Chardan Healthcare Acquisition Corp. Announces Merger Agreement with BiomX Ltd.

Chardan Healthcare Acquisition Corp. (NYSE: CHAC, “CHAC”), a special purpose acquisition company (“SPAC”) sponsored by affiliates of Chardan Capital Markets LLC (“Chardan”), announced today that it has entered into a definitive agreement for a business combination with BiomX Ltd. (“BiomX”), a microbiome company developing both natural and engineered phage therapies.

Assuming no redemption of CHAC shareholders, the combined company will have an initial market capitalization of approximately $254 million. Upon closing of the transaction, it is expected that CHAC will be renamed BiomX and remain on the NYSE American Stock Exchange, listed under a new ticker symbol.

CHAC has entered into a mix of commitments including purchase and sale, backstop, and voting agreements with BiomX and with investors — including OrbiMed, RTW Investment, Johnson & Johnson Innovation – JJDC, Inc. (JJDC), Takeda Ventures, Inc., Seventure Partners’ Health for Life Capital I, SBI Japan-Israel Innovation Fund, as well as RM Global Partners (RMGP) BioPharma Investment Fund — so that the $50 million minimum closing condition for the transaction has been satisfied prior to today’s announcement.

Proceeds from the transaction will provide BiomX with substantial growth capital and the flexibility of a public listing to further accelerate BiomX’s expansion as a leading microbiome product discovery company. BiomX is developing customized phage-based products designed to improve the appearance of acne-prone skin and eradicate harmful bacteria in chronic diseases. The company’s pipeline includes preclinical candidates for acne-prone skin, inflammatory bowel disease (IBD), primary sclerosing cholangitis (PSC), and colorectal cancer (CRC). BiomX’s product for acne-prone skin is anticipated to begin clinical testing by the end of 2019. The combined company will continue to be led by BiomX’s experienced management team headed by Chief Executive Officer Jonathan Solomon.

“We created CHAC to partner with an innovative biotechnology company that would benefit from a public listing, could use our cash resources to implement groundbreaking clinical work, and whose products and technology could lead to significant growth and drive long-term returns for our shareholders. BiomX has all those qualities, along with an experienced management team ready to take the reins of a public company. We believe this transaction leaves BiomX with a strong balance sheet and sufficient cash for the company to reach multiple value inflection points in its leading clinical programs. We also believe we have structured a transaction that will deliver value to all stakeholders and create opportunity for new investors. We are excited to make use of inherent features of the SPAC in combination with the fundamental qualities of BiomX and supportive shareholders for the benefit of all of our partners.”

said Jonas Grossman, CHAC’s President and Chief Executive Officer.

“Having our existing investors participate in this financing, along with additional life science funds who have not previously invested in BiomX, demonstrates their confidence in our approach of using both natural and engineered phage cocktails to eradicate harmful bacteria in chronic diseases and conditions,”

said Jonathan Solomon, Chief Executive Officer of BiomX.

“This merger will provide us with substantial additional financial resources that will support our upcoming clinical trials, speed up our preclinical research and help expand our manufacturing capabilities.”

Gbola Amusa, M.D., C.F.A, Executive Chairman of CHAC, added,

“We see growing investment momentum and interest in phage as a potentially disruptive and safe precision tool for the eradication of specific harmful strains of bacteria. BiomX is well positioned to develop novel phage therapies based in part on its unique blend of state-of-the-art microbiome, phage, computational biology, and synthetic biology technologies originally licensed from sources like the Weizmann Institute and MIT. In addition, BiomX is targeting substantial commercial markets. The global market for cosmetics products for acne-prone skin according to WiseGuy Reports was approximately $4 billion in 2018. EvaluatePharma estimates the global IBD and global colorectal cancer markets, respectively, generated $17.7 billion and $8.4 billion in prescription sales in 2018. For another of BiomX’s target indications, PSC, we estimate the total addressable US market could be more than $3.5 billion in sales.”

“We have supported BiomX’s development and growth because of its talented management team and innovative drug development capabilities,” said Robbie Woodman, Ph.D., Senior Partner at Takeda Ventures, Inc. and member of the BiomX Board of Directors. “The combined company is well positioned to advance its programs for acne-prone skin, IBD and PSC.”

The respective boards of directors of both CHAC and BiomX have approved the proposed transaction. Completion of the transaction, which is expected in October 2019, is subject to approval by CHAC stockholders and satisfaction of other closing conditions.

Chardan is acting as CHAC’s M&A and capital markets advisor. Cantor is acting as capital markets advisor to BiomX. Loeb & Loeb LLP and Meitar Liquornik Geva Leshem Tal are representing CHAC. Goodwin Procter LLP, Mayer Brown LLP and ZAG-S&W Zysman Aharoni Gayer & Co are representing BiomX.

Summary of Transaction

CHAC raised $70 million in its IPO which is now held in a trust account. Under the terms of the proposed transaction announced today, CHAC will issue 16.625 million shares and vested securities to current securityholders of BiomX. Certain BiomX shareholders may, subject to the terms of the investment agreements, receive up to an additional 6.0 million CHAC shares: 2.0 million shares if the share price exceeds $16.50 by fiscal year 2021, an additional 2.0 million shares if the share price exceeds $22.75 by fiscal year 2023, and an additional 2.0 million shares if the share price exceeds $29.00 by fiscal year 2025.

After giving effect to the investor transactions being undertaken in order to meet the minimum cash condition, and assuming no redemption from CHAC shareholders, it is estimated that the current securityholders of BiomX will own approximately 73% of the issued and outstanding vested securities in the combined company at closing.

Post-closing, Mr. Solomon and three current BiomX directors will join Mr. Grossman and Dr. Amusa from CHAC on the seven-person board of directors. An additional board member will be designated by BiomX.

The description of the business combination contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the business combination, a copy of which will be filed by CHAC with the Securities and Exchange Commission (“SEC”) as an exhibit to a Current Report on Form 8-K. Additional information about the proposed transaction will be described in CHAC’s preliminary proxy statement relating to the business combination, which CHAC will file with the SEC.