Oramed Pharmaceuticals Issues Letter to Shareholders

Rhea-AI Summary

Oramed Pharmaceuticals (NASDAQ: ORMP) has announced key developments expected for completion in 2025, centered around its new joint venture OraTech Pharmaceuticals. The venture focuses on oral insulin development with planned U.S. Phase 3 trials.

Key highlights include:

• Distribution of majority OraTech holdings to Oramed shareholders via dividend, coinciding with OraTech's planned Nasdaq listing
• Planned cash dividend of approximately $0.25 per share
• Marketing Authorization Application submitted by HTIT for oral insulin capsule in China, with OraTech expected to receive royalties
• Ongoing revenue from Scilex partnership, including $400,000 in royalties due for Q4 2024

The company maintains a strong financial position through its Scilex transaction, receiving $70 million from a $99.5 million loan agreement, with additional $53 million expected over two years. Oramed holds 12.25 million Scilex shares, increasing to 18.75 million shares, plus royalty streams from multiple products including ZTlido, ELYXYB, and GLOPERBA.

Positive

• New joint venture OraTech established for oral insulin development
• Marketing Authorization Application submitted in China
• $70M received from $99.5M Scilex loan agreement, additional $53M expected
• Holding 18.75M Scilex shares (after upcoming increase)
• $400,000 Q4 2024 royalties from ZTlido sales
• Multiple revenue streams from Scilex product royalties

Negative

• Phase 3 trials still pending, not yet started
• OraTech public listing and dividend distribution subject to regulatory approval
• Cash dividend ($0.25/share) partially intended to offset tax liabilities

Insights

Financial Analyst

Oramed's shareholder letter reveals a significant corporate transformation with multiple value creation vectors. The planned $0.25 per share cash dividend represents a substantial 12.5% yield at current prices, providing immediate tangible returns to shareholders. More strategically important is the plan to distribute Oramed's majority holding in OraTech to shareholders when the joint venture achieves public trading status, effectively creating a tax-efficient spin-off.

The company's financial engineering extends to its $99.5 million Scilex investment, which has already returned $70 million with an additional $53 million expected within two years. This transaction has generated both equity ownership (18.75 million Scilex shares) and established multiple royalty streams, including $400,000 from Q4 2024 ZTlido sales - a figure expected to grow quarterly.

Oramed is effectively transforming from a clinical-stage biotech into a hybrid model featuring royalty streams, strategic investments, and targeted drug development via OraTech. This multi-faceted approach diversifies risk while potentially accelerating value realization. The China regulatory submission for the oral insulin capsule opens a significant market opportunity, with OraTech positioned to receive royalties once commercialized.

This corporate restructuring appears designed to unlock value by separating development-stage assets from revenue-generating investments while returning capital to shareholders - a strategy that could significantly enhance shareholder returns beyond what traditional clinical development timelines might offer.

Key Highlights – expected completion in YR 2025:

• OraTech Pharmaceuticals Inc. - A new joint venture focused on oral insulin development, with planned U.S. Phase 3 trials.
• Distribution of majority of Oramed's holding in OraTech to Oramed shareholders via dividend planned to coincide with OraTech's public listing.
• Cash dividend planned (~$0.25 per share).
• Marketing Authorization Application has been submitted by HTIT, and commercialization preparations are underway for oral insulin capsule. OraTech expected to receive royalties from sales in China.
• Oramed to receive royalty streams over the next decade from multiple Scilex products including $400,000 due for Q4 2024 sales.

NEW YORK, March 4, 2025 /PRNewswire/ -- Oramed Pharmaceuticals Inc. (NASDAQ: ORMP) (TASE: ORMP) ("Oramed"), a clinical-stage pharmaceutical company focused on the development of oral drug delivery platforms, today issued a letter to its shareholders from its President and Chief Executive Officer Nadav Kidron.

Dear Shareholders,

I am happy to take this opportunity to provide our shareholders with an overview of our key accomplishments and outline our future direction. 

Oramed-HTIT Joint Venture: OraTech - A Transformational Partnership

We are excited about our joint venture, OraTech Pharmaceuticals, Inc. ("OraTech"), which we believe represents a significant step forward in advancing our proprietary oral drug delivery technology. This company will serve as the foundation for developing, marketing, and commercializing innovative treatments leveraging Oramed's oral insulin and POD™ platform.

The collaboration combines Oramed's innovative drug delivery technology with Hefei Tianhui Biotech Co., Ltd's ("HTIT") state-of-the-art manufacturing capabilities, creating a powerful synergy that we believe positions OraTech as a true game-changer in the pharmaceutical industry. This integration of cutting-edge technology and advanced manufacturing expertise will enable us to ensure consistent, high-quality production at scale, setting new standards for oral protein delivery.

OraTech is backed by a substantial capital and operational commitment. These resources are earmarked to support the initiation of a Phase 3 clinical trial in the U.S., a key milestone in bringing oral insulin to market. By leveraging insights from prior clinical studies, we have strategically designed this refined Phase 3 trial to focus on key patient subpopulations that we believe have the highest potential to demonstrate efficacy.

In parallel, HTIT has already submitted a Marketing Authorization Application to China's regulators for the oral insulin capsule in China. Commercialization preparations are underway, and OraTech is expected to receive royalties from sales in China.

The establishment of OraTech represents a unique opportunity to build a company focused on advancing next-generation therapies, unlocking new market potential.

Stock Dividend and Strategic Opportunities

OraTech has initiated work on the Securities and Exchange Commission registration process with the goal of achieving Nasdaq trading status later this year. As part of this strategic initiative, Oramed plans to distribute OraTech stock to its shareholders via a dividend, granting them the majority of Oramed's ownership in OraTech. This distribution is expected to coincide with OraTech's public trading debut on Nasdaq.

Cash Dividend

Oramed is evaluating an opportunity to issue cash dividends of approximately $0.25 per share intended to help offset any potential tax liabilities associated with the OraTech stock distribution. Beyond mitigating potential tax concerns, this initiative underscores our commitment to maximizing shareholder value.

Strategic Scilex Financing : Delivering Tangible Value

Our investment in Scilex Holding Company ("Scilex") underscores our commitment to generating meaningful value through well-structured financial transactions. To date, we have received $70 million from our $99.5 million secured loan agreement, with additional payments of approximately $53 million expected over the  next two years.

Beyond these direct financial returns, the transaction has provided us with 12.25 million shares of Scilex common stock, which will increase to 18.75 million shares this month as a result of warrant vesting. Additionally, we structured this deal to include meaningful upside through ongoing royalty streams from the following Scilex products:

• ZTlido – A 4% royalty on sales worldwide for the next decade and a 25% profit share on the majority of sales outside the U.S., leveraging its U.S. Food and Drug Administration approval as a lidocaine topical system targeting the global pain patch market valued at $4.8 billion in 2021, and is projected to reach $7.3 billion by 2031. Oramed will receive $400,000 in royalties for Q4 2024 and expects this amount to increase on a quarterly basis. More details at www.ztlido.com.
• ELYXYB – The first ready-to-use oral solution for acute migraines, addressing a condition that affects approximately 39 million Americans. We hold a 2% royalty on worldwide sales. More details at www.elyxyb.com.
• GLOPERBA – An innovative oral liquid formulation for gout treatment, tapping into a market with strong growth potential. We hold a 2% royalty on worldwide sales and a 25% profit share on the majority of sales outside the U.S. More details at www.gloperba.com.

Strong Balance Sheet: Positioned for Growth and Value Creation

Oramed maintains a robust financial position, strengthened by our strategic Scilex transaction and the OraTech joint venture. Our disciplined approach to cash management includes CDs, bonds, real estate and equities. We believe that our disciplined capital allocation strategy enables us to maintain sufficient liquidity for both our core operations and strategic initiatives, positioning Oramed for sustainable long-term growth.

Looking Ahead: A Commitment to Strategic Growth

Looking forward, we are actively pursuing acquisitions and partnerships that leverage our expertise in technology development and strategic dealmaking. We have identified several promising opportunities across multiple innovation ecosystems and expect to announce additional strategic initiatives in the coming quarters.

Sincerely,
Nadav Kidron
Chief Executive Officer

Forward-looking statements: This press release contains forward-looking statements, which may generally be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," or "continue" and variations or similar expressions and include statements that OraTech will serve as the foundation for developing, marketing, and commercializing innovative treatments leveraging Oramed's oral insulin and POD™ platform, that the initiation of a Phase 3 clinical trial in the U.S. will be a key milestone in bringing oral insulin to market, that OraTech is a true game-changer in the pharmaceutical industry, that integration of cutting-edge technology and advanced manufacturing expertise enables Oramed to ensure consistent, high-quality production at scale, setting new standards for oral protein delivery, expected royalties from sales in Greater China, unlocking new market potential, the process and timing for OraTech becoming a publicly traded company listed on Nasdaq, Oramed plans to distribute OraTech stock to its shareholders via a dividend, Oramed's ability to create shareholder value, including through well-structured financial transactions, expected royalty contributions from Scilex and expectations to announce additional strategic initiatives in the coming quarters. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, uncertainties in satisfaction of closing conditions for the contemplated transactions, risks and uncertainties discussed in the Company's most recent annual and quarterly reports and detailed from time to time in the Company's other filings with the Securities and Exchange Commission, all of which could cause the actual results or performance of Oramed to differ materially from those contemplated in such forward-looking statements. These forward-looking statements speak only as of the date hereof. Oramed undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date hereof or to reflect actual outcomes, unless required by law.

Company Contact:
+1-844-9-ORAMED
ir@oramed.com

www.oramed.com 

Logo: https://mma.prnewswire.com/media/1724339/Oramed_Logo.jpg

 

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SOURCE Oramed Pharmaceuticals Inc.

FAQ

When will OraTech Pharmaceuticals complete its Phase 3 trials for ORMP's oral insulin?

The Phase 3 trials are planned to begin in the U.S., with expected completion in 2025.

What is the expected dividend amount for ORMP shareholders in 2025?

Oramed plans to distribute approximately $0.25 per share as a cash dividend.

How much royalty revenue will ORMP receive from ZTlido sales in Q4 2024?

Oramed will receive $400,000 in royalties for Q4 2024 sales of ZTlido.

What is the status of ORMP's oral insulin approval in China?

A Marketing Authorization Application has been submitted by HTIT, with commercialization preparations underway.

How many Scilex shares does ORMP currently own and what's the expected increase?

Oramed holds 12.25M Scilex shares, increasing to 18.75M shares through warrant vesting.