Oramed(ORMP) - 2022 Q4 - Annual Report

Clinical Trials and Research - The ORA-D-013-1 Phase 3 trial for the oral insulin candidate did not meet its primary and secondary endpoints, leading to the termination of both ORA-D-013-1 and ORA-D-013-2 trials[21] - The company is conducting a comprehensive analysis of the trial data to explore potential paths forward for the oral insulin candidate[21] - The company plans to continue clinical trials to demonstrate the effectiveness of its oral dosage form for insulin delivery[20] - The oral vaccine developed by Oravax has shown significant antibody response (2-6 fold over baseline) in preliminary Phase 1 data, with no safety issues reported[25] - The company experienced approximately six months of delays in clinical trials due to COVID-19, but does not expect material impact on its development timeline[30] - Oramed Ltd. is currently evaluating collaboration paths with both HTIT and Medicox following the results of the ORA-D-013-1 Phase 3 trial[42][45] Market Opportunities and Demand - The estimated global diabetes population is projected to increase from 537 million in 2021 to 783 million by 2045, highlighting significant market demand for diabetes-related products[29] - The oral insulin capsule is anticipated to be competitive due to its efficacy and safety profile, despite existing treatment options for diabetes[64] Financial Performance and Assets - As of December 31, 2022, the company had $40.5 million in cash and cash equivalents, $111.5 million in short-term and long-term bank deposits, and $3.7 million in marketable securities[233] - The company owns 1,701,357 common shares of DNA and 117,000 ordinary shares of Entera, which are classified as marketable securities[236] - The company aims to preserve financial assets, maintain adequate liquidity, and maximize returns while minimizing exposure to market risks[234] Patents and Licensing Agreements - The company holds 112 patents, with 20 issued during the fiscal year ended December 31, 2022, covering technologies for oral delivery of proteins and diabetes treatment[34] - The HTIT License Agreement grants HTIT an exclusive commercialization license for ORMD-0801 in China, with royalties of 10% on net sales and milestone payments totaling $37.5 million, of which $20.5 million has been received[41] - The Medicox distribution license agreement allows Medicox to distribute ORMD-0801 in South Korea for ten years, with up to $15 million in developmental milestones and 15% royalties on gross sales[44] - The Oravax License Agreement includes 7.5% royalties on net sales and potential milestone payments ranging from $25 million to $100 million based on sales achievements[43] - Oramed Ltd. has entered into a Patent Transfer Agreement with Entera, receiving 3% royalties on Entera's net revenues from a patent application related to oral administration of proteins[40] - As of December 31, 2022, Entera had not paid any royalties to Oramed Ltd., and Oramed held approximately 0.4% of Entera's outstanding ordinary shares[40] Strategic Evaluation and Shareholder Value - The company is evaluating potential strategic opportunities to enhance shareholder value[16] - Research and development expenses are expected to continue being the company's major expenditure, impacting short- and long-term capital requirements[18] Competition and Industry Landscape - Competition in the biomedical and pharmaceutical sectors is intense, with many companies having greater financial and technical resources[60] - The drug approval process is time-consuming and resource-intensive, influenced by factors such as illness severity and alternative treatments available[58] - The FDA's review of a Biological License Application can take an average of 18 months, providing 12 years of exclusivity in the U.S. market upon approval[55] Human Resources and Talent Management - The company has contracted with seventeen individuals for employment or consulting arrangements, including six in senior management and four in research and development[75] - The company provides competitive compensation, health, and retirement programs, along with bonuses and stock-based compensation for eligible employees[76] - The company focuses on attracting and retaining top talent to create an inclusive and diverse workplace[74] - The company has a Scientific Advisory Board consisting of recognized experts in the field, enhancing its research and development capabilities[65] Financial Risk Management - The company does not use any currency hedging transactions to mitigate financial exposure from fluctuations in the exchange rate of the U.S. dollar against the NIS[239] - The average exchange rate of the U.S. dollar to the NIS for the year ended December 31, 2022, was 3.358, with a period-end rate of 3.519[239] - The company is exposed to a potential exchange rate gain of approximately $206,000 with a 10% appreciation of the NIS against the U.S. dollar, and a loss of approximately $169,000 with a 10% devaluation[238]