By M. Marin

NASDAQ:ORMP

READ THE FULL ORMP RESEARCH REPORT

Planning Spin-off / IPO of JV Company

Oramed Pharmaceuticals (NASDAQ:ORMP) formed a JV with Hefei Tianhui Biotech (HTIT), OraTech Pharmaceuticals, which is a strategic initiative to move its assets forward. The JV partners recently made some amendments to their JV agreement to facilitate, among other goals, the planned spin-off and IPO of OraTech following the expected investments of $40.0 million and $7.5 million by HTIT and Oramed, respectively. When / if OraTech lists on Nasdaq, HTIT and ORMP intend to make respective additional $20.0 million and $7.5 million investments. Coincident with OraTech’s launch on Nasdaq, Oramed plans to distribute the majority of expected 50% stake in OraTech to ORMP shareholders via a dividend.

OraTech will leverage HTIT’s manufacturing technologies and focus on developing and commercializing innovative products globally based on the combined assets and capabilities of the two JV partners. The company expects that the combination of their respective strengths – delivery technology and advanced manufacturing capabilities – will enable OraTech to develop, market and commercialize innovative treatments leveraging Oramed’s oral insulin and POD™ (Protein Oral Delivery) pipeline and scale production with consistent, high-quality output.

ORMP’s JV partner, HTIT, is a high-tech company focused on biopharmaceutical product manufacturing and R&D with an emphasis on the oral delivery of therapeutic macromolecules. It operates an oral insulin manufacturing facility located in Hefei, China.

Phase 3 oral insulin clinical trial in the U.S. planned

OraTech intends to initiate a Phase 3 clinical trial in the U.S. that will be designed to incorporate takeaways from previous clinical studies in order to focus on key patient subpopulations that have responded in prior activities. The protocol for the planned new Phase 3 study would represent a fine-tuned approach strategically focused on the specific patient subgroups identified as significant responders following the company’s analysis of prior Phase 2 and Phase 3 data. ORMP hopes to leverage its analysis in order to optimize the potential for successful outcomes of a new Phase 3 trial to advance its oral insulin therapy in diabetes management. In prior clinical activities, a subpopulation of patients with specific parameters such as body mass index (BMI), baseline HbA1c, age, gender and body weight appeared to respond positively to the company’s oral insulin. These subsets exhibited an over 1% placebo adjusted, statistically significant reduction in HbA1c. As a result, a differentiated protocol that is aligned with the positive subpopulation data and informed by feedback from discussions with the FDA is expected to guide the design of the planned Phase 3 trial.

Marketing Authorization Application submitted to regulators in China for the oral insulin

Separately, HTIT has also submitted a Marketing Authorization Application to regulators in China for the oral insulin capsule in that market, with commercialization preparations underway that are expected to result in royalties from sales in China to OraTech.

Capital allocation strategy includes share buybacks, strategic investments & potential dividend

ORMP has a strong balance sheet that it is leveraging to support its initiatives and returns to shareholders via share buybacks and potential dividends. The company had $142 million in cash and equivalents and short-term investments at the end of 2024 and another roughly $11 million in long-term investments and no long term debt. Reflecting its sizable net cash position, ORMP potentially might issue cash dividends of about $0.25 per share to help offset any potential tax liabilities associated with its distribution of the OraTech stock to ORMP investors. Additional capital allocations include share buybacks and strategic investments in early stage companies designed to boost total returns to shareholders.

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