ORAMED PHARMACEUTICALS INC. Commitments Disclosure

NOTE 8 - COMMITMENTS:

 

a.

On August 21, 2020, the Company received a letter from HTIT, disputing certain pending payment obligations of HTIT under the Technology License Agreement (“TLA”). The payment obligation being disputed is $6,000, out of which only an amount of $2,000 has been received and has been included in deferred revenue in each of the consolidated balance sheets as of the years ended December 31, 2024, and December 31, 2023.   On February 7, 2025, the Company and HTIT entered into a JV Agreement (as defined in note 15). Pursuant to the terms of the JV Agreement, each of the Company, the Subsidiary and HTIT irrevocably released and waived (i) any claims and demands against each other party in connection with the TLA; and (ii) all rights, obligations and liabilities set out and arising with respect to the performance of the TLA. For more details see note 15.

 

b.

On November 13, 2022, the Company entered the Medicox License Agreement with Medicox.   The Medicox License Agreement grants Medicox an exclusive license to apply for regulatory approval and distribute ORMD-0801 in the Republic of Korea. The Medicox License Agreement is for ten years, but the parties have the right to terminate it with a 180 days-notice.   Medicox will comply with agreed distribution targets and will purchase ORMD-0801 at an agreed upon transfer price per capsule. In addition, Medicox will pay the Company up to $15,000 in developmental milestones, $2,000 of which were received by the Company in 2022, and up to 15% royalties on gross sales. Medicox will also be responsible for obtaining a regulatory approval in the Republic of Korea.   For the Company’s revenue recognition policy, see note 1m.

 

c.

Grants from the Israel Innovation Authority (“IIA”)

 

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 SOFR.

 

At the time the grants were received, successful development of the related projects was not assured. The total amount that was received through December 31, 2024 was $2,214 ($2,587 including interest). All grants were received before the year ended August 31, 2020 and recorded as a reduction of research and development expenses at that time.

 

As of December 31, 2024, the liability to the IIA was $59. The royalty expenses which are related to the funded project were recognized in cost of revenues in the relevant periods.

 

As of December 31, 2024, the Company has paid a total amount of $556 to the IIA.

 

For additional details see note 15.

d.

Leases

 

On August 2, 2020, the Subsidiary entered into a lease agreement for its facilities in Israel. The lease agreement is for a period of 60 months commencing September 1, 2020. The Subsidiary has the option to extend the period for another 60 months. The annual lease payment, including management fees, as of December 31, 2024 is approximately NIS 435 ($119). As security for its obligation under this lease agreement, the Company provided a bank guarantee in an amount equal to three monthly lease payments. For accounting purposes, the lease period is 60 months.

 

On December 2, 2021, the Subsidiary entered into an addendum (the “Addendum”) to the current lease agreement for its facilities in Israel. The Addendum refers to the lease of an additional space of 264 square meters for a period of 60 months commencing February 1, 2022. The Subsidiary has the option to extend the period for another 60 months. The annual lease payment, including management fees, is approximately NIS 435 ($119). As security for its obligation under the Addendum, the Company provided a bank guarantee in an amount equal to three monthly lease payments. For accounting purposes, the lease commenced on February 1, 2022 as the Subsidiary did not have access to the space until that date. For accounting purposes, the lease period is 60 months.

 

The total expenses related to leases were $265 for the year ended December 31, 2024, and $236 for the year ended December 31, 2023.

 

The Company has various operating leases for office space and vehicles that expire through 2027. Below is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of December 31, 2024 and 2023:

 

		December 31, 2024				December 31, 2023
Operating right-of-use assets		$	414			$	694
Operating lease liabilities, current			216				267
Operating lease liabilities long-term			156				342
Total operating lease liabilities		$	372			$	609
Weighted Average of Remaining Lease Term
Operating leases			1.8				2.5
Weighted Average Discount Rate
Operating leases			3.52	%			3.15	%

 

Operating cash flows from operating lease for the years Ended December 31, 2024 and 2023 were $264 and $267, respectively.

 

Lease payments for the Company’s right-of-use assets over the remaining lease periods as of December 31, 2024 are as follows:

 

		December 31, 2024
2025		$	225
2026			141
2027			18
Total undiscounted lease payments			384
Less: Interest*			(12	)
Present value of lease liabilities		$	372

 

*	Future lease payments were discounted by 3%-7% interest rate.

e.

Clinical Research Organization Services Agreement

 

On September 23, 2024, the Subsidiary entered into a Clinical Research Organization Services Agreement with a third party, to retain it as a clinical research organization (“CRO”). The services covered by the agreement include strategic planning, expert consultation, data processing, regulatory, clerical, project management and other research and development services requested by the Company for the Phase 3 clinical trial. As consideration for its services, the Company will pay the CRO a total amount of $11,577 during the term of the engagement and based on achievement of certain milestones, of which $775 recognized in research and development expenses through December 31, 2024.