration in later stages or if
we commercialized the product independently. If we raise additional funds through equity offerings, the terms of these securities may
include liquidation or other preferences that adversely affect our stockholders’ rights or cause significant dilution to our stockholders.
If we raise additional capital through debt financing, it would be subject to fixed payment obligations and may be subject to covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring
dividends or acquiring or licensing intellectual property rights.
Developing drugs and conducting clinical trials
is expensive. Our future funding requirements will depend on many factors, including:
Domestic and international equity and debt markets
have experienced and may continue to experience heightened volatility and turmoil based on domestic and international economic conditions
and concerns. In the event these economic conditions and concerns continue or worsen and the markets continue to remain volatile, or a
bear market, or recession, ensues in the U.S. stock market, or the markets are negatively impacted by factors such as Israel’s war
with Hamas and Hezbollah, the Russian invasion of Ukraine and the resulting world sanctions on Russia, Belarus, and related parties or
other sources of geopolitical uncertainty and instability, our operating results and liquidity could be affected adversely by those factors
in many ways, including making it more difficult for us to raise funds if necessary and our stock price may decline.
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There can be no assurance that sufficient funds
will be available to us when required or on acceptable terms, if at all. Our inability to obtain additional funds could have a material
adverse effect on our business, financial condition and results of operations. Moreover, if we are unable to obtain additional funds on
a timely basis, there will be substantial doubt about our ability to continue as a going concern and increased risk of insolvency and
up to a total loss of investment by our stockholders.
If we engage in future acquisitions or strategic partnerships,
this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject
us to other risks.
We may evaluate various additional acquisition
opportunities and strategic partnerships, including licensing or acquiring complementary or unrelated products, intellectual property
rights, technologies or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
● increased operating expenses and cash requirements;
● the assumption of additional indebtedness or contingent liabilities;
● the issuance of our equity securities;
Our financial statements contain an explanatory paragraph regarding
substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable
terms or at all.
Our financial statements contain
an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. We have concluded that there is
substantial doubt about our ability to continue as a going concern. We have accumulated a deficit of $216.9 million since our inception.
To date, we have not generated revenue from our operations and we do not expect to generate any significant revenues from sales of products
in the next twelve months. Our cash needs may increase in the foreseeable future. As of December 31, 2025, we had $5.0 million in cash
and cash equivalents and restricted cash.
We believe our cash and cash equivalents on hand,
including the cash raised in January 2026, as described under “Liquidity and Capital Resources” in Item 7 of this Annual Report,
will be sufficient to meet our working capital and capital expenditure requirements through the end of the second quarter of 2026. Our
continuation as a going concern is dependent upon many factors, including our ability to raise additional funds, the success of our clinical
trial for DFI/DFO and our ability to repay our obligations when due. We cannot be sure that we will be able to obtain any future funding,
and any such funding we may obtain may not be sufficient to finance our operations. If we are unable to obtain sufficient funds, we may
be unable to continue as a going concern.
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We are seeking to develop product candidates using phage technology,
an approach for which it is difficult to predict the time and cost of development. To our knowledge, as of the date of this Annual Report,
no bacteriophage has thus far been approved as a drug in the United States or in the European Union.
We are developing our drug product candidates with
phage technology. We have not, nor to our knowledge has any other company, received regulatory marketing approval from the FDA, or equivalent
foreign regulatory agencies for a drug product based on this approach (phage technology). While in vitro and in vivo studies
have characterized the behavior of phage in cell cultures and animal models and there exists a body of literature regarding the use of
phage therapy in humans, the safety and efficacy of phage therapy in humans has not been extensively studied in well-controlled modern
clinical trials. Most of the prior research on phage-based therapy was conducted in the former Soviet Union prior to and immediately after
World War II and lacked appropriate control group design or lacked control groups at all. Furthermore, the standard of care has changed
substantially during the ensuing decades since those studies were performed, diminishing the relevance of prior claims of improved cure
rates. Any product candidates that we develop may not demonstrate in patients the therapeutic properties ascribed to them in laboratory
and other preclinical studies, and they may interact with human biological systems in unforeseen, ineffective or even harmful ways. We
cannot be certain that our approach will lead to the development of approvable or marketable drug products. Furthermore, the bacterial
targets of phage may develop resistance to our product candidates over time, which we may or may not be able to overcome with the development
of new phage cocktails or we may not be able to construct a cocktail with sufficient coverage of our target pathogen universe.
If our product candidates receive regulatory approval
but do not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generate product revenue
sufficient to attain profitability. Our success will depend upon physicians who specialize in the treatment of diseases targeted by our
product candidates that we pursue as drugs, prescribing potential treatments that involve the use of our product candidates in lieu of,
or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Our success
will also depend on consumer acceptance and adoption of our products that we commercialize. Adverse events in preclinical studies and
clinical trials of our product candidates or in clinical trials of others developing similar products and the resulting publicity, as
well as any other adverse events in the field of phage therapeutics, could result in a decrease in demand for any product that we may
develop. The degree of market acceptance of any approved products will depend on a number of factors, including:
● the effectiveness of the product;
● the prevalence and severity of any side effects;
● potential advantages or disadvantages over alternative treatments;
● relative convenience and ease of administration;
● the strength of marketing and distribution support;
● sufficient third-party coverage or reimbursement.
Developing our product candidates on a commercial
scale will require substantial technical, financial and human resources. We and our third-party collaborators may experience delays in
developing manufacturing capabilities for our product candidates, and may not be able to do so at the scale required to efficiently conduct
the clinical trials required to obtain regulatory approval of those of our product candidates that require it, or to manufacture commercial
quantities of our products, if approved or otherwise permitted to be marketed.
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Our product candidates must undergo clinical testing which may
fail to demonstrate the requisite safety and efficacy for drug products, or safety, purity, and potency for biologics, and any of our
product candidates could cause adverse effects, which would substantially delay or prevent regulatory approval and/or commercialization.
Before we can obtain regulatory approval for a
product candidate or otherwise obtain evidence allowing us to market the product as a drug or biologic, we must undertake extensive preclinical
and clinical testing in humans to demonstrate safety and efficacy or in the case of biologics, safety, purity, and potency, to the satisfaction
of the FDA or other regulatory agencies. Clinical trials of product candidates sufficient to obtain regulatory marketing approval or otherwise
demonstrate safety prior to marketing, are expensive and take years to complete. Furthermore, results from these clinical trials may not
show safety or efficacy of our product candidates sufficient to lead to approval, or to warrant further development. Our approach is intended
to design phage combinations, or cocktails, to target specific strains of pathogenic bacteria in order to alter microbiome composition
and confer potential therapeutic or cosmetic benefit to patients. However, there can be no assurance that the eradication of the selected
targets will result in a clinically meaningful effect on the underlying disease, such as in cases where the pathology of the disease is
not well-defined. In addition, the bacteria that we target may be associated with the disease, but may not be causative or contributive
to the pathology of the disease, or there may be other bacteria that our product candidates do not target that are more meaningful drivers
of the underlying disease. In addition, our product candidates require the use of effective delivery vehicles to reach the target organ
or tissue, and there can be no assurance that our intended delivery systems will allow our product candidates to reach the desired locations
in a patient. Safety must first be established through preclinical testing and early clinical trials, before efficacy can be evaluated
and established and thereby lead to FDA or other regulatory agencies marketing approval. Our clinical trials may produce undesirable side
effects or negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and/or preclinical
testing or to abandon programs.
Ongoing geopolitical instability have adversely affected
and may continue to adversely affect our business, including our clinical trials.
General economic, political, demographic and business
conditions worldwide, including geopolitical uncertainty and instability, such as the Israel’s war with Hamas and Hezbollah and
the Russia-Ukraine conflict, might adversely affect our business, through indirect disruption to our supply chain, harming our ability
to raise funds at terms acceptable to us among other affects. We may further experience additional disruptions that could severely impact
our business, preclinical studies and clinical trials, including:
● delays or difficulties in enrolling patients in our clinical trials;
● interruptions or delays to our sourced discovery and clinical activities.
Changes in trade policy, including the imposition of tariffs,
may adversely affect our business, results of operations and financial condition.
The U.S. and various foreign governments have established
certain trade and tariff requirements. From time to time, the U.S. government has indicated a willingness to revise or renegotiate tariffs
on certain goods imported into the U.S. Since we rely on certain components from certain countries in the European Union, such steps,
if adopted, could adversely impact our business, increase our costs, and make our products less competitive.
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If we are not able to obtain, or if there are delays in obtaining,
required regulatory approvals for our product candidates for therapeutic indications, we will not be able to commercialize, or will be
delayed in commercializing, our product candidates, and our future ability to generate revenue will be materially impaired.
Our product candidates and the activities associated
with their development and commercialization for therapeutic indications, including their design, testing, manufacture, safety, efficacy,
recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to regulation by
the FDA and other regulatory agencies in the United States and by equivalent foreign regulatory authorities. Before we can commercialize
any of our product candidates for therapeutic indications, we must obtain marketing approval. We have not received approval to market
any of our product candidates from regulatory authorities in any jurisdiction, and it is possible that none of our product candidates
or any product candidates we may seek to develop in the future will ever obtain regulatory approval.
The process of obtaining regulatory approvals for
therapeutic indications, both in the United States and in other countries, is expensive, may take many years if additional clinical trials
are required, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates
involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted IND, or equivalent application types, may cause delays in the approval
or rejection of an application. The FDA and equivalent foreign regulatory authorities have substantial discretion in the approval process
and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical,
clinical or other studies. There is uncertainty around new budget and staffing cuts imposed by the Trump administration on the FDA, which
may affect the timely development, approval and commercialization of new drugs. Also, the Trump administration may change or overhaul
existing drug regulations, which would lead to additional time and money to comply with. Furthermore, the Trump administration’s
tariffs could raise the cost of the clinical operations or affect the supply chains. Our product candidates could be delayed in receiving,
or fail to receive, regulatory approval for many reasons, including the following:
Of the large number of drugs in development, only
a small percentage successfully complete the FDA or equivalent foreign regulatory approval processes and are commercialized. The lengthy
approval process as well as the unpredictability of future clinical trial results may result in us failing to obtain regulatory approval
to market its product candidates, which would significantly harm our business, results of operations and prospects.
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The FDA may also require a panel of experts, referred
to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support approval for therapeutic indications.
The opinion of the Advisory Committee, although not binding, may have a significant impact on our ability to obtain approval of any product
candidates that we develop based on the completed clinical trials. In the European Union, the safety and efficacy data of any product
candidate considered by the EMA to qualify as an advanced therapy medicinal product must be reviewed by the EMA’s, Committee for
Advanced Therapies, a group of experts in advanced therapy medicinal products.
Moreover, under PREA, in the United States, and
the Pediatric Regulation, in the European Union, the FDA or equivalent foreign regulatory authority could require mandatory testing in
the pediatric population. Applications for approval in the United States or in the European Union must contain data to assess the safety
and efficacy of the biologic for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the product is safe and effective. The FDA or equivalent foreign regulatory authority may,
in its discretion, grant full or partial waivers, or deferrals, for submission of data in pediatric subjects. If the FDA requires data
in pediatric patients, significantly more capital will have to be invested in order to conduct the mandatory pediatric clinical trials
and studies, but the approval of the medicinal products for the adult population should normally not be affected. If the results of such
pediatric studies are not positive, our product candidates will not be approved for children.
In addition, even if we were to obtain approval,
regulatory authorities may approve any of our product candidates for fewer or more limited therapeutic indications than our requests,
may include limitations for use or contraindications that limit the suitable patient population, may not approve the price we intend to
charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials or may approve a product
candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product
candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
If we experience delays in obtaining approval or
if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our future
ability to generate revenues will be materially impaired.
We have never generated any revenue from product sales and may
never be profitable or, if achieved, may not sustain profitability.
Our ability to generate meaningful revenue and
achieve profitability depends on our ability, and the ability of any third party with which we may partner, to successfully complete the
development of, and meet regulatory requirements, including (but not limited to) obtaining any necessary regulatory approvals, to commercialize
our product candidates. We do not currently meet regulatory requirements or have the required approvals to market our product candidates
and may never meet or receive them. We do not anticipate generating revenue from product sales for the foreseeable future, if ever. If
any of our product candidates fail in clinical trials or if any of our product candidates do not meet regulatory requirements, including
gaining regulatory approval when needed, or if any of our product candidates, if marketed, fail to achieve market acceptance, we may never
become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
Our ability to generate future revenue from product sales depends heavily on our success in:
● meeting regulatory requirements for marketing the products;
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● obtaining market acceptance of any approved products;
● addressing any competing technological and market developments;
● implementing additional internal systems and infrastructure, as needed;
● identifying and validating new product candidates;
● attracting, hiring and retaining qualified personnel.
Even if one or more of the product candidates that
we develop is approved for commercial sale or otherwise permitted for marketing, we anticipate incurring significant costs associated
with commercializing any approved product. Our expenses could increase beyond expectations if we are required by the FDA, or the EMA,
or other equivalent foreign regulatory agencies to perform clinical trials and other studies in addition to those that we currently anticipate.
Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional
funding to continue operations. If we fail to become profitable, or if we are unable to fund our continuing losses, our business, financial
condition and results of operations may be materially adversely impacted.
We are seeking to develop product candidates to treat medical
conditions related to the presence of certain bacteria. Our success is largely dependent on a broad degree of market acceptance, and in
the case of drug products, physician adoption and use, which are necessary for commercial success.
Even if we obtain FDA or foreign regulatory approvals
for our drug product candidates, the commercial success of our product candidates will depend on consumer acceptance and adoption of products
that we commercialize. Adverse events in preclinical studies and clinical trials of our product candidates or in clinical trials of others
developing similar products and the resulting publicity could result in a decrease in demand for any product that we may develop.
In addition, the commercial success of our drug
product candidates will depend significantly on their broad adoption and use by pediatricians and other physicians for approved therapeutic
indications, as well as any other indications for which we may seek approval. We cannot be certain that our approach will lead to the
development of approvable or marketable products.
Obtaining high titers for specific phage cocktails necessary
for our preclinical and clinical testing may be difficult and time-consuming.
Our product candidates are phage cocktails that
we have designed to meet specific characteristics. We and our contract manufacturers produce a cocktail of multiple phage and it may be
difficult or time-consuming to achieve high titers, or levels, of phage sufficient for our preclinical and clinical testing. In some cases,
it may require multiple product runs in order for us to obtain the amounts necessary for its clinical testing. This may result in delays
in our clinical trial timelines, and it may increase production costs and associated expenses. Also, it may be difficult to reproduce
the manufacturing process to the extent that more significant quantities are required as our product candidates advance through the clinical
development process.
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Results from preclinical studies of our product candidates may
not be predictive of the results of clinical trials or later stage clinical development.
Preclinical studies of our product candidates,
such as BX011, including studies in animal disease models may not accurately predict the safety of the product candidate such that further
human clinical trials would be allowed to proceed. In particular, promising preclinical testing suggesting the potential efficacy of prototype
phage products may not predict the ability of these products to address conditions in the human clinical settings. For example, while
we have studied phage activity in vitro and in vivo, these results may not be replicated when our phage cocktails are administered
to human subjects. Despite promising data in any preclinical studies, our phage technology may be found not to be efficacious when studied
in clinical trials.
To satisfy FDA or equivalent foreign regulatory
approval standards, we must demonstrate in adequate and well controlled clinical trials that our drug product candidates are safe and
effective for their intended use. Success in preclinical testing and early-stage clinical trials does not ensure that later clinical trials
will be successful. Our initial results from preclinical testing also may not be confirmed by later analysis or subsequent larger clinical
trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after
obtaining promising results in earlier clinical trials, and most product candidates that commence clinical trials are never approved for
commercial sale.
If we encounter difficulties enrolling patients in our clinical
trials, our clinical development activities could be delayed or otherwise adversely affected.
Completion of clinical trials depends, among other
things, on our ability to enroll a sufficient number of patients, which is a function of many factors, including:
● the therapeutic endpoints chosen for evaluation;
● the eligibility criteria defined in the protocol;
● the perceived benefit of the product candidate under study;
● our ability to obtain and maintain patient consents; and
● competition for patients from clinical trials for other treatments.
We have experienced and may continue to experience
difficulties in enrolling patients in our clinical trials, including recently with respect to enrollment in our DFO phase 2 study, which
could increase the costs or affect the timing or outcome of these clinical trials. This is particularly true with respect to diseases
with relatively small patient populations. In addition, potential patients for our trials may not be adequately diagnosed or identified
with the diseases that we are targeting or may not meet the entry criteria for our studies.
We may not be able to initiate or continue clinical
trials if we are unable to locate a sufficient number of eligible patients to participate in the clinical trials required by the FDA or
equivalent foreign regulatory agencies. In addition, the process of finding and diagnosing patients may prove costly. Our inability to
enroll a sufficient number of patients for any of our clinical trials would result in significant delays or may require us to abandon
one or more clinical trials.
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Delays, or clinical holds, in our clinical trials could result
in us not achieving anticipated developmental milestones when expected, increased costs and delays in our ability to obtain regulatory
approval for and commercialization of our product candidates.
Delays in our clinical trials could result in us
not meeting anticipated clinical milestones and could materially impact our product development costs and delay regulatory approval of
our product candidates. Planned clinical trials may not be commenced or completed on schedule, or at all. Furthermore, our clinical trials
may become subject to a clinical hold based on the evaluation of data and information submitted to the governing regulatory authorities.
Clinical trials can be delayed, or be subject to
a clinical hold, for a variety of reasons, including:
● delays in reaching a consensus with clinical investigators on study design;
● delays in obtaining clinical materials;
● slower than expected patient recruitment for participation in clinical trials;
● adverse safety events experienced during our clinical trials.
If we do not successfully commence or complete
our clinical trials on schedule, the price of our securities may decline. Significant preclinical or clinical trial delays or suspensions
could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors
to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming
our business and results of operations.
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Our current or future product candidates may cause adverse effects
that could halt their clinical development, prevent their approval or marketing, limit their commercial potential or result in significant
negative consequences.
Adverse effects could occur and cause us or regulatory
authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing
approval by the FDA or equivalent foreign regulatory agencies. Results of our trials could reveal a high and unacceptable severity and
prevalence of side effects or unexpected characteristics. For example, adverse events experienced by participants in our Study contributed
to our decision to discontinue further development of BX004, followed by additional internal analysis and feedback from the DMC, which
recommended consideration of adjusting dosing regimen.
If adverse effects arise in the development of
our product candidates, we, the FDA or equivalent foreign regulatory agencies, the IRBs or independent ethics committees at the institutions
in which our studies are conducted, or the Data Safety Monitoring Board could suspend or terminate our clinical trials or the FDA or equivalent
foreign regulatory agencies could deny approval of our product candidates for any or all targeted indications.
We intend to continue to evaluate our product candidates
for safety and tolerability in the form of Phase 1 clinical trials. While our current and future product candidates will undergo safety
testing to the extent possible and, where applicable, under such conditions discussed with regulatory authorities, not all adverse effects
of drugs can be predicted or anticipated. Unforeseen adverse effects could arise either during clinical development or, if such adverse
effects are more rare, after our products have been approved by regulatory authorities and the approved product has been marketed, resulting
in the exposure of additional patients. For example, while we screen our phage in attempts to minimize safety issues, there can be no
assurance that we will eliminate the risk of the appearance of virulence genes, antibiotic resistance genes, lysogenic genes, integrase
genes, or other toxic genes in our phage, or of adverse reactions to our phage in a patient’s immune system. So far, we have not
demonstrated, and we cannot predict, if ongoing or future clinical trials will demonstrate that any of our product candidates are safe
in humans. Moreover, clinical trials of our product candidates are conducted in carefully defined sets of patients who have agreed to
enter into clinical trials. Consequently, it is possible that our clinical trials may indicate an apparent positive effect of a product
candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable adverse effects.
Ultimately, some or all of our product candidates
may prove to be unsafe for human use. Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears
to suffer, adverse health effects as a result of participating in our clinical trials. Any of these events could prevent us from achieving
or maintaining market acceptance of our product candidates and could substantially increase commercialization costs.
We have not completed composition development of our product
candidates.
The development of our product candidates requires
that we isolate, select, optimize and combine a number of phage that target the desired bacteria for that product candidate. The selection
of phage for any of our product candidates is based on a variety of factors, including, without limitation, the ability of the selected
phage, in combination, to successfully kill the targeted bacteria, the degree of cross-reactivity of the individual phage with the same
part of the bacterial targets, the ability of the combined phage to satisfy regulatory requirements, our ability to manufacture sufficient
quantities of the phage, intellectual property rights of third parties, and other factors. While we have selected an initial formulation
of BX011, there can be no assurance that this initial formulation will be the final formulations of this product candidate for commercialization
if approved. If we are unable to complete formulation development of our product candidates in the time frame that we have anticipated,
then our product development timelines, and the regulatory approval of our product candidates, could be delayed.
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We must continue to develop manufacturing processes for our product
candidates, and any delay in doing so, or our inability to do so, would result in delays in our clinical trials.
The manufacturing processes for our product candidates,
and the scale-up of such processes for clinical trials, may present challenges, and there can be no assurance that we will be able to
complete this work in a timely manner, if at all. Any delay in the development or scale-up of these manufacturing processes could delay
the start of clinical trials and harm our business. In order to scale-up our manufacturing capacity, we need to either build additional
internal manufacturing capacity, contract with one or more partners, or both. Our technology and the production process for our equipment
and tools are complex and we may encounter unexpected difficulties in manufacturing our product candidates. For example, the manufacturing
hosts that we use to produce our phage may contain one or more integrated phage in their genomes that, if we are unable to remove, can
present challenges in manufacturing of the produced phage. There is no assurance that we will be able to continue to build manufacturing
capacity internally or find one or more suitable partners, or both, to meet the necessary volume and quality requirements. Manufacturing
and product quality issues may arise as we increase the scale of our production. Any delay or inability in establishing or expanding our
manufacturing capacity could diminish our ability to develop our product candidates.
If we submit marketing applications for any of
our product candidates manufactured by third-party manufacturers, the manufacturing facilities used to produce such product candidates
will be subjected to ongoing periodic inspection for compliance with European, FDA and cGMP regulations. Compliance with these regulations
and standards is complex and costly, and there can be no assurance that we will be able to comply. Any failure to comply with applicable
regulations could result in sanctions being imposed (including fines, injunctions and civil penalties), failure of regulatory authorities
to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or
recalls of product candidates or products, operating restrictions and criminal prosecution.
If our competitors are able to develop and market products that
are more effective, safer or more affordable than ours, or obtain marketing approval before we do, our commercial opportunities may be
limited.
Competition in the biotechnology and pharmaceutical
industries is intense and continues to increase. Some companies that are larger and have significantly more resources than us are aggressively
pursuing development programs for indications that we are pursuing, including traditional therapies and therapies with novel mechanisms
of action. In addition, other companies are developing phage-based products for therapeutic and non-therapeutic uses, and may elect to
use their expertise in phage development and manufacturing to try to develop products that would compete with our products.
We also face potential competition from academic
institutions, government agencies and private and public research institutions engaged in the discovery and development of drugs and therapies.
Many of our competitors have significantly greater financial resources and expertise in research and development, preclinical testing,
conducting clinical trials, obtaining regulatory approvals, manufacturing, sales and marketing than we do. Smaller or early-stage companies
may also prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical
companies.
In the European Union, potential competition also
comes from medicinal preparations made by hospitals or pharmacists and administered without marketing authorizations, generally referred
to as “compounding.” In some member states, national authorities generally promote compounding in order to reduce healthcare
expenses.
Our competitors may succeed in developing products
that are more effective, have fewer side effects and are safer or more affordable than our product candidates, which would render our
product candidates less competitive or noncompetitive. These competitors also compete with us to recruit and retain qualified scientific
and management personnel, establish clinical trial sites and patient registration for clinical trials, as well as to acquire technology
and technology licenses complementary to our programs or advantageous to our business. Moreover, competitors that are able to achieve
patent protection, obtain regulatory approvals and commence commercial sales of their products before we do, and competitors that have
already done so may enjoy a significant competitive advantage.
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We may not be successful in our efforts to identify or discover
additional product candidates.
Although we intend to utilize our technology to
evaluate other therapeutic opportunities in addition to the product candidates that we are currently developing, we may fail to identify
other product candidates for clinical development for a number of reasons. For example, our research methodology may not be successful
in identifying potential product candidates, or those we identify may be shown to have harmful side effects or other characteristics that
make them unmarketable or unlikely to receive regulatory approval. In addition, we may not be able to identify phage that eradicate the
target bacteria, including due to sourcing difficulties such as lack of diversity, inability to obtain samples in a timely manner or at
all, or contamination in the samples. We may also encounter difficulties in designing phage cocktails that meet the requirements of an
investigational therapy, including due to the build-up of resistances in bacteria to our phage, the range of host bacteria that are affected
by our phage, the variety of activity on different bacteria growth states, issues with toxicity in our phage, and the stability, robustness
and ease of manufacturing of our product candidates. In addition, the designing of synthetically engineered phage may fail to result in
the development of phage with the desired characteristics or behaviors that are suitable for use as viable therapies, or may result in
phage that contain undesired features such as immunogenicity, toxicity and other safety concerns.
A key part of our strategy is to utilize our screening
technology to identify product candidates to pursue in clinical development. If we fail to identify and develop additional potential product
candidates, we may be unable to grow our business and our results of operations could be materially harmed. Such product candidates will
require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval
by the FDA and/or applicable foreign regulatory agencies. All product candidates are prone to the risks of failure that are inherent in
pharmaceutical product development.
Legal requirements as well as ethical and social concerns about
synthetic biology and genetic engineering could limit or prevent the use of our technologies and limit our revenues.
Our technology may include the use of synthetic
biology and genetic engineering. In some countries, drugs made using genetically modified organisms may be subject to a more stringent
legal regime, which could prove to be complex and very challenging, especially for a small life sciences company. For example, in the
European Union, the rules on genetically modified organisms would apply in addition to the general rules on medicinal products or cosmetic
products. The rules on advanced therapy medicinal products may also apply.
Additionally, public perception about the safety
and environmental hazards of, and ethical concerns over, synthetic biology and genetic engineering could influence public acceptance of
our technologies, product candidates and processes. If we and our collaborators are not able to overcome the legal challenges as well
as the ethical and social concerns relating to synthetic biology and genetic engineering, our technologies, product candidates and processes
may not be accepted. These challenges and concerns could result in increased expenses, regulatory scrutiny and increased regulation, trade
restrictions on imports of our product candidates, delays or other impediments to our programs or the public acceptance and commercialization
of our products. We design and produce product candidates with characteristics comparable or superior to those found in naturally occurring
organisms or enzymes in a controlled laboratory; however, the release of such organisms into uncontrolled environments could have unintended
consequences. Any adverse effect resulting from such a release could have a material adverse effect on our business, financial condition
or results of operations, and we may have exposure to liability for any resulting harm.
We may expend our limited resources to pursue a particular product
candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is
a greater likelihood of success.
Because we have limited financial and managerial
resources, we intend to focus on developing product candidates for specific indications that we identify as most likely to succeed, in
terms of both their potential for marketing approval and commercialization. As a result, we may forego or delay pursuit of opportunities
with other product candidates or for other indications that may prove to have greater commercial potential. For example, we spent significant
time and resources developing BX005 and BX004, which we discontinued.
Our resource allocation decisions may cause us
to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do
not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights
to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous
for us to retain sole development and commercialization rights to the product candidate.
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There is a substantial risk of product liability claims in our
business. If we do not obtain sufficient liability insurance, a product liability claim could result in substantial liabilities to us.
Our business exposes us to significant potential
product liability risks that are inherent in the development, manufacturing and marketing of human therapeutic products. Regardless of
merit or eventual outcome, product liability claims may result in:
● delay or failure to complete our clinical trials;
● withdrawal of clinical trial participants;
● decreased demand for our product candidates;
● injury to our reputation;
● litigation costs;
● substantial monetary awards against us; and
● diversion of management or other resources from key aspects of our operations.
If we succeed in marketing products, product liability
claims could result in an FDA or equivalent foreign regulatory agency investigation of the safety or efficacy of our products, our manufacturing
processes and facilities or our marketing programs. Such investigation could also potentially lead to a recall of our products or more
serious enforcement actions, or limitations on the indications, for which they may be used, or suspension or withdrawal of approval.
We currently only have limited clinical trials
insurance policies that cover clinical trials in certain territories. We intend to expand our insurance coverage to include the sale of
commercial products if marketing approval is obtained for our product candidates or any other compound that we may develop. However, insurance
coverage is expensive, and we may not be able to maintain insurance coverage at a reasonable cost or at all, and the insurance coverage
that we have or obtain may not be adequate to cover potential claims or losses.
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Our employees, independent contractors, consultants, commercial
partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or
other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties
could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA and other similar foreign regulatory
bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies, comply with manufacturing
standards we have established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct
laws or report financial information or data accurately or to disclose unauthorized activities to us. If we obtain FDA approval of any
of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase
significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other
things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and
education programs.
Our limited operating history compared to the long time it takes
to develop phage based products may make it difficult to evaluate the success of our business to date and to assess our future viability.
Since inception in 2015 through its dissolution
in February 2026, BiomX Ltd. devoted substantially all of its resources to developing product candidates with phage technology through
its preclinical programs, building its intellectual property portfolio, developing a supply chain, planning its business, raising capital
and providing general and administrative support for these operations. Such development efforts take very long periods of time before
they can be proved successful. We have not yet demonstrated our ability to successfully complete any clinical study or other pivotal clinical
trials, obtain regulatory approvals, manufacture a commercial-scale product, or arrange for a third-party to do so on our behalf, or conduct
sales and marketing activities necessary for successful product commercialization. Consequently, any predictions made about our future
success or viability may not be as accurate as they could be if we had a longer operating history.
In addition, as an early-stage company, we may
encounter unforeseen expenses, difficulties, complications, delays and other known and unknown circumstances. As we advance our product
candidates, we will need to transition from a company with a research focus to a company capable of supporting clinical development and,
if successful, commercial activities. We may not be successful in such a transition.
We may need to grow the size of our organization and may experience
difficulties in managing this growth.
As our research, development, manufacturing and
commercialization plans and strategies, we may need additional managerial, operational, sales, marketing, financial and other personnel.
Future growth would impose significant added responsibilities on members of management, including:
Our future financial performance and our ability
to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management
may also have to divert a disproportionate amount of our attention away from day-to-day activities in order to devote a substantial amount
of time to managing these growth activities.
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If we are not able to effectively expand our organization
by hiring additional employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the
tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development
and commercialization goals.
In addition, our ongoing evaluation of strategic
alternatives may not result in any transaction or alternative that improves our prospects, or at all, on terms acceptable to us or our
stockholders. If we are unable to identify and execute a viable strategic alternative or otherwise secure sufficient additional resources,
we may be required to further reduce or discontinue our operations, delay, limit or terminate development activities, pursue an orderly
wind-down, and our business, financial condition and results of operations could be materially and adversely affected.
Risks Related to Government Regulation and Government
Our product candidates are subject to significant regulatory
approval requirements, including the risk of clinical holds, which could delay, prevent or limit our ability to market or develop our
product candidates.
Our research and development activities, preclinical
studies, clinical trials and the anticipated manufacturing and marketing of our drug product candidates are subject to extensive regulation
by the FDA and other regulatory agencies in the United States and by comparable authorities in Europe and elsewhere. To satisfy FDA or
equivalent foreign regulatory approval standards, we must demonstrate in adequate and well controlled clinical trials that our drug product
candidates are safe and effective for their intended use. The regulatory approval process is expensive and time-consuming, and the timing
of receipt of regulatory approval is difficult to predict. Given the uncertainties around phage therapy, our product candidates could
require a significantly longer time to gain regulatory approval than expected or may never gain approval. We cannot be certain that, even
after expending substantial time and financial resources, we will obtain regulatory approval for any of our product candidates. A delay
or denial of regulatory approval could delay or prevent our ability to generate product revenue and to achieve profitability. In addition,
the FDA or comparable foreign regulatory authorities may impose a clinical hold at any time if they determine that we have not satisfied
applicable requirements or conditions, which could delay or prevent the initiation or continuation of our clinical trials and materially
adversely affect our development timelines and costs.
Regulatory requirements for development of our
product candidates are uncertain and evolving. Changes in these laws or the current interpretation or application of these laws would
have a significant adverse impact on our ability to develop and commercialize our product candidates. The legal and regulatory status
of phage therapy remains unclear in many countries, including the European Union. Changes in regulatory approval policies during the development
period of any of our product candidates, changes in, or the enactment of, additional regulations or statutes, or changes in regulatory
review practices for a submitted product application may cause a delay in obtaining approval or result in the rejection of an application
for regulatory approval.
Regulatory approval, if obtained, may be made subject
to limitations on the indicated uses for which we may market a product, as well as the approved labeling for the product. These limitations
could adversely affect our potential product revenue. Regulatory approval may also be conditioned on costly post-marketing follow-up studies.
In addition, the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping related to the product
will be subject to extensive ongoing regulatory requirements. Furthermore, for any marketed product, our manufacturer and our manufacturing
facilities will be subject to registration and listing requirements and continual review and periodic inspections by the FDA or other
regulatory authorities. Failure to comply with applicable regulatory requirements may, among other things, result in fines, suspensions
of regulatory approvals, product recalls, product seizures, operating restrictions and criminal prosecution.
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Failure to comply with health and data protection laws and regulations
could lead to claims, government enforcement actions (which could include civil or criminal penalties), regulatory actions, private litigation
and/or adverse publicity and could negatively affect our operating results and business.
We may be subject to federal, state and foreign
data protection laws and regulations (i.e., laws and regulations that address privacy and security). In the United States, numerous federal
and state laws and regulations, including federal health information privacy laws, state consumer privacy laws, state data breach notification
laws, state health information privacy laws and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission
Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations
or the operations of our collaborators. In addition, we may obtain health information from third parties (including research institutions
from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by the Health
Information Technology for Economic and Clinical Health of 2009. Depending on the facts and circumstances, we could be subject to criminal
penalties if we knowingly obtain, use or disclose individually identifiable health information maintained by a HIPAA-covered entity in
a manner that is not authorized or permitted by HIPAA.
Additional requirements may also be imposed by
international data protection laws. In this context, Regulation 2016/679 of the GDPR (in addition to many other international data protection
laws) may have an impact on our operations when we collect and/or process personal data of individuals located in the European Union.
The GDPR has applied since May 25, 2018 (replacing previously applicable data protection frameworks) and has an extraterritorial reach.
The GDPR allows members states to introduce specific requirements in relation to certain areas, including processing of special categories
of data, and we may face further restrictions and non-compliance risks under such national frameworks. We have not yet assessed whether
its activities might be caught by the GDPR.
Because of the types of data we collect and process,
which may involve health, biometric and genetic data, we may face high risks for non-compliance with the GDPR rules (or local declinations
of GDPR-rules across the different European Union Member States), as these types of data are considered as special categories of data