Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements 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" and "Risk Factors" in this Annual Report.

Overview

We are a clinical stage product discovery company developing products using both natural and engineered phage technologies designed to target and kill specific harmful bacteria associated with chronic diseases, such as DFI. 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 large-market 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. If we continue to advance our product candidates, we expect our expenses to remain significant. To date, we have funded our operations with proceeds from sales of our Common Stock, preferred shares and warrants, governmental grants, collaboration agreements and debt. As of December 31, 2025, we received gross proceeds of approximately $217.3 million from sales of our securities. In addition, as of December 31, 2025, we received $14.7 million from our collaboration agreements and grants from the IIA and MTEC.

In addition, 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 $17.7 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $216.9 million.

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.

As of December 31, 2025, we had cash, cash equivalents and restricted cash of $5.0 million. Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, as we believe our cash and cash equivalents on hand will be sufficient to meet our working capital and capital expenditure requirements only through the end of the second quarter of 2026 as discussed further below under "Liquidity and Capital Resources".

On March 6, 2024 we entered into a merger agreement with APT and certain other parties, as a result of which APT became our wholly-owned subsidiary, effective as of March 15, 2024, or the Acquisition. The Acquisition was structured as a stock-for-stock transaction whereby all outstanding equity interests of APT were exchanged in a merger for an aggregate of 48,237 shares of BiomX Common Stock, 40,470 Redeemable Convertible Preferred Shares, convertible into 213,000 shares of BiomX Common Stock, and warrants, or the Merger Warrants, exercisable for 11,403 shares of BiomX Common Stock. Upon the consummation of the Acquisition, a successor-in-interest of APT became a wholly-owned subsidiary of BiomX. The Merger Warrants are exercisable at any time after July 9, 2024 at an exercise price of $950.00 per share and will expire on January 28, 2027.

On August 26, 2024, we effected a 1-for-10 reverse stock split, and on November 25, 2025, we effected a 1-for-19 reverse stock split. Unless otherwise indicated, all share and per share amounts in this Annual Report have been retroactively adjusted to reflect these reverse stock splits, including proportional adjustments to equity awards, warrants and Redeemable Convertible Preferred Shares, and to the number of shares issued and issuable under the Company's stock incentive plans and certain existing agreements.

In December 2025, we discontinued the development of BX004 following an internal analysis and feedback from the DMC, which recommended consideration of alternative dosing regimens or treatment strategies in response to adverse events experienced by certain participants; however, pursuing such alternatives was beyond the Company's available resource. Additionally, we implemented cost-cutting measures including a significant reduction in workforce while reviewing other strategic alternatives.

In December 2025, following the discontinuation of development of BX004, our Israeli subsidiary, BiomX Ltd., commenced insolvency proceedings in Israel. Prior to the commencement of these insolvency proceedings, BiomX Ltd. served as the core operational subsidiary of the Company, employing a significant portion of our workforce. As a result of BiomX Ltd.'s insolvency, our business has been materially impacted, and without additional resources, we have limited ongoing operations and limited ability to advance our programs as previously planned. Accordingly, we are actively evaluating and pursuing strategic alternatives and other business opportunities to exploit the expertise of our management staff, based on time, available resources and market conditions.

On December 26, 2025, we entered into the 2025 Second SPA with the Investor Pursuant to the 2025 Second SPA, we agreed to issue and sell, in a private placement transaction, an aggregate of 3,300 shares of our newly created Series Y Convertible Preferred Stock, as defined below, with an aggregate stated value of $3.3 million, and warrants to purchase up to 3,300,000 shares of the Company's common stock, for aggregate gross proceeds of $3.0 million. The Series Y Convertible Preferred Stock has a stated value of $1,000 and is convertible into Common Stock at an initial conversion price of $2.00 per share (i.e., 1,650,000 shares of Common Stock), subject to adjustments. Accordingly, subject to receipt of approval of the stockholders of the Company, the Investor is expected to beneficially own the majority of the shares of common stock of the Company and will have control over the Company. Therefore, if the stockholders approval is obtained, the Investor is expected to cause the Company to change its business, strategy and objectives.

Components of Our Consolidated Results of Operations

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales in the near future. If development efforts for our product candidates are successful and result in any necessary regulatory approvals or otherwise lead to any commercialized products or additional license agreements with third parties, we may generate revenue in the future from product sales or payments from collaboration or license agreements with third parties.

Operating Expenses

Research and Development Expenses, net

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred, offset by the IIA and MTEC grants and, to a lesser degree, income from research and development collaboration agreements. These expenses include:

	●	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; and
	●	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.

The table below summarizes our research and development expenses incurred by program:

		Year Ended December 31,
		2025				2024
		USD In thousands
BX004			11,094				10,495
BX211/BX011			1,897				2,239
Salaries and related benefits (including stock-based compensation)			5,424				8,006
Depreciation			2,264				1,488
Rent and related expenses			2,113				3,900
Infrastructure & other unallocated or R&D expenses			490				1,123
Less grants from the IIA and MTEC and consideration from collaboration agreements			(1,990	)			(2,588	)
Total research and development expenses, net			21,292				24,663

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

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, related benefits 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 to corporate and securities matters; professional fees for accounting, tax and audit services; insurance costs; travel expenses; and facility-related expenses, including rent, depreciation, as well as operating related costs.

We 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.

Impairment of Goodwill, Intangible Asset and Other long-lived asset

Goodwill and Intangible Asset

In connection with our acquisition of APT, we allocated a portion of the purchase price to goodwill and in-process research and development or, IPR&D intangible asset.

During the fourth quarter of 2025, the Company's stock price declined significantly, in part following the Company's announcement regarding the discontinuation of the CF Phase 2b clinical trial due to adverse events and the filing of the application to commence insolvency proceedings for BiomX Ltd. The discontinuation of the CF trial raised concerns that extended beyond the CF program itself, as the adverse events observed may have broader implications for the Company's platform technology and pipeline programs. As a result, the Company performed an impairment assessment of its IPR&D acquired in the APT acquisition. Based on this assessment, we recognized an impairment charge of $11.8 millionfor the year ended December 31, 2025.

During the third and fourth quarters of 2024, we experienced a decline in our stock price resulting in market capitalization being less than our stockholders' equity, which we concluded as an impairment indicator. As a result, we performed a quantitative assessment for goodwill and IPR&D impairment and recognized an impairment charge of $0.8 million and $3.2 million, respectively, for the year ended December 31, 2024.

Other long-lived asset impairment

On December 16, 2025, BiomX Ltd. filed an application for the commencement of legal insolvency proceedings. As a result, BiomX Ltd. sold all of its property and equipment subsequent to the balance sheet date. Accordingly, we recorded an impairment of $0.5 million for the year ended December 31, 2025, to reflect the sale proceeds.

On December 31, 2025, APT signed an amendment to terminate its lease agreement in Gaithersburg, Maryland. In addition, APT intends to dispose of all of its property and equipment. Based on purchase offers received for its equipment, we determined that the expected sale proceeds are negligible and wrote down the full carrying amount of the assets in amount of $1.2 million for the year ended December 31, 2025.

In December 2024, we decided to cease the use of the property in Gaithersburg, Maryland and made it available for sublease. As a result, we performed an impairment assessment of the right-of-use asset and related leasehold improvements and recognized an impairment charge of $4.0 million.

Gain from early lease termination

Following the termination of the lease agreement pursuant to an amendment executed by APT, the Company was required to settle the termination consideration. In accordance with the termination provisions of the agreement, the Company was required to pay the landlord $0.8 million, and the landlord was entitled to apply a lease security deposit in the amount of an additional $0.15 million. As a result of the early termination of the lease, we recognized a gain from early termination in the amount of $2.9 million.

Other expenses (income)

Other expenses (income) primarily consist of a capital loss from the sale of fixed assets, a reversal of the contract liability related to the AD program that was paused in 2024, and proceeds from the subleasing of a portion of our office space in Ness Ziona, Israel, which sublease ended in September 2024.

Interest expenses

Interest expense mainly related to interest on the existing loan to APT from the U.S. Small Business Administration and interest incurred under a Loan and Security Agreement with Hercules Capital, Inc., or the Hercules Loan Agreement. On March 19, 2024, we prepaid all of the remaining loan balance under the Hercules Loan Agreement in a total amount of $10.4 million.

Income from change in fair value of warrants

Income from change in fair value of warrants reflects the revaluation that resulted from the accounting of the warrants issued under the March 2024 PIPE and the warrants issued under the February 2025 Financing.

Financial expenses, net

Financial expenses, net consist primarily of interest income on our bank deposits and money market funds and transaction costs incurred in connection with the February 2025 Financing and the March 2024 PIPE.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our consolidated results of operations for the years ended December 31, 2025 and 2024:

		Year ended December 31,
		2025				2024
		USD in thousands
R&D expenses, net			21,292				24,663
General and administrative expenses			9,628				11,776
Gain from early lease termination			(2,949	)			-
Goodwill impairment			-				801
IPR&D impairment			11,842				3,237
Other long-lived asset impairment			1,653				4,046
Operating loss			41,466				44,523
Other expense (income)			93				(2,143	)
Interest expenses			20				873
Finance expense, net			724				919
Income from change in fair value of warrants			(6,111	)			(26,458	)
Tax expenses			7				13
Net Loss			36,199				17,727

R&D expenses, net (net of grants received from the IIA and MTEC, and consideration from research collaborations) were $21.3 million for the year ended December 31, 2025, compared to $24.7 million for the year ended December 31, 2024. The decrease of $3.4 million, or 14%, in the year ended December 31, 2025 compared to the prior year, is primarily due to the following:

	●	a decrease of $2.7 million in salaries and related expenses due to workforce reduction; and
	●	a decrease of $1.8 million in rent expenses primarily due to the accounting treatment of the right-of-use asset impairment recognized in 2024, which resulted in reduced expenses in 2025.

The decrease was partially offset by an increase of $0.8 million associated with the initiation of the Phase 2b clinical trial for our CF product candidate, BX004, as well as by an increase of $0.8 million in depreciation expenses attributable to the accelerated depreciation of leasehold improvements resulting from the remeasurement of lease liability of our office lease agreement in Ness Ziona, Israel and the termination of APT's lease agreement. In addition, we recorded $1.6 million of MTEC grants and $0.4 million of IIA grants for the year ended December 31, 2025, compared to $2.6 million of MTEC grants for the year ended December 31, 2024.

General and administrative expenses were $9.6 million for the year ended December 31, 2025, compared to $11.8 million for the year ended December 31, 2024. The $2.2 million decrease, or 19%, is primarily driven by Acquisition-related expenses of $0.9 million and $0.4 million of legal fees associated with both the Acquisition and the March 2024 PIPE, as well as a decrease of $0.2 in other professional service fees. Additionally, we had a decrease of $0.5 million in salaries and related expenses due to workforce reduction and a $0.2 million decrease in premium for the Company's directors' and officers' insurance policy.

Gain from early lease termination was $2.9 million, following the derecognition of the related right-of-use asset and lease liability, and the total consideration paid, as a result of APT's lease termination.

Goodwill impairment in the 2024 period was $0.8 million, following an impairment of the Company's goodwill that resulted from the Acquisition. The Company's market capitalization as of September 30, 2024, was lower in comparison to its stockholders' equity and triggered an impairment assessment that concluded that the entire goodwill should be impaired.

IPR&D impairment was $11.8 million for the year ended December 31, 2025, compared to $3.2 million for the year ended December 31, 2024, following our quantitative assessment for IPR&D impairment.

Other long-lived asset impairment was $1.7 million for the year ended December 31, 2025, compared to $4.0 million for the year ended December 31, 2024. The decrease of $2.3 million, or 58%, reflects impairment charges at BiomX Israel and APT. At BiomX Israel, impairment was recorded in connection with the commencement of insolvency proceedings and the subsequent sale of all property and equipment, based on sale proceeds. At APT, impairment was recorded after determining that expected sale proceeds for its equipment are negligible.

Other expense was $0.1 million for the year ended December 31, 2025, compared to other income of $2.1 million for the year ended December 31, 2024. The decrease of $2.2 million, or 105%, is primarily due to the reversion of the contract liability associated with the Company's AD program which has been suspended in 2024.

Interest expenses were $20,000 for the year ended December 31, 2025, compared to $873,000 for the year ended December 31, 2024. The decrease of $853,000, or 98%, is due to repayment of the loan under the Hercules Loan Agreement in March 2024. Interest in the 2025 period was related to an existing loan to APT from the U.S. Small Business Administration.

Finance expense, net was $0.7 million for the year ended December 31, 2025, compared to $0.9 million for the year ended December 31, 2024. The decrease of $0.2 million, or 22%, was primarily attributable to lower transaction costs incurred in connection with the February 2025 financing, as compared to the March 2024 PIPE financing, partially offset by lower interest income in the current period.

Income from change in fair value of warrants was $6.1 million for the year ended December 31, 2025, compared to $26.5 million for the year ended December 31, 2024. The decrease of $20.4 million, or 77%, is primarily attributed to the revaluation resulting from the accounting treatment of the Company's warrants that are classified as a liability, as well as to the issuance of warrants in the February 2025 Financing.

Liquidity and Capital Resources

Sources of Liquidity

We have never generated any revenue from sales of our products and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations to date primarily with proceeds from the sale of our Common Stock, preferred shares and warrants, venture debt, IIA and MTEC grants and funds from collaboration agreements and through the business combination between Chardan Healthcare Acquisition Corp., a special purpose acquisition company, and BiomX Ltd. (the "Business Combination"), pursuant to which Chardan Healthcare Acquisition Corp. changed its name to BiomX Inc. Through December 31, 2025, we had received gross cash proceeds of approximately $217.3 million from sales of our Common Stock and preferred shares and $14.7 million from our collaboration agreements and grants from the IIA and MTEC.

Cash in excess of immediate requirements is invested primarily with a view to liquidity and capital preservation.

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 us 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 conditions. The first tranche of $15 million was advanced to us on the date the Hercules Loan Agreement was executed. On March 19, 2024, we voluntarily prepaid the outstanding amount under the Hercules Loan Agreement and such agreement expired.

On December 7, 2023, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on January 2, 2024. In addition, on December 7, 2023, we entered into an At the Market Offering Agreement, or the 2023 ATM Agreement, with H.C. Wainwright & Co., LLC, or Wainwright, with Wainwright as manager, pursuant to which we may issue and sell shares of our Common Stock having an aggregate offering price of up to $7.5 million from time to time through Wainwright. We are not obligated to make any sales of Common Stock under the 2023 ATM Agreement. On February 24, 2025, we suspended the ATM Agreement and the related continuous offering by us under an effective registration Statement on Form S-3. On August 13, 2025, we filed a prospectus supplement to amend our prior prospectus dated January 2, 2024, and as previously supplemented on February 24, 2025. The prospectus supplement updated the maximum aggregate amount of securities we may offer and sell under the 2023 ATM Agreement. Under the prospectus supplement, we may issue and sell shares of Common Stock having an aggregate offering price of up to $1.7 million from time to time through Wainwright. During the year ended December 31, 2025, we sold 121,773 shares of Common Stock under the 2023 ATM Agreement, at an average price of $11.13 per share, raising aggregate net proceeds of approximately $1.3 million, after deducting an aggregate commission of $51.

On March 15, 2024, concurrently with the consummation of the Acquisition, we consummated a private placement, or the March 2024 PIPE, pursuant to an exemption from registration requirements under the Securities Act, with certain investors pursuant to which such investors purchased an aggregate of 216,417 shares of our Series X Convertible Preferred Stock, par value $0.0019 per share, with each Series X Convertible Preferred Stock being convertible into 6 shares of our shares of Common Stock, after giving effect to the Reverse Split, and warrants, or Private Placement Warrants, to purchase up to an aggregate of 569,519 shares of the Company's Common Stock, for aggregate gross proceeds of approximately $50 million.

On February 25, 2025, we entered into a Securities Purchase Agreement with certain investors, or the February 2025 SPA, pursuant to which we agreed to issue and sell, (i) in a registered direct offering, or the February 2025 Registered Direct Offering: (a) an aggregate of 148,857 shares of our Common Stock, and (b) pre-funded warrants, or the February 2025 Pre-Funded Warrants, to purchase up to an aggregate of 42,381 shares of Common Stock, or the February 2025 Pre-Funded Warrant Shares, and (ii) in a concurrent private placement, or the February 2025 PIPE, (a) unregistered pre-funded warrants, or the February 2025 Private Pre-Funded Warrants, to purchase up to an aggregate of 121,362 shares of Common Stock, or the February 2025 Private Pre-Funded Warrant Shares, and (b) unregistered warrants, or the February 2025 Common Warrants, and together with the February 2025 Private Pre-Funded Warrants, the February 2025 Private Warrants, to purchase up to an aggregate of 312,599 shares of Common Stock, or the February 2025 Common Warrant Shares, and together with the February 2025 Private Pre-Funded Warrant Shares, the February 2025 Private Warrant Shares. Each share of Common Stock (or February 2025 Pre-Funded Warrant in lieu thereof) and each February 2025 Private Pre-Funded Warrant is sold with an accompanying February 2025 Common Warrant. The combined effective purchase price of each share of Common Stock (or February 2025 Pre-Funded Warrant in lieu thereof) and accompanying February 2025 Common Warrant, and of each February 2025 Private Pre-Funded Warrant and accompanying February 2025 Common Warrant, is $17.68. The gross proceeds to the Company from the February 2025 Registered Direct Offering and the February 2025 PIPE were $5.5 million, before deducting placement agent fees and other offering expenses payable by the Company. In addition, on February 25, 2025, we also entered into inducement letter agreements, or the Inducement Letter Agreements, with certain holders, or the Holders, of certain of their existing warrants to purchase an aggregate of 366,087 shares of Common Stock, originally issued to the Holders on March 15, 2024, having an original exercise price of $43.91 per share (after giving effect to the Reverse Split), or the Existing Warrants. The shares of Common Stock issued upon the exercise of the Existing Warrants are registered pursuant to the Effective S-3. Pursuant to the Inducement Letter Agreements, the Holders agreed to exercise for cash the Existing Warrants at a reduced exercise price of $17.68 per share, or the February 2025 Warrant Exercise, in consideration of our agreement to issue new unregistered warrants, or the New Warrants, to purchase up to an aggregate of 366,087 shares of Common Stock at an exercise price of $17.68 per share, or the New Warrant Shares. In connection with the February 2025 Warrant Exercise, we agreed that, in the event that any February 2025 Warrant Exercise would otherwise require the Company to issue a number of shares of Common Stock in excess of the number of shares of Common Stock that the Holder may acquire without exceeding the beneficial ownership limitations, or the Beneficial Ownership Limitation, set forth in the Existing Warrants (or, if applicable and at the Holder's election, 9.99%) (such excess shares, the Excess Existing Warrant Shares), (i) the Company shall issue to the Holder the maximum number of Existing Warrant Shares that the Holder is entitled to receive without exceeding the Beneficial Ownership Limitation, as directed by the Holder, and (ii) in lieu of issuing any Excess Existing Warrant Shares, (x) the Existing Warrant shall automatically be amended and restated in its entirety as set in the Letter Agreement, or, following such amendment, the Amended and Restated Warrant. The gross proceeds to the Company from the February 2025 Warrant Exercise were $6.5 million prior to deducting placement agent fees and offering expenses. We refer to the February 2025 Warrant Exercise, February 2025 Registered Direct Offering and the February 2025 PIPE, as the February 2025 Financing.

On December 26, 2025, we entered into the 2025 Second SPA with the Investor, pursuant to which the Company agreed to issue and sell, in a private placement transaction, an aggregate of 3,300 shares of the Company's newly created Series Y Convertible Preferred Stock, with an aggregate stated value of $3.3 million, and warrants to purchase up to 3,300,000 shares of the Company's Common Stock, for aggregate gross proceeds to the Company of $3.0 million, before deducting placement agent fees and other offering expenses. Each share of Series Y Preferred Stock has a stated value of $1,000 and will be convertible into shares of Common Stock at a conversion price of $2.00 per share, subject to customary adjustments. Holders of Series Y Convertible Preferred Stock will be entitled to receive dividends on the stated value at a rate of 15% per annum, compounded quarterly, payable in arrears, which dividends may, at the Investor's sole election, be paid in cash or shares of Common Stock. The Series Y Convertible Preferred Stock does not have voting rights (except as otherwise required by law or as expressly provided in the certificate of designations), and each share will have a maturity of one year from the closing date. Conversion is subject to beneficial ownership limitations of 19.99% of the Company's outstanding Common Stock. Pursuant to the 2025 Second SPA, the Company also agreed to issue to the Investor warrants to purchase up to an aggregate number of shares of Common Stock equal to 200% of the number of shares of Common Stock issuable upon conversion of the Series Y Preferred Stock, or the "2025 Second SPA Warrants", i.e., 3,300,000 shares of Common Stock. The 2025 Second SPA Warrants will be exercisable immediately upon issuance, subject to certain limitations and will have an initial exercise price of $2.00 and will expire five years from the date of issuance.

Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern as we believe that our current funds, including the funds received from the 2025 Second SPA, will be sufficient to meet our working capital and capital expenditure requirements only through the end of the second quarter of 2026. 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 did with the ATM Agreement and the Hercules Loan Agreement. Our ability to secure such additional funds is contingent upon obtaining the stockholder approval required pursuant to the 2025 Second SPA. Failure to obtain such approval would severely constrain our financing options, potentially forcing us to cease our operations, and would increase the substantial doubt about our ability to continue as a going concern.

We have no other commitments to obtain additional financing 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.

Cash Flows

The following table summarizes our cash flows for each of the periods presented:

		Year Ended December 31,
		2025				2024
		USD In thousands
Net cash used in operating activities			(26,390	)			(36,979	)
Net cash provided by investing activities			108				715
Net cash provided by financing activities			13,189				38,374
Effect of exchange rate changes on cash and cash equivalents and restricted cash			73				1
Net increase (decrease) in cash and cash equivalents			(13,020	)			2,111

Operating Activities

During the year ended December 31, 2025, operating activities used $26.4 million of net cash, primarily due to a net loss of $36.2 million adjusted by non-cash charges of $9.8 million. Non-cash charges mainly consisted of $6.1 million related to income from change in fair value of the warrants and $2.9 million gain from early lease termination. These were partially offset by non-cash expenses including stock-based compensation of $2.1 million, depreciation of $2.9 million, and impairment charges of $11.8 million related to the IPR&D asset and $1.7 million related to other long-lived assets. Net changes in our operating assets and liabilities consisted primarily of a decrease in net change in operating leases of $0.1 million and in other account payables of $3.4 million, partially offset by a decrease in other current assets of $2.2 million and in trade account payables of $1.2 million.

During the year ended December 31, 2024, operating activities used $37.0 million of net cash, primarily due to a net loss of $17.7 million adjusted by non-cash charges of 16.3 million and a net change of $3.0 million in our operating assets and liabilities. Non-cash charges mainly consisted of $26.5 million related to income from change in fair value of the Private Placement Warrants, $2.0 million of income from change in contract liability resulting from pausing the Company's AD program, $1.8 million related to stock-based compensation expenses, $1.8 million of depreciation and impairment charges of goodwill, IPR&D asset and long-lived assets of $0.8 million, $3.2 million and $4.0 million, respectively. Net changes in our operating assets and liabilities consisted primarily of an increase in trade account payables of $3.2 million and an increase in other account payables of $1.0 million, partially offset by a decrease in other current assets of $0.8 million and in net change in operating leases of $0.3 million.

Investing Activities

During the year ended December 31, 2025, investment activities provided net cash of $0.1 million, mainly consisting of proceeds from the sale of property and equipment.

During the year ended December 31, 2024, investment activities provided net cash of $0.7 million, mainly consisting of cash and restricted cash acquired from the Acquisition.

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 sponsored enterprises. We use foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, we recognize gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses, net. As of December 31, 2025, we had no outstanding foreign exchange contracts. As of December 31, 2024, we had outstanding foreign exchange contracts in the amount of approximately $2.4 million with a fair value asset of $19 thousand.

Financing Activities

During the year ended December 31, 2025, financing activities provided net cash of $13.2 million, mainly consisting of the issuance of Common Stock and warrants under the February 2025 Financing as well as issuance of Common Stock under the ATM.

During the year ended December 31, 2024, financing activities provided net cash of $38.4 million, mainly consisting of the issuance of Convertible Preferred Shares and the Private Placement Warrants in the March 2024 PIPE in the amount of $20.4 million, net of issuance costs, and $28.7 million, respectively. This was partially offset by the prepayment of the long-term debt in the amount of $10.7 million under the Hercules Loan Agreement.

Contractual Obligations, Commitments and Contingencies

Our contractual obligations and commitments relate primarily to our operating leases and non-cancelable purchase obligations under agreements with various research and development organizations and suppliers in the ordinary course of business. In August 2019, we entered into a lease agreement for office and lab spaces in Gaithersburg, Maryland. This lease agreement was terminated effective December 31, 2025. In September 2020, we entered into a lease agreement for office and laboratory space in Ness Ziona, Israel. In November 2025, the latter lease agreement for office and laboratory space in Ness Ziona, Israel, was terminated.

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. 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. 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

The Government of Israel, through the IIA, encourages research and development projects by providing grants. Through December 31, 2025, our Israeli subsidiary, BiomX Ltd., had received an aggregate of $8.9 million in the form of grants from the IIA. However, as further described above, BiomX Ltd. commenced insolvency proceedings in December 2025, and a trustee was appointed in January 2026 to administer these proceedings. As a result, BiomX Inc. no longer maintains operational control over BiomX Ltd. and does not expect to recover any significant value from its investment in BiomX Ltd. Consequently, the Company no longer considers the IIA grants received by BiomX Ltd., nor any related obligations or potential royalties, as relevant to its ongoing financial condition or operations.

Outlook

In addition to continuing our current business, we are pursuing strategic alternatives. Therefore, we do not have visibility into the levels of expenses we may incur in the future. However, if we continue our operations and develop product candidates to treat DFO and DFI, our expenses will remain substantial and may also increase as we:

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continue the development of our product candidates;

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

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

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

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

Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern as we believe that our current funds will only be sufficient to meet our working capital and capital expenditure requirements through the end of the second quarter of 2026. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If we receive regulatory approval for our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, 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, loans, milestone payments, possibly additional grants from MTEC 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 armed conflicts or other disruptions, and 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. Furthermore, we believe that our ability to raise additional capital and to secure future funding is contingent upon obtaining the stockholder approval required pursuant to the 2025 Second SPA. 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

We entered into forward and optioncontracts to hedge against the risk of overall changes in future cash flow from payments of salaries and related expenses, as well as other expenses denominated in NIS. As of December 31, 2025 we had no outstanding foreign exchange contracts. As of December 31, 2024, we had outstanding foreign exchange contracts in the nominal amount of approximately $2.4 million.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with US GAAP. 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. 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.

Accrued research and development expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open 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; 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:

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vendors in connection with preclinical development activities;

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CROs and investigative sites in connection with preclinical and clinical trials; and

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subcontractors in connection with the manufacturing of materials for preclinical and clinical trials.

We measure the expense recognized based on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs and subcontractors that supply, conduct and manage preclinical studies, human clinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of certain milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the 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.

Intangible assets

We accounted for the acquisition of APT using the acquisition method of accounting, which required us to estimate the fair values of the assets acquired and liabilities assumed. This included acquired IPR&D, and goodwill. The IPR&D is considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon successful completion of the project, IPR&D assets are reclassified to developed technology and amortized over their estimated useful lives.

We test goodwill and IPR&D for impairment at least on an annual basis, on the last day of the third quarter of the fiscal year and whenever events or changes in circumstances indicate the carrying value of a reporting unit may not be recoverable. We estimate the fair value of IPR&D asset using a market approach, based on the Company's equity value with the addition of a control premium derived from publicly available data from studies for similar transactions of public companies.

Business Combination

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair value. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities are recorded as goodwill and IPR&D. Such valuations require our management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from intangible assets, their useful lives and discount rates. Our management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. See Note 1C to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to business combination.

Warrants fair value revaluation

We account for the warrants in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants issued under the 2024 PIPE, the February 2025 SPA, and the 2025 Second SPA as liability at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The warrants are valued using the Black-Scholes model.