Oramed Pharmaceuticals Inc. — Form 10-Q Summary
Reporting period: First quarter of fiscal 2022, the three months ended November 30, 2021. Financial amounts are in U.S. dollars; statement figures are in thousands unless otherwise stated. The filing is unaudited.
Business context
Oramed is a clinical-stage pharmaceutical company developing oral drug-delivery products, principally oral insulin candidate ORMD-0801. It also reported development programs for oral GLP-1, leptin and an oral COVID-19 vaccine through 63%-owned Oravax. The company has not generated significant operating revenue; reported revenue chiefly reflects recognition over time of consideration under its HTIT license agreement.
Financial results and position
| Metric | Q1 FY2022 | Comparable prior quarter |
|---|---|---|
| Revenue | $674 | $674 |
| Cost of revenue | $0 | $0 |
| Research and development | $6,410 | $5,774 |
| Sales and marketing | $585 | $0 |
| General and administrative | $1,739 | $727 |
| Operating loss | $8,060 | $5,827 |
| Net loss | $8,098 | $5,570 |
| Net loss attributable to Oramed stockholders | $7,890 | $5,570 |
| Basic and diluted loss per share | $0.22 | $0.23 |
| Operating cash used | $6,903 | $6,152 |
Revenue was unchanged, while operating costs and losses increased. R&D rose 11%, primarily with Phase 3 and NASH trial activity and Oravax-related in-process R&D. G&A increased 139%, including higher stock compensation, professional fees, and public- and investor-relations costs. Sales and marketing costs emerged at $585. Net financial results shifted from $257 of income to $38 of expense, primarily attributed to a decrease in the fair value of Entera shares. Loss per share improved slightly as weighted-average shares increased to 36.7 million from 23.8 million.
At November 30, 2021, cash and cash equivalents were $31.880 million; short- and long-term deposits totaled $136.156 million; and marketable securities totaled $11.704 million. Current assets were $152.332 million against current liabilities of $7.660 million, yielding working capital of $144.672 million. Total assets were $182.450 million. The balance sheet reports no conventional interest-bearing borrowings; liabilities primarily comprise payables, deferred revenue, lease obligations and other items.
Cash and cash equivalents fell by $45.365 million during the quarter, but this reflected $100 million invested in short-term deposits, partly offset by $60.563 million of financing inflows. Investing activities used $99.048 million; operating activities used $6.903 million. The company raised approximately $46.375 million net in a November registered direct offering and received additional proceeds through its equity distribution agreement and option/warrant exercises.
Outlook, risks and notable items
- Management said available resources and commitments were expected to support planned development and spending for at least the next 12 months, while noting that unexpected expense increases could require earlier financing. The company expects R&D to remain its principal operating expense and may seek additional equity financing.
- Oramed expected topline results in calendar 2022 from two concurrent Phase 3 ORMD-0801 studies, involving approximately 1,125 patients, and anticipated filing a BLA in calendar 2024. At quarter-end, the company said 75% of the 675-patient U.S. study had been enrolled and randomized; the second study had exceeded 25% enrollment as of August 2021. These are forward-looking expectations, not assured outcomes.
- Oravax’s oral COVID-19 vaccine received South African regulatory clearance to begin a Phase 1 trial; the first participant was enrolled on December 14, 2021, after quarter-end. On December 29, Oravax signed an agreement for an initial pre-purchase of 10 million doses for Southeast Asia. The filing does not establish that this will result in completed sales or revenue.
- HTIT disputes certain pending payment obligations under the license arrangement. The filing describes $6 million as disputed and says $2 million had been received and included in deferred revenue; Oramed disputes HTIT’s claims and was seeking resolution. HTIT had paid $20.5 million of stated milestone payments to date, against a potential aggregate of $37.5 million, subject to conditions.
- Oramed reported no material expected COVID-19 impact on development timing or liquidity based on its then-current assessment, while continuing to monitor effects. Clinical and regulatory success, future financing, and the timing and amount of license milestones and royalties remain uncertain.
- The company reported an accumulated deficit of $122.742 million and expects continued development spending. The filing’s results and timelines are subject to clinical, regulatory, financing and commercial risks.
Important facts for investors to verify
- Progress, enrollment, safety and efficacy results for both ORMD-0801 Phase 3 studies, and whether the projected 2022 topline results and 2024 BLA timing remain achievable.
- The status and outcome of the HTIT payment dispute, including the amount ultimately collectible and the conditions attached to remaining milestone payments.
- Whether Oravax’s Phase 1 trial and dose pre-purchase agreement advance to regulatory, manufacturing and commercial milestones.
- Cash burn and the accessibility, maturity profile and yields of deposits and marketable securities, as well as the need for further equity financing and resulting dilution.
- Whether the company’s statement that resources support at least 12 months of planned activity remains valid as trial and operating costs evolve.