UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-35813
ORAMED PHARMACEUTICALS INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 98-0376008 | ||||||
(State or Other Jurisdiction of | (I.R.S. Employer | ||||||
Incorporation or Organization) | Identification No.) | ||||||
1185 Avenue of the Americas, Third Floor, | |||||||
New York, NY | 10036 | ||||||
(Address of Principal Executive Offices) | (Zip Code) | ||||||
844-967-2633 | |||||||
(Registrant's Telephone Number, Including Area Code) | |||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||
Title of each class | Trading symbol | Name of each exchange on which registered | |||||
Common Stock, par value $0.012 | ORMP | The Nasdaq Capital Market, | |||||
Tel Aviv Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of November 7, 2024, there were 40,312,069 shares of the issuer's common stock, $0.012 par value per share, outstanding.
ORAMED PHARMACEUTICALS INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION | 1 | |
ITEM 1 - FINANCIAL STATEMENTS | 1 | |
ITEM 2 | - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 19 |
ITEM 3 | - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 27 |
ITEM 4 | - CONTROLS AND PROCEDURES | 27 |
PART II - OTHER INFORMATION | 27 | |
ITEM 2- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 27 | |
ITEM 6 | - EXHIBITS | 28 |
As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Oramed" and the "Company" mean Oramed Pharmaceuticals Inc. and our wholly-owned subsidiaries, unless otherwise indicated. All dollar amounts refer to U.S. Dollars unless otherwise indicated.
On September 30, 2024, the exchange rate between the New Israeli Shekel, or NIS, and the dollar, as quoted by the Bank of Israel, was NIS 3.710 to $1.00. Unless indicated otherwise by the context, statements in this Quarterly Report on Form 10-Q that provide the dollar equivalent of NIS amounts or provide the NIS equivalent of dollar amounts are based on such exchange rate.
i
Cautionary Statement Regarding Forward-Looking Statements
The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws and the Israeli securities law. Words such as "expects," "anticipates," "intends," "plans," "planned expenditures," "believes," "seeks," "estimates," "considers" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Quarterly Report on Form 10-Q. Additionally, statements concerning future matters are forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward- looking statements include, among other statements, statements regarding the following:
- our plan to evaluate potential strategic opportunities;
- our potential repurchases of shares of our common stock;
- our ability to recover the proceeds and/or collateral under the Tranche A Note or the Tranche B Note (each as defined herein), or, collectively, the Notes, and related agreements from Scilex Holding Company, or Scilex;
- the fluctuating market price and liquidity of the common stock of Scilex underlying the warrants we hold;
- the possibility that the anticipated benefits of the 2023 Scilex Transaction (as defined herein) are not realized when expected or at all, including as a result of the impact of, or problems arising from, the ability of Scilex to repay the Notes and the ability of the Company to realize the value of the warrants;
- the ability of Oramed, Hefei Tianhui Biotech Co., Ltd., or HTIT Biotech, and Technowl Limited to reach agreement and enter into additional agreements within a three-month period of the signing of the JV Agreement (as defined herein), and the ability of the parties to succeed in the goals set out for the joint venture;
- our exposure to potential litigation;
- our ability to enhance value for our stockholders;
- the expected development and potential benefits from our products;
- the prospects of entering into additional license agreements, or other partnerships or forms of cooperation with other companies or medical institutions;
- future milestones, conditions and royalties under our license agreements;
- the potential of the Oravax Medical Inc., or Oravax, vaccine to protect against the coronavirus, or COVID-19;
- our research and development plans, including preclinical and clinical trials plans and the timing of enrollment, obtaining results and conclusion of trials;
ii
- our belief that our technology has the potential to deliver medications and vaccines orally that today can only be delivered via injection;
- the competitive ability of our technology based on product efficacy, safety, patient convenience, reliability, value and patent position;
- the potential market demand for our products;
- our ability to obtain patent protection for our intellectual property;
- our expectation that our research and development expenses will continue to be our major expenditure;
- our expectations regarding our short- and long-term capital requirements;
- our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and
- information with respect to any other plans and strategies for our business.
Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or our Annual Report, as filed with the Securities and Exchange Commission, or the SEC, on March 6, 2024, as well as those discussed elsewhere in our Annual Report and expressed from time to time in our other filings with the SEC. In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this Quarterly Report on Form 10-Q could be interpreted differently in light of additional research, clinical and preclinical trials results. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report on Form 10-Q which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
iii
PART I - FINANCIAL INFORMATION | |
ITEM 1 - FINANCIAL STATEMENTS | |
ORAMED PHARMACEUTICALS INC. | |
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF SEPTEMBER 30, 2024 | |
TABLE OF CONTENTS | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | Page |
Balance sheets | 2 |
Statements of comprehensive income (loss) | 3 |
Statements of changes in stockholders' equity | 4 |
Statements of cash flows | 6 |
Notes to financial statements | 7-18 |
1 |
ORAMED PHARMACEUTICALS INC. | ||||||
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
U.S. Dollars in thousands (except share and per share data) | ||||||
(UNAUDITED) | ||||||
September 30, | December 31, | |||||
2024 | 2023 | |||||
Assets | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ | 42,104 | $ | 9,055 | ||
Short-term deposits | 42,741 | 95,279 | ||||
Investments at fair value | 57,455 | 57,713 | ||||
Prepaid expenses and other current assets | 474 | 537 | ||||
Total current assets | 142,774 | 162,584 | ||||
LONG-TERM ASSETS: | ||||||
Long-term deposits | 2 | 7 | ||||
Investments at fair value | 16,901 | 51,035 | ||||
Marketable securities | 646 | 1,807 | ||||
Other non-marketable equity securities | 3,524 | 3,524 | ||||
Amounts funded in respect of employee rights upon retirement | 30 | 27 | ||||
Property and equipment, net | 718 | 873 | ||||
Operating lease right-of-use assets | 486 | 694 | ||||
Total long-term assets | 22,307 | 57,967 | ||||
Total assets | $ | 165,081 | $ | 220,551 | ||
Liabilities and stockholders' equity | ||||||
CURRENT LIABILITIES: | ||||||
Accounts payable and accrued expenses | $ | 4,995 | $ | 1,609 | ||
Short-term borrowings | - | 51,013 | ||||
Payable to related parties | 35 | 325 | ||||
Operating lease liabilities | 243 | 267 | ||||
Total current liabilities | 5,273 | 53,214 | ||||
LONG-TERM LIABILITIES: | ||||||
Long-term deferred revenues | 4,000 | 4,000 | ||||
Employee rights upon retirement | 29 | 28 | ||||
Provision for uncertain tax position | 11 | 11 | ||||
Operating lease liabilities | 186 | 342 | ||||
Other liabilities | 60 | 63 | ||||
Total long-term liabilities | 4,286 | 4,444 | ||||
COMMITMENTS (note 5) | ||||||
EQUITY ATTRIBUTABLE TO COMPANY'S STOCKHOLDERS: | ||||||
Common stock, $0.012 par value (60,000,000 authorized shares; 40,209,575 and 40,338,979 shares issued and | ||||||
outstanding as of September 30, 2024 and December 31, 2023, respectively) | 484 | 485 | ||||
Additional paid-in capital | 322,384 | 320,892 | ||||
Accumulated deficit | (166,427) | (157,556) | ||||
Total stockholders' equity | 156,441 | 163,821 | ||||
Non-controlling interests | (919) | (928) | ||||
Total equity | 155,522 | 162,893 | ||||
Total liabilities and equity | $ | 165,081 | $ | 220,551 | ||
The accompanying notes are an integral part of the condensed consolidated financial statements.
2
ORAMED PHARMACEUTICALS INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
Nine months ended | Three months ended | |||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
REVENUES | $ | - | 1,340 | $ | - | - | ||||||
RESEARCH AND DEVELOPMENT | (4,863) | (7,205) | (2,242) | (957) | ||||||||
SALES AND MARKETING | - | 287 | - | 663 | ||||||||
GENERAL AND ADMINISTRATIVE | (4,323) | (6,314) | (847) | (2,599) | ||||||||
OPERATING LOSS | (9,186) | (11,892) | (3,089) | (2,893) | ||||||||
INTEREST EXPENSES | (853) | (826) | - | (826) | ||||||||
FINANCIAL INCOME (LOSS), NET | 3,902 | 4,510 | (15,420) | 435 | ||||||||
LOSS BEFORE TAX EXPENSES | $ | (6,137) | (8,208) | $ | (18,509) | (3,284) | ||||||
TAX EXPENSES | (2,767) | - | (1,133) | - | ||||||||
NET LOSS | $ | (8,904) | (8,208) | $ | (19,642) | (3,284) | ||||||
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | (33) | (397) | (23) | (62) | ||||||||
NET LOSS ATTRIBUTABLE TO STOCKHOLDERS | (8,871 | ) | (7,811 | ) | (19,619 | ) | (3,222 | ) | ||||
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK | ) | ) | ) | ) | ||||||||
$ | (0.22 | $ | (0.19 | $ | (0.48 | $ | (0.08 | |||||
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK | ||||||||||||
USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF | ||||||||||||
COMMON STOCK | 40,882,110 | 40,246,515 | 40,896,845 | 40,445,896 | ||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
ORAMED PHARMACEUTICALS INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
U.S. Dollars in thousands
(UNAUDITED)
Common Stock | Additional | Total | Non- | ||||||||||||||||||||||
paid-in | Accumulated | stockholders' | controlling | Total | |||||||||||||||||||||
Shares | $ | capital | deficit | equity | interests | equity | |||||||||||||||||||
In thousands | |||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2023 | 40,339 | $ | 485 | $ | 320,892 | $ | (157,556) | $ | 163,821 | $ | (928) | $ | 162,893 | ||||||||||||
CHANGES DURING THE NINE MONTH | |||||||||||||||||||||||||
PERIOD ENDED SEPTEMBER 30, 2024 | |||||||||||||||||||||||||
STOCK-BASED COMPENSATION | 410 | 5 | 2,777 | - | 2,782 | - | 2,782 | ||||||||||||||||||
STOCK-BASED COMPENSATION OF | |||||||||||||||||||||||||
SUBSIDIARY | - | - | - | - | - | 42 | 42 | ||||||||||||||||||
REPURCHASE AND RETIREMENT OF | |||||||||||||||||||||||||
COMMON STOCK | (539) | (6) | (1,285) | (1,291) | (1,291) | ||||||||||||||||||||
NET LOSS | - | - | - | (8,871) | (8,871) | (33) | (8,904) | ||||||||||||||||||
BALANCE AS OF SEPTEMBER 30, 2024 | ) | ) | |||||||||||||||||||||||
40,210 | $ | 484 | $ | 322,384 | $ | (166,427 | $ | 156,441 | $ | (919 | $ | 155,522 | |||||||||||||
Common Stock | Additional | Total | Non- | ||||||||||||||||||||||
paid-in | Accumulated | stockholders' | controlling | Total | |||||||||||||||||||||
Shares | $ | capital | deficit | equity | interests | equity | |||||||||||||||||||
In thousands | |||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2022 | 39,564 | $ | 476 | $ | 314,417 | $ | (163,081) | $ | 151,812 | $ | (656) | $ | 151,156 | ||||||||||||
CHANGES DURING THE NINE MONTH | |||||||||||||||||||||||||
PERIOD ENDED SEPTEMBER 30, 2023: | |||||||||||||||||||||||||
ISSUANCE OF COMMON STOCK, NET | 193 | 2 | 2,426 | - | 2,428 | - | 2,428 | ||||||||||||||||||
SHARES ISSUED FOR SERVICES | 3 | * | 9 | - | 9 | - | 9 | ||||||||||||||||||
STOCK-BASED COMPENSATION | 523 | 6 | 2,688 | - | 2,694 | - | 2,694 | ||||||||||||||||||
STOCK-BASED COMPENSATION OF | |||||||||||||||||||||||||
SUBSIDIARY | - | - | - | - | - | 151 | 151 | ||||||||||||||||||
NET LOSS | - | - | - | (7,811) | (7,811) | (397) | (8,208) | ||||||||||||||||||
BALANCE AS OF SEPTEMBER 30, 2023 | ) | ) | |||||||||||||||||||||||
40,283 | $ | 484 | $ | 319,540 | $ | (170,892 | $ | 149,132 | $ | (902 | $ | 148,230 | |||||||||||||
* Represents an amount of less than $1.
4
ORAMED PHARMACEUTICALS INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
U.S. Dollars in thousands
(UNAUDITED)
Additional | Total | Non- | |||||||||||||||||||
Common Stock | paid-in | Accumulated | stockholders' | controlling | Total | ||||||||||||||||
Shares | $ | capital | deficit | equity | interests | equity | |||||||||||||||
In thousands | |||||||||||||||||||||
BALANCE AS OF JUNE 30, 2024 | 40,629 | $ | 488 | $ | 323,385 | $ | (146,808) | $ | 177,065 | $ | (911) | $ | 176,154 | ||||||||
CHANGES DURING THE THREE MONTH | |||||||||||||||||||||
PERIOD ENDED SEPTEMBER 30, 2024 | |||||||||||||||||||||
STOCK-BASED COMPENSATION | 120 | 2 | 284 | - | 286 | - | 286 | ||||||||||||||
STOCK-BASED COMPENSATION OF | |||||||||||||||||||||
SUBSIDIARY | - | - | - | - | - | 15 | 15 | ||||||||||||||
REPURCHASE AND RETIREMENT OF | |||||||||||||||||||||
COMMON STOCK | (539) | (6) | (1,285) | (1,291) | (1,291) | ||||||||||||||||
NET LOSS | - | - | - | (19,619) | (19,619) | (23) | (19,642) | ||||||||||||||
BALANCE AS OF SEPTEMBER 30, 2024 | ) | ) | |||||||||||||||||||
40,210 | $ | 484 | $ | 322,384 | $ | (166,427 | $ | 156,441 | $ | (919 | $ | 155,522 | |||||||||
Common Stock | Additional | Total | Non- | ||||||||||||||||||
paid-in | Accumulated | stockholders' | controlling | Total | |||||||||||||||||
Shares | $ | capital | deficit | equity | interests | equity | |||||||||||||||
In thousands | |||||||||||||||||||||
BALANCE AS OF JUNE 30, 2023 | 40,219 | $ | 484 | $ | 318,732 | $ | (167,670) | $ | 151,546 | $ | (891) | $ | 150,655 | ||||||||
CHANGES DURING THE THREE MONTH | |||||||||||||||||||||
PERIOD ENDED SEPTEMBER 30, 2023: | |||||||||||||||||||||
SHARES ISSUED FOR SERVICES | 3 | * | 7 | - | 7 | - | 7 | ||||||||||||||
STOCK-BASED COMPENSATION | 61 | * | 801 | - | 801 | - | 801 | ||||||||||||||
STOCK-BASED COMPENSATION OF | |||||||||||||||||||||
SUBSIDIARY | - | - | - | - | - | 51 | 51 | ||||||||||||||
NET LOSS | - | - | - | (3,222) | (3,222) | (62) | (3,284) | ||||||||||||||
BALANCE AS OF SEPTEMBER 30, 2023 | ) | ) | |||||||||||||||||||
40,283 | $ | 484 | $ | 319,540 | $ | (170,892 | $ | 149,132 | $ | (902 | $ | 148,230 | |||||||||
* Represents an amount of less than $1.
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
ORAMED PHARMACEUTICALS INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands
(UNAUDITED)
Nine months ended | ||||||
September, | ||||||
2024 | 2023 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net loss | $ | (8,904) | $ | (8,208) | ||
Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation | 162 | 143 | ||||
Exchange differences and interest on deposits and held to maturity bonds | (2,162) | (2,042) | ||||
Changes in fair value of investments | (140) | (191) | ||||
Stock-based compensation | 2,824 | 2,845 | ||||
Shares issued for services | - | 9 | ||||
Gain on amounts funded in respect of employee rights upon retirement | (3) | (2) | ||||
Change in accrued interest on short-term borrowings | (1,463) | 813 | ||||
Prepaid expenses and other current assets | 63 | 726 | ||||
Accounts payable, accrued expenses and related parties | 3,096 | (1,601) | ||||
Net changes in operating lease | 28 | (35) | ||||
Deferred revenues | - | (1,340) | ||||
Liability for employee rights upon retirement | 1 | 6 | ||||
Other liabilities | (3) | - | ||||
Total net cash used in operating activities | (6,501 | ) | (8,877 | ) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchase of short-term deposits | (42,450) | (91,369) | ||||
Proceeds from short-term deposits | 97,152 | 84,760 | ||||
Proceeds from maturity of held to maturity securities | - | 3,375 | ||||
Proceeds from long-term deposits | 5 | - | ||||
Long-term investments | (1,307) | (99,550) | ||||
Proceeds from long-term investments and marketable securities | 37,000 | - | ||||
Purchase of property and equipment, net | (7) | (251) | ||||
Total net cash provided by (used in) investing activities | 90,393 | (103,035 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Proceeds from issuance of common stock, net of issuance costs | - | 2,428 | ||||
Repurchase and retirement of common stock | (1,291) | - | ||||
Loans received | - | 99,550 | ||||
Loans repaid | (49,550) | (25,000) | ||||
Total net cash provided by (used in) financing activities | (50,841 | ) | 76,978 | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (2 | ) | (62 | ) | ||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD
33,049 | (34,996) | ||||
9,055 | 40,464 | ||||
$ | 42,104 | $ | 5,468 | ||
(A) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS - | ||||||
Interest received | $ | 6,873 | $ | 3,393 | ||
Interest paid | $ | (2,316) | $ | (14) | ||
(B) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES - | ||||||
Recognition of operating lease right-of-use assets and liabilities | 58 | - | ||||
Derecognition of right-of-use asset | (26) | - | ||||
Derecognition of lease liability | ||||||
23 | - | |||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
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