Oramed Pharmaceuticals Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended May 31, 2021. Financial statement amounts below are in U.S. dollars; unless noted otherwise, amounts are in millions. Oramed is a development-stage pharmaceutical company focused on oral insulin and other orally delivered therapies.
Financial results and liquidity
| Metric | Three months ended May 31, 2021 | Three months ended May 31, 2020 | Nine months ended May 31, 2021 | Nine months ended May 31, 2020 |
|---|---|---|---|---|
| Revenue | $0.681 | $0.681 | $2.020 | $2.029 |
| Research and development expense | $5.502 | $1.925 | $15.145 | $7.267 |
| General and administrative expense | $1.297 | $1.030 | $3.688 | $3.502 |
| Net loss | $5.625 | $2.284 | $15.803 | $8.515 |
| Basic and diluted loss per share | $0.17 | $0.10 | $0.57 | $0.44 |
| Operating cash used | Not separately provided for the quarter | $15.039 | $9.982 |
Revenue is primarily recognized over time under the HTIT license agreement; cost of revenue was zero. The company reported a $16.813 million operating loss for the nine-month period. Financial income was $1.010 million, mainly reflecting increased fair value of investments in D.N.A and Entera.
At May 31, 2021, cash and cash equivalents were $57.414 million, short-term deposits $5.017 million, and marketable securities $14.498 million. Current assets were $72.233 million against current liabilities of $5.750 million, yielding working capital of $66.483 million. Total assets were $80.492 million. No interest-bearing debt is reported; operating lease liabilities totaled $0.560 million.
Financing activities provided $47.869 million in the nine months, chiefly from common-stock issuance ($41.127 million net) and option and warrant exercises ($6.742 million). Shares outstanding were 30.523 million at May 31 and 32.514 million as of July 14, 2021. Management said available resources were expected to support planned activity for at least 12 months, while noting that additional financing could be needed if expenses rise unexpectedly.
Material changes and business developments
- Nine-month R&D expense more than doubled year over year, primarily due to Phase 3 oral-insulin trials and Oravax-related acquired research and development costs. Quarterly R&D expense rose 186% year over year.
- Nine-month net loss increased to $15.803 million from $8.515 million; revenue was essentially unchanged. Weighted-average shares increased, reflecting equity issuance and exercises.
- Oramed formed and consolidated Oravax, in which it held 63%, for development of an oral COVID-19 vaccine. The asset acquisition resulted in $1.040 million of IPR&D expense and $1.495 million of non-controlling interests. Oravax clinical trials were planned for the second half of 2021.
- Oral insulin Phase 3 trial ORA-D-013-1 began in late 2020; in June 2021, the company reported 50% enrollment and randomization. ORA-D-013-2 began in the U.S. in early 2021. The company expected topline Phase 3 results in 2022 and anticipated filing a BLA in 2023.
Outlook, risks, and unusual items
- Management expects R&D to remain its major operating expense. The company has not generated significant operating revenue and remains dependent on financing, successful development, and regulatory approvals.
- HTIT disputes pending license-agreement payment obligations. Oramed says it disputes HTIT’s claims and is seeking resolution; the filing describes the disputed obligation as $2 million to $6 million. The company had received $20.5 million of the agreement’s stated $37.5 million aggregate consideration.
- The oral-insulin program faces clinical and regulatory uncertainty, including the risk that trial results or regulatory review may not support approval. Oravax’s vaccine development and potential commercial value are also uncertain.
- After quarter-end, Oramed entered a new equity distribution agreement with capacity of up to $28 million; by July 14, it had issued shares for $10.987 million in net proceeds. Under its separate $40 million sales agreement, net proceeds had reached $38.799 million by that date.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. It reported no off-balance-sheet arrangements expected to have a material effect.
Important facts for investors to verify
- Enrollment, safety, efficacy results, and timing for both ORMD-0801 Phase 3 trials; verify whether the anticipated 2022 results and 2023 BLA filing remain achievable.
- Status and amount of HTIT’s disputed payments, and whether the parties resolve their disagreement.
- Cash runway against clinical-trial commitments, operating cash use, and future equity financing needs and dilution.
- Oravax’s clinical-trial progress, funding and governance arrangements, and any shareholder distribution or listing plans.