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 ~~February 28, 2021~~March 31, 2022

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

Commission file number: ~~000-50298~~001-35813

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.)

1185 Avenue of the Americas, Third Floor, New York, NY		10036
(Address of Principal Executive Offices)		(Zip Code)

844-967-2633

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, par value $0.012		ORMP		The Nasdaq Capital Market, Tel Aviv Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~April 13, 2021,~~May 12, 2022, there were ~~30,228,421~~38,564,016 shares of the issuer’s common stock, $0.012 par value per share, outstanding.

ORAMED PHARMACEUTICALS INC.

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		1

ITEM 1 - FINANCIAL STATEMENTS		1

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2016

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		2822

ITEM 4 - CONTROLS AND PROCEDURES		2822

PART II - OTHER INFORMATION		2923

ITEM 6 - EXHIBITS		2923

On February 28, 2022, the Board of Directors approved a change of the Company’s fiscal year from the period beginning on September 1 and ending on August 31 to the period beginning on January 1 and ending on December 31. As a result, the Company filed a transition report on Form 10-Q with the Securities and Exchange Commission on March 30, 2022 that included financial information for the transition period from September 1, 2021 through December 31, 2021. Subsequent to that report, the Company’s fiscal year now begins on January 1 and ends on December 31. This Quarterly Report on Form 10-Q is the Company’s first quarterly report in its new fiscal year, and reports financial results for the quarter ended March 31, 2022.

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 subsidiaries, unless otherwise indicated. All dollar amounts refer to U.S. Dollars unless otherwise indicated.

On ~~February 28, 2021,~~March 31, 2022, the exchange rate between the New Israeli Shekel, or NIS, and the dollar, as quoted by the Bank of Israel, was NIS ~~3.280~~3.176 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.

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,” “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 Incubator of Technologies Co., Ltd., or HTIT, as well as our disagreements with HTIT;

●

expected timing of a clinical trial for the potential Oravax Medical Inc., or Oravax vaccine and its potential to protect against COVID-19;

●

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, and our expectation to file a Biologics 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 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;

●

information with respect to any other plans and strategies for our business; and

●

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

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, 2021, or our Annual Report, as filed with the Securities and Exchange Commission, or the SEC, on November 24, 2021, as well as those discussed elsewhere in our Annual Report and expressed from time to time in our other filings with the SEC. In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this Quarterly Report on Form 10-Q could be interpreted differently in light of additional research, clinical and preclinical trials results. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report on Form 10-Q which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

PART I – FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

ORAMED PHARMACEUTICALS INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF ~~FEBRUARY 28, 2021~~MARCH 31, 2022

TABLE OF CONTENTS

		Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Balance sheets	2
~~Balance sheets~~		2
Statements of comprehensive loss		3
Statements of changes in stockholders’ equity		~~4-5~~4
Statements of cash flows		65
Notes to financial statements		~~7-19~~6-15

ORAMED PHARMACEUTICALS INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

February 28, August 31,

2021

2020

Assets
CURRENT ASSETS:
Cash and cash equivalents $ 33,805 $ 19,296
Short-term deposits 13,116 11,060
Marketable securities 9,868 9,544
Prepaid expenses and other current assets 683 611
Total current assets 57,472 40,511

LONG-TERM ASSETS:
Long-term deposits 2 2
Marketable securities 3,140 3,928
Amounts funded in respect of employee rights upon retirement 20 18
Property and equipment, net 415 99
Operating lease right-of-use assets 608 75
Total long-term assets 4,185 4,122
Total assets $ 61,657 $ 44,633

Liabilities and stockholders’ equity
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,003 $ 1,699
Deferred revenues 2,703 2,703
Payable to related parties 87 90
Operating lease liabilities 139 44
Total current liabilities 5,932 4,536

LONG-TERM LIABILITIES:
Deferred revenues 5,606 6,947
Employee rights upon retirement 20 18
Provision for uncertain tax position 11 11
Operating lease liabilities 469 31
Other liabilities 177 211
Total long-term liabilities 6,283 7,218

COMMITMENTS (note 2)

STOCKHOLDERS’ EQUITY:
Common stock, $0.012 par value (60,000,000 authorized shares; 28,289,592 and 23,675,530 shares issued and outstanding as of February 28, 2021 and August 31, 2020, respectively) 339 284
Additional paid-in capital 151,895 125,209
Accumulated deficit (102,792 ) (92,614 )
Total stockholders’ equity 49,442 32,879
Total liabilities and stockholders’ equity $ 61,657 $ 44,633

	March 31,			December 31,
	2022			2021
Assets
CURRENT ASSETS:
Cash and cash equivalents	$	27,967		$	27,456
Short-term deposits		106,368			111,077
Marketable securities		7,275			7,747
Prepaid expenses and other current assets		1,952			1,657
Total current assets		143,562			147,937

LONG-TERM ASSETS:
Long-term deposits		25,151			25,094
Marketable securities		1,955			3,875
Amounts funded in respect of employee rights upon retirement		24			26
Property and equipment, net		424			388
Operating lease right-of-use assets		1,108			500
Total long-term assets		28,662			29,883
Total assets	$	172,224		$	177,820

Liabilities and stockholders’ equity

CURRENT LIABILITIES:
Accounts payable, accrued expenses and other liabilities	$	3,310		$	4,535
Deferred revenues		2,703			2,703
Payable to related parties		74			-
Operating lease liabilities		237			130
Total current liabilities		6,324			7,368

LONG-TERM LIABILITIES:
Long-term deferred revenues		2,674			3,340
Employee rights upon retirement		22			22
Provision for uncertain tax position		11			11
Operating lease liabilities		871			370
Other liabilities		99			99
Total long-term liabilities		3,677			3,842

COMMITMENTS (note 2)

Equity
EQUITY ATTRIBUTABLE TO COMPANY’S STOCKHOLDERS:
Common stock, $0.012 par value (60,000,000 authorized shares; 38,564,016 and 38,158,792 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively)		463			459
Additional paid-in capital		298,831			292,514
Accumulated deficit		(136,945	)		(126,520	)
Total stockholders’ equity		162,349			166,453
Non-controlling interests		(126	)		157
Total equity		162,223			166,610
Total liabilities and equity	$	172,224		$	177,820

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

ORAMED PHARMACEUTICALS INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

(UNAUDITED)

Six months ended Three months ended
February 28, February 29, February 28, February 29,
2021 2020 2021 2020
REVENUES $ 1,339 $ 1,348 $ 665 $ 674
COST OF REVENUES - - - -
RESEARCH AND DEVELOPMENT EXPENSES 9,643 5,342 3,869 3,320
GENERAL AND ADMINISTRATIVE EXPENSES 2,391 2,472 1,664 1,391
OPERATING LOSS 10,695 6,466 4,868 4,037
FINANCIAL INCOME (EXPENSES), NET 517 235 260 349
LOSS BEFORE TAXES ON INCOME 10,178 6,231 4,608 3,688
TAXES ON INCOME - - - -
NET LOSS FOR THE PERIOD $ 10,178 $ 6,231 $ 4,608 $ 3,688
LOSS PER SHARE OF COMMON STOCK:
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK $ 0.40 $ 0.35 $ 0.17 $ 0.21
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK 25,359,960 17,645,372 27,004,268 17,818,429

	Three months ended
	March 31,
	2022		2021
REVENUES	$	666	$	666
RESEARCH AND DEVELOPMENT EXPENSES		5,836		6,168
SALES AND MARKETING EXPENSES		590		-
GENERAL AND ADMINISTRATIVE EXPENSES		5,492		1,102
OPERATING LOSS		11,252		6,604

FINANCIAL INCOME		544		541
NET LOSS FOR THE PERIOD	$	10,708	$	6,063
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		283		393
NET LOSS ATTRIBUTABLE TO STOCKHOLDERS		10,425		5,670
LOSS PER SHARE
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK	$	0.27	$	0.20
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK		38,679,622		27,963,072

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

ORAMED PHARMACEUTICALS INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. Dollars in thousands

(UNAUDITED)

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 SIX MONTH PERIOD ENDED FEBRUARY 28, 2021:
ISSUANCE OF COMMON STOCK, NET 3,996 48 22,210 - 22,258
EXERCISE OF WARRANTS AND OPTIONS 618 7 3,748 - 3,755
STOCK-BASED COMPENSATION - - 728 - 728
NET LOSS - - - (10,178 ) (10,178 )
BALANCE AS OF FEBRUARY 28, 2021 28,289 $ 339 $ 151,895 $ (102,792 ) $ 49,442

Additional Total
Common Stock paid-in Accumulated stockholders’
Shares $ capital deficit equity
In thousands
BALANCE AS OF AUGUST 31, 2019 17,383 $ 208 $ 100,288 $ (81,103 ) $ 19,393
CHANGES DURING THE SIX MONTH PERIOD ENDED FEBRUARY 29, 2020:
ISSUANCE OF COMMON STOCK, NET 441 5 2,311 - 2,316
SHARES ISSUED FOR SERVICES 8 * 30 - 30
EXERCISE OF WARRANTS AND OPTIONS 12 1 12 - 13
STOCK-BASED COMPENSATION - - 569 - 569
NET LOSS - - - (6,231 ) (6,231 )
BALANCE AS OF FEBRUARY 29, 2020 17,844 $ 214 $ 103,210 $ (87,334 ) $ 16,090

	Common Stock				Additional paid-in			Accumulated			Total stockholders’			Non- controlling			Total
	Shares		$		capital			deficit			equity			interests			equity
	In thousands
BALANCE AS OF DECEMBER 31, 2021		38,158	$	459	$	292,514		$	(126,520	)	$	166,453		$	157		$	166,610
CHANGES DURING THE THREE MONTH PERIOD ENDED MARCH 31, 2022:
ISSUANCE OF COMMON STOCK, NET		277		3		2,966			-			2,969			-			2,969
EXERCISE OF WARRANTS AND OPTIONS		4		(*)		-			-			-			-			-
STOCK-BASED COMPENSATION		125		1		4,028			-			4,029			-			4,029
TAX WITHHOLDINGS RELATED TO STOCK-BASED COMPENSATION SETTLEMENTS		-		-		(677	)		-			(677	)		-			(677	)
NET LOSS		-		-		-			(10,425	)		(10,425	)		(283	)		(10,708	)
BALANCE AS OF MARCH 31, 2022		38,564	$	463	$	298,831		$	(136,945	)	$	162,349		$	(126	)	$	162,223

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~CASH FLOWS

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

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

Oramed Pharmaceuticals Inc. (collectively with its ~~subsidiary,~~subsidiaries, the “Company”, unless the context indicates otherwise), a Delaware corporation, 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.~~ 2002.

On February 17, 2006, the Company entered into an agreement with Hadasit Medical Services and Development Ltd. 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, 2020,~~March 31, 2022, the Hong Kong Subsidiary has no operations.

On ~~November 30, 2015,~~March 18, 2021, the Company entered into a ~~Technology~~license agreement (the “Oravax License ~~Agreement (the “TLA”~~Agreement”) with ~~Hefei Tianhui Incubator of Technologies Co.~~Oravax Medical Inc. (“Oravax”) and into a stockholders agreement (the “Stockholders Agreement”) with Akers Biosciences Inc. (“Akers”), Premas Biotech Pvt. Ltd. (“~~HTIT”~~Premas”), Cutter Mill Capital LLC (“Cutter Mill”) 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 “HTIT License Agreement”Run Ridge LLC (“Run Ridge”). According to the ~~HTIT License~~Stockholders Agreement, ~~the Company granted HTIT an exclusive commercialization license in the territory~~Oravax issued 1,890,000 shares 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 subjectcapital stock to the Company, ~~entering into certain agreements with certain third parties,~~representing 63% of the issued and ~~$26,500 will be paid upon achievement~~outstanding share capital of ~~certain milestones~~Oravax, on a fully diluted basis, as of the date of issuance. Consequently, Oramed consolidates Oravax in its consolidated financial statements since that time.

On November 23, 2021, Oravax incorporated a wholly-owned subsidiary in Israel, Oravax Medical Ltd., which is engaged in research and ~~conditions. In~~development. Effective January 1, 2022, Oravax transferred its rights and obligations under the ~~event that~~Oravax License Agreement to Oravax Medical Ltd.

On February 28, 2022, the ~~Company does not meet certain conditions, the Royalties rate may be reduced to~~Board of Directors approved a ~~minimum of 8%. Following the final expiration~~change of the Company’s ~~patents covering~~fiscal year from the ~~technology~~period beginning on September 1 and ending on August 31 to the period beginning on January 1 and ending on December 31. As a result, the Company filed a transition report on Form 10-Q with the Securities and Exchange Commission on March 30, 2022 that included financial information for the transition period from September 1, 2021 through December 31, 2021. Subsequent to that report, the Company’s fiscal year now begins on January 1 and ends on December 31. This Quarterly Report on Form 10-Q is the Company’s first quarterly report in its new fiscal year, and reports financial results for the ~~Territory in 2033, the Royalties rate may be reduced, under certain circumstances, to 5%.~~quarter ended March 31, 2022.

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 February 28, 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.

In addition, on November 30, 2015, the Company entered into a Stock Purchase Agreement with HTIT (the “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.

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.

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 revenues in each of the consolidated balance sheets as of February 28, 2021 and for the fiscal years ended August 31, 2020 and 2019. 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.

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. Based on the Company’s current cash resources and commitments, the Company believes it 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 COVID-19. However, the Company has experienced approximately six months of delays in clinical trials due to slow-downs of recruitment for trials generally. The Company may experience further delays if the pandemic continues for an extended period of time and it is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented by governments to combat the virus throughout the world.

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 weighted average number of common stock options, warrants and RSUs excluded from the calculation of diluted net loss was ~~5,338,751~~3,463,525 and ~~4,736,787 for the six month periods ended February 28, 2021 and February 29, 2020, respectively, and 5,401,269 and 4,840,417~~5,483,784 for the three month periods ended ~~February 28,~~March 31, 2022 and March 31, 2021, ~~and February 29, 2020,~~ respectively.

On November 30, 2015, the Company entered into a Technology License Agreement (the “TLA”), with Hefei Tianhui Incubator 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 “HTIT License Agreement”). The HTIT License Agreement and a stock purchase agreement, dated November 30, 2015, between the ~~SPA~~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.

~~On September 1, 2018, the Company adopted~~Under Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASC 606”), using the modified retrospective method of adoption. Under this method, the Company applied Accounting StandardsStandard Codification, (“ASC”) 606 to the License Agreement at the adoption date and was required to make an adjustment to the September 1, 2018 opening accumulated deficit balance and all prior periods continue to be presented under ASC 605. The most significant impact from adopting ASC 606 was the impact of the timing of recognition of revenue associated with the milestone payment. Under ASC 606, the Company is required to recognize the total transaction price (which includes consideration related to milestones once the criteria for recognition have been satisfied) using the input method over the period the performance obligation is fulfilled. Accordingly, once the consideration associated with a milestone is included in the transaction price, incremental revenue is recognized immediately based on the period of time that has elapsed towards complete satisfaction of the performance obligation.

~~Under 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~~As of March 31, 2022, an aggregate amount of $22,382 was allocated to the HTIT License Agreement, ~~as of February 28, 2021 aggregated $22,382,~~ all of which were received through the balance sheet date. Through ~~February 28, 2021,~~March 31, 2022, the Company has recognized revenue associated with this agreement in the aggregate amount of ~~$14,073,~~$17,005, of which $666 was recognized in the quarter ended ~~February 28, 2021,~~March 31, 2022, and deferred the remaining amount of ~~$8,309~~$5,377, which is presented as deferred revenues on the condensed consolidated balance sheet.

The condensed consolidated financial statements included herein have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) 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, ~~2020~~2021 (the ~~“2020~~“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 ~~2020~~2021 Form 10-K. The results for interim periods are not necessarily indicative of a full fiscal year’s results.

In ~~February~~June 2016, the Financial Accounting Standards Board ~~(“FASB”)~~ issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes the existing guidance for lease accounting, Leases (Topic 840). The new standard requires a lessee to record assets and liabilities on its balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the lessee’s income statement. The Company adopted this standard as of September 1, 2019 on a modified retrospective basis and will not restate comparative periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allows the Company to carry forward the historical lease classification. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of its balance sheet. The Company recognized those lease payments in its statements of operations on a straight-line basis over the lease period. As of the adoption date, the Company recognized an operating lease asset and liability of $168 and $168, respectively, as of September 1, 2019 on its balance sheet.

~~In June 2016, the FASB issued ASU~~Accounting Standards Update 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance will be effective for the fiscal year beginning after December 15, 2022, including interim periods within that year. The adoption of this guidance ~~will~~is not expected to have a significant impact on the Company’s consolidated financial statements.

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~~rights to a ~~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~~2010, in return for 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 ~~February 28, 2021,~~March 31, 2022, Entera 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.Inc. (“Amgen”). To the extent that the license granted to 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~~ 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.

Under the terms of the Company’s funding from the IIA, royalties of 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 ~~February 28, 2021~~March 31, 2022 was $2,207 ($~~2,490~~2,514 including interest).

The royalty expenses which are related to the funded project were recognized in cost of revenues in the relevant periods.

~~During fiscal year 2020,~~Following the Company’s 2019 annual meeting of stockholders, a complaint was filed in the Court of Chancery of the State of Delaware against the Company ~~received an aggregate payment of €50 from~~and the ~~EC under The European Innovation Council Accelerator (previously known as SME Instrument)~~members of the ~~European Innovation Programme Horizon 2020.~~

~~As part~~Board of Directors. On April 27, 2022, the Court of Chancery of the ~~grant~~State of Delaware approved the terms of a settlement between the Company ~~is required to use~~and the ~~proceeds from~~plaintiff in the ~~grant~~complaint, awarding the plaintiff an amount of $850,000 in ~~Europe. The Company intends~~attorneys’ fees, which was paid on ~~using~~April 28, 2022 and included in general and administrative expenses. All other details of the ~~grant to explore~~settlement were previously agreed by the ~~possibility~~parties and acted upon at the Company’s 2021 annual meeting of ~~running clinical trials in Europe.~~stockholders.

The Company measures fair value and discloses fair value measurements for financial assets. Fair value is based on the price that would be received to sell an asset 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:

As of ~~February 28, 2021,~~March 31, 2022, the assets measured at fair value are comprised of equity securities (Level 1). The fair value of held to maturity bonds as presented in note 4 was based on a Level 2 measurement.

As of ~~February 28, 2021,~~March 31, 2022, 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 ~~February 28, 2021,~~March 31, 2022, 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.

Other than items related to the asset acquisition transaction of Oravax (see note 8), there were no Level 3 items measured at fair value for the quarter ended March 31, 2021.

There were no Level 3 items for the three month ~~periods~~period ended ~~February 28, 2021 and February 29, 2020.~~March 31, 2022.

The Company’s marketable securities include investments in equity securities of D.N.A and Entera and in held to maturity ~~bonds, fair value through profit and loss, preferred equity and mutual funds.~~bonds.

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 ~~February 28, 2021,~~March 31, 2022, the Company owns approximately ~~1.9%~~1.4% of D.N.A’s outstanding ordinary shares.

The cost of the securities as of ~~February 28,~~both March 31, 2022 and December 31, 2021 ~~and August 31, 2020 is~~was $595.

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)).

The amortized cost and estimated fair value of ~~held-to-maturity~~held to maturity securities as of ~~February 28, 2021, are~~March 31, 2022, were as follows:

The amortized cost and estimated fair value of ~~held-to-maturity~~held to maturity securities as of ~~August~~December 31, ~~2020, are~~2021, were as follows:

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.

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 commencement 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.~~2027. Below is a summary of our operating right-of-use assets and operating lease liabilities as of ~~February 28,~~March 31, 2022 and December 31, 2021:

~~Minimum lease~~Lease payments for the Company’s right-of-use assets over the remaining lease periods as of ~~February 28,~~March 31, 2022 and December 31, 2021 are as follows:

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”),~~ whereby the President and Chief Executive Officer ~~(the “CEO”)~~ and the ~~CSO,~~Chief Scientific Officer, 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~~President and Chief Executive Officer and the ~~CSO~~Chief Scientific Officer is NIS ~~127,570~~146,705 ($~~39)~~46) and NIS ~~92,522~~106,400 ($~~28)~~34), respectively.

In addition to the Consulting 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~~President and Chief Executive Officer to the U.S. During the ~~six~~three months ended ~~February 28, 2021,~~March 31, 2022, such relocation expenses ~~totalled $180,~~were $143, compared to ~~$298~~$112 for the ~~six~~three months ended ~~February 29, 2020.~~March 31, 2021.

On March 18, 2021, the Company entered into athe Oravax License Agreement ~~(the “Oravax License Agreement”)~~and into the Stockholders Agreement with Oravax. On that date, Oravax’s assets were (1) in process research and development of COVID-19 vaccine technology; and (2) $1,500 to be received in cash. According to the Stockholders Agreement, Oravax ~~Medical Inc. (“Oravax”), pursuant~~issued 1,890,000 shares of its capital stock to ~~which~~ the Company, ~~will grant~~representing 63% of the issued and outstanding share capital of Oravax, on a fully diluted basis, as of the date of issuance, for which we paid $1,500. Consequently, the Company consolidates Oravax in its consolidated financial statements since that time. In addition, under the terms of the Oravax License Agreement, the Company has licensed out to Oravax ~~an exclusive, worldwide license (the “License”) under the Company’s~~certain patent rights, ~~in certain patents~~know-how and information related ~~intellectual property in which Oravax will receive certain rights relating~~ to the Company’s ~~proprietary~~ oral drug delivery technology with respect to ~~further develop, manufacture and commercialize oral vaccines for~~the combination with the COVID-19 ~~and other novel coronaviruses based on Premas Biotech Pvt.’s (“Premas”) proprietary~~ vaccine technology involving a triple antigen virus like particle (the “Oravax Product”) which was previously owned by Cystron Biotech LLC (“Cystron”), and later acquired by Akers Biosciences Inc. (“Akers”).technology.

In consideration for the grant of the License, the Oravax License Agreement provides that the Company will receive (i) royalties equal to 7.5% 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 $25,000 to $100,000, 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 the Company, that will oversee the ongoing research, development, clinical and regulatory activity with respect to the Oravax Product. In addition, the Company agreed to buy and Oravax agreed to issue to the Company 1,890,000 shares of common stock of Oravax, representing 63% of the common stock of Oravax for the aggregate amount of $1,500.product. Akers ~~agreed to contribute to Oravax~~contributed $1,500 in cash to Oravax and ~~substantially all of the assets of Cystron, including~~ a license agreement to the ~~Premas novel vaccine technology.~~Oravax product which includes a maximum of 2.5% royalties of all net sales. Effective January 1, 2022, Oravax transferred its rights and obligations under the Oravax License Agreement to its wholly-owned subsidiary, Oravax Medical Ltd.

~~The company is evaluating the nature of the transaction for accounting purposes.~~

Concurrently with the execution and delivery of the Oravax License Agreement, the Company entered into athe Stockholders Agreement ~~(the “Stockholders Agreement”),~~ with Akers, Premas, Cutter Mill, ~~Capital LLC (“Cutter Mill”),~~ and Run Ridge, ~~LLC (“Run Ridge”),~~ entities controlled by Michael Vasinikovich and Craig Schwabe, former members of Cystron Biotech LLC (“Cystron,” and collectively with Akers, Premas, Cutter Mill and Run Ridge, the ~~Stockholders Parties.~~“Stockholders Parties”). Pursuant to the Stockholders Agreement, among other things, the Company ~~will have~~has the right to appoint two out of the three members to the board of directors of Oravax (the “Oravax Board”), one of which is the Company’s Chief Executive Officer who will serve as the chairman of the Oravax Board, conditioned upon the Company maintaining certain ownership thresholds. Akers ~~will have~~has the right, until the third anniversary of the Stockholders Agreement effective date, to appoint one member to the Oravax Board. Oravax’s common stock held by the Stockholders Parties ~~will be~~is subject to certain transfer restrictions. In addition, the Stockholders Parties ~~will~~ have certain rights of participation in future financings as well as rights of first refusal and co-sale related to future potential transactions. Nadav Kidron, the Company’s President and Chief Executive Officer, was one of the former members of Cystron.

On May 2, 2022, the Company granted 4,500 RSUs representing a right to receive shares of the Company’s common stock to Mr. Yadin Rozov, a member of the Company’s board of directors. The RSUs will vest in four equal annual instalments on each of May 2, 2023, 2024, 2025 and 2026. These RSUs expire on May 2, 2032. The total fair value of these RSUs on the date of grant was $23, using the quoted closing market share price of $5.14 on the Nasdaq Capital Market on the last trading day before the date of grant.

On May 2, 2022, the Company granted options to purchase an aggregate of 7,500 shares of the Company’s common stock to Mr. Yadin Rozov, a member of the Company’s board of directors, at an exercise price of $5.14 per share (equivalent to the closing price of the Company’s common stock on the last trading day before the date of grant). The options will vest in four equal annual instalments on each of May 2, 2023, 2024, 2025 and 2026. These options expire on May 2, 2032. The fair value of all these options on the date of grant was $24, using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $5.14; dividend yield of 0% for all years; expected volatility of 65.26%; risk-free interest rates of 3.03%; and expected term of 6.26 years.

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).~~

~~The statements contained in this Quarterly~~and our Transition Report on Form 10-Q ~~that are not historical facts are “forward-looking statements” within~~for 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” and similar expressions or variations of such words are intendedtransition period from September 1, 2021 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:December 31, 2021.

~~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, 2020, or our Annual Report, as filed with the Securities and Exchange Commission, or the SEC, on November 24, 2020, as well as those discussed elsewhere in our Annual Report and expressed from time to time in our other filings with the SEC. In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this Quarterly Report on Form 10-Q could be interpreted differently in light of additional research, clinical and preclinical trials results. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this QuarterlyReport 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.~~

We are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions ~~including~~with a technology platform that delivers protein orally instead of by injection. Our first drug candidate is an oral insulin capsule to be used for the treatment of individuals with ~~diabetes, and the use of orally ingestible capsules for delivery of other polypeptides.~~uncontrolled diabetes. We utilize clinical research organizations, or CROs, to conduct our clinical ~~studies.~~trials.

~~Recent business developments~~Through our research and development efforts, we have successfully developed an oral dosage form intended to withstand the harsh environment of the stomach and effectively deliver active biological 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.

Our proprietary flagship product, an orally ingestible insulin capsule, or ORMD-0801, allows insulin to travel from the gastrointestinal tract via the portal vein to the ~~bloodstream,~~liver, revolutionizing the manner in which insulin is delivered. ItThis novel mode of delivery enables a closer mirroring of the ~~passage in a more physiological manner than current~~human body’s delivery ~~methods~~ of insulin.

FDA Guidance: 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 BLA. If approved, the 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.

~~Phase IIb Trial:~~ 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 269 type 2 diabetic 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 levels over a 90-day treatment period. Secondary endpoints of the trial included 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 type 2 diabetic 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 with 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~~:2b Trial: In February 2020, we announced positive topline data from the second and final cohort of ~~the~~our 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 12.2b trial. 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~~3 Trial: Based on guidance received from the FDA as part of the ~~End-of-Phase~~end-of-Phase 2 meeting ~~process~~ for ~~our oral insulin candidate,~~ ORMD-0801, we ~~have~~ submitted the protocols to the FDA ~~the protocols~~ for our ~~upcoming~~ pivotal Phase ~~III studies.~~3 trials. In line with the FDA’s expectations and recommendations, we ~~intend to conduct~~are currently conducting two Phase 3 ~~studies~~trials concurrently in patients with type 2 diabetes, or T2D. These ~~studies~~trials 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 ~~will be~~is being recruited from multiple sites throughout the ~~U.S., European Union countries,~~United States, Europe, and Israel. Our ~~phase III~~Phase 3 trial ~~will be~~is composed of 2two protocols:

ORA-D-013-1: This trial ~~will treat~~is currently being conducted on T2D patients with inadequate ~~glycemic~~glycaemic control who are currently on ~~1, 2,~~two or 3three oral glucose-lowering agents. This U.S. trial ~~will~~was designed to recruit 675 patients from 75over 90 clinical sites located throughout the U.S. Patients ~~will be~~were randomized 1:1:1 in this double-dummy trial 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 trial is to evaluate the efficacy of ORMD-0801 compared to placebo in improving ~~glycemic~~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 ~~the fourth quarter of~~December 2020. In ~~March 2021,~~May 2022, we announced that ~~25%~~we completed enrollment, surpassing our target of ~~the~~ 675 patients ~~were enrolled and randomized.~~with 710 patients enrolled.

ORA-D-013-2: This trial ~~will include~~includes T2D patients with inadequate ~~glycemic~~glycaemic control who are attempting to manage their condition with either diet alone or with diet and metformin or SGL2 monotherapy. A total of 450 patients ~~will be~~are being recruited through 36 sites in the ~~U.S.~~United States and 25 sites in Western Europe and Israel. Patients ~~will be~~are being randomized 1:1 into two cohorts dosed ~~with~~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 ~~glycemic~~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.~~United States in March 2021. In August 2021, we announced that over 25% of the ~~first calendar quarter of 2021.~~450 patients were enrolled and randomized.

We expect to receive the efficacy data from the trials after patients have completed the first ~~6-months~~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 ~~2022~~January 2023 and we anticipate filing a BLA with the FDA in ~~2023.~~2024. A BLA would grant us at least 12 years of marketing exclusivity from the date of approval in the ~~U.S.~~United States.

HTIT License. On November 30, 2015, we, the Subsidiary and HTIT entered into a Technology License Agreement, or the 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.

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 we are in discussions with HTIT in an attempt to reach a mutually agreeable solution. For further information, see note 2.b. to our interim condensed consolidated financial statements.

NASH trial: In ~~June~~September 2020, we ~~presented topline data from~~initiated an open-label trial of 8 patients that assessed the safety, tolerability, and early effects of 16 mg ORMD-0801 (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 (MRI-PDFF). In 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 December 2020, based on the NASH trial results, we initiated a follow-on~~open label clinical trial of our oral insulin capsule, ORMD-0801, for the treatment of ~~NASH.~~non-alcoholic steatohepatitis, or NASH, in type 2 diabetes. This ~~40 patients~~six patient multi-center trial ~~will be~~is comprised of ~~eight~~three clinical sites in Belgium. The trial will measure change and percent change in MRI-PDFF from baseline to week 12. Data from this trial is expected in the second half of 2022.

In December 2020, we initiated a double blind, placebo controlled clinical trial of our oral insulin capsule, ORMD-0801, for the treatment of NASH in type 2 diabetes. This 30 patient multi-center trial is comprised of five clinical sites: three in the ~~EU, three in the U.S.~~United States and two in Israel. The ~~follow-on clinical~~ trial will measure ~~efficacy endpoints via~~change and percent change in MRI-PDFF ~~for 12-week dosing.~~from baseline to week 12. In March 2022, we announced the completion of patient enrollment. Data from this trial is expected in the second half of 2022.

Oral GLP-1, is an incretin hormone, which stimulates the secretion of insulin from the pancreas. In 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,~~June 2021, we ~~completed~~initiated a ~~Phase I pharmacokinetic trial to evaluate the safety and pharmacokinetics of ORMD-0901 compared to placebo. We intend on initiating a follow-on~~ trial in T2D patients ~~which~~in the United States under an Investigational New Drug application filed with the FDA. Data from this trial is expected ~~to start during~~in the ~~first~~second half of ~~2021 in the U.S. under an IND submitted to the FDA.~~2022.

We are developing a new drug candidate, a weight loss treatment in the form of an oral leptin capsule. We anticipate initiating a proof of concept single-dose trial for this candidate to evaluate its pharmacokinetics and pharmacodynamics (glucagon reduction) in 10 type 1 adult diabetic patients. During the third quarter of 2020, we finalized the trial without any safety issues. Patients who received leptin on average had a decrease in glucose as compared to the 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 the placebo group.

On November 30, 2015, we, our Israeli subsidiary 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, 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 was payable immediately, $8 million will be paid subject to our entry into certain agreements with certain third parties, and $26.5 million will be paid 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 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, 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. Through February 28, 2021, we received aggregate milestone payments of $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 (we estimate this obligation between $2 million to $6 million) under the TLA. We wholly dispute said claims and we are in discussions with HTIT in an attempt to reach a mutually agreeable solution.Oral Vaccine

On November 30, 2015, we also entered into a separate Securities Purchase Agreement with HTIT, or the SPA, pursuant to which, in December 2015, we issued to HTIT 1,155,367 shares of our common stock for total consideration of $12 million. In connection with the HTIT License Agreement and the SPA, we received a non-refundable payment of $500,000 as a no-shop fee.

On March 18, 2021, we entered into a ~~License Agreement,~~license agreement, or the Oravax License Agreement, with Oravax, ~~Medical Inc., or Oravax,~~our 63% owned joint venture, pursuant to which we ~~will grant~~granted to Oravax an exclusive, worldwide license ~~or the License, under~~of our rights in 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 Biotech Pvt. ~~‘s,~~Ltd.’s, or ~~Premas,~~Premas’s, proprietary vaccine technology involving a triple antigen virus like particle, or the Oravax ~~Product~~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,~~ Effective January 1, 2022, Oravax transferred its rights and obligations under the Oravax License Agreement ~~provides that we will receive (i) royalties equal~~ to ~~7.5% on net sales, as defined in~~its wholly-owned subsidiary, Oravax Medical Ltd. For further details regarding the Oravax License Agreement, see note 8 to our interim condensed consolidated financial statements.

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 1 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 participant in a Phase 1 clinical trial of ~~each product commercialized by Oravax,~~ its ~~affiliates and permitted sublicensees related~~oral virus-like particle (VLP) COVID-19 vaccine in Johannesburg, South Africa. The trial protocol requires participants who have never been vaccinated for, or infected with, COVID-19. This has caused delays, as many volunteers have failed the screening process due to prior asymptomatic infection. We are currently exploring ways to increase enrollment, which may include changes to the ~~License during~~protocol as well as adding an additional clinical site to help increase enrollment.

On December 29, 2021, Oravax signed a cooperation and purchase agreement for an initial pre-purchase of 10 million doses of oral COVID-19 vaccines with Tan Thanh Holdings to commercialize the ~~term specified~~vaccine in ~~the Oravax License Agreement, (ii) sublicensing fees equal to 15% of~~Southeast Asia.

We do not expect any ~~non-sales-based consideration received by Oravax from a permitted sublicensee~~material impact on our development timeline 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 respectour liquidity due to the ~~Oravax Product. In addition,~~worldwide spread of COVID-19. However, we ~~agreed~~have experienced approximately six months of delays in clinical trials due to ~~buy~~slow-downs of recruitment for trials generally. We may experience further delays if the pandemic continues for an extended period of time and ~~Oravax agreed~~we are continuing to ~~issue~~assess the effect on our operations by monitoring the spread of COVID-19 and the actions implemented by governments to ~~us 1,890,000 shares of common stock of Oravax, representing 63% of~~combat the ~~common stock of Oravax for~~virus throughout the aggregate amount of $1.5 million. Akers agreed to contribute to Oravax $1.5 million in cash and substantially all of the assets of Cystron, including a license agreement to the Premas novel vaccine technology.world.

Comparison of ~~six and~~ three month periods ended ~~February 28,~~March 31, 2022 and March 31, 2021 ~~and February 29, 2020~~

The following table summarizes certain statements of operations data of the Company for the ~~six and~~ three month periods ended ~~February 28,~~March 31, 2022 and March 31, 2021 ~~and February 29, 2020~~ (in thousands of dollars except share and per share data):

Revenues consist of proceeds related to the HTIT License Agreement that are recognized on a cumulative basis when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, through the expected product submission date of June 2023, using the input method.

Revenues were ~~$1,339,000 and $1,348,000 for the six month periods ended February 28, 2021 and February 29, 2020, respectively.~~

~~Revenues~~$666,000 for the three month ~~period~~periods ended ~~February 28, 2021 were $665,000~~March 31, 2022 and ~~the revenues for the three month period ended February 29, 2020 were $674,000.~~March 31, 2021.

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 Israeli Law for the Encouragement of Industrial Research, Development and Technological Innovation, 1984, as amended, including any regulations or investment tracks promulgated thereunder.

There was no cost of revenues for the three ~~and the six~~ month periods ended ~~February 28, 2021~~March 31, 2022 and ~~February 29, 2020.~~March 31, 2021.

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 CROs, independent clinical investigators and other third-party service providers to assist us with the execution of our clinical ~~studies.~~trials.

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~~pre-trial 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, payments for patient recruitment and treatment, as well as salaries and related expenses of research and development staff.

Research and development expenses for the six month period ended February 28, 2021 increased by 80% to $9,643,000, from $5,342,000 for the six month period ended February 29, 2020. The increase is primarily due to an increase in expenses related to our Phase III clinical trial. Stock-based compensation costs for the six month period ended February 28, 2021 totaled $305,000, as compared to $218,000 during the six month period ended February 29, 2020. The increase is mainly attributable to awards granted to employees and a consultant during the six month period ended February 28, 2021.

Research and development expenses for the three month period ended ~~February 28, 2021 increased~~March 31, 2022 decreased by ~~17%~~5% to ~~$3,869,000, from $3,320,000~~$5,836,000, compared to $6,168,000 for the three month period ended ~~February 29, 2020.~~March 31, 2021. The ~~increase is primarily~~decrease was mainly due to ~~an increase~~higher in process research and development costs of Oravax recognized in the first quarter of 2021 and a decrease in expenses related to our Phase ~~III~~3 clinical ~~trial.~~trials, which involved higher expenses upon commencement, partially offset by an increase in stock-based compensation expenses. Stock-based compensation ~~costs~~expenses for the three month period ended ~~February 28, 2021 totaled $167,000, as~~March 31, 2022 were $562,000, compared to ~~$122,000~~$271,000 during the three month period ended ~~February 29, 2020. The~~March 31, 2021. This increase iswas mainly ~~attributable~~due to equity awards granted to employees in the first quarter of 2022 and a ~~consultant during~~grant to an employee in September 2021.

~~In the six month~~ periods ended ~~February 28,~~March 31, 2022 and March 31, 2021, ~~and February 29, 2020,~~ we did not recognize any research and development grants. As of ~~February 28, 2021,~~March 31, 2022, we had incurred liabilities to pay royalties to the Israel Innovation Authority of the Israeli Ministry of Economy &and Industry of ~~$280,000.~~$169,000.

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 March 31, 2022 were $590,000, compared to no expenses for the three month period ended March 31, 2021. The increase was mainly due to stock-based compensation expenses, salary related expenses and consulting expenses. Stock-based compensation costs for the three month period ended March 31, 2022 were $364,000, compared to no stock-based compensation expenses during the three month period ended March 31, 2021. This increase was mainly due to equity awards granted to an employee during fiscal year 2021.

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 six month period ended February 28, 2021 decreased by 3% to $2,391,000 from $2,472,000 for the six month period ended February 29, 2020. Stock-based compensation costs for the six month period ended February 28, 2021 totaled $424, as compared to $350 during the six month period ended February 29, 2020. The increase is mainly attributable to awards granted to employees and a consultant during the six month period ended February 28, 2021.

General and administrative expenses for the three month period ended ~~February 28, 2021~~March 31, 2022 increased by ~~20%~~398% to ~~$1,664,000 from $1,391,000~~$5,492,000, compared to $1,102,000 for the three month period ended ~~February 29, 2020.~~March 31, 2021. The increase ~~in costs related to general and administrative activities is primarily attributable~~was mainly due to an increase in stock-based compensation expenses and legal expenses as well as public relations and ~~costs related to our directors' and officer’s' insurance policy.~~investor relations expenses. Stock-based compensation costs for the three month period ended ~~February 28, 2021 totaled $243,000, as~~March 31, 2022 were $3,103,000, compared to $166,000 during the three month period ended February 29, 2020. The increase is mainly attributable to awards granted to employees and a consultant during the three month period ended February 28, 2021.

Net financial income increased by 120% from net financial income of $235 for the six month period ended February 29, 2020 to net financial income of $517 for the six month period ended February 28, 2021. The increase is primarily attributable to an increase in fair value of the ordinary shares of D.N.A Biomedical Solutions Ltd. and Entera Bio Ltd.

~~Net financial income decreased by 25% from net financial income of $349,000~~$377,000 for the three month period ended ~~February 29, 2020~~March 31, 2021. This increase was mainly due to equity awards granted to directors, officers and employees.

Net financial income ~~of $260,000~~was $544,000 for the three month period ended ~~February 28,~~March 31, 2022, compared to $541,000 for the three month period ended March 31, 2021. ~~The decrease is primarily attributable to the decrease in fair value of the ordinary shares of D.N.A Biomedical Solutions Ltd. and Entera Bio Ltd.~~

From inception through ~~February 28, 2021,~~March 31, 2022, we have incurred losses in an aggregate amount of ~~$102,792,000.~~$136,945,000. During that period and through ~~April 13, 2021,~~March 31, 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 ~~$143,323,000,~~$244,394,000, net of transaction costs. During that period, we also received cash consideration of ~~$12,594,000~~$27,938,000 from the exercise of warrants and options. We expect to seek to obtain additional financing through similar sources in the future, as needed. As of ~~February 28, 2021,~~March 31, 2022, we had ~~$33,805,000~~$27,967,000 of available cash, ~~$13,116,000~~$131,519,000 of short-term and long-term bank deposits and ~~$13,008,000~~$9,230,000 of marketable securities.

From inception through March 31, 2022, we have not generated significant revenues from our operations. 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.~~months, although no assurance can be given that we will not need additional funds prior to such time.

If there are unexpected increases in our operating expenses, we may need to seek additional financing during the next 12 months. Successful completion of our development programs and our transition to normal operations is dependent upon obtaining necessary regulatory approvals from the FDA prior to selling our products within the United States, obtaining foreign regulatory approvals to sell our products internationally, or entering into licensing agreements with third parties. There can be no assurance that we will receive regulatory approval of any of our product candidates, and a substantial amount of time may pass before we achieve a level of revenues adequate to support our operations, if at all. We also expect to incur substantial expenditures in connection with the regulatory approval process for each of our product candidates during their respective developmental periods. Obtaining marketing approval will be directly dependent on our ability to implement the necessary regulatory steps required to obtain marketing approval in the United States and in other countries. We cannot predict the outcome of these activities.

As of ~~February 28,~~March 31, 2022, our total current assets were $143,562,000 and our total current liabilities were $6,324,000. On March 31, 2022, we had a working capital surplus of $137,238,000 and an accumulated loss of $136,945,000. As of December 31, 2021, our total current assets were ~~$57,472,000~~$147,937,000 and our total current liabilities were ~~$5,932,000.~~$7,368,000. On ~~February 28,~~December 31, 2021, we had a working capital surplus of ~~$51,540,000~~$140,569,000 and an accumulated loss of $102,792,000. As of August 31, 2020, our total current assets were $40,511,000 and our total current liabilities were $4,536,000. On August 31, 2020, we had a working capital surplus of $35,975,000 and an accumulated loss of $92,614,000.$126,520,000. The ~~increase~~decrease in working capital from ~~August~~December 31, ~~2020~~2021 to ~~February 28, 2021~~March 31, 2022 was ~~primarily~~mainly due to ~~capital raising.~~a decrease in short term deposits.

During the ~~six~~three month period ended ~~February 28, 2021,~~March 31, 2022, cash and cash equivalents ~~increased~~were $27,967,000, compared to ~~$33,805,000 from the $19,296,000 reported~~$27,456,000 as of ~~August~~December 31, ~~2020, which is~~2021. The decrease was mainly due to the reasons described below.

Operating activities used cash of ~~$9,401,000~~$9,125,000 in the ~~six~~three month period ended ~~February 28, 2021, as~~March 31, 2022, compared to ~~$6,625,000~~$3,682,000 used in the ~~six~~three month period ended ~~February 29, 2020.~~March 31, 2021. Cash used in operating activities primarily consisted of ~~net loss resulting from~~ research and development, sales and marketing and general and administrative expenses ~~as well as changes in deferred revenue due to the License Agreement~~ and ~~is partially offset by~~ changes in accounts payable and accrued ~~expenses.~~expenses, partially offset by changes in stock-based compensation.

Investing activities ~~used~~provided cash of ~~$2,111,000~~$7,359,000 in the ~~six~~three month period ended ~~February 28, 2021, as~~March 31, 2022, compared to ~~$6,900,000~~cash provided from investing activities of $10,753,000 in the ~~six~~three month period ended ~~February 29, 2020.~~March 31, 2021. Cash ~~used in~~provided by investing activities in the ~~six~~three month period ended ~~February 28, 2021~~March 31, 2022 consisted primarily of ~~the purchase of short-term deposits and held to maturity securities and is partially offset by~~ the proceeds of short-term deposits and held to maturity securities. Cash provided by investing activities in the ~~six~~three month period ended ~~February 29, 2020~~March 31, 2021 consisted primarily of the proceeds ~~from the sale~~ of short-term deposits and held to maturity securities, ~~and is partially~~ offset by the purchase of ~~short term deposits.~~bonds held to maturity.

Financing activities provided cash of ~~$26,013,000~~$2,292,000 in the ~~six~~three month period ended ~~February 28, 2021, as~~March 31, 2022, compared to ~~$2,329,000~~$29,032,000 provided in the ~~six~~three month period ended ~~February 29, 2020.~~March 31, 2021. Cash provided by financing activities consisted primarily of proceeds from the ~~issuances~~issuance of our common ~~stock as well as proceeds from the exercise of options and warrants.~~stock.

On ~~February 27, 2020,~~September 1, 2021, we entered into ~~an underwriting agreement with National Securities Corporation, or the Underwriter, in connection with~~ a ~~public~~controlled equity offering or the Offering of 5,250,000 shares of our common stock, at an offering price of $4.00 per share. We also granted the Underwriter a 45-day option to purchase from us up to an additional 787,500 shares of common stock at the public offering price, or the Over-Allotment Option. In connection with the Offering, we also agreed to issue to the Underwriter, or its designees, warrants, or the Underwriter’s Warrants, to purchase up to an aggregate of 7% of the shares of common stock sold in the Offering (including any additional shares sold during the 45-day option period), at an exercise price of $4.80 per share. The Underwriter’s Warrants issued in the Offering will be exercisable at any time and from time to time, in whole or in part, commencing six months from issuance for a period of three years from the date of issuance. The closing of the Offering occurred on March 2, 2020. On April 9, 2020, we issued 180,561 shares of our common stock and 12,640 Underwriter’s Warrants pursuant to a partial exercise by the Underwriter of the Over-Allotment Option, or the Partial Over-Allotment Option Exercise. The net proceeds to us from the Offering, including from the Partial Over-Allotment Option Exercise, after deducting the underwriting discount and our Offering expenses, were $19,894,000.

~~On September 5, 2019, we entered into an equity distribution~~ agreement, or the ~~Sales~~Cantor Equity Distribution Agreement, with Cantor Fitzgerald & Co., as agent, pursuant to which ~~we could, from time to time and at our option,~~the Company may issue and sell shares of ~~our~~its common stock having an aggregate offering price of up to ~~$15,000,000,~~$100,000,000, through a sales agent, subject to certain terms and conditions. Any shares sold ~~were~~will be sold pursuant to ~~the Company’s~~our effective shelf registration statement on Form S-3 including a prospectus dated July 26, 2021 and prospectus supplement ~~each~~ dated ~~February 10, 2020 (which superseded a prior registration statement, prospectus and prospectus supplement that related to shares sold under the Sales Agreement).~~September 1, 2021. We 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 Sales Agreement. As of ~~February 28, 2021, 3,212,621~~May 12, 2022, 841,638 shares were issued under the ~~Sales~~Cantor Equity Distribution Agreement for aggregate net proceeds of ~~$14,397,000.~~$15,275,000.

On ~~December 1, 2020,~~November 3, 2021, we entered into ~~an equity distribution~~a securities purchase agreement with several institutional and accredited investors, or the ~~New Sales Agreement,~~Purchasers, pursuant to which we ~~may, from time~~agreed to ~~time and at our option, issue and~~ sell, in a registered direct offering, or the Offering, an aggregate of 2,000,000 shares of our common stock ~~having~~to the Purchasers for an ~~aggregate~~ offering price of up to $40,000,000, through a 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 10, 2020 and prospectus supplement dated December 1, 2020. We will pay the sales agent a cash commission of 3.0% of the gross proceeds$25.00 per share. The closing of the sale of ~~any~~the shares ~~sold through the sales agent under the New Sales Agreement. As of February 28, 2021, 1,623,114 shares were issued under the New Sales Agreement for aggregate~~occurred on November 5, 2021. The net proceeds ~~of $11,852,000. As of April 13, 2021, 3,152,093 shares~~to us from the Offering, after deducting the placement agent’s fees and expenses and the Company’s Offering expenses, were ~~issued under the New Sales Agreement for aggregate net proceeds of $27,653,000.~~approximately $46,375,000.

As of February 28, 2021 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.

Our critical accounting policies are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report.

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.

There has been no significant change in our exposure to market risk during the quarter ended ~~February 28, 2021.~~March 31, 2022. 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.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~February 28, 2021.~~March 31, 2022. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~February 28, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.

	Common Stock				Additional paid-in		Accumulated			Total stockholders’			Non- controlling			Total
	Shares		$		capital		deficit			equity			interests			equity
	In thousands
BALANCE AS OF DECEMBER 31, 2020		26,660	$	320	$	138,587	$	(99,938	)	$	38,969		$	-		$	38,969
CHANGES DURING THE THREE MONTH PERIOD ENDED MARCH 31, 2021:
ISSUANCE OF COMMON STOCK, NET		2,265		27		22,280		-			22,307			-			22,307
EXERCISE OF WARRANTS AND OPTIONS		1,022		12		6,713		-			6,725			-			6,725
STOCK-BASED COMPENSATION		-		-		647		-			647			-			647
ASSET ACQUISITION		-		-		1,045		-			1,045			1,495			2,540
NET LOSS		-		-		-		(5,670	)		(5,670	)		(393	)		(6,063	)
BALANCE AS OF MARCH 31, 2021		29,947	$	359	$	169,272	$	(105,608	)	$	64,023		$	1,102		$	65,125

	Three months ended
	March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,708	)	$	(6,063	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		11			28
Non-cash expense for acquired in-process research and development					1,040
Exchange differences and interest on deposits and held to maturity bonds		(235	)		126
Changes in fair value of investments		(110	)		(459	)
Stock-based compensation		4,029			647
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(295	)		(378	)
Accounts payable, accrued expenses and related parties		(1,151	)		2,063
Deferred revenues		(666	)		(666	)
Other liabilities		-			(20	)
Total net cash used in operating activities		(9,125	)		(3,682	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of held to maturity securities		-			(4,104	)
Proceeds from sale of short-term deposits		5,000			9,500
Proceeds from maturity of held to maturity securities		2,406			2,355
Proceeds from sale of mutual funds		-			3,029
Funds in respect of employee rights upon retirement		-			-
Purchase of property and equipment		(47	)		(27	)
Total net cash provided by investing activities		7,359			10,753
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of issuance costs		2,969			22,307
Proceeds from exercise of options		-			6,725
Tax withholdings related to stock-based compensation settlements		(677	)		-
Total net cash provided by financing activities		2,292			29,032
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(15	)		8

INCREASE IN CASH AND CASH EQUIVALENTS		511			36,111

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		27,456			21,630
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27,967		$	57,741

(A) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS -
Interest received	$	122		$	263
(B) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS -
Recognition of operating lease right of use assets and liabilities	$	647		$	-
(C) ASSET ACQUISITION TRANSACTION (see note 8) -
In-process research and development		-			1,040
Note receivable from Akers		-			1,500
Additional paid in capital		-			(1,045	)
Non-controlling interests	$	-		$	(1,495	)

	Six months ended
	February 28, 2021			February 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,178	)	$	(6,231	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		30			2
Exchange differences and interest on deposits and held to maturity bonds		515			(17	)
Changes in fair value of investments		(351	)		121
Stock-based compensation		728			569
Shares issued for services		-			30
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(72	)		479
Accounts payable, accrued expenses and related parties		1,304			(186	)
Deferred revenues		(1,342	)		(1,349	)
Liability for employee rights upon retirement		2			(5	)
Other liabilities		(37	)		(38	)
Total net cash used in operating activities		(9,401	)		(6,625	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term deposits		(5,000	)		(10,200	)
Proceeds from sale of mutual funds		775			-
Purchase of held to maturity securities		(4,406	)		-
Proceeds from sale of short-term deposits		2,500			15,000
Proceeds from maturity of held to maturity securities		4,366			2,100
Funds in respect of employee rights upon retirement		-			3
Purchase of property and equipment		(346	)		(3	)
Total net cash provided by investing activities		(2,111	)		6,900

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of issuance costs		22,265			2,316
Proceeds from exercise of options		3,748			13
Total net cash provided by financing activities		26,013			2,329

EFFECT OF EXCHANGE RATE CHANGES ON CASH		8			1

INCREASE IN CASH AND CASH EQUIVALENTS		14,509			2,605
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		19,296			3,329
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	33,805		$	5,934

(A) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS -
Interest received	$	208		$	348

(B) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Right of use assets and lease liabilities recognition	$	582			-

	February 28, 2021		August 31, 2020
Short-term:
D.N.A (see b below)	$	553	$	246
Entera (see c below)		194		150
Held to maturity bonds (see d below)		6,120		5,369
Preferred equity		-		481
Mutual funds*		3,001		3,298
	$	9,868	$	9,544
Long-term:
Held to maturity bonds (see d below)	$	3,140	$	3,928
		13,008	$	13,472

	March 31, 2022		December 31, 2021
Short-term:
D.N.A (see b below)	$	974	$	863
Entera (see c below)		336		337
Held to maturity bonds (see d below)		5,965		6,547
	$	7,275	$	7,747
Long-term:
Held to maturity bonds (see d below)	$	1,955	$	3,875
	$	9,230	$	11,622

	February 28,			August 31,
	2021			2020
Assets
CURRENT ASSETS:
Cash and cash equivalents	$	33,805		$	19,296
Short-term deposits		13,116			11,060
Marketable securities		9,868			9,544
Prepaid expenses and other current assets		683			611
Total current assets		57,472			40,511

LONG-TERM ASSETS:
Long-term deposits		2			2
Marketable securities		3,140			3,928
Amounts funded in respect of employee rights upon retirement		20			18
Property and equipment, net		415			99
Operating lease right-of-use assets		608			75
Total long-term assets		4,185			4,122
Total assets	$	61,657		$	44,633

Liabilities and stockholders’ equity
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	3,003		$	1,699
Deferred revenues		2,703			2,703
Payable to related parties		87			90
Operating lease liabilities		139			44
Total current liabilities		5,932			4,536

LONG-TERM LIABILITIES:
Deferred revenues		5,606			6,947
Employee rights upon retirement		20			18
Provision for uncertain tax position		11			11
Operating lease liabilities		469			31
Other liabilities		177			211
Total long-term liabilities		6,283			7,218

COMMITMENTS (note 2)

STOCKHOLDERS’ EQUITY:
Common stock, $0.012 par value (60,000,000 authorized shares; 28,289,592 and 23,675,530 shares issued and outstanding as of February 28, 2021 and August 31, 2020, respectively)		339			284
Additional paid-in capital		151,895			125,209
Accumulated deficit		(102,792	)		(92,614	)
Total stockholders’ equity		49,442			32,879
Total liabilities and stockholders’ equity	$	61,657		$	44,633

					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 SIX MONTH PERIOD ENDED FEBRUARY 28, 2021:
ISSUANCE OF COMMON STOCK, NET		3,996		48		22,210		-			22,258
EXERCISE OF WARRANTS AND OPTIONS		618		7		3,748		-			3,755
STOCK-BASED COMPENSATION		-		-		728		-			728
NET LOSS		-		-		-		(10,178	)		(10,178	)
BALANCE AS OF FEBRUARY 28, 2021		28,289	$	339	$	151,895	$	(102,792	)	$	49,442

	February 28, 2021
	Amortized cost		Gross unrealized gains (losses)			Estimated fair value		Average yield to maturity rate
Short-term:
Commercial bonds	$	6,049	$	(76	)	$	5,973		2.06	%
Accrued interest		71		-			71

Long-term		3,140		7			3,147		1.57	%
	$	9,260	$	(69	)	$	9,191

	March 31, 2022
	Amortized cost		Gross unrealized gains (losses)			Estimated fair value		Average yield to maturity rate
Short-term:
Commercial bonds	$	5,892	$	(114	)	$	5,778		1.30	%
Accrued interest		73		-			73

Long-term		1,955		(52	)		1,903		0.83	%
	$	7,920	$	(166	)	$	7,754

	August 31, 2020
	Amortized cost		Gross unrealized gains (losses)			Estimated fair value		Average yield to maturity rate
Short-term:
Commercial bonds	$	5,295	$	(29	)	$	5,266		2.26	%
Accrued interest		74		-			74

Long-term		3,928		56			3,984		2.20	%
	$	9,297	$	27		$	9,324

	December 31, 2021
	Amortized cost		Gross unrealized gains (losses)			Estimated fair value		Average yield to maturity rate
Short-term:
Commercial bonds	$	6,432	$	(115	)	$	6,317		1.37	%
Accrued interest		115		-			115

Long-term		3,875		(29	)		3,846		1.20	%
	$	10,422	$	(144	)	$	10,278

	February 28, 2021
Operating right-of-use assets	$	608

Operating lease liabilities, current		139
Operating lease liabilities long-term		469
Total operating lease liabilities	$	608

	Three months ended
	March 31, 2022		March 31, 2021

Revenues	$	666	$	666
Cost of revenues		-		-
Research and development expenses		5,836		6,168
Sales and Marketing expenses		590		-
General and administrative expenses		5,492		1,102
Financial income (expenses), net		544		541
Taxes on income		-		-
Net loss for the period	$	10,708	$	6,063
Basic and diluted loss per share of common stock	$	0.27	$	0.20
Weighted average shares of common stock outstanding used in computing basic and diluted loss per share of common stock		38,679,622		27,963,072

Number		Exhibit

10.1*		~~Second Amendment, dated February 8, 2021, to Employment Agreement, entered into as~~Representative Form of ~~May 16, 2019, by and between Oramed Ltd. and Avraham Gabay.~~
~~10.2+~~		~~License Agreement, dated as of March 18, 2021, by and~~Indemnification Agreements between Oramed Pharmaceuticals Inc.~~, Oramed Ltd.~~ and ~~Oravax Medical Inc. (incorporated by reference from~~each of our ~~current report on Form 8-K filed March 19, 2021).~~directors and officers.
~~10.3~~		Stockholders Agreement, dated as of March 18, 2021, by and between Oramed Pharmaceuticals Inc., Akers Biosciences Inc., Premas Biotech PVT Ltd., Cutter Mill Capital LLC, and Run Ridge LLC (incorporated by reference from our current report on Form 8-K filed March 19, 2021).
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*
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**
32.1**		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2**
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 ~~February 28, 2021~~March 31, 2022 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.

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

+*	~~Certain confidential portions of this exhibit were omitted because the identified confidential provisions (i) are not material and (ii) would be competitively harmful if publicly disclosed.~~
*	Filed herewith
**	~~Furnished herewith~~

	ORAMED PHARMACEUTICALS INC.

Date: ~~April 13, 2021~~May 12, 2022	By:	/s/ Nadav Kidron
		Nadav Kidron
		President and Chief Executive Officer

Date: ~~April 13, 2021~~May 12, 2022	By:	/s/ ~~Avraham Gabay~~David Silberman
		~~Avraham Gabay~~David Silberman
		Chief Financial Officer
		(Principal Financial and Accounting Officer)