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Item 7. Management’s Discussion and Analysis

2023-03-29 compared with 2022-03-30 · 310 added, 299 removed, 253 unchanged (71% of the section changed)

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that involve risks and uncertainties.

Our actual results may differ materially from those discussed in any forward-looking statement

because of various factors, including those described in the sections titled “Cautionary Statement Regarding Forward-Looking Statements”

Our actual results may differ materially from those discussed in any forward-looking statement because

of various factors, including those described in the sections titled “Cautionary Statement Regarding Forward-Looking Statements”

and “Risk Factors” in this Annual Report.

are a clinical stage microbiome product discovery company developing products using both natural and engineered phage technologies designed

to target and destroy specific harmful bacteria associated with chronic diseases, such as CF, AD, as well as IBD, PSC and CRC.

Bacteriophage

or phage are bacterial, species-specific, strain-limited viruses that infect, amplify and kill the target bacteria and are considered

inert to mammalian cells.

By utilizing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic

biology, we develop phage-based therapies intended to address both large-market and orphan diseases.

Since BiomX Ltd.’s inception in 2015, and

since the Business Combination, we have devoted substantially all our resources to organizing and staffing our company, raising capital,

acquiring rights to or discovering product candidates, developing our technology platforms, securing related intellectual property rights,

and conducting discovery, research and development and clinical activities for our product candidates.

We do not have any products approved

for sale, and we have not generated any revenue from product sales.

As we advance our product candidates, we expect our expenses to remain

To date, we have funded our operations with proceeds from sales of Common Stock and preferred shares.

Through December

31, 2021, we had received gross proceeds of approximately $146 million from sales of our securities.

To date, we received approximately

$634 thousand from our collaboration agreements and recorded a reduction from research and development expenses of $634 thousand.

Since BiomX Ltd.’s inception in 2015, and

since the Business Combination, we have incurred significant operating losses.

Our ability to generate revenue from product sales sufficient

to achieve profitability will depend on the successful development of, the receipt of regulatory approval for, and eventual commercialization

of one or more of our product candidates.

Our net losses were approximately $36.2 million and $30.1 million for the years ended December

31, 2021 and 2020, respectively.

As of December 31, 2021, we had an accumulated deficit of $108.5 million and expect that for the foreseeable

future we will continue to incur significant expenses as we advance our product candidates from discovery through preclinical development

and clinical trials and seek regulatory approval of our product candidates.

In addition, if we obtain regulatory approval for any of our

product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

We may also incur expenses in connection with in-licensing or acquiring additional product candidates.

Because of the numerous risks and uncertainties

associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able

to achieve or maintain profitability.

We are a clinical stage microbiome product discovery

company developing products using both natural and engineered phage technologies designed to target and destroy specific harmful bacteria

associated with chronic diseases, such as CF and AD.

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.

Since BiomX Ltd.’s inception in 2015, we

have devoted substantially all our resources to organizing and staffing our company, raising capital, acquiring rights to or discovering

product candidates, developing our technology platforms, securing related intellectual property rights, and conducting discovery, research

and development and clinical activities for our product candidates.

We do not have any products approved for sale, and we have not generated

any revenue from product sales.

As we advance our product candidates, we expect our expenses to remain significant.

To date, we have

funded our operations with proceeds from sales of Common Stock, preferred shares, warrants, governmental grants, collaboration agreements

Through December 31, 2022, we had received gross proceeds of approximately $146 million from sales of our securities.

we received approximately $1,134,000 from our collaboration agreements and recorded a reduction from research and development expenses

In addition, we have incurred significant operating

Our ability to generate revenue from product sales sufficient to achieve profitability will depend on the successful development

of, the receipt of regulatory approval for, and eventual commercialization of one or more of our product candidates.

Our net losses were

approximately $28.3 million and $36.2 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, we

had an accumulated deficit of $136.8 million and expect that for the foreseeable future we will continue to incur significant expenses

as we advance our product candidates from discovery through preclinical development and clinical trials and seek regulatory approval of

our product candidates.

In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant

commercialization expenses related to product manufacturing, marketing, sales and distribution.

We may also incur expenses in connection

with in-licensing or acquiring additional product candidates.

Because of the numerous risks and uncertainties associated

with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve

or maintain profitability.

Even if we are able to generate product sales, we may not become profitable.

If we fail to become

profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels

and be forced to reduce or terminate our operations.

We may implement cost reduction strategies, which may include amending, delaying,

limiting, reducing or terminating one or more of our programs or ongoing or planned clinical trials of our product candidates.

If we fail to become profitable

or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced

to reduce or terminate our operations.

We may implement cost reduction strategies, which may include amending, delaying, limiting, reducing

or terminating one or more of our programs or ongoing or planned clinical trials of our product candidates.

In May 2022, we announced,

as part of our corporate restructuring plan, or the Corporate Restructuring, our intention to reduce our operating costs, including a

50% reduction in personnel, while prioritizing our ongoing CF program.

On December 31, 2022, we had cash, cash equivalents

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We believe that our existing cash and cash equivalents and short-term deposits, will enable us to

fund our operating expenses and capital expenditure requirements until at least the end of 2023, as discussed further below under ”-Liquidity

fund our operating expenses and capital expenditure requirements until at least the middle of 2024, as discussed further below under “-Liquidity

and Capital Resources”

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development and operation of our proprietary platform;

expenses incurred in connection with the preclinical

and clinical development of our product candidates, including under agreements with third parties, such as CROs and contract manufacturing

organizations, as well as consultants, subcontractors and key opinion leaders providing scientific development services;

manufacturing scale-up expenses and the cost of acquiring

and manufacturing preclinical and clinical trial materials;

license maintenance fees and milestone fees incurred

in connection with various license agreements;

employee-related expenses, including salaries, related

benefits, travel and stock-based compensation expenses for employees engaged in research and development functions, as well as external

costs, such as fees paid to outside consultants engaged in such activities;

costs related to compliance with regulatory requirements

and legal fees relating to patent matters;

expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with third parties, such as CROs and contract manufacturing organizations, as well as consultants, subcontractors and key opinion leaders providing scientific development services;

manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials;

license maintenance fees and milestone fees incurred in connection with various license agreements;

employee-related expenses, including salaries, related benefits, travel and stock-based compensation expenses for employees engaged in research and development functions, as well as external costs, such as fees paid to outside consultants engaged in such activities;

costs related to compliance with regulatory requirements and legal fees relating to patent matters;

depreciation and other expenses.

We recognize external development costs based

on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

We do not allocate employee costs or facility

expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs

and, as such, are not separately classified.

We use internal resources primarily to oversee the research and discovery as well as for

managing our preclinical development, process development, manufacturing and clinical development activities.

These employees work across

multiple programs and, therefore, we do not track their costs by program.

We recognize external development costs based on

an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

We do not allocate employee costs or facility expenses,

including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as

such, are not separately classified.

We use internal resources primarily to oversee the research and discovery as well as for managing

our preclinical development, process development, manufacturing and clinical development activities.

These employees work across multiple

programs and, therefore, we do not track their costs by program.

The table below summarizes our research and development

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Salaries and related benefits (including stock-based compensation)

Rent and related expenses

Infrastructure & other unallocated research and development or R&D expenses

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Total research and development expenses, net

Research and development activities are central

to our business.

Research and development activities are central to

our business.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier

stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

As a result, we expect

that our research and development expenses will increase substantially over the next several years, particularly as we increase personnel

costs, including stock-based compensation, contractor costs and facilities costs, as we continue to advance the development of our product

We also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom

we have entered into license agreements to acquire the rights to our product candidates.

Our research and development

expenses reflect, among other things, programs that were discontinued or put on hold as well as new development programs.

we expect that our research and development expenses will increase substantially over the next several years, particularly as we increase

personnel costs, including stock-based compensation, contractor costs and facilities costs, as we continue to advance the development

of our product candidates.

We also may incur additional expenses related to milestone and royalty payments payable to third parties with

whom we have entered into license agreements to acquire the rights to our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily

of salaries, related benefits, travel and stock-based compensation expenses for personnel in executive, finance, corporate, business

development and administrative functions.

General and administrative expenses also include legal fees relating corporate and securities

professional fees for accounting, tax and audit services;

of salaries, related benefits, travel and stock-based compensation expenses for personnel in executive, finance, corporate, business development

and administrative functions.

General and administrative expenses also include legal fees relating corporate and securities matters;

fees for accounting, tax and audit services;

insurance costs;

travel expenses;

and facility-related expenses, including

rent, as well as operating related costs.

We anticipate that our general and administrative

expenses will increase in the future as we increase our headcount to support our continued research activities and development of our

product candidates.

We also anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance, directors’

and officers’ insurance costs as well as investor and public relations expenses associated with being a public company.

We anticipate

the additional costs for these services will increase our general and administrative expenses in the future.

Additionally, if and when

we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expenses as a result

of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidate.

of intangible assets

and facility-related expenses, including rent, as well

as operating related costs.

We believe that our general and administrative expenses

may increase in the future as we increase our headcount to support our continued research activities and development of our product candidates.

We also anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance, directors’ and officers’

insurance costs as well as investor and public relations expenses associated with being a public company.

We anticipate the additional

costs for these services will increase our general and administrative expenses in the future.

Additionally, if and when we believe a regulatory

approval of a product candidate appears likely, we anticipate an increase in payroll and expenses as a result of our preparation for commercial

operations, especially as it relates to the sales and marketing of our product candidate.

Amortization of intangible assets

Intangible assets consist of in-process research

and development, amortized for a period of three years, that started on January 1, 2020.

Other income consists of proceeds from sub-leasing

a portion of our office space in Ness Ziona, Israel starting in August 2022.

Interest expenses

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million for the year ended December 31, 2021.

The increase of $3.3 million, or 17%, in the year ended December 31, 2021 compared to the

The decrease of $6.5 million, or 29%, in the year ended December 31, 2022 compared to the

prior year, is primarily due to the following:

an increase of $3.7 million of clinical activities

and expenses related to conducting pre-clinical and clinical trials of our product candidates;

an increase of $3.1 million in salaries and related

expenses, mainly due to the growth in the number of employees;

a decrease of $3.2 million that resulted from receiving

higher IIA grants.

The Company recorded grants from the IIA totaling

$3.7 million and $0.5 million for the years ended December 31, 2021 and December 31, 2020, respectively.

a decrease of $4.9 million in salaries and related expenses and stock-based compensation expenses due to a reduction in workforce, as a result of the Corporate Restructuring;

● a decrease of $1.0 million due

to delays in the development of BX005, the product candidate for the treatment of AD;

● a decrease of $1.2 million due

to the pause in the development of BX003, the product candidate for the treatment of IBD and PSC;

● a decrease of $1.8 million due

to the discontinuation in the development of BX001, the product candidate for the treatment of acne;

These were partially offset by a decrease in IIA grants of $2.6 million.

We recorded grants from the IIA totaling $1.1 million and $3.7 million for the years ended December 31, 2022 and December 31, 2021, respectively.

Amortization of intangible assets remained consistent

from 2021 to 2022.

General and administrative expenses were $11.3

million for the year ended December 31, 2021, compared to $9.3 million for the year ended December 31, 2020.

The increase of $2.0 million,

or 22%, is primarily due to the following:

an increase of $0.9 million in expenses associated

with operating as a public company, such as directors’ and officers’ insurance, listing fees and investor relations;

of $0.5 million in stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees ;

an increase of $0.4 million in rent and related expenses as well

as operational expenses resulting from moving into our new facility in April 2021.

General and administrative expenses were $9.5 million

for the year ended December 31, 2022, compared to $11.3 million for the year ended December 31, 2021.

The decrease of $1.8 million, or

16%, is primarily due to the following:

● a decrease of $0.9 million in

salaries and related expenses and stock-based compensation expenses due to a reduction in workforce, as a result of the Corporate Restructuring;

● a decrease of $0.5 million in

recruitment and employee related expenses due to the Corporate Restructuring;

Interest expenses were $2.1 million for the year

ended December 31, 2021.

The Company had no interest expenses for the year ended December 31, 2020.

The increase of $0.7 million, or 100%,

is due interest payments accrued under the Hercules Loan Agreement, entered into in August 2021.

Financial income, net was $2 thousand for the

year ended December 31, 2021, compared to $172 thousand for the year ended December 31, 2020.

The decrease of $170 thousand, or 99%,

is primarily due to U.S.

dollar/NIS exchange rate differences and the decrease in interest rates on bank deposits and money market funds.

ended December 31, 2022, compared to $0.7 million for the year ended December 31, 2021.

The increase of $1.4 million, or 200%, is due

interest payments accrued under the Hercules Loan Agreement, entered into in August 2021, in addition to the increase of the U.S.

Financial income, net was $902,000 for the year

ended December 31, 2022, compared to $2,000 for the year ended December 31, 2021.

The increase of $900,000 is primarily due to appreciation

dollar against the NIS and due to the rising interest rates, which resulted in higher interest income.

Other income was $134,000 for the year ended

December 31, 2022.

The Company had no other income for the year ended December 31, 2021.

The increase of $134,000, or 100%, is due to

a sublease agreement for a portion of our office space in Ness Ziona, Israel entered into in August 2022 following our Corporate Restructuring.

Liquidity and Capital Resources

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our operations.

We have funded our operations to date primarily with proceeds from the sale of our Common Stock and preferred shares,

venture debt, IIA grants and funds from collaboration agreements and through the Business Combination.

Through December 31, 2021, we had

received gross cash proceeds of approximately $146 million from sales of our Common Stock and preferred shares.

In August 2021, we borrowed

$15.0 million under the Hercules Loan Agreement.

In addition, in 2021 and 2020 we received approximately $3.2 million and $0.7 million

from our collaboration agreements and grants from the IIA, respectively.

We have funded our operations to date primarily with proceeds from the sale of our Common Stock, preferred shares and

warrants, venture debt, IIA grants and funds from collaboration agreements and through the Business Combination.

Through December 31,

2022, we had received gross cash proceeds of approximately $146 million from sales of our Common Stock and preferred shares.

2021, we borrowed $15.0 million under the Hercules Loan Agreement.

In addition, in 2022 and 2021 we received approximately $1.9 million

and $3.2 million from our collaboration agreements and grants from the IIA, respectively.

Cash in excess of immediate requirements is invested

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Through December 31, 2022, we sold an aggregate of 983,184 shares of Common Stock pursuant to the Sale Agreement for aggregate gross proceeds

of $5,413 thousands.

From January 1, 2022 through March 25, 2022, we sold an aggregate of 26,011 shares of Common Stock pursuant to the

Sale Agreement for aggregate gross proceeds of $36,406.

Subject to any limitations on aggregate amounts as a result of the value of our

Common Stock owned by non-affiliates that are imposed by SEC regulations, we may continue to sell shares under the Sale Agreement and

otherwise to use our shelf registration statement to raise additional funds from time to time.

On August 16, 2021 we entered into the Hercules

Loan Agreement with Hercules, with respect to a venture debt facility.

Under the Hercules Loan Agreement, Hercules provided the Company

with access to a term loan with an aggregate principal amount of up to $30,000, available in three tranches, subject to certain terms

and conditions.

The first tranche of $15,000 was advanced to the Company on the date the Hercules Loan Agreement was executed.

occurrence of specified milestones and continuing through December 31, 2022, a loan in the aggregate principal amount of up to $10,000,

and upon the occurrence of specified milestones and continuing through September 30, 2023, a loan in the aggregate principal amount of

up to $5,000, may become available.

The milestones for the remaining tranches have not yet been reached as of December 31, 2021.

We believe that our existing cash resources will

be sufficient to meet our capital requirements and fund our operations for at least until the end of 2023.

In the future we will likely

require or desire additional funds to support our operating expenses and capital requirements or for other purposes, such as acquisitions,

and may seek to raise such additional funds through public or private equity or debt financings or collaborative agreements or from other

sources, as we are doing now with the Sale Agreement and the Hercules Loan Agreement.

However, the COVID-19 pandemic continues to rapidly

evolve and has already resulted in a significant disruption of global financial markets.

If the disruption due to COVID-19 or other reasons,

such as the Russia–Ukraine military conflict, persists and deepens, we could experience an inability to access additional capital,

which could in the future negatively affect our capacity to support our operating expenses and capital requirements or to make investments

for other purposes, such as acquisitions.

have no other commitments to obtain additional financing, except for our commitment under the Securities Purchase Agreement with the

Cystic Fibrosis Foundation, signed in December 2021, and cannot assure you that additional financing will be available at all or, if

available, that such financing would be obtainable on terms favorable to us and would not be dilutive.

Our future liquidity and cash

requirements will depend on numerous factors, including the introduction of new products as well as the ability to continue to maintain

controls over our operating expenditures.

The following table summarizes our cash flows

for each of the periods presented:

of $5.7 million.

From January 1, 2023 through March 24, 2023, we did not sell any shares.

Subject to any limitations on aggregate amounts

as a result of the value of our Common Stock owned by non-affiliates that are imposed by SEC regulations, we may continue to sell shares

under the Sale Agreement and otherwise to use our shelf registration statement to raise additional funds from time to time.

On August 16, 2021 we entered into the Hercules Loan

Agreement with Hercules, with respect to a venture debt facility.

Under the Hercules Loan Agreement, Hercules provided the Company with

access to a term loan with an aggregate principal amount of up to $30 million, available in three tranches, subject to certain terms and

The first tranche of $15 million was advanced to the Company on the date the Hercules Loan Agreement was executed.

occurrence of specified milestones and continuing through December 31, 2022, we could receive a loan in the aggregate principal amount

of up to $10 million.

However, such milestones for such tranche and for the extension of the period of interest only payments to September

1, 2023 did not occur by December 31, 2022 and have expired.

Additionally, upon the occurrence of specified milestones and continuing

through September 30, 2023, we might be entitled to borrow a loan in the aggregate principal amount of up to $5 million.

However, we do

not expect that such milestones will occur by September 30, 2023.

The Company is required to make interest only payments through

March 1, 2023, and is required to repay the principal balance and interest in monthly installments through September 1, 2025.

On February 22, 2023, we entered into a securities

purchase agreement to issue and sell an aggregate of 30,608,163 shares of its common stock (or pre-funded warrants, and collectively,

the “Securities”) at a price of $0.245 per share or $0.244 per pre-funded warrant, through a private investment in public

equity, also referred to as PIPE, financing.

The gross proceeds from this offering are expected to be approximately $7.5 million, before

deducting issuance costs.

The financing is expected to close in two parts.

The first closing, which covers 5,975,918 Securities for gross

proceeds of $1.5 million, occurred on February 27, 2023.

The second closing for the remaining Securities, which is contingent upon approval

of the issuance of the additional Securities by our stockholders in accordance with NYSE American rules, is expected to take place in

the second quarter of 2023.

We believe that our existing cash resources will be

sufficient to meet our capital requirements and fund our operations for at least until the middle of 2024.

In the future, in addition

to the remaining funds under the PIPE, we will likely require or desire additional funds to support our operating expenses and capital

requirements or for other purposes, such as acquisitions, and may seek to raise such additional funds through public or private equity

or debt financings or collaborative agreements or from other sources, as we are doing now with the Sale Agreement and the Hercules Loan

If certain disruptions due to, for instance, the Russia–Ukraine military conflict, or the Israeli political instability

persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our capacity

to support our operating expenses and capital requirements or to make investments for other purposes, such as acquisitions.

We have no other commitments to obtain additional

financing, other than with respect to the closing of the second part of the PIPE, and cannot assure you that additional financing will

be available at all or, if available, that such financing would be obtainable on terms favorable to us and would not be dilutive.

future liquidity and cash requirements will depend on numerous factors, including the introduction of new products as well as the ability

to continue to maintain controls over our operating expenditures.

The following table summarizes our cash flows for

each of the periods presented:

USD In thousands

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Non-cash charges for the year ended December 31, 2022, mainly

consisted of stock-based compensation expenses of $3.2 million and depreciation and amortization of $2.6 million, partially offset by

revaluation of contingent liabilities expenses of $0.5 million.

Net changes in our operating assets and liabilities for the year ended

December 31, 2021 consisted primarily of an increase in trade account payables of $0.4 million, and an increase in other account payables

of $2.7 million.

consisted of stock-based compensation expenses of $1.5 million and depreciation and amortization of $2.5 million.

Net changes in our operating

assets and liabilities for the year ended December 31, 2022, consisted primarily of a decrease in trade account payables of $2.0 million

and a decrease in other account payables of $3.3 million, partially offset by a decrease in other current assets of $1.0 million.

During the year ended December 31, 2021, operating

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Net changes in our operating assets and liabilities for the year ended

December 31, 2020 consisted primarily of an increase in liabilities relating to operating leases of $1.4 million, and an increase in

other account payables of $1.4 million, partially offset by an increase of $1.5 million in other receivables and a decrease in trade

account payables of $0.8 million.

December 31, 2021 consisted primarily of an increase in trade account payables of $0.4 million, and an increase in other account payables

of $2.7 million.

Investing Activities

the year ended December 31, 2021, investing activities provided net cash of $16.2 million, mainly consisting of proceeds from withdrawal

of short-term deposits of $19.8 million, partially offset by purchases of property and equipment of $3.7 million, primarily laboratory

equipment and leasehold improvements.

During the year ended December 31, 2022, investing

activities used net cash of $10.9 million, mainly consisting of net change in investment in short-term deposits of $9.9 million and purchases

of property and equipment of $1.0 million, primarily laboratory equipment and leasehold improvements.

We have invested, and plan to continue to invest,

our existing cash in short-term investments in accordance with our investment policy.

These investments may include money market funds

and investment securities consisting of U.S.

activities used in net cash of $2.1 million, mainly consisting of investment in short-term deposits of $13.5 million, partially offset

by proceeds from withdrawal of short-term deposits of $11.5 million.

During the year ended December 31, 2021, investing

activities provided net cash of $16.2 million, mainly consisting of proceeds from withdrawal of short-term deposits of $19.8 million,

partially offset by purchases of property and equipment of $3.7 million, primarily laboratory equipment and leasehold improvements.

We have invested, and plan to continue to invest, our

existing cash in short-term investments in accordance with our investment policy.

These investments may include money market funds and

investment securities consisting of U.S.

Treasury notes, and high quality, marketable debt instruments of corporations and government

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As of December 31, 2022, we had outstanding foreign exchange contracts in the amount of approximately $4.5 million

with a fair value of $62 thousand.

with a fair value liability of $55,000.

As of December 31, 2021, we had outstanding foreign exchange contracts in the amount of approximately

$1.5 million, with a fair value of $90 thousand.

$4.2 million, with a fair value asset of $62,000.

Financing Activities

the year ended December 31, 2021, financing activities provided net cash of $37.3 million, consisting of $5.2 million due to issuance

of Common Stock under the Sale Agreement, $17.7 million due to issuances of Common Stock under a registered direct offering, as described

below, as well as investments by Maruho and the CF Foundation,

$14.2 million proceeds from long-term debt and related to the Hercules Loan Agreement and $0.1 million from exercise of stock options.

During the year ended December 31, 2022, financing

activities provided net cash provided of $134 thousand, consisting of $75 thousand due to the Business Combination, $98 thousand from

issuance of Common Stock and $307 thousand from exercise of stock options.

activities provided net cash of $0.3 million, mainly consisting of $0.3 million due to issuances of Common Stock under the Sale Agreement.

During the year ended December 31, 2021, financing

activities provided net cash of $37.3 million, consisting of $5.2 million due to issuance of Common Stock under the Sale Agreement, $17.7

million due to issuances of Common Stock under a registered direct offering, as described below, as well as investments by Maruho and

the CF Foundation, $14.2 million proceeds from long-term debt and related to the Hercules Loan Agreement and $0.1 million from exercise

of stock options.

Contractual Obligations, Commitments and Contingencies

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However, we may record charges in the future as a result of these indemnification obligations.

In accordance with our certificate

of incorporation and bylaws, as well as contractual indemnification agreements, we have potential indemnification obligations to our officers

and directors for specified events or occurrences, subject to some limits, while they are serving at our request in such capacities.

have been no claims to date, and we have director and officer insurance that may enable us to recover a portion of any amounts paid for

future potential claims.

In accordance

with our certificate of incorporation and bylaws, as well as contractual indemnification agreements, we have potential indemnification

obligations to our officers and directors for specified events or occurrences, subject to some limits, while they are serving at our request

in such capacities.

There have been no claims to date, and we have director and officer insurance that may enable us to recover a portion

of any amounts paid for future potential claims.

Government Grants and Related Royalties

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an aggregate of $6.9 million in the form of grants from the IIA.

was formed as an incubator company as part of the FutuRx incubator,

BiomX Ltd was formed as an incubator company as part of the FutuRx incubator,

and, until 2017, the majority of its funding was from IIA grants and funding by the incubator, which is supported by the IIA.

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Local Manufacturing Obligation

long as the manufacturing of our product candidates takes place in Israel and no technology funded with IIA grants is sold or out licensed

to a non-Israeli entity, the maximum aggregate royalties paid generally would not exceed 100% of the grants made to us, plus annual interest

equal to the 12-month LIBOR rate applicable to U.S.

As long as the manufacturing of our product candidates

takes place in Israel and no technology funded with IIA grants is sold or out licensed to a non-Israeli entity, the maximum aggregate

royalties paid generally would not exceed 100% of the grants made to us, plus annual interest equal to the 12-month LIBOR rate applicable

dollar deposits, as published on the first business day of each calendar year.

Under the terms of the Research

Law, the products may be manufactured outside of Israel by us or by another entity only if prior approval is received from the IIA (such

approval is not required for the transfer of up to 10% of the manufacturing capacity in the aggregate, in which case a notice must be

provided to the IIA and not be objected to by the IIA within 30 days of such notice).

Under the terms of the Research Law, the products

may be manufactured outside of Israel by us or by another entity only if prior approval is received from the IIA (such approval is not

required for the transfer of up to 10% of the manufacturing capacity in the aggregate, in which case a notice must be provided to the

IIA and not be objected to by the IIA within 30 days of such notice).

Know-How Transfer Limitation

The Research Law restricts

the ability to transfer know-how funded by the IIA outside of Israel.

Transfer of IIA funded know-how outside of Israel requires prior

approval of the IIA and may be subject to payments to the IIA, calculated according to formulae provided under the Research Law.

redemption fee is subject to a cap of six times the total amount of the IIA grants, plus interest accrued thereon (i.e.

the total liability

to the IIA, including accrued interest, multiplied by six).

If we wish to transfer IIA funded know-how, the terms for approval will be

determined according to the nature of the transaction and the consideration paid to us in connection with such transfer.

Approval of transfer of IIA

funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related

regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel.

The Research Law restricts the ability to transfer

know-how funded by the IIA outside of Israel.

Transfer of IIA funded know-how outside of Israel requires prior approval of the IIA and

may be subject to payments to the IIA, calculated according to formulae provided under the Research Law.

The redemption fee is subject

to a cap of six times the total amount of the IIA grants, plus interest accrued thereon (i.e.

the total liability to the IIA, including

accrued interest, multiplied by six).

If we wish to transfer IIA funded know-how, the terms for approval will be determined according

to the nature of the transaction and the consideration paid to us in connection with such transfer.

Approval of transfer of IIA funded know-how to

another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related regulations, including

the restrictions on the transfer of know-how and manufacturing rights outside of Israel.

Change of Control

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The consideration available

to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as

a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.

to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a

merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.

As of December 31, 2022, no sales were generated

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As part of funding our current and planned product development activities, we have submitted follow-up grant applications for

expect our expenses to remain substantially in the same level in connection with our ongoing activities.

We expect our expenses to remain substantially

in the same level in connection with our ongoing activities.

Our expenses will remain substantial and may also increase as we:

continue the development of our product candidates;

complete IND-enabling activities and prepare to initiate

clinical trials for our product candidates;

initiate additional clinical trials and preclinical

studies for product candidates in our pipeline;

seek to identify and develop or in-license or acquire

additional product candidates and technologies;

seek regulatory approvals for our product candidates

that successfully complete clinical trials, if any;

establish a sales, marketing and distribution infrastructure

to commercialize any product candidates for which we may obtain regulatory approval;

hire and retain additional personnel, such as clinical,

quality control, commercial and scientific personnel;

expand our infrastructure and facilities to accommodate

our growing employee base, including adding equipment and physical infrastructure to support our research and development.

complete IND-enabling activities and prepare to initiate clinical trials for our product candidates;

initiate additional clinical trials and preclinical studies for product candidates in our pipeline;

seek to identify and develop or in-license or acquire additional product candidates and technologies;

seek regulatory approvals for our product candidates that successfully complete clinical trials, if any;

establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain regulatory approval;

hire and retain additional personnel, such as clinical, quality control, commercial and scientific personnel;

expand our infrastructure and facilities to accommodate our growing employee base, including adding equipment and physical infrastructure to support our research and development.

We believe that our existing cash and cash equivalents

will enable us to fund our operating expenses and capital expenditure requirements until at least the end of 2023.

will enable us to fund our operating expenses and capital expenditure requirements until at least the middle of 2024.

We have based these

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sales, marketing and distribution, depending on where we choose to commercialize.

Until such time, if ever, that we can generate

product revenue sufficient to achieve profitability, we expect to finance our cash needs through public or private sales of our equity,

including under the Sale Agreement or the additional investment under the CF Foundation agreement, loans, including the second and/or

third tranches under the Hercules Loan Agreement, milestone payments, possibly additional grants from the IIA or other government or non-profit

institutions and other outside funding sources.

Our ability to raise additional capital in the equity and debt markets is dependent on

a number of factors including, but not limited to, market volatility resulting from the COVID-19 pandemic, armed conflicts such as in

Ukraine or other disruptions, market demand for our securities, which itself is subject to a number of development and business risks

and uncertainties, as well as the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable

to the Company.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’

ownership interests may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely

affect their rights as a common stockholder.

Debt financing and preferred equity financing, if available, may involve agreements that

include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures

or declaring dividends.

If we raise additional funds through government and other third-party funding, collaboration agreements, strategic

alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies,

future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate

our product development or future commercialization efforts or grant rights to develop and market products or product candidates that

we would otherwise prefer to develop and market by ourselves.

For more information regarding the risks related to our outlook, see “ Risk

Factors — Risks Related to Our Business, Technology and Industry.”

Until such time, if ever, that we can generate product

revenue sufficient to achieve profitability, we expect to finance our cash needs through public or private sales of our equity, including

under the Sale Agreement or the second part of the PIPE, loans, including the second and/or third tranches under the Hercules Loan Agreement,

milestone payments, possibly additional grants from the IIA or other government or non-profit institutions and other outside funding sources.

Our ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited

to, market volatility resulting from the COVID-19 pandemic, armed conflicts such as in Ukraine or other disruptions, market demand for

our securities, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that

we would be able to raise such additional capital at a price or on terms that are favorable to the Company.

To the extent that we

raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests may be

materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect their rights

as a common stockholder.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting

or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through government and other third-party funding, collaboration agreements, strategic alliances, licensing

arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue

streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

If we are unable to raise

additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development

or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer

to develop and market by ourselves.

For more information regarding the risks related to our outlook, see “ Risk Factors —

Risks Related to Our Business, Technology and Industry.”

Foreign Exchange Contracts

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$4.5 million and $4.2 million, respectively.

Accounting Policies and Significant Judgments and Estimates

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared

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The preparation of our consolidated financial statements and related disclosures requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent

assets and liabilities in our financial statements.

We base our estimates on historical experience, known trends and events and various

other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities that are not readily apparent from other sources.

We evaluate our estimates and assumptions

on an ongoing basis.

and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets

and liabilities in our financial statements.

We base our estimates on historical experience, known trends and events and various other

factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying

values of assets and liabilities that are not readily apparent from other sources.

We evaluate our estimates and assumptions on an ongoing

Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are

described in more detail in Note 2 to our consolidated financial statements, we believe that the following accounting policies are those

most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

While our significant accounting policies are described

in more detail in Note 2 to our consolidated financial statements, we believe that the following accounting policies are those most critical

to the judgments and estimates used in the preparation of our consolidated financial statements.

Accrued research and development expenses

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contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf

and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or

otherwise notified of actual costs.

The majority of our service providers invoice us in arrears for services performed, on a pre-determined

schedule or when contractual milestones are met;

and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise

notified of actual costs.

The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule

or when contractual milestones are met;

however, some require advance payments.

We make estimates of our accrued expenses as

of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.

We periodically

confirm the accuracy of these estimates with the service providers and make adjustments, if necessary.

Examples of estimated accrued

research and development expenses include fees paid to:

vendors in connection with preclinical development

CROs and investigative sites in connection with preclinical

and clinical trials;

subcontractors in connection with the manufacturing

of materials for preclinical and clinical trials.

We make estimates of our accrued expenses as of each balance

sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.

We periodically confirm

the accuracy of these estimates with the service providers and make adjustments, if necessary.

Examples of estimated accrued research

and development expenses include fees paid to:

● vendors in connection with preclinical

development activities;

● CROs and investigative sites

in connection with preclinical and clinical trials;

● subcontractors in connection

with the manufacturing of materials for preclinical and clinical trials.

We measure the expense recognized based on our

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fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of

prepaid expenses accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our

understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary

and may result in changes in estimates that increase or decrease amounts recognized in any particular period.

To date, there have not

been any material adjustments to our prior estimates of accrued research and development expenses.

actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid

expenses accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding

of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result

in changes in estimates that increase or decrease amounts recognized in any particular period.

To date, there have not been any material

adjustments to our prior estimates of accrued research and development expenses.

Stock-Based Compensation

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including employee stock options under our stock plans based on estimated fair values.

ASC 718-10 requires that we estimate the fair

value of equity-based payment awards on the date of grant using an option-pricing model.

The fair value of the award is recognized as

an expense over the requisite service periods in our Consolidated Statements of Operations.

We recognize stock-based award forfeitures

as they occur, rather than estimate by applying a forfeiture rate.

ASC 718-10 requires that we estimate the fair value

of equity-based payment awards on the date of grant using an option-pricing model.

The fair value of the award is recognized as an expense

over the requisite service periods in our Consolidated Statements of Operations.

We recognize stock-based award forfeitures as they occur,

rather than estimate by applying a forfeiture rate.

We recognize compensation expenses for the fair

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of its stock.

Expected volatility is estimated based on volatility of similar companies in the biotechnology sector.

We have historically

not paid dividends and has no foreseeable plans to issue dividends.

The risk-free interest rate is based on the yield from governmental

zero-coupon bonds with an equivalent term.

The expected option term is calculated for options granted to employees and directors using

the “simplified” method.

We used an average historical stock price volatility based on a combined weighted average of our historical average volatility

and that of a selected peer group of comparable public companies within the biotechnology and pharmaceutical industry that were deemed

to be representative of future stock price trends as we do not have a sufficient historical trading history of our Common Stock.

continue to apply this process until a sufficient amount of historical information regarding the volatility of our stock price becomes

We have historically not paid dividends and has no foreseeable plans to issue dividends.

The risk-free interest rate is based

on the yield from governmental zero-coupon bonds with an equivalent term.

The expected option term is calculated for options granted to

employees and directors using the “simplified” method.

Grants to non-employees are based on the contractual term.

Changes in the determination of each

of the inputs can affect the fair value of the options granted and the results of our operations.

in the determination of each of the inputs can affect the fair value of the options granted and the results of our operations.

Intangible assets

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of the R&D assets for three years and began amortizing these assets accordingly in the financial statements.

As of December 31, 2022,

the intangible asset was fully amortized.

We review these intangible assets at least annually

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of non-convertible debt securities over a three-year period.

We shall cease to be an emerging growth company commencing on January 1,

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis