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 November 30, 20172021

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-50298001-35813

ORAMED PHARMACEUTICALS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

98-0376008
(State or Other Jurisdiction of

Incorporation or Organization)
(I.R.S. Employer

Identification No.)

Hi-Tech Park 2/4 Givat Ram

PO Box 39098

Jerusalem, Israel

91390
1185 Avenue of the Americas, Third Floor, New York, NY10036
(Address of Principal Executive Offices)(Zip Code)

+ 972-2-566-0001844-967-2633

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $0.012ORMPThe 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 filerAccelerated filer
Non-accelerated filer☐  (Do not check if a smaller reporting company)

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 January 10, 2018,11, 2022, there were 14,370,93038,283,841 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 INFORMATION1
ITEM 1 - FINANCIAL STATEMENTS1
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS1716
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK2425
ITEM 4 - CONTROLS AND PROCEDURES2425
PART II - OTHER INFORMATION2526
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS25
ITEM 6 - EXHIBITS2526

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our” and the “Company” mean Oramed Pharmaceuticals Inc. and our wholly-owned Israeli subsidiary, Oramed Ltd.,subsidiaries, unless otherwise indicated.  All dollar amounts refer to U.S. Dollars unless otherwise indicated.

On November 30, 2017,2021, the exchange rate between the New Israeli Shekel, or NIS, and the dollar, as quoted by the Bank of Israel, was NIS 3.4993.162 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

 

PART I – FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

ORAMED PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF NOVEMBER 30, 20172021

TABLE OF CONTENTS

Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Balance sheets2
Statements of comprehensive loss3
StatementStatements of changes in stockholders’ equity4
Statements of cash flows5
Notes to financial statements6-166-15

1


 

ORAMED PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

  November 30,  August 31, 
  2017  2017 
Assets      
CURRENT ASSETS:      
Cash and cash equivalents $1,258  $3,969 
Short-term deposits  14,992   13,293 
Marketable securities  2,722   2,860 
Restricted cash  -   16 
Prepaid expenses and other current assets  163   159 
Total current assets  19,135   20,297 
         
LONG-TERM ASSETS:        
Long-term deposits and investment  17,780   16,232 
Marketable securities  4,598   2,151 
Amounts funded in respect of employee rights upon retirement  14   14 
Property and equipment, net  17   18 
Total long-term assets  22,409   18,415 
Total assets $41,544  $38,712 
         
Liabilities and stockholders’ equity        
         
CURRENT LIABILITIES:        
Accounts payable and accrued expenses $2,599  $2,716 
Deferred revenues  2,449   2,449 
Payable to related parties  76   - 
Total current liabilities  5,124   5,165 
         
LONG-TERM LIABILITIES:        
Deferred revenues  13,226   13,837 
Employee rights upon retirement  19   18 
Provision for uncertain tax position  11   11 
Other liabilities  423   443 
Total long-term liabilities  13,679   14,309 
         
COMMITMENTS (note 2)        
         
STOCKHOLDERS’ EQUITY:        
Common stock, $0.012 par value (30,000,000 authorized shares; 14,307,890 and 13,668,530 shares issued and outstanding as of November 30, 2017 and August 31, 2017, respectively)  170   163 
Additional paid-in capital  80,871   75,170 
Accumulated other comprehensive income  727   401 
Accumulated loss  (59,027)  (56,496)
Total stockholders’ equity  22,741   19,238 
Total liabilities and stockholders’ equity $41,544  $38,712 
  November 30,  August 31, 
  2021  2021 
Assets      
CURRENT ASSETS:      
Cash and cash equivalents $31,880  $77,245 
Short-term deposits  111,082   11,044 
Marketable securities  7,573   5,851 
Prepaid expenses and other current assets  1,797   1,197 
Total current assets  152,332   95,337 
         
LONG-TERM ASSETS:        
Long-term deposits  25,074   25,016 
Marketable securities  4,131   6,692 
Amounts funded in respect of employee rights upon retirement  24   24 
Property and equipment, net  385   397 
Operating lease right-of-use assets  504   533 
Total long-term assets  30,118   32,662 
Total assets $182,450  $127,999 
         
Liabilities and stockholders’ equity        
         
CURRENT LIABILITIES:        
Accounts payable and accrued expenses $4,761  $3,792 
Deferred revenues  2,703   2,703 
Payable to related parties  66   54 
Operating lease liabilities  130   130 
Total current liabilities  7,660   6,679 
         
LONG-TERM LIABILITIES:        
Long-term deferred revenues  3,570   4,244 
Employee rights upon retirement  22   21 
Provision for uncertain tax position  11   11 
Operating lease liabilities  374   403 
Other liabilities  122   124 
Total long-term liabilities  4,099   4,803 
         
COMMITMENTS (note 2)        
         
EQUITY        
EQUITY ATTRIBUTABLE TO COMPANY’S STOCKHOLDERS:        
Common stock, $0.012 par value (60,000,000 authorized shares; 38,086,020 and 35,293,889 shares issued and outstanding as of November 30, 2021 and August 31, 2021, respectively)  458   424 
Additional paid-in capital  292,439   230,201 
Accumulated deficit  (122,742)  (114,852)
Total stockholders’ equity  170,155   115,773 
Non-controlling interests  536   744 
Total equity  170,691   116,517 
Total liabilities and equity $182,450  $127,999 

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

 

ORAMED PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)


  Three months ended 
  November 30,  November 30, 
  2017  2016 
       
REVENUES $611  $610 
COST OF REVENUES     187 
RESEARCH AND DEVELOPMENT EXPENSES, NET  2,327   2,353 
GENERAL AND ADMINISTRATIVE EXPENSES  1,016   468 
OPERATING LOSS  2,732   2,398 
FINANCIAL INCOME  222   186 
FINANCIAL EXPENSES  21   24 
LOSS BEFORE TAXES ON INCOME  2,531   2,236 
TAXES ON INCOME  -   400 
NET LOSS FOR THE PERIOD $2,531  $2,636 
         
UNREALIZED LOSS (GAIN) ON AVAILABLE FOR SALE SECURITIES  (326)  63 
TOTAL OTHER COMPREHENSIVE LOSS (GAIN)  (326)  63 
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD $2,205  $2,699 
         
LOSS PER SHARE OF COMMON STOCK:        
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK $0.18  $0.20 
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK  14,239,346   13,205,971 
  Three months ended 
  November 30,  November 30, 
  2021  2020 
REVENUES $674   674 
RESEARCH AND DEVELOPMENT EXPENSES  6,410   5,774 
SALES AND MARKETING EXPENSES  585   - 
GENERAL AND ADMINISTRATIVE EXPENSES  1,739   727 
OPERATING LOSS  8,060   5,827 
FINANCIAL INCOME  (137)  (269)
FINANCIAL EXPENSES  175   12 
NET LOSS FOR THE PERIOD $8,098   5,570 
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS  208   - 
NET LOSS ATTRIBUTABLE TO STOCKHOLDERS  7,890   5,570 
LOSS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO COMMON STOCKHOLDERS:        
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK $0.22  $0.23 
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK  36,672,551   

23,754,980

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

 

ORAMED PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. Dollars in thousands (except share data)

(UNAUDITED)


           Accumulated       
        Additional  other     Total 
  Common Stock  paid-in  comprehensive  Accumulated  stockholders’ 
  Shares  $  capital  income  loss  equity 
  In thousands                
BALANCE AS OF AUGUST 31, 2017  13,668  $163  $75,170  $401  $(56,496) $19,238 
CHANGES DURING THE THREE-MONTH PERIOD ENDED NOVEMBER 30, 2017:                        
SHARES ISSUED FOR SERVICES  3   *   24   -   -   24 
ISSUANCE OF COMMON STOCK, NET  454   5   4,225   -   -   4,230 
EXERCISE OF WARRANTS AND OPTIONS  178   2   928   -   -   930 
STOCK-BASED COMPENSATION  5   *   524   -   -   524 
NET LOSS  -   -   -   -   (2,531)  (2,531)
OTHER COMPREHENSIVE INCOME  -   -   -   326   -   326 
BALANCE AS OF NOVEMBER 30, 2017  14,308  $170  $80,871  $727  $(59,027) $22,741 
  Common Stock  Additional
paid-in
  Accumulated  Total
stockholders’
  Non-
controlling
  Total 
  Shares  $  capital  deficit  equity  interests  equity 
  In thousands                   
BALANCE AS OF AUGUST 31, 2021  35,293  $424  $230,201  $(114,852) $115,773   744  $116,517 
CHANGES DURING THE THREE MONTH PERIOD ENDED NOVEMBER 30, 2021:                            
ISSUANCE OF COMMON STOCK, NET  2,631   32   59,908   -   59,940   -   59,940 
EXERCISE OF WARRANTS AND OPTIONS  88   1   621   -   622   -   622 
STOCK-BASED COMPENSATION  74   1   1,709   -   1,710   -   1,710 
NET LOSS  -   -   -   (7,890)  (7,890)  (208)  (8,098)
BALANCE AS OF NOVEMBER 30, 2021  38,086  $458  $292,439  $(122,742) $170,155   536  $170,691 

        Additional     Total 
  Common Stock  paid-in  Accumulated  stockholders’ 
  Shares  $  capital  deficit  equity 
  In thousands             
BALANCE AS OF AUGUST 31, 2020  23,675  $284  $125,209  $(92,614) $32,879 
CHANGES DURING THE THREE MONTH PERIOD ENDED NOVEMBER 30, 2020:                    
ISSUANCE OF COMMON STOCK, NET  135   2   584   -   586 
STOCK-BASED COMPENSATION  -   *   317   -   317 
NET LOSS  -   -   -   (5,570)  (5,570)
BALANCE AS OF NOVEMBER 30, 2020  23,810  $286  $126,110  $(98,184) $28,212 

*    Represents an amount of less than $1.

*Represents an amount of less than $1.

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

 

ORAMED PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

(UNAUDITED)

  Three months ended 
  November 30, 
  2017  2016 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(2,531) $(2,636)
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities:        
Depreciation  1   1 
Exchange differences and interest on deposits and held to maturity bonds  (71)  (112)
Stock-based compensation  524   158 
Shares issued for services  24   17 
Changes in operating assets and liabilities:        
Prepaid expenses and other current assets  (4)  (232)
Accounts payable, accrued expenses and related parties  (41)  825 
Deferred revenues  (611)  3,366 
Liability for employee rights upon retirement  1   - 
Other liabilities  (20)  111 
Total net cash provided by (used in) operating activities  (2,728)  1,498 
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of short-term deposits  (2,039)  (1,000)
Purchase of long-term deposits  (3,540)  (3,000)
Purchase of held to maturity securities  (2,879)  (1,056)
Proceeds from sale of short-term deposits  2,455   1,320 
Proceeds from maturity of held to maturity securities  857   300 
Total net cash used in investing activities  (5,146)  (3,436)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from issuance of common stock, net of issuance costs  4,230   - 
Proceeds from exercise of warrants and options  930   320 
Total net cash provided by financing activities  5,160   320 
EFFECT OF EXCHANGE RATE CHANGES ON CASH  3   1 
DECREASE IN CASH AND CASH EQUIVALENTS  (2,711)  (1,617)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  3,969   3,907 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,258  $2,290 
         
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS -        
Interest received $133  $56 
  Three months ended 
  

November 30,

2021

  

November 30,

2020

 
CASH  FLOWS FROM OPERATING ACTIVITIES:      
Net loss $(8,098) $(5,570)
Adjustments required to reconcile net loss to net cash used in operating activities:        
Depreciation  12   2 
Exchange differences and interest on deposits and held to maturity bonds  (383)  (114)
Changes in fair value of investments  151   (162)
Stock-based compensation  1,710   317 
Changes in operating assets and liabilities:        
Prepaid expenses and other current assets  (600)  (1,104)
Accounts payable, accrued expenses and related parties  981   1,153 
Deferred revenues  (674)  (675)
Liability for employee rights upon retirement  1   1 
Other liabilities  (3)  - 
Total net cash used in operating activities  (6,903)  (6,152)
CASH FLOWS FROM INVESTING ACTIVITIES:        
Investment in short-term deposits  (100,000)  (7,460)
Purchase of held to maturity securities  -   (658)
Purchase of corporate bonds designated as fair value  -   (1,004)
Proceeds from sale of short-term deposits  -   7,960 
Proceeds from maturity of held to maturity securities  953   1,900 
Proceeds from sale of mutual funds  -   775 
Funds in respect of employee rights upon retirement  (1)  (1)
Purchase of property and equipment  -   (313)
Total net cash provided by (used in) investing activities  (99,048)  1,199 
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from issuance of common stock, net of issuance costs  59,940   586 
Proceeds from exercise of options  623   - 
Total net cash provided by financing activities  60,563   586 
EFFECT OF EXCHANGE RATE CHANGES ON CASH  23   2 
         
DECREASE IN CASH AND CASH EQUIVALENTS  (45,365)  (4,365)
         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  77,245   19,296 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $31,880  $14,931 
         
(A) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS -        
Interest received $112  $92 
(B) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:        
Recognition of operating lease right of use assets and liabilities $-  $582 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

 

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

a.General:

1)Incorporation and operations

Oramed Pharmaceuticals Inc. (collectively with its subsidiary,subsidiaries, the “Company”, unless the context indicates otherwise) was incorporated on April 12, 2002, under the laws of the State of Nevada. From incorporation until March 3, 2006, the Company was an exploration stage company engaged in the acquisition and exploration of mineral properties. On February 17, 2006, the Company entered into an agreement with Hadasit Medical Services and Development Ltd. (“Hadasit”) to acquire the provisional patent related to an orally ingestible insulin capsule to be used for the treatment of individuals with diabetes.

On May 14, 2007, the Company incorporated a wholly-owned subsidiary in Israel, Oramed Ltd. (the “Subsidiary”), which is engaged in research and development.

On March 11, 2011, the Company was reincorporated from the State of Nevada to the State of Delaware.

On July 30, 2019, the Subsidiary incorporated a wholly-owned subsidiary in Hong Kong, Oramed HK Limited (the “Hong Kong Subsidiary”). As of November 30, 2021, the Hong Kong Subsidiary has no operations.

On November 30, 2015, the Company entered into a Technology License Agreement (the “TLA”), with Hefei Tianhui IncubationIncubator of Technologies Co. Ltd. (“HTIT”) and on December 21, 2015, the parties entered into an Amended and Restated Technology License Agreement that was further amended by the parties on June 3, 2016 and July 24, 2016 (the “License“HTIT License Agreement”). According to the License Agreement, the Company granted HTIT an exclusive commercialization license in the territory of the People’s Republic of China, Macau and Hong Kong (the “Territory”), related to the Company’s oral insulin capsule, ORMD-0801 (the “Product”). Pursuant to the License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to the Subsidiary’s technology and ORMD-0801 capsule, and will pay to the Subsidiary (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory (“Royalties”), and (ii) an aggregate of $37,500, of which $3,000 was payable immediately, $8,000 will be paid subject to the Company entering into certain agreements with certain third parties, and $26,500 will be paid upon achievement of certain milestones and conditions. In the event that the Company does not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the final expiration of the Company’s patents covering the technology in the Territory in 2033, the Royalties rate may be reduced, under certain circumstances, to 5%.See note 2b.

The royalty payment obligation shall apply during the period of time beginning upon the first commercial sale of the Product in the Territory, and ending upon the later of (i) the expiration of the last-to-expire licensed patents in the Territory; and (ii) 15 years after the first commercial sale of the Product in the Territory (the “Royalty Term”).

The License Agreement shall remain in effect until the expiration of the Royalty Term. The License Agreement contains customary termination provisions.

6

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

Among others, the Company’s involvement through the product submission date will include consultancy for the pre-commercialization activities in the Territory, as well as advisory services to HTIT on an ongoing basis.

The initial payment of $3,000 was received in January 2016. Following the achievement of certain milestones, the second and third payments of $6,500 and $4,000, respectively, were received in July 2016 and the fourth milestone payment of $4,000 was received in October 2016.

In addition, on November 30, 2015,On March 18, 2021, the Company entered into a Stock Purchaselicense agreement (the “Oravax License Agreement”) and into the Stockholders Agreement (as defined below) with HTIT (the “SPA”Oravax Medical Inc. (“Oravax”). According to the SPA,Stockholders Agreement, Oravax issued 1,890,000 shares of its capital stock to the Company, issued 1,155,367 shares of common stock to HTIT for $12,000. The transaction closed on December 28, 2015.

The License Agreement and the SPA were considered a single arrangement with multiple deliverables. The Company allocated the total consideration of $49,500 between the License Agreement and the SPA according to their fair value, as follows: $10,617 was allocated to the issuance of common stock (less issuance expenses of $23), based on the quoted pricerepresenting 63% of the Company’s sharesissued and outstanding share capital of Oravax, on a fully diluted basis, as of the closing date of the SPA on December 28, 2015, and $38,883 was allocated to the License Agreement. Given the Company’s continuing involvement through the expected product submission (June 2023), amounts received relating to the License Agreement are recognized over the period from which the Companyissuance. Consequently, Oramed is entitled to the respective payment, and the expected product submission date using a time-based model approach over the periods that the fees are earned.

In July 2015, according to the letter of intent signed between the parties or their affiliates, HTIT’s affiliate paid the Subsidiary a non-refundable amount of $500 as a no-shop fee. The no-shop fee was deferred and the related revenue is recognized over the estimated term of the License Agreement.

Amounts that were allocated to the License Agreementconsolidating Oravax in its consolidated financial statements as of November 30, 2017 aggregated $19,383, all of which were received through the balance sheet date. Through November 30, 2017, the Company recognized revenue in the amount of $3,708, and deferred the remaining amount of $15,675.May 31, 2021.

72)

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

The following table summarizes the movement in deferred revenues balances for the three-month period ended November 30, 2017 and the year ended August 31, 2017:

   Three months ended November 30,  Year ended August 31, 
   2017  2017 
        
 Deferred revenue at the beginning of period $16,286  $14,766 
 Amounts received  -     4,000 
 Amounts due to the Company  -     (24)
 Revenue recognized  (611)  (2,456)
 Deferred revenue at the end of period  15,675   16,286 
 Less – current deferred revenue portion  (2,449)  (2,449)
 Non-current deferred revenue portion $13,226  $13,837 

2)Development and liquidity risks

The Company is engaged in research and development in the biotechnology field for innovative pharmaceutical solutions, including an orally ingestible insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules for delivery of other polypeptides, and has not generated significant revenues from its operations. Continued operation ofBased on the Company’s current cash resources and commitments, the Company is contingent upon obtaining sufficient funding untilbelieves it becomes profitable.will be able to maintain its current planned development activities and the corresponding level of expenditures for at least the next 12 months, although no assurance can be given that the Company will not need additional funds prior to such time. If there are unexpected increases in its operating expenses, the Company may need to seek additional financing during the next 12 months. Successful completion of the Company’s development programs and its transition to normal operations is dependent upon obtaining necessary regulatory approvals from the U.S. Food and Drug Administration prior to selling its products within the United States, obtaining foreign regulatory approvals to sell its products internationally, or entering into licensing agreements with third parties. There can be no assurance that the Company will receive regulatory approval of any of its product candidates, and a substantial amount of time may pass before the Company achieves a level of revenues adequate to support its operations, if at all. The Company also expects to incur substantial expenditures in connection with the regulatory approval process for each of its product candidates during their respective developmental periods. Obtaining marketing approval will be directly dependent on the Company’s ability to implement the necessary regulatory steps required to obtain marketing approval in the United States and in other countries. The Company cannot predict the outcome of these activities.

In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operation by monitoring the spread of COVID-19 and the actions implemented by the governments to combat the virus throughout the world.


 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued):

b.Loss per common share

Basic and diluted net loss per common share are computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding for each period. Outstanding stock options, warrants and restricted stock units (“RSUs”) have been excluded from the calculation of the diluted loss per share because all such securities are anti-dilutive for all periods presented. The totalweighted average number of common stock options, warrants and RSUs excluded from the calculation of diluted net loss was 1,424,0293,138,733 and 2,470,4945,278,347 for the three-monththree month periods ended November 30, 20172021 and 2016,November 30, 2020, respectively.

c.Revenue recognition

The HTIT License Agreement and a stock purchase agreement, dated November 30, 2015, between the Company and HTIT (the “SPA”) were considered a single arrangement with multiple deliverables. The Company allocated the total consideration of $49,500 between the HTIT License Agreement and the SPA according to their fair value, as follows: $10,617 was allocated to the issuance of common stock (less issuance expenses of $23), based on the quoted price of the Company’s shares on the closing date of the SPA on December 28, 2015, and $38,883 was allocated to the HTIT License Agreement.

Under Accounting Standard Codification, (“ASC”) 606, the Company identified a single performance obligation in the agreement and determined that the license and services are not distinct as the license and services are highly dependent on each other. In other words, HTIT cannot benefit from the license without the related services, and vice versa.

Since the customer benefits from the services as the entity performs, revenue is recognized over time through the expected product submission date in June 2023, using the input method. The Company used the input method to measure the process for the purpose of recognizing revenue, which approximates the straight line attribution. The Company used significant judgment when it determined the product submission date.

Under ASC 606, the consideration that the Company would be entitled to upon the achievement of contractual milestones, which are contingent upon the occurrence of future events, are a form of variable consideration. When assessing the portion, if any, of such milestones-related consideration to be included in the transaction price, the Company first assesses the most likely outcome for each milestone and excludes the consideration related to milestones of which the occurrence is not considered the most likely outcome.

The Company then evaluates if any of the variable consideration determined in the first step is constrained by including in the transaction price variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company used significant judgment when it determined the first step of variable consideration.

The potential future royalty consideration is also considered a form of variable consideration under ASC 606 as it is based on a percentage of potential future sales of the Company’s products. However, the Company applies the sales-based royalty exception and accordingly will recognize the sales-based royalty amounts when the related sale has occurred. To date, the Company has not recognized any royalty-related revenue.

Amounts that were allocated to the HTIT License Agreement as of November 30, 2021 aggregated $22,382, all of which were received through the balance sheet date. Through November 30, 2021, the Company has recognized revenue associated with this agreement in the aggregate amount of $16,109, of which $674 was recognized in the quarter ended November 30, 2021, and deferred the remaining amount of $6,273 which is presented as deferred revenues on the condensed consolidated balance sheet.

8

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES(continued):

a.d.Condensed Consolidated Financial Statements Preparationconsolidated financial statements preparation

The condensed consolidated financial statements included herein have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAPGAAP”) and, on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 20172021 (the “2017“2021 Form 10-K”). These condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair statement of the results of the periods presented. Certain information and disclosures normally included in annual consolidated financial statements have been omitted in this interim period report pursuant to the rules and regulations of the Securities and Exchange Commission. Because the condensed consolidated interim financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the 20172021 Form 10-K. The results for interim periods are not necessarily indicative of a full fiscal year’s results.

 

b.e.NewlyRecently issued and recentlyaccounting pronouncements, not yet adopted Accounting Pronouncements

In May 2014,June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with Customers”a methodology that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principlereflects expected credit losses and requires consideration of this ASU is that an entity will recognize revenue upon the transfera broader range of goods or servicesreasonable and supportable information to customers in an amount that the entity expects to be entitled to in exchange for those goods or services.inform credit loss estimates. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration ofwill be effective for the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective in annual reporting periodsfiscal year beginning after December 15, 2017,2022, including interim reporting periods within that reporting period.year. The Company will implementadoption of this guidance is not expected to have a significant impact on the guidance for the annual period ending on August 31, 2019. The Company is currently evaluating the impact of the guidance on itsCompany’s consolidated financial statements.

9

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 2 - COMMITMENTS:

a.In March 2011, the Subsidiary sold shares of its investee company, Entera Bio Ltd. (“Entera”) to D.N.A Biomedical Solutions Ltd. (“D.N.A”), retaining 117,000 ordinary shares (after giving effect to a 3% interest as of March 2011, which is accounted for as a cost method investment (amounting to $1)stock split by Entera in July 2018). In consideration for the shares sold to D.N.A, the Company received, among other payments, 4,202,334 ordinary shares of D.N.A (see also note 4).

As part of this agreement, the Subsidiary entered into a patent transfer agreement (the “Patent Transfer Agreement”) according to which the Subsidiary assigned to Entera all of its right, title and interest in and to thea certain patent application related to the oral administration of proteins that it has licensed to Entera since August 2010. Under this agreement, the Subsidiary is entitled to receive from Entera royalties of 3% of Entera’s net revenues (as defined in the agreement) and a license back of that patent application for use in respect of diabetes and influenza. As of November 30, 2017,2021, Entera had not yet realized any revenues and had not paid any royalties to the Subsidiary. On December 11, 2018, Entera announced that it had entered into a research collaboration and license agreement (the “Amgen License”) with Amgen related to the research of inflammatory disease and other serious illnesses. As reported by Entera, under the terms of the Amgen License, Entera will receive a modest initial technology access fee from Amgen and will be responsible for preclinical development at Amgen’s expense. Entera will be eligible to receive up to $270,000 in aggregate payments, as well as tiered royalties up to mid-single digits, upon achievement of various clinical and commercial milestones if Amgen decides to move all of these programs forward. Amgen is responsible for clinical development, manufacturing and commercialization of any of the resulting programs. To the extent the Amgen License results in net revenues as defined in the Patent Transfer Agreement, the Subsidiary will be entitled to the aforementioned royalties.

In addition, as part of a consulting agreement with a third party, dated February 15, 2011, the Subsidiary is obliged to pay this third party royalties of 8% of the net royalties received in respect of the patent that was sold to Entera in March 2011.


 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 2 - COMMITMENTS (continued):

b.On January 3, 2017,

According to the HTIT License Agreement, the Company granted HTIT an exclusive commercialization license in the territory of the People’s Republic of China, Macau and Hong Kong (the “Territory”), related to the Company’s oral insulin capsule, ORMD-0801 (the “Product”). Pursuant to the HTIT License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to the Subsidiary’s technology and ORMD-0801 capsule, and will pay to the Subsidiary (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory (“Royalties”), and (ii) an aggregate of $37,500, of which $3,000 was payable immediately, $8,000 will be paid subject to the Company entering into certain agreements with certain third parties, and $26,500 will be paid upon achievement of certain milestones and conditions. In the event that the Company does not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the final expiration of the Company’s patents covering the technology in the Territory in 2033, the Royalties rate may be reduced, under certain circumstances, to 5%.

The royalty payment obligation shall apply during the period of time beginning upon the first commercial sale of the Product in the Territory, and ending upon the later of (i) the expiration of the last-to-expire licensed patents in the Territory; and (ii) 15 years after the first commercial sale of the Product in the Territory (the “Royalty Term”).

The HTIT License Agreement shall remain in effect until the expiration of the Royalty Term. The HTIT License Agreement contains customary termination provisions.

Among others, the Company’s involvement through the product submission date will include consultancy for the pre-commercialization activities in the Territory, as well as advisory services to HTIT on an ongoing basis.

As of November 30, 2021, the Company has received milestone payments in an aggregate amount of $20,500 as follows: the initial payment of $3,000 was received in January 2016. Following the achievement of certain milestones, the second and third payments of $6,500 and $4,000, respectively, were received in July 2016, the fourth milestone payment of $4,000 was received in October 2016 and the fifth milestone payment of $3,000 was received in January 2019.

On August 21, 2020, the Company received a letter from HTIT, disputing certain pending payment obligations of HTIT under the TLA. The payment obligation being disputed is $6,000, out of which only an amount of $2,000 has been received and has been included in Deferred revenue in each of the consolidated balance sheets as of November 30, 2021 and for the fiscal years ended August 31, 2021, and 2020. The Company wholly disputes the claims made by HTIT and has been engaged in discussions and exchanges with HTIT in an attempt to clarify and resolve disagreements between the parties regarding milestone payments and work plan implementation.

In addition, on November 30, 2015, the Company entered into SPA. According to the SPA, the Company issued 1,155,367 shares of common stock to HTIT for $12,000. The transaction closed on December 28, 2015.

The HTIT License Agreement and the SPA were considered a lease agreement for its office facilitiessingle arrangement with multiple deliverables. The Company allocated the total consideration of $49,500 between the HTIT License Agreement and the SPA according to their fair value, as follows: $10,617 was allocated to the issuance of common stock (less issuance expenses of $23), based on the quoted price of the Company’s shares on the closing date of the SPA on December 28, 2015, and $38,883 was allocated to the HTIT License Agreement. The Company determined that revenues are recognized over time through the expected product submission date in Israel.June 2023.

In July 2015, according to the letter of intent signed between the parties or their affiliates, HTIT’s affiliate paid the Subsidiary a non-refundable amount of $500 as a no-shop fee. The lease agreementno-shop fee was deferred and the related revenue is for a periodrecognized over the estimated term of 60 months commencing October 1, 2016.the HTIT License Agreement.


For the Company’s revenue recognition policy see note 1c. 

The annual lease payment is New Israeli Shekel (“NIS”) 119,000 ($34) from October 2016 through September 2018 and NIS 132,000 ($38) from October 2018 through September 2021, and is linked to the increase in the Israeli consumer price index (“CPI”) (as of November 30, 2017, the future lease payments until the expiration of the lease agreement will be $142, based on the exchange rate as of November 30, 2017).


 

As security for its obligation under this lease agreement, the Company provided a bank guarantee

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in an amount equal to three monthly lease payments.thousands (except share and per share data)

(UNAUDITED)

NOTE 2 - COMMITMENTS (continued):

c.On March 3, 2016,December 18, 2017, the Subsidiary entered into an agreement with a vendor for process development and production of its capsules and on November 24, 2016, April 3, 2017 and July 10, 2017 into amendments to such agreement in an amount of up to Swiss Franc (“CHF”) 1,000,000 ($1,014), CHF 665,000 ($675) of which was recognized through November 30, 2017.

d.On May 11, 2016, the Subsidiary entered into a Master Service Agreement with a vendor to retain its services for a pre-clinical toxicology trial for an oral GLP-1 analog capsule for type 2 diabetes patients. As consideration for its services, the Subsidiary will pay the vendor a total amount of $1,283 during the term of the engagement and based on achievement of certain milestones, of which $1,266 was recognized through November 30, 2017.

e.On June 13, 2016, the Subsidiary entered into a four-year service agreement with a third party and on December 19, 2016, this agreement and all of the third party rights and obligations thereunder were assigned to another third party. This agreement is required by the License Agreement as described in note 1 and will support the Company’s research and development. The Subsidiary is obligated to pay the third party a total amount of up to €2,360,000 ($2,722), of which €962,400 ($1,067) was recognized in research and development through November 30, 2017.

10

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 2 - COMMITMENTS(continued):

f.On July 24, 2016, the Subsidiary entered into a General Technical Agreement with a vendor for the scale-up process development and production of one of its oral capsule ingredients in the amount of $4,300$2,905 that will be paid over the term of the engagement and based on the achievement of certain development milestones, $3,980 of which were$1,592 was recognized in research and development expenses through November 30, 2017. This agreement is part of the requirements of the License Agreement as described in note 1.2021.

g.d.On February 21, 2017,September 2, 2020 (effective as of January 15, 2020), the Subsidiary entered into an agreementa CRO Services Agreement with a vendorthird party to retain its servicesit as a clinical research organization (“CRO”) for a pre-clinical toxicologythe Subsidiary’s phase 3 clinical trial for anits oral insulin capsule for type 2 and type 1 diabetes patients.insulin. As consideration for its services, the Subsidiary will pay the vendorCRO a total amount of up to $952$21,589 during the term of the engagement and based on achievement of certain milestones, of which $691$10,048 was recognized in research and development expenses through November 30, 2017.2021.

h.e.On May 3, 2017, the Company entered into a consulting agreement with a third party advisor for a periodSeptember 16, 2020 (effective as of one year, pursuant to which such advisor will provide investor relations services and will be entitled to receive a monthly cash fee and 10,000 shares of the Company’s common stock that will be issued in four equal quarterly installments commencing August 1, 2017. As of November 30, 2017, the Company had issued to such advisor 5,000 shares. The fair value of the shares at the grant date was $44.

i.On June 5, 2017,January 15, 2020), the Subsidiary entered into a clinical research agreementCRO Services Agreement with a vendor,third party to retain it as a CRO for the conduct of its clampSubsidiary’s phase 3 clinical trial for anits oral insulin capsule for type 1 diabetes patients.insulin. As consideration for its services, the Subsidiary will pay the vendorCRO a total amount of $958$12,343 during the term of the engagement and based on achievement of certain milestones, $160 of which $3,991 was recognized in research and development expenses through November 30, 2017.2021.

j.f.Grants from the Bio-Jerusalem Fund (“Bio-Jerusalem”)

The Subsidiary is committed to pay royalties to Bio-Jerusalem on proceeds from future sales at a rate of 4% and up to 100% of the amount of the grant received (Israeli CPI linked) at the total amount of $65. The Company received no grants from Bio-Jerusalem since fiscal year 2013.

Through November 30, 2017, total milestone payments received which are related to the funded project aggregated $17,500 and all related royalty expenses were recognized in cost of revenues in prior periods.

k.Grants from the Israel Innovation Authority (“IIA”)

Under the terms of the Company’s funding from the IIA, royalties of 3.5%3% are payable on sales of products developed from a project so funded, up to a maximum amount equaling 100%-150% of the grants received (dollar linked) with the addition of interest at an annual rate based on LIBOR.

At the time the grants were received, successful development of the related projects was not assured.

The total amount that was received through November 30, 20172021 was $2,194.$2,207 ($2,510 including interest).

ThroughAs of November 30, 2017, total milestone payments received2021, the liability to the IIA was $207.

The royalty expenses which are related to the funded project aggregated $17,500. The royalty expenses were recognized in cost of revenues in prior periods and will be paid over the term of the License Agreement in accordance with the revenue recognized from the related project.relevant periods.

 

11

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 3 - FAIR VALUE:

The Company measures fair value and discloses fair value measurements for financial assets and liabilities.assets. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1:Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:Observable prices that are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3:Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

As of November 30, 2017,2021, the assets or liabilities measured at fair value are comprised of available for sale equity securities (Level 1).

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

As of November 30, 2017, the carrying amount of cash and cash equivalents, short-term deposits and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term maturities of these instruments.

As of November 30, 2017, the carrying amount of long-term deposits approximates their fair values due to the stated interest rates which approximate market rates.

The fair value of held to maturity bonds as presented in note 4 was based on a Level 12 measurement.

As of November 30, 2021, the carrying amounts of cash equivalents, short-term deposits and accounts payable approximate their fair values due to the short-term maturities of these instruments.

As of November 30, 2021, the carrying amounts of long-term deposits approximate their fair values due to the stated interest rates which approximate market rates.

The amounts funded in respect of employee rights are stated at cash surrender value which approximates its fair value.

There were no Level 3 items for the three-monththree month periods ended November 30, 20172021 and 2016.November 30, 2020.

12

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 4 - MARKETABLE SECURITIES:

The Company’s marketable securities include investments in equity securities of D.N.A and Entera and in held to maturity bonds.

a.Composition:

   November 30, 2017  August 31, 2017 
 Short-term:      
 D.N.A (see b below) $1,322  $996 
 Held to maturity bonds (see c below)  1,400   1,864 
   $2,722  $2,860 
 Long-term:        
 Held to maturity bonds (see c below) $4,598  $2,151 
  November 30,
2021
  August 31,
2021
 
Short-term:      
D.N.A (see b below) $724  $701 
Entera (see c below)  397   571 
Held to maturity bonds (see d below)  6,452   4,579 
  $7,573  $5,851 
Long-term:        
Held to maturity bonds (see d below) $4,131  $6,692 
  $11,704  $12,543 

b.D.N.A

The investment in D.N.A is reported at fair value, with unrealized gains and losses, recorded as a separate component of other comprehensive income in equity until realized. Unrealized losses that are considered to be other-than-temporary are charged to statement of operations as an impairment charge and are included in the consolidated statement of operations under impairment of available-for-sale securities.

The D.N.A ordinary shares are traded on the Tel Aviv Stock Exchange. The fair value of those securities is measured at the quoted prices of the securities on the measurement date.

As of November 30, 2017,2021, the Company owns approximately 6.9%1.7% of D.N.A’s outstanding ordinary shares.

The cost of the securities as of November 30, 20172021 and August 31, 20172021 is $595.

c.Entera

Entera ordinary shares have been traded on The Nasdaq Capital Market since June 28, 2018. The Company measures the investment at fair value from such date, since it has a readily determinable fair value (prior to such date the investment was accounted for as a cost method investment (amounting to $1)).

13

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 4 - MARKETABLE SECURITIES (continued):

c.d.Held to maturity securities

The amortized cost and estimated fair value of held-to-maturity securities as of November 30, 2017,2021, are as follows:

   November 30, 2017 
   Amortized cost  Gross unrealized losses  

 

Estimated fair value

 
 Short-term:         
 Commercial bonds $1,359  $(2) $1,357 
 Accrued interest  41   -   41 
              
 Long-term  4,598   (27)  4,571 
   $5,998  $(29) $5,969 
  November 30, 2021 
  Amortized cost  Gross unrealized gains (losses)  

 

Estimated
fair value

  

Average

yield to maturity

rate

 
Short-term:            
Commercial bonds $6,348  $(109) $6,239   1.42%
Accrued interest  104   -   104     
                 
Long-term  4,131   (20)  4,111   1.24%
  $10,583  $(129) $10,454     

As of November 30, 2017, the contractual maturities of debt securities classified as held-to-maturity are as follows: after one year through two years, $4,598, and the yield to maturity rates vary between 1.40% to 1.90%.

The amortized cost and estimated fair value of held-to-maturity securities as of August 31, 2017,2021, are as follows:

   August 31, 2017 
   Amortized cost  Gross unrealized losses  

 

Estimated fair value

 
 Short-term:         
 Commercial bonds $1,823  $  (1) $1,822 
 Accrued interest  41   -   41 
              
 Long-term  2,151   -   2,151 
   $4,015  $(1) $4,014 
  August 31, 2021 
  Amortized cost  Gross unrealized gains (losses)  

 

Estimated
fair value

  

Average

yield to maturity

rate

 
Short-term:            
Commercial bonds $4,463  $(98) $4,365   1.73%
Accrued interest  116   -   116     
                 
Long-term  6,692   610   7,302   1.08%
  $11,271  $512  $11,783     

As of August 31, 2017, the contractual maturities of debt securities classified as held-to-maturity are as follows: after one year through two years, $2,151 and the yield to maturity rates vary between 1.30% to 1.87%.

Held to maturity securities which will mature during the 12 months from the balance sheet date are included in short-term marketable securities. Held to maturity securities with maturity dates of more than one year are considered long-term marketable securities.

14

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 5 - LONG-TERM DEPOSITS AND INVESTMENTS:STOCKHOLDERS’ EQUITY:

1.On September 1, 2021, the Company entered into a controlled equity offering agreement (the “Cantor Equity Distribution Agreement”) with Cantor Fitzgerald & Co., as agent, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $100,000, through a sales agent, subject to certain terms and conditions. Any shares sold will be sold pursuant to our effective shelf registration statement on Form S-3 including a prospectus dated July 26, 2021 and prospectus supplement dated September 1, 2021.  The Company paid the sales agent a cash commission of 3.0% of the gross proceeds of the sale of any shares sold through the sales agent under the Cantor Equity Distribution Agreement. As of November 30, 2021 and through January 11, 2022, 565,120 shares were issued under the Cantor Equity Distribution Agreement for aggregate net proceeds of $12,298.

Composition:

2.On November 3, 2021, the Company entered into a securities purchase agreement with several institutional and accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell, in a registered direct offering (the “Offering”), an aggregate of 2,000,000 shares of the Company’s common stock to the Purchasers for an offering price of $25.00 per share. The closing of the sale of the shares occurred on November 5, 2021. The net proceeds to the Company from the Offering, after deducting the placement agent’s fees and expenses and the Company’s Offering expenses, were approximately $46,375.

   November 30,  August 31, 
   2017  2017 
        
 Bank deposits (1) $17,778  $16,230 
 Lease car deposits  1   1 
 Investment  1   1 
   $17,780  $16,232 
3.The following are the significant stock options transactions with employees and board members made during the three months ended November 30, 2021:

(1)a.Represents U.S. dollar bank deposits which carry fixed annual interest rates between 2.15%On September 1, 2021, the Company granted options to 2.56%, with maturitiespurchase an aggregate of more than one year from50,000 shares of common stock of the Company at an exercise price of $20.19 per share (equivalent to the closing price of the Company’s common stock on the date of grant) to the condensed consolidated balance sheet.Chief Financial Officer. The latest maturityoptions shall vest in four equal installments of 12,500 options on each of June 27, 2022, June 27, 2023, June 27, 2024 and June 27, 2025. These options expire on September 1, 2031. The fair value of all these options on the date is duringof grant was $574, using the year ending August 31, 2020.Black Scholes option-pricing model and was based on the following assumptions: stock price of $20.19; dividend yield of 0% for all years; expected volatility of 61.62%; risk-free interest rates of 0.93%; and expected term of 6.16 years.
b.

On September 1, 2021, the Company granted 50,000 RSUs to the Chief Financial Officer that shall vest as follows:

33,333 if the closing price per share of the Company’s common stock will be at least $25.00 for at least 20 days out of any 30-trading day period; and

 

1.If the first condition is met any time before June 27, 2022, then the RSUs will vest in three equal installments (on June 27, 2022, June 27, 2023 and June 27, 2024).

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

2.If the first condition is met any time between June 27, 2022 and June 27, 2023, then 1/3 of the RSUs will vest immediately, and the remainder will vest in two equal installments (on June 27, 2023 and June 27, 2024).

3.If the first condition is met anytime between June 27, 2023 and June 27, 2024, then 2/3 of the RSUs will vest immediately, and the remaining 1/3 will vest on June 27, 2024).

4.If the first condition is met any time after June 27, 2024, then the RSUs will vest immediately.

16,667 upon achievement of a certain licensing agreement as specified by the Board of Directors; and

1.If the first condition is met any time before June 27, 2022, then the RSUs will vest in three equal installments (on June 27, 2022, June 27, 2023 and June 27, 2024).

2.If the first condition is met any time between June 27, 2022 and June 27, 2023, then 1/3 of the RSUs will vest immediately, and the remainder will vest in two equal installments (on June 27, 2023 and June 27, 2024).

3.If the first condition is met any time between June 27, 2023 and June 27, 2024, then 2/3 of the RSUs will vest immediately, and the remaining 1/3 will vest on June 27, 2024).

4.If the first condition is met any time after June 27, 2024, then the RSUs will vest immediately.

These RSUs expire on September 1, 2031.

Composition:

   November 30,  August 31, 
   2017  2017 
        
 Accounts payable $1,582  $571 
 Payroll and related accruals  54   97 
 Institutions  24   228 
 Accrued liabilities  645   1,593 
 Other  294   227 
   $2,599  $2,716 

NOTE 7 - STOCKHOLDERS’ EQUITY:

On April 2, 2015, the Company entered into an At The Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc., as successor to FBR Capital Markets & Co. (“FBR”), as amended, pursuant to which the Company may, from time to time and at its option, issue and sell shares of its common stock having an aggregate offering price of up to $25,000 through FBR as its sales agent, subject to certain terms and conditions. Any shares sold will be sold pursuant to the Company’s effective shelf registration statement on Form S-3 including a prospectus dated February 2, 2017, as supplemented by a prospectus supplement dated April 5, 2017. The Company will pay FBR a commission of 3.0%total value of the gross proceeds ofRSUs is $662, using the sale of any shares sold through FBR. As of November 30, 2017, 456,889 shares were sold under the Sales AgreementMonte-Carlo model for aggregate net proceeds of $4,256 and an additional 50,000 shares were subsequently sold during December 2017 for aggregate net proceeds of $441.RSUs with market conditions.

 

15

 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 6 - LEASES

(UNAUDITED)

The right-of-use asset and lease liability are initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate based on the information available at the date of adoption in determining the present value of the lease payments. The Company’s incremental borrowing rate is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located.

The Company has various operating leases for office space and vehicles that expire through 2025. Below is a summary of our operating right-of-use assets and operating lease liabilities as of November 30, 2021 and August 31. 2021:

  November 30,
2021
  August 31,
2021
 
Operating right-of-use assets $504  $533 
         
Operating lease liabilities, current  130   130 
Operating lease liabilities long-term  374   403 
Total operating lease liabilities $504  $533 

For more information about our office lease terms, please see note 2(c).

Minimum lease payments for the Company’s right-of-use assets over the remaining lease periods as of November 30, 2021 and August 31. 2021 are as follows:

  November 30,
2021
  August 31,
2021
 
2022 $118  $156 
2023  140   138 
2024  138   136 
2025  138   136 
Total undiscounted lease payments  534   565 
Less: Interest*  (30)  (32)
Present value of lease liabilities $504  $533 

*Future lease payments were discounted by 3% interest rate.

NOTE 87 - RELATED PARTIES - TRANSACTIONS:

On July 1, 2008, the Subsidiary entered into two consulting agreements with KNRY Ltd. (“KNRY”), an Israeli company owned by the Chief Scientific Officer (the “CSO”),CSO, whereby the Chief Executive Officer (the “CEO”)CEO and the CSO, through KNRY, provide services to the Company (the “Consulting Agreements”). The Consulting Agreements are both terminable by either party upon 140 days prior written notice. The Consulting Agreements, as amended, provide that KNRY will be reimbursed for reasonable expenses incurred in connection with the performance of the Consulting Agreements and that the monthly consulting fee paid to the CEO and the CSO is NIS 127,570146,705 ($35)46) and NIS 80,454106,400 ($22)34), respectively.

In addition to the Consulting Agreement,Agreements, based on a relocation cost analysis, prepared by consulting company ORI - Organizational Resources International Ltd., the Company pays for certain direct costs, related taxes and expenses incurred in connection with the relocation of the CEO to New York, upU.S. During the three months ended November 30, 2021, such relocation expenses totaled $67, compared to an aggregate yearly amount of $332.$74 for the three months ended November 30, 2020.

 

NOTE 9 - SUBSEQUENT EVENT:


 

ORAMED PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except share and per share data)

(UNAUDITED)

NOTE 8 – SUBSEQUENT EVENTS:

a.On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”), which among other changes reduces the federal corporate tax rate to 21%. The Company is currently evaluating the impact of the TCJA on its consolidated financial statements.

b.On December 18, 2017,2, 2021, the Subsidiary entered into an addendum (the “Addendum”) to the current lease agreement withfor its facilities in Israel. The Addendum refers to the lease of an additional space of 264 sqm for a vendorperiod of 60 months commencing February 1, 2022. The Subsidiary has the option to extend the period for another 60 months. The annual lease payment, including management fees, is approximately NIS 435,000 ($138). As security for its obligation under this lease agreement, the process development and productionCompany will provide a bank guarantee in an amount equal to 3 monthly lease payments.

b.On January 3, 2022, the Company granted an aggregate of one150,000 shares of its oral capsule ingredients in the amountCompany’s common stock to the Company’s Chief Executive Officer. The total fair value of $2,900.these shares on the date of grant was $2,084, using the quoted closing market share price of $13.89 on the Nasdaq Capital Market on the date of grant.

 

 16c.On January 3, 2022, the Company granted an aggregate of 207,500 RSUs representing a right to receive shares of the Company’s common stock to the Company's employees and board members as follows: 63,000 to the President and Chief Executive Officer; 42,000 to the Chief Scientific Officer; 21,000 to the Chief Operating Officer, 19,000 to the Chief Financial Officer and Treasurer, 19,000 to the Chief Commercial Officer, 18,000 to the Chief Legal Officer and Secretary (effective as of the time his employment with the Company commenced on January 9, 2022), an aggregate of 24,000 to four board members and 1,500 to an employee. The RSUs will vest in four equal annual instalments on each of January 1, 2023, 2024, 2025 and 2026. These RSUs expire on January 3, 2032. The total fair value of these RSUs on the date of grant was $2,882, using the quoted closing market share price of $13.89 on the Nasdaq Capital Market on the date of grant.

 d.On January 3, 2022, the Company granted options to purchase an aggregate of 321,500 shares of common stock of the Company to the Company's employees and board members at an exercise price of $13.89 per share (equivalent to the closing price of the Company’s common stock on the date of grant) as follows: 107,000 to the President and Chief Executive Officer; 72,000 to the Chief Scientific Officer; 36,000 to the Chief Operating Officer, 32,000 to the Chief Financial Officer and Treasurer and 32,000 to the Chief Commercial Officer, an aggregate of 40,000 to four board members and 2,500 to an employee. The options will vest in four equal annual instalments on each of January 1, 2023, 2024, 2025 and 2026. These options expire on January 3, 2032. The fair value of all these options on the date of grant was $2,627, using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $13.89; dividend yield of 0% for all years; expected volatility of 62.94%; risk-free interest rates of 1.46%; and expected term of 6.25 years.

e.On January 3, 2022, the Company granted options to purchase an aggregate of 30,000 shares of common stock of the Company to the Company's Chief Legal Officer and Secretary (effective as of the time his employment with the Company commenced on January 9, 2022), at an exercise price of $12.03 per share (equivalent to the closing price of the Company’s common stock on January 10, 2022 which represents the first trading date after his employment with the Company commenced). The options will vest in four equal annual instalments on each of January 1, 2023, 2024, 2025 and 2026. These options expire on January 3, 2032. The fair value of all these options on the date of grant was $214, using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $12.03; dividend yield of 0% for all years; expected volatility of 63.19%; risk-free interest rates of 1.62%; and expected term of 6.25 years.


 

ITEM 2 -MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes included elsewhere herein and in our consolidated financial statements, accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report (as defined below).

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. Words such as “expects,” “anticipates,” “intends,” “plans,” “planned expenditures,” “believes,” “seeks,” “estimates”“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:

the expected development and potential benefits from our products in treating diabetes;

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 the license agreement with Hefei Tianhui IncubationIncubator of Technologies Co., Ltd., or HTIT, as well as our disagreements with HTIT;

expected timing of a clinical study for the potential Oravax vaccine and its potential to protect against the coronavirus, or COVID-19, pandemic;

our consideration of ways in which our shareholders could benefit more directly from Oravax, including the potential issuance of some of our shares in Oravax to our shareholders as a dividend;

our research and development plans, including pre-clinical and clinical trials plans and the timing of enrollment, obtaining results and conclusion of trials, including without limitation, our expectation that we will initiate two six-month Phase III clinical trials if our Phase IIb three-month dosing clinical trial is successful, and our expectation to file a New DrugBiologics License Application, or BLA thereafter;

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 product efficacy, safety, patient convenience, reliability, value and patent position;

the potential market demand for our products;

our expectation that in the upcoming years our research and development expenses, net, 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.business; and

our expectations regarding the impact of COVID-19, including on our clinical trials and operations.

17

 

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 August 31, 2017,2021, or our Annual Report, as filed with the Securities and Exchange Commission, or the SEC, on November 29, 2017,24, 2021, as well as those discussed elsewhere in our Annual Report and this QuarterlyReport on Form 10-Q 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.

Overview of Operations

We are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions, including an oral insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of other polypeptides. We utilize Clinical Research Organizations, or CROs, to conduct our clinical studies.

Through our research and development efforts, we have successfully developed an oral dosage form intended to withstand the harsh environment of the stomach and intestines and effectively deliver active insulin or other proteins, such as Glucagon-like peptide-1, or GLP-1, leptin, and others. The excipients in the formulation are not intended to modify the proteins chemically or biologically, and the dosage form is designed to be safe to ingest. We plan to continue to conduct clinical trials to show the effectiveness of our technology.

Recent business developmentsOral insulin

Product Candidates

Orally Ingestible Insulin

In August 2017, we had a call with the U.S. Food and Drug Administration, or FDA, regarding our: Our proprietary flagship product, an orally ingestible insulin capsule, or ORMD-0801. DuringORMD-0801, allows insulin to travel from the call,gastrointestinal tract via the portal vein to the bloodstream, revolutionizing the manner in which insulin is delivered. It enables the passage in a more physiological manner than current delivery methods of insulin.

FDA advisedGuidance: In August 2017, the U.S. Food and Drug Administration, or FDA, instructed us that the regulatory pathway for the submission of ORMD-0801 would be a Biologics License Application.BLA. If approved, such athe BLA pathway would grant us 12 years of marketing exclusivity for ORMD-0801, from the approval date, and an additional six months of exclusivity may be granted to us if the product also receives approval for use in pediatric patients. The FDA confirmed that the approach to nonclinical toxicology, chemistry manufacturing controls and qualification of excipients would be driven by their published guidance documents. We plan to initiate in the first quarter of calendar year

Phase IIb Study: In May 2018, we initiated a three-month dose-ranging Phase IIb clinical trial of ORMD-0801 (Cohort A). This placebo controlled, randomized, 90-day treatment clinical trial was conducted on approximately 240269 type 2 diabetic, or T2D, patients in multiple centers throughout the United States pursuant to an Investigational New Drug application, or IND, with the FDA. The primary endpoints of the trial were to assess the safety and evaluate the effect of ORMD-0801 on HbA1c the main FDA registrational endpoint andlevels over a clamp study on six type 1 diabetic patients.

In February 2017, we completed a Phase IIa dose finding clinical trial which was initiated in October 2016. This randomized, double-blind trial was conducted on 32 type 2 adult diabetic patients in order to better define the optimal dosing of ORMD-0801 moving forward. The results90-day treatment period. Secondary endpoints of the trial indicatedincluded measurements of fasting plasma glucose, or FPG, post-prandial glucose, or PPG levels, during a mixed-meal tolerance test, or MMTT, and weight. In May 2019, we initiated an extension of this protocol for approximately 75 T2D patients, who were dosed using a lower dosage of insulin (Cohort B).

Cohort A: In November 2019, we announced positive results from the initial cohort of the Phase IIb trial. Patients randomized in the trial to once-daily ORMD-0801 achieved a statistically significant (p-value 0.036) reduction from baseline in HbA1c of 0.60% (0.54% with placebo adjustment). This 0.54% reduction in HbA1c is clinically meaningful. Treatment with ORMD-0801 demonstrated an excellent safety profile, with no serious drug-related adverse events and potentially meaningfulwith no increased frequency of hypoglycemic episodes when compared to placebo. In addition, during this 90-day trial, no weight gain was observed. In the initial cohort, 269 U.S.-based patients were enrolled and treated with a dose-increasing approach: 16 mg initial dose, titrated to 24 mg per dose, and then titrated to 32 mg per dose. Patients were randomized into three groups to assess dosing frequency: once-daily (32 mg per day), twice-daily (64 mg per day), thrice daily (96 mg per day). There was a corresponding placebo for each treatment arm. Two hundred nine (209) patients completed treatment to the 12-week endpoint and were included in the data analysis (24 subjects did not complete the full 12 weeks of treatment). The twice-daily arms achieved statistically significant (p-value 0.042) reductions from baseline in HbA1c of 0.59% (0.53% with placebo adjustment). The thrice-daily arm did not meet statistical significance (p-value 0.093). In addition, due to evidence of treatment-by-center interaction, two sites (36 patients (13.4% of enrolled subjects)) were excluded from the statistical analysis as they showed results opposite from the rest of the statistically significant results. Our internal investigation as well as an independent investigation did not find a cause for such discrepancy.


Cohort B: In February 2020, we announced positive topline data from the second and final cohort of the Phase IIb trial with a different regimen across three daily dose ranges (8 mg, 16 mg, 32 mg). Patients randomized in the trial treated with 8 mg of ORMD-0801 once-daily achieved a statistically significant (p-value 0.028) observed mean reduction of 1.29% from baseline and a least square mean reduction of 0.95% from baseline, or 0.81% adjusted for placebo. Patients who had HbA1c readings above 9% at baseline and received 8 mg of oral insulin once-daily experienced a 1.26% reduction in HbA1c by week 12. Treatment with ORMD-0801 at all doses demonstrated an excellent safety profile, with no serious drug-related adverse events and with no increased frequency of hypoglycemic episodes or weight gain compared to placebo. The primary efficacy endpoint was a reduction in HbA1c at week 12.

Phase III Study: Based on guidance received from the FDA as part of the end-of-phase II meeting process for our oral insulin candidate, ORMD-0801, we have submitted to the FDA the protocols for our upcoming pivotal Phase III studies. In line with the FDA’s expectations and recommendations, we are currently conducting two Phase III studies concurrently in patients with T2D. These studies involve about 1,125 patients to provide evidence of ORMD-0801’s safety and efficacy in T2D patients over a treatment period of 6 to 12 months. A geographically diverse patient population is being recruited from multiple sites throughout the United States, Europe, and Israel. Our Phase III study is composed from 2 protocols:

ORA-D-013-1: This study will treat T2D patients with inadequate glycaemic control who are currently on 2 or 3 oral glucose-lowering agents. This U.S. study will recruit 675 patients from over 90 clinical sites located throughout the U.S. Patients will be randomized 1:1:1 in this double-dummy study into cohorts of: 8 mg ORMD-0801 once-daily at night and placebo 45 minutes before breakfast; 8 mg ORMD-0801 twice-daily, at night and 45 minutes before breakfast; and placebo twice-daily, at night and 45 minutes before breakfast. The primary endpoint of the study is to evaluate the efficacy of ORMD-0801 compared to placebo in improving glycaemic control as assessed by HbA1c, with a secondary efficacy endpoint of assessing the change from baseline in fasting plasma glucose at 26 weeks. We initiated this trial in December 2020. In November 2021, we announced that 75% of the 675 patients were enrolled and randomized.

ORA-D-013-2: This study will include T2D patients with inadequate glycaemic control who are managing their condition with either diet alone or with diet and metformin monotherapy. A total of 450 patients will be recruited through 36 sites in the U.S. and 25 sites in Western Europe and Israel. Patients will be randomized 1:1 into two cohorts dosed with: 8 mg ORMD-0801 at night; and placebo at night. The primary endpoint is to evaluate the efficacy of ORMD-0801 compared to placebo in improving glycaemic control as assessed by HbA1c over a 26-week treatment period, with a secondary efficacy endpoint of assessing the change from baseline in fasting plasma glucose at 26 weeks. We initiated this trial in the U.S. in March 2021. In August 2021, we announced that over 25% of the 450 patients were enrolled and randomized.

We expect to receive the efficacy data suggestfrom the trials after patients have completed the first 6 months of treatment. Safety will be further monitored as patients will be exposed to the drug over an additional 6 months (total 12 months). The trial’s topline results are expected in calendar 2022 and we anticipate filing a BLA with the FDA in calendar 2024. A BLA would grant us 12 years of marketing exclusivity from the date of approval in the U.S.

NASH trial: In June 2020, we presented topline data of 8 patients from an open-label trial that assessed the safety, tolerability, and early effects of 16 mg ORMD-0801 improves glucose control.

(2x8 mg capsules) on liver fat in T2D, patients with nonalcoholic steatohepatitis, or NASH. The 12-week dosing had no serious adverse events and it induced an observed mean 6.9±6.8% reduction in liver fat content (p-value: 0.035), and the relative reduction of 30%, as measured by MRI-derived proton density fat fraction, or MRI-PDFF. In March 2017,parallel, concentrations of gamma-glutamyltransferase (GGT), a key marker of chronic hepatitis, were significantly lower after 12 weeks of treatment as compared to baseline (-14.6±13.1 U/L; p value: 0.008).

In September 2020, we initiated a six month toxicology study to allow for the usean open label clinical trial of our oral insulin capsule, ORMD-0801, for the treatment of NASH. This 10 patient multi-center trial is comprised of three clinical sites in Belgium. The trial will measure change and percent change in MRI-PDFF from baseline to week 12.


In December 2020, we initiated a longer period than previously performed, in preparation for our proposed upcoming three-monthdouble blind, placebo controlled clinical trial of our oral insulin capsule, ORMD-0801, for type 2 diabetes. We anticipate receiving the final reporttreatment of this studyNASH. This 30 patient multi-center trial is comprised of five clinical sites: three in the first quarterU.S. and two in Israel. The trial will measure change and percent change in MRI-PDFF from baseline to week 12. In September 2021, we announced that over 50% of calendar year 2018.the patients were enrolled and randomized.

Oral Glucagon-Like Peptide-1: Oral GLP-1, is an incretin hormone, which stimulates the secretion of insulin from the pancreas. In April 2016,addition to our flagship product, the ORMD-0801 insulin capsule, we use our technology for an orally ingestible GLP-1 capsule, or ORMD-0901. 

In February 2019, we completed a Phase IIb clinicalI pharmacokinetic trial on 180 type 2 adult diabetic patients that was initiated in June 2015 and conducted in 33 sites in the United States. This double-blind, randomized, 28-day dosing clinical trial was conducted under an Investigational New Drug application, or IND, with the FDA. The clinical trial, designed to assessevaluate the safety and efficacypharmacokinetics of our ORMD-0801, investigated ORMD-0801 overORMD-0901 compared to placebo in healthy volunteers. We initiated a 28 day treatment period and had statistical power to give us greater insight intofollow-on trial in T2D patients, in June 2021 in the drug’s efficacy. The trial indicated a statistically significant lowering of blood glucose levels versus placebo across several endpoints, with no serious or severe adverse issues related to the drug. The trial successfully met all of its primary and most of its secondary and exploratory endpoints for both safety and efficacy.

18

Should our Phase IIb three-month dose-ranging clinical trial successfully meet its primary endpoints, we anticipate initiating two six-month Phase III clinical trials on both type 1 and type 2 diabetic patients, following which we expect to file a New Drug Application with a potential FDA approval by the third quarter of calendar year 2023.

GLP-1 Analog

In September 2013, we submitted a pre-IND package to the FDA for ORMD-0901, our oral exenatide capsule, for a Phase II clinical trial on healthy volunteers and type 2 diabetic patients. In August 2015, we began a non-FDA clinical trial outside of the United States on type 2 diabetic patients. The trial was completed during the second quarter of calendar year 2016 and indicated positive results as it showed ORMD-0901 to be safe and well tolerated and demonstrated encouraging efficacy data. We completed a three-month pre-clinical toxicology study in March 2017 and the final report will beU.S. under an IND submitted to the FDAFDA.

Oral Vaccine

On March 18, 2021, we entered into a license agreement, or the Oravax License Agreement, with Oravax. For more information about the Oravax License Agreement, please see below under “Out-Licensed Technology”.

Oravax, Oramed’s 63% owned joint venture combines our IND.proprietary POD™ oral delivery technology and the novel vaccine technology of Premas Biotech Pvt. Ltd., or Premas. We expectare considering ways in which our shareholders could benefit more directly from Oravax, including potentially issuing some of our shares in Oravax to file an IND duringour shareholders as a dividend, which would make Oravax a publicly held company that may in turn apply for listing on a stock exchange.

A single dose of Oravax’s oral vaccine produced a significant antibody response in a preclinical in-vivo study. Oravax’s novel vaccine technology may be a candidate for protection against COVID-19 and its variants due to triple antigen targeting, easier distribution and ease of administration.

On October 29, 2021, we announced Oravax’s oral COVID-19 vaccine has received clearance from the South African Health Products Regulatory Authority to initiate a Phase I trial and subsequently to commence patient enrollment in a first in human, Phase 1 clinical trial, for its oral COVID-19 vaccine and on December 14, 2021, Oravax screened and enrolled the first quarterparticipant in a Phase 1 clinical trial of calendar year 2018its oral virus-like particle (VLP) COVID-19 vaccine in Johannesburg, South Africa.

On December 29, 2021, Oravax signed a cooperation and move directly into a small pharmacokinetics study on healthy volunteers followed by a large Phase II trial on type 2 diabetic patients which will be conductedpurchase agreement for an initial pre-purchase of 10 million doses of oral COVID-19 vaccines with Tan Thanh Holdings to commercialize the vaccine in the United States under an IND.Southeast Asia.

Other productsProducts

During the first quarter of calendar 2017, we beganWe are developing a new drug candidate, a weight loss treatment in the form of an oral leptin capsule, and in April 2017, Israel’s Ministrycapsule. During the third quarter of Health approved our commencement ofthe 2020 calendar year, we finalized a proof of concept single dose studysingle-dose trial for our oral leptin drugthis candidate to evaluate its pharmacokineticpharmacokinetics and pharmacodynamics (glucagon reduction) in 10 type 1 adult diabetic patients. The study is projectedpatients without any safety issues. Patients who received leptin on average had a decrease in glucose as compared to initiatethe placebo group during the first 30-180 minutes following dosing. At different time periods, the leptin treated patients on average had glucagon values that were either lower than or similar to, those in calendar year 2018 and be completed during calendar year 2019.

In November 2017, Israel’s Ministrythe placebo group. We are currently in the middle of Health approved us to initiate an exploratory clinicala second study of our oral insulin capsule, ORMD-0801,15 type 1 adult diabetic patients who serve as both the active and placebo arms in patientsthis study, with nonalcoholic steatohepatitis (NASH). The proposed three-month treatment study will assessanticipated results in the effectivenessfirst quarter of ORMD-0801 in reducing liver fat content, inflammation and fibrosis in patients with NASH. We expect to initiate the study in2022 calendar year 2018 and complete it during calendar year 2019.year.

The table below gives an overview of our primary product pipeline (calendar quarters):

Phase IPhase IIPhase IIITimeline

ORMD-0801

oral insulin

Type 2 diabetes

Q1 ’14: Phase IIa completed

Q2 ’16: Phase IIb multi-center study completed

Q1 ’17: Phase IIa - dose finding study completed

Q1 ’18: Phase IIb 90-day multi-center study projected initiation (projected completion Q2 ’19)

Q4 ’19: Phase III study projected initiation (projected completion Q2 ’21)

Type 1 diabetes

Q3 ’14: Phase IIa study completed

Q1 ’18: Clamp study projected initiation (projected completion Q3 ’18)

Q4 ’19: Phase III projected initiation (projected completion Q2 ’21)

ORMD-0901

oral GLP-1

Type 2 diabetes 

Q2 ’16: Phase Ib non-US study completed

Q1 ’18: Pharmacokinetics clinical study projected initiation (projected completion Q3 ’18)

H2 ’18: Phase II projected initiation (projected completion Q4 ’19)

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Out-Licensed Technology

HTIT License

On November 30, 2015, we, our Israeli subsidiaryOramed Ltd. and HTIT entered into a Technology License Agreement, or TLA, and on December 21, 2015, these parties entered into an Amended and Restated Technology License Agreement that was further amended by the parties on June 3, 2016 and July 24, 2016, or the HTIT License Agreement. According to the HTIT License Agreement, we granted HTIT an exclusive commercialization license in the territory of the People’s Republic of China, Macau and Hong Kong or the Territory,(the “Territory”), related to our oral insulin capsule, ORMD-0801, or the Product. Pursuant to the HTIT License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to our subsidiary’s technology and ORMD-0801 capsule, and will pay (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory, or Royalties, and (ii) an aggregate of $37.5 million, of which $3 million iswas payable immediately, $8 million will be paid subject to our entry into certain agreements with certain third parties, and $26.5 million will be payable upon achievement of certain milestones and conditions. In the event that we will not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the final expiration of our patents covering the technology in the Territory in 2033, the Royalties rate may be reduced, under certain circumstances, to 5%. The royalty payment obligation shall apply during the period of time beginning upon the first commercial sale of the Product in the Territory, and ending upon the later of (i) the final expiration of the last-to-expire licensed patentpatents in the TerritoryTerritory; and (ii) 15 years after the first commercial sale of the Product in the Territory, or the Royalty Term. The HTIT License Agreement shall remain in effect until the expiration of the Royalty Term. The HTIT License Agreement contains customary termination provisions. The initial payment of $3 million wasThrough November 30, 2021, we received in January 2016. Following the achievement of certain milestones, the second and thirdaggregate milestone payments of $6.5$20.5 million out of the aggregate amount of $37.5 million.

On August 21, 2020, we received a letter from HTIT, disputing certain pending payment obligations of HTIT under the TLA. We wholly dispute said claims and $4 million, respectively, were receivedwe are in July 2016, and the fourth milestone payment of $4 million was receiveddiscussions with HTIT in October 2016.an attempt to reach a mutually agreeable solution.

Oravax License

On November 30, 2015,March 18, 2021, we also entered into a separate Securities Purchasethe Oravax License Agreement with HTIT, or the SPA,Oravax, pursuant to which we will grant to Oravax an exclusive, worldwide license, or the License, under our rights in December 2015,certain patents and related intellectual property in which Oravax will receive certain rights relating to our proprietary oral delivery technology to further develop, manufacture and commercialize oral vaccines for COVID-19 and other novel coronaviruses based on Premas’s proprietary vaccine technology involving a triple antigen virus like particle, or the Oravax Product, which was previously owned by Cystron Biotech LLC, or Cystron, and later acquired by Akers Biosciences Inc., or Akers.

In consideration for the grant of the License, the Oravax License Agreement provides that we issuedwill receive (i) royalties equal to HTIT 1,155,3677.5% on net sales, as defined in the Oravax License Agreement, of each product commercialized by Oravax, its affiliates and permitted sublicensees related to the License during the term specified in the Oravax License Agreement, (ii) sublicensing fees equal to 15% of any non-sales-based consideration received by Oravax from a permitted sublicensee and (iii) other payments ranging between $25 million to $100 million, based on certain sales milestones being achieved by Oravax. The parties further agreed to establish a development and steering committee, which will consist of three members, of which two members will be appointed by us, that will oversee the ongoing research, development, clinical and regulatory activity with respect to the Oravax Product. In addition, we agreed to buy and Oravax agreed to issue to us 1,890,000 shares of our common stock of Oravax, representing 63% of the common stock of Oravax for total considerationthe aggregate amount of $12$1.5 million. In connection withAkers agreed to contribute to Oravax $1.5 million in cash and substantially all of the License Agreementassets of Cystron, including a license agreement to Premas’s novel vaccine technology. Nadav Kidron, the Company’s President and Chief Executive Officer, was one of the SPA, we received a non-refundable paymentformer members of $500,000 as a no-shop fee.Cystron. 


 

Results of Operations

Comparison of three month periods ended November 30, 20172021 and 2016November 30, 2020

The following table summarizes certain statements of operations data of the Company for the three month periods ended November 30, 20172021 and 2016November 30, 2020 (in thousands of dollars except share and per share data):

  Three months ended 
  November 30, 
  2017  2016 
       
Revenues $611  $610 
Cost of revenues     187 
Research and development expenses  2,327   2,353 
General and administrative expenses  1,016   468 
Financial income, net  201   162 
Taxes on income     400 
Net loss for the period $2,531  $2,636 
Loss per common share - basic and diluted $0.18  $0.20 
Weighted average common shares outstanding  14,239,346   13,205,971 

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  Three  months ended 
  November 30,
2021
  November 30,
2020
 
       
Revenues $674  $674 
Cost of revenues  -   - 
Research and development expenses  6,410   5,774 
Sales and Marketing expenses  585   - 
General and administrative expenses  1,739   727 
Financial income (expenses), net  (38)  257 
Taxes on income  -   - 
Net loss for the period $8,098  $5,570 
Loss per common share - basic and diluted $0.22  $0.23 
Weighted average common shares outstanding  36,672,551   23,754,980 

Revenues

Revenues consist of proceeds related to the HTIT License Agreement that are recognized overon a cumulative basis when it is probable that a significant reversal in the termamount of cumulative revenue recognized will not occur, through the License Agreement throughexpected product submission date of June 2023.2023 using the input method.

Revenues were $674,000 for each of the three month periodperiods ended November 30, 2017 totaled $611,000, consistent with $610,000 for the three month period ended2021 and November 30, 2016.2020.

Cost of revenues

Cost of revenues consists of royalties related to the HTIT License Agreement that will be paid over the term of the HTIT License Agreement in accordance with revenue recognition accounting and the Law for the Encouragement of Industrial Research, Development and Technological Innovation, 1984, as amended, including any regulations or tracks promulgated thereunder.

NoThere was no cost of revenues was recognized during the three month period ended November 30, 2017 compared to cost of revenues of $187,000 for the three month periodperiods ended November 30, 2016. The decrease is due to no additional milestone payments having been received during the three month period ended2021 and November 30, 2017.2020.


 

Research and development expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, employee benefits, costs of materials, supplies, the cost of services provided by outside contractors, including services related to our clinical trials, clinical trial expenses, the full cost of manufacturing drugs for use in research and preclinical development.  All costs associated with research and development are expensed as incurred.

Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing external entities such as contract research organizations, or CROs, independent clinical investigators and other third-party service providers to assist us with the execution of our clinical studies.

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Clinical activities, which relate principally to clinical sites and other administrative functions to manage our clinical trials, are performed primarily by CROs. CROs typically perform most of the start-up activities for our trials, including document preparation, site identification, screening and preparation, pre-study visits, training, and program management.

Clinical trial and pre-clinical trial expenses include regulatory and scientific consultants’ compensation and fees, research expenses, purchase of materials, cost of capsule manufacturing, of the oral insulin and exenatide capsules, payments for patient recruitment and treatment, as well as salaries and related expenses of research and development staff.

Research and development expenses for the three month period ended November 30, 2017 decreased2021 increased by 1%11% to $2,327,000,$6,410,000, from $2,353,000$5,774,000 for the three month period ended November 30, 2016.2020. The decreaseincrease is mainlyprimarily due to completion of our dose finding clinical trial and is partially offset by an increase in expenses related to progress in toxicology studies and preparations for our Phase IIb three-month3 and NASH clinical trial.trials in addition to expenses related to the in process research and development costs related to Oravax. Stock-based compensation costs for the three month period ended November 30, 20172021 totaled $171,000,$505,000, as compared to $136,000$137,000 during the three month period ended November 30, 2016.2020. The increase is mainly attributable to awards granted to employees and a consultant duringand to new award grants in fiscal year 2017.2021.

Government grants

In the three month periods ended November 30, 20172021 and 2016,November 30, 2020, we did not recognize any research and development grants. As of November 30, 2017,2021, we incurred liabilities to pay royalties to the Israel Innovation Authority of the Israeli Ministry of Economy & Industry of $533,000.$207,000.

Sales and Marketing expenses

Sales and Marketing expenses include the salaries and related expenses of our commercial functions, consulting costs and other general costs. We anticipate that our commercial activities will increase in the future towards and following potential approval of our planned BLA submission for ORMD-0801.

Sales and Marketing expenses for the three month period ended November 30, 2021 were $585,000 while we incurred no expenses for the three month period ended November 30, 2020. The increase in costs related to sales and marketing expenses activities is primarily attributable to stock-based compensation expenses and salary related expenses. Stock-based compensation costs for the three month period ended November 30, 2021 totaled $433,000 while there were no stock-based compensation expenses during the three month period ended November 30, 2020. The increase is mainly attributable to awards granted to an employee during fiscal 2021.

General and administrative expenses

General and administrative expenses include the salaries and related expenses of our management, consulting costs, legal and professional fees, travel expenses, business development costs, insurance expenses and other general costs.

 

General and administrative expenses for the three month period ended November 30, 20172021 increased by 117%139% to $1,016,000$1,739,000 from $468,000$727,000 for the three month period ended November 30, 2016.2020. The increase in costs related to general and administrative activities during the three month period ended November 30, 2017 is mainlyprimarily attributable to an increase in stock-based compensation costs, consultingexpenses and travelprofessional fees expenses related to the relocation of our Chief Executive Officer to New York, where the Company has leased an office since September 2017.as well as public relations and investor relations expenses. Stock-based compensation costs for the three month period ended November 30, 20172021 totaled $352,000,$772,000, as compared to $23,000$180,000 during the three month period ended November 30, 2016.2020. The increase is mainly attributable to awards granted to employeesan employee during the three month period ended November 30, 2021 and a consultantto awards granted during fiscal year 2017.2021.


 

Financial income (expense), net

Net financial income increased by 24%decreased from net financial income of $162,000$257,000 for the three month period ended November 30, 20162020 to net incomefinancial expenses of $201,000$38,000 for the three month period ended November 30, 2017. The increase is mainly attributable to an increase in income from bank deposits and held to maturity bonds as a result of an increase in interest rates.

Taxes on income

No taxes on income were recognized for the three month period ended November 30, 2017 as compared to $400,000 for the three month period ended November 30, 2016.2021. The decrease is dueprimarily attributable to a decrease in withholding tax deducted from milestone payments received related to the License Agreement that resulted from a decrease in such proceeds. The Company estimates that withholding tax will not be utilized in the next five years, and therefore it was deducted.

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Other comprehensive income

Unrealized gains on available for sale securities for the three month period ended November 30, 2017 of $326,000, compared to losses of $63,000 for the three month period ended November 30, 2016, resulted from the increase in fair value of the ordinary shares of D.N.A Biomedical SolutionsEntera Bio Ltd. that we hold.

Liquidity and capital resources

 

From inception through November 30, 2017,2021, we have incurred losses in an aggregate amount of $59,027,000.$122,742,000. During that period and through January 11, 2022, we have financed our operations through several private placements of our common stock, as well as public offerings of our common stock, raising a total of $60,309,000,$241,432,000, net of transaction costs. During that period, we also received cash consideration of $5,810,000$27,922,000 from the exercise of warrants and options. We willexpect to seek to obtain additional financing through similar sources in the future, as needed. As of November 30, 2017,2021, we had $1,258,000$31,880,000 of available cash, $32,772,000$136,156,000 of short-term and long-term bank deposits and $7,320,000$11,704,000 of marketable securities.

Management continues to evaluate various financing alternatives for funding future research and development activities and general and administrative expenses through fundraising in the public or private equity markets. Although there is no assurance that we will be successful with those initiatives, management believes that it will be able to secure the necessary financing as a result of future third party investments. Based on our current cash resources and commitments, we believe we will be able to maintain our current planned development activities and the corresponding level of expenditures for at least the next 12 months and beyond.months.

As of November 30, 2017,2021, our total current assets were $19,135,000$152,332,000 and our total current liabilities were $5,124,000.$7,660,000. On November 30, 2017,2021, we had a working capital surplus of $14,011,000$144,672,000 and an accumulated loss of $59,027,000.$122,742,000. As of August 31, 2017,2021, our total current assets were $20,297,000$95,337,000 and our total current liabilities were $5,165,000.$6,679,000. On August 31, 2017,2021, we had a working capital surplus of $15,132,000$88,658,000 and an accumulated loss of $56,496,000.$114,852,000. The decreaseincrease in working capital from August 31, 20172021 to November 30, 20172021 was primarily due to investment in long-term deposits and marketable securities.capital raising.

During the three month period ended November 30, 2017,2021, cash and cash equivalents decreased to $1,258,000$31,880,000 from the $3,969,000$77,245,000 reported as of August 31, 2017,2021, which is due to the reasons described below.

 

Operating activities used cash of $2,728,000$6,903,000 in the three month period ended November 30, 2017,2021, as compared to $1,498,000 provided$6,152,000 used in the three month period ended November 30, 2016.2020. Cash used in operating activities in the three month period ended November 30, 2017 primarily consisted of net loss resulting from research and development, sales and marketing and general and administrative expenses, as well as changes in deferred revenuesrevenue due to the HTIT License Agreement and is partially offset by changes in accounts payable and accrued expenses and stock-based compensation, whilecompensation.


Investing activities used cash of $99,048,000 in the three month period ended November 30, 2021, as compared to cash provided by operatinginvesting activities of $1,199,000 in the three month period ended November 30, 2020. Cash used in investing activities in the three month period ended November 30, 20162021 consisted primarily consisted of changes in deferred revenues and is partially offsetthe purchase of short-term deposits. Cash provided by net loss resulting from research and development and general and administrative expenses.

Investinginvesting activities used cash of $5,146,000 in the three month period ended November 30, 2017, as compared2020 consisted primarily of the proceeds from the sale of short-term deposits and held to $3,436,000 usedmaturity securities and mutual funds and is partially offset by the purchase of short term deposits and the purchase of held to maturity securities and corporate bonds designated at fair value.

Financing activities provided cash of $60,563,000 in the three month period ended November 30, 2016. Cash used in investing activities in the three month periods ended November 30, 2017 and 2016 consisted primarily of the purchase of short-term and long-term bank deposits and marketable securities.

Financing activities provided cash of $5,160,000 in the three month period ended November 30, 2017,2021, as compared to $320,000 that were$586,000 provided in the three month period ended November 30, 2016. Financing2020. Cash provided by financing activities inconsisted primarily proceeds from the three month period ended November 30, 2017 consisted of aggregate net proceeds of $4,230,000 from our issuance of 453,919our common stock under an At The Market Issuance Sales Agreement, dated April 2, 2015, or the Sales Agreement, with B. Riley FBR, Inc., as successor to FBR Capital Markets & Co., or FBR,well as amended, and proceeds from exercise of warrants and options while financing activities in the three month period ended November 30, 2016 consisted of proceeds from the exercise of options. Pursuantoptions and warrants.

On September 1, 2021, we entered into a controlled equity offering agreement, or the Cantor Equity Distribution Agreement, with Cantor Fitzgerald & Co., as agent, pursuant to which the Sales Agreement, weCompany may from time to time and at our option, issue and sell shares of ourits common stock having an aggregate offering price of up to $25,000,000$100,000,000, through FBR asa sales agent, subject to certain terms and conditions. Any shares sold will be sold pursuant to our effective shelf registration statement on Form S-3 including a prospectus dated February 2, 2017, as supplemented by aJuly 26, 2021 and prospectus supplement dated April 5, 2017.September 1, 2021.  We will pay FBRpaid the sales agent a cash commission of 3.0% of the gross proceeds of the sale of any shares sold through FBR.the sales agent under the Cantor Equity Sales Agreement. As of January 11, 2022, 565,120 shares were issued under the Cantor Equity Distribution Agreement for aggregate net proceeds of $12,298,000.

On November 3, 2021, we entered into a securities purchase agreement with several institutional and accredited investors, or the Purchasers, pursuant to which we agreed to sell, in a registered direct offering, or the Offering, an aggregate of 2,000,000 shares of our common stock to the Purchasers for an offering price of $25.00 per share. The closing of the sale of the shares occurred on November 5, 2021. The net proceeds to us from the Offering, after deducting the placement agent’s fees and expenses and the Company’s Offering expenses, were approximately $46,375,000.

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Off-balance sheet arrangementsCritical accounting policies and estimates

As of November 30, 2017, we had no off-balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Significant Accounting Policies

 

Our significantcritical accounting policies are described in the notes to the consolidated financial statements as“Management’s Discussion and Analysis of August 31, 2017 includedFinancial Condition and Results of Operations” contained in our Annual Report.

Planned Expenditures

We invest heavily in research and development, and we expect that in the upcoming years our research and development expenses will continue to be our major operating expense.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no significant change in our exposure to market risk during the three month periodquarter ended November 30, 2017.2021. For a discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our Annual Report.

ITEM 4 - CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2017.2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended November 30, 20172021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 1, 2017, we issued 2,500 shares of our common stock to Corporate Profile, LLC, or Corporate Profile, in payment of a portion of the consulting fee for investor relations services owed to Corporate Profile pursuant to a Stock Purchase Agreement and Letter Agreement, each dated May 3, 2017, between us and Corporate Profile.

On October 24, 2017, we issued 8,750 shares of our common stock to an investor resulting from his exercise of warrants purchased in connection with our 2012 private placement for a total exercise price of $52,500.

On November 14, 2017, we issued 6,399 shares of our common stock to an investor resulting from his exercise of warrants purchased in connection with our 2012 private placement for a total exercise price of $38,394.

We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

ITEM 6 - EXHIBITS

Number Exhibit
31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
101.1* 
101.1*The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2017,2021 formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Loss, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

___________________

*Filed herewith
**Furnished herewith

 25 
104.1*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith

**Furnished herewith


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ORAMED PHARMACEUTICALS INC.
Date: January 11, 20182022By:/s/ Nadav Kidron
Nadav Kidron
President and Chief Executive Officer
Date: January 11, 20182022By:/s/ Hilla EisenbergDavid Silberman
Hilla EisenbergDavid Silberman
Chief Financial Officer
(Principal Financial and Accounting Officer)

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