Form 4: BiomX Inc. Sees Significant Ownership Changes Following Merger with Adaptive Phage Therapeutics

James E. Flynn and related Deerfield entities report changes in beneficial ownership of BiomX Inc. securities following the merger with Adaptive Phage Therapeutics, including acquisitions of common stock and preferred stock.

Summary

• James E. Flynn, along with Deerfield Management Company and related entities, filed a Form 4 detailing changes in beneficial ownership of BiomX Inc. (PHGE) securities.
• The filing is triggered by the merger between BiomX and Adaptive Phage Therapeutics (APT) on March 15, 2024.
• As a result of the merger, 16,972,145 shares of Series B-1 Preferred Stock of APT held by Deerfield funds were converted into 3,055,049 shares of BiomX Common Stock, 13,490 shares of Series X Non-Voting Convertible Preferred Stock, and warrants to purchase 722,175 shares of Common Stock.
• Deerfield funds also purchased 40,350 shares of Series X Preferred Stock and warrants to purchase 20,175,000 Common Stock in a private placement at $231.10 per share.
• The warrants from both the merger and the private placement are not currently exercisable and require stockholder approval.
• The Series X Preferred Stock is convertible into Common Stock upon stockholder approval, or into cash if approval is not obtained within 5 months.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to Deerfield's increased investment, but tempered by the uncertainty surrounding stockholder approval and the potential for cash conversion of the preferred stock.

Positives

• Deerfield's increased investment in BiomX through the merger and private placement signals confidence in the company's future.
• The potential conversion of Series X Preferred Stock into Common Stock could increase the company's public float and liquidity.

Negatives

• The warrants are not currently exercisable and require stockholder approval, creating uncertainty.
• If stockholder approval for the Series X Preferred Stock conversion is not obtained, the conversion to cash could negatively impact BiomX's cash position.

Risks

• Failure to obtain stockholder approval for the warrant exercises and Series X Preferred Stock conversion could hinder BiomX's growth plans.
• The conversion of Series X Preferred Stock to cash, if stockholder approval is not obtained, could strain BiomX's financial resources.
• The market's reaction to the merger and the changes in ownership could be volatile.

Future Outlook

The future depends on stockholder approval for the warrant exercises and Series X Preferred Stock conversion. If approved, the conversion of preferred stock to common stock will occur 4 business days after approval. If not approved within 5 months, the Series X Preferred Stock will be converted to cash.

Industry Context

The merger reflects a trend of consolidation in the biotechnology industry, particularly among companies focused on innovative therapies. Institutional investors like Deerfield Management often play a key role in these transactions.

Comparison to Industry Standards

• Deerfield Management is a well-known healthcare investment firm, and their involvement often signals potential for growth.
• Similar transactions involving preferred stock and warrant structures are common in biotech mergers and acquisitions, allowing for staged investment and potential upside.
• Comparable companies in the phage therapy space include companies such as Armata Pharmaceuticals and Felix Biotechnology, which are also attracting investor attention.

Stakeholder Impact

• Shareholders will be impacted by the potential dilution from warrant exercises and preferred stock conversion.
• Employees may be affected by the integration of the two companies following the merger.
• Customers could benefit from the combined company's expanded product pipeline.

Next Steps

• BiomX needs to obtain stockholder approval for the warrant exercises and Series X Preferred Stock conversion.
• The company will need to manage the potential conversion of Series X Preferred Stock to cash if stockholder approval is not obtained.

Key Dates