Oramed Pharmaceuticals Inc. — Form 10-Q Summary
Reporting period: Three and six months ended February 29, 2020 (fiscal second quarter); amounts below are U.S. dollars in thousands unless stated otherwise. Oramed is a clinical-stage pharmaceutical company developing oral insulin (ORMD-0801) and other orally delivered drug candidates. Revenue primarily reflects its HTIT licensing arrangement, not product sales.
Financial results and liquidity
| Metric | Three months ended Feb. 29, 2020 | Six months ended Feb. 29, 2020 | Comparable 2019 period |
|---|---|---|---|
| Revenue | $674 | $1,348 | $666 and $1,340, respectively |
| Research and development | $3,320 | $5,342 | $3,114 and $7,461 in the financial statements |
| General and administrative | $1,391 | $2,472 | $1,065 and $1,997, respectively |
| Net loss | $3,688 | $6,231 | $3,701 and $8,003, respectively |
| Basic and diluted loss per share | $0.21 | $0.35 | $0.21 and $0.46, respectively |
| Operating cash used | Not stated separately | $6,625 | $6,015 |
Gross margins are not a meaningful indicator for this development-stage business. Six-month revenue was nearly flat year over year, while net loss narrowed, reflecting lower R&D expense and no income tax expense; quarterly R&D and G&A increased year over year. The MD&A gives prior-period six-month R&D as $7,641, while the statement of loss reports $7,461; the filing does not reconcile this difference.
At February 29, 2020, cash and cash equivalents were $5,934, short-term deposits $17,288, and marketable securities $5,704. Current assets were $29,489 and current liabilities $5,155, for reported working capital of $24,334, down from $28,016 at August 31, 2019. Stockholders’ equity was $16,090. The filing reports no interest-bearing borrowings. Deferred revenue was $11,012, associated principally with the HTIT license. Six-month investing activities provided $6,900 and financing activities provided $2,329, including $2,316 net proceeds from equity sales.
On March 2, 2020, after quarter-end, the company closed a public offering of 5.25 million shares at $4 per share, reporting net proceeds of approximately $19,292. The underwriter also received an option for additional shares and warrants, subject to the terms described in the filing.
Business developments, outlook and risks
- ORMD-0801: Management reported positive Phase IIb Cohort A findings, including statistically significant HbA1c reductions in once- and twice-daily dosing arms. The analysis excluded two sites, comprising 36 patients, because their results differed from other sites; the company said its internal review found no cause and an independent advisor was investigating.
- Management expected to start Phase III trials in type 1 and type 2 diabetes in the second half of 2020 and anticipated a BLA filing thereafter, with potential FDA approval by year-end 2024. These are forward-looking targets, not assured outcomes. Food-effect results received in March 2020 supported a proposed pre-meal dosing schedule; other study reports were still pending.
- Other programs include oral GLP-1 (ORMD-0901), an exploratory NASH study, and an oral leptin candidate. COVID-19-related government restrictions were delaying recruitment for the planned leptin study. The company also identified possible disruption to trial enrollment, CROs, suppliers, regulatory interactions and access to capital.
- The HTIT agreement covers China, Macau and Hong Kong, with potential milestone payments totaling $37.5 million and sales royalties. Oramed had received $20.5 million in milestone payments through the reporting date; remaining amounts depend on contractual conditions and milestones. No royalty revenue had been recognized.
- Management stated that existing resources and commitments were expected to support planned activities for at least 12 months, while noting that unexpected spending could require earlier financing. This estimate preceded the March offering proceeds. R&D is expected to remain the company’s largest operating expense.
Key facts for investors to verify
- Reconcile the filing’s six-month 2019 R&D figures ($7,461 in the statement of loss versus $7,641 in MD&A) and its operating-cash-flow figures ($6,625 in the cash-flow statement versus approximately $6,624 in MD&A).
- Confirm share counts: the balance-sheet narrative states 23,093,978 shares outstanding at February 29, while the equity statement shows approximately 17.844 million shares at that date; the cover reports 23,093,978 as of April 5, after the March offering.
- Track the independent review of the excluded Phase IIb sites, complete clinical reports, and whether planned Phase III timing and design receive regulatory support.
- Assess actual COVID-19 effects on enrollment, CRO operations, trial schedules, regulatory engagement and financing needs against management’s then-current expectations.
- Monitor remaining HTIT milestone conditions and the company’s cash use and runway, including the effect of the post-quarter offering.