Oramed Pharmaceuticals Inc. — Form 10-Q
Reporting period: Three months ended November 30, 2019 (fiscal 2020 first quarter). Amounts below are U.S. dollars; financial statement amounts are in thousands unless otherwise noted.
Business context
Oramed is a development-stage pharmaceutical company focused on oral delivery of insulin and other drugs. It has not generated significant operating revenue; reported revenue primarily reflects recognition over time of payments under its China-region license agreement with HTIT.
Financial results and liquidity
| Metric | Three months ended Nov. 30, 2019 | Prior-year period |
|---|---|---|
| Revenue | $674 | $674 |
| Cost of revenue | $0 | $35 |
| Research and development | $2,022 | $4,347 |
| General and administrative | $1,081 | $932 |
| Operating loss | $2,429 | $4,640 |
| Net loss | $2,543 | $4,302 |
| Basic and diluted loss per share | $0.15 | $0.25 |
| Cash used in operating activities | $2,996 | $4,131 |
- At November 30, 2019, cash and cash equivalents were $3.171 million, short-term deposits $23.755 million, and marketable securities $3.457 million, including $250,000 classified as long-term.
- Current assets were $30.742 million and current liabilities $4.641 million, leaving working capital of $26.101 million. Total assets were $31.142 million; stockholders’ equity was $17.160 million.
- No borrowings or interest-bearing debt are identified in the presented balance sheet. Liabilities include deferred revenue, payables, employee obligations, and lease liabilities.
- Cash and cash equivalents declined $158,000 during the quarter. Investing activities provided $2.825 million, primarily from deposit and bond maturities; financing activities provided $13,000.
- Gross margin percentages are not stated. Revenue was $674,000 with no cost of revenue in the quarter.
Material changes versus prior-year quarter
- R&D expense fell 53%, primarily reflecting lower costs for the Phase IIb three-month treatment trial; increased regulatory consulting partly offset the decline.
- G&A expense rose 16%, primarily due to legal expenses.
- Net loss improved by $1.759 million, while revenue was unchanged. The filing reports a $303,000 loss from changes in investment fair value for the current quarter, compared with a $60,000 gain in the prior-year quarter.
- Operating cash use decreased by $1.135 million year over year.
Outlook, developments, and risks
- Management said current cash resources and commitments should support planned development and expenditure levels for at least the next 12 months and beyond, while cautioning that additional financing could be needed, including if expenses rise unexpectedly.
- Oramed reported positive initial Phase IIb results for ORMD-0801: once-daily and twice-daily dosing produced statistically significant HbA1c reductions, placebo-adjusted reductions of 0.54% and 0.53%, respectively. The three-times-daily arm was not statistically significant. Two sites representing 36 patients were excluded from statistical analysis after showing results opposite to the other sites; the company said it was investigating the discrepancy. The final study report was expected in Q1 2020.
- The company anticipated initiating Phase III trials in type 1 and type 2 diabetes in the second half of calendar 2020 and filing a BLA after those trials, with potential FDA approval by year-end 2024. These are forward-looking expectations, not assurances.
- Other study reports, including glucose-clamp, food-effect, NASH, toxicology, and ORMD-0901 Phase I work, were expected in or around Q1 2020. A low-dose cohort and FDA meetings were also pending.
- Under the HTIT license, Oramed had received $20.5 million of potential aggregate milestone payments of $37.5 million through the reporting date. Remaining payments depend on specified agreements, milestones, and conditions. The agreement also provides for royalties on future sales; no royalty revenue had been recognized.
- Management cited clinical and regulatory uncertainty, the need for FDA and foreign approvals, substantial expected development spending, and possible future financing needs. The company had an at-the-market equity sales agreement for up to $15 million; no shares had been sold by November 30, 2019. By January 9, 2020, it reported 335,163 shares sold for net proceeds of approximately $1.785 million.
- The company adopted lease accounting guidance on September 1, 2019, recording an operating lease asset and liability of $113,000 at adoption. It reported effective disclosure controls and no material change in internal controls during the quarter.
Key facts for investors to verify
- Reporting-period alignment: the filing covers the quarter ended November 30, 2019, corresponding to fiscal Q1 2020.
- Full Phase IIb results, including the excluded-site discrepancy, low-dose cohort findings, and subsequent regulatory feedback.
- Timing, design, and funding needs for planned Phase III trials and the projected BLA timeline.
- Conditions and timing for remaining HTIT milestone payments, and whether the licensee advances toward commercialization.
- Cash burn, investment values, and additional equity financing; management’s runway statement is an estimate rather than a guarantee.