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).
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”
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:
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the expected
development and potential benefits from our products in treating diabetes;
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the prospects of entering into additional license agreements,
or other partnerships or forms of cooperation with other companies or medical institutions;
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future milestones, conditions and royalties under the
license agreement with Hefei Tianhui Incubator of Technologies Co., Ltd., or HTIT;
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our research and development plans, including pre-clinical
and clinical trials plans and the timing of enrollment, obtaining results and conclusion of trials, including without limitation,
our expectation that we will initiate two six-month Phase III clinical trials if our Phase IIb three-month dose-ranging clinical
trial is successful, and our expectation to file a New Drug Application, thereafter;
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our belief that our technology has the potential to deliver
medications and vaccines orally that today can only be delivered via injection;
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the competitive ability of our technology-based product
efficacy, safety, patient convenience, reliability, value and patent position;
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the potential market demand for our products;
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our expectation that in the upcoming year our research
and development expenses, net, will continue to be our major expenditure;
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our expectations
regarding our short- and long-term capital requirements;
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our outlook for the coming months and future periods,
including but not limited to our expectations regarding future revenue and expenses;
and
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information
with respect to any other plans and strategies for our business.
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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, 2018, or our Annual Report, as filed with the Securities and Exchange Commission, or the
SEC, on November 28, 2018, as well as those discussed elsewhere in our Annual Report and this Quarterly
Report on
Form 10-Q 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.
Overview of Operations
We are a pharmaceutical company currently
engaged in the research and development of innovative pharmaceutical solutions, including an oral insulin capsule to be used for
the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of other polypeptides.
Recent business developments
Product Candidates
Oral Insulin
In April 2018, we initiated a three-month
dose-ranging Phase IIb clinical trial of our proprietary flagship product, an orally ingestible insulin capsule, or ORMD-0801.
This placebo controlled, randomized, 90 day treatment clinical trial is being conducted on approximately 300 type 2 diabetic patients
in multiple centers throughout the United States pursuant to an Investigational New Drug application, or IND, with the U.S. Food
and Drug Administration, or FDA. The primary endpoints of the trial are 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 include 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 began an
extension of this protocol for approximately 75 type 2 diabetic patients, to be dosed using a lower dosage. The first part of
the trial, which included the initial approximately 300 patients, is projected to be completed in the fourth quarter of calendar
year 2019.
We had a call with the FDA in August 2017
regarding ORMD-0801 after the completion of a Phase IIb clinical trial on 180 diabetic patients, which indicated a statistically
significant blood glucose lowering effect of ORMD-0801 versus placebo across several endpoints. During the call, the FDA advised
that the regulatory pathway for the submission of ORMD-0801 would be a Biologics License Application, or BLA. 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. The FDA confirmed that the approach
to nonclinical toxicology, chemistry manufacturing controls and qualification of excipients would be driven by their published
guidance documents.
In June 2018, we initiated a glucose clamp
study which will quantify insulin absorption in type 1 diabetic patients treated with ORMD-0801. The glucose clamp is a method
for quantifying insulin absorption in order to measure a patient’s insulin sensitivity and how well a patient metabolizes
glucose. This exploratory, randomized, double-blind glucose clamp study is evaluating exposure-response profiles of type 1 diabetic
patients treated with ORMD-0801. Six patients with HbA1c levels of 10% or below, aged 18-50, are enrolled in the study.
In June 2018, we also initiated a food
effect trial in the United States for ORMD-0801. This single-blind, five period, randomized, placebo-controlled crossover trial
is evaluating the pharmacokinetics and pharmacodynamics of ORMD-0801 taken at different times in relation to meals in healthy
volunteers and patients with type 1 diabetes. 48 patients are enrolled, including 24 healthy volunteers and 24 patients with type
1 diabetes.
In March 2019, we completed a six-month
dosing toxicology study of our oral insulin formulation, which was initiated in September 2018 following the FDA’s request.
We expect to get the results of this study in the first quarter of calendar year 2020.
Should our Phase IIb three-month dose-ranging
clinical trial successfully meet its primary or secondary endpoints, we anticipate initiating two six-month Phase III clinical
trials on both type 1 and type 2 diabetic patients, following which we expect to file a BLA with potential FDA approval by the
end of the first half of calendar year 2024.
Oral GLP-1 Analog
In addition to our flagship product, the
ORMD-0801 insulin capsule, we are using our technology for an orally ingestible GLP-1/exenatide capsule, or ORMD-0901. In September
2018, the FDA cleared our IND application for human trials of ORMD-0901. In February 2019, we completed a Phase I pharmacokinetic
trial which was initiated in January 2019 to evaluate the safety and the pharmacokinetics of ORMD-0901 compared to placebo. We
expect to get the results of this study in the second half of calendar year 2019. This study was conducted pursuant to the IND
and will be followed by a Phase II trial on type 2 diabetic patients which will be conducted in the United States under an IND.
Other products
In April 2017, Israel’s Ministry
of Health approved our commencement of a proof of concept single dose study for our oral leptin drug candidate to evaluate its
pharmacokinetic and pharmacodynamics (glucagon reduction) in 10 type 1 adult diabetic patients. The study is projected to be initiated
in calendar year 2019 and be completed during calendar year 2019.
In October 2018, we initiated an exploratory
clinical study of ORMD-0801 in patients with nonalcoholic steatohepatitis, or NASH. The three-month treatment study, which was
approved by Israel’s Ministry of Health, will assess the effectiveness of ORMD-0801 in reducing liver fat content, inflammation
and fibrosis in 30 patients with NASH. As requested by Israel’s Ministry of Health, the first part of the study will be
conducted on 10 participants and is expected to be completed during calendar year 2019.
The table below gives an overview of our
primary product pipeline (calendar quarters):
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Phase
I
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Phase II
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Phase III
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Timeline
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ORMD-0801
oral insulin
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Type
2 diabetes
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Q2 ’18: Phase IIb 90-day multi-center
study initiated (projected completion of the first part of the study Q4 ’19)
Q3 ’20: Phase III study projected
initiation (projected completion Q3 ’22)
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Type
1 diabetes
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Q2 ’18: Clamp study initiated (projected
completion Q3 ’19)
Q2 ’18: Food effect study initiated
(projected completion Q3 ’19)
Q3 ’20: Phase III projected initiation
(projected completion Q3 ’22)
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ORMD-0901
oral GLP-1
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Type
2 diabetes
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Q1 ’19: Pharmacokinetics clinical study
completed (projected results Q3-Q4 ’19)
Q1 ’20: Phase II projected initiation
(projected completion Q4 ’21)
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Out-Licensed Technology
On November 30, 2015, we, our Israeli subsidiary
and HTIT entered into a Technology License Agreement, 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 License Agreement.
According to the 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 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 was paid subject to our entry into certain agreements with certain third parties,
and $26.5 million is payable 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 License Agreement shall remain in effect until the expiration of
the Royalty Term. The License Agreement contains customary termination provisions. Through May 31, 2019, we received aggregate
milestone payments of $20.5 million.
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 License Agreement and the SPA, we received
a non-refundable payment of $500,000 as a no-shop fee.
In March 2019, we were formally informed
by HTIT that the Center for Drug Evaluation of the China National Medical Products Administration approved HTIT’s IND for
two doses of ORMD-0801 and the initiation of clinical trials in China for ORMD-0801, which are expected by HTIT to begin in the
second half of calendar year 2019.
Results of Operations
Comparison of nine and three-month
periods ended May 31, 2019 and 2018
The following table summarizes certain
statements of operations data of the Company for the nine and three-month periods ended May 31, 2019 and 2018 (in thousands of
dollars except share and per share data):
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Nine months ended
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Three months ended
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May 31,
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May 31,
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2019
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2018
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2019
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2018
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Revenues
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$
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2,022
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|
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$
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1,832
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$
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682
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$
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617
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Cost of revenues
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90
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(86
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)
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-
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(86
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)
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Research and development expenses
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11,322
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|
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9,245
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|
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3,861
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4,194
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General and administrative expenses
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2,896
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3,050
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899
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1,043
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Financial income, net
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511
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576
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6
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180
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Taxes on income
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300
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-
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-
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Net loss for the period
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$
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12,075
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$
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9,801
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$
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4,072
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$
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4,354
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Loss per common share - basic and diluted
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$
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0.69
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$
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0.68
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$
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0.23
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$
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0.30
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Weighted average common shares outstanding
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17,453,185
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14,401,623
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17,456,683
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14,518,878
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Revenues
Revenues consist of proceeds related to
the 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 for the nine-month period ended
May 31, 2019 increased by 10% to $2,022,000, from $1,832,000 for the nine-month period ended May 31, 2018. The increase is primarily
attributable to the additional milestone payments received under the License Agreement during the nine-month period ended May
31, 2019.
Revenues for the three-month period ended
May 31, 2019 increased by 11% to $682,000, from $617,000 for the three-month period ended May 31, 2018. The increase is primarily
attributable to the additional milestone payments received under the License Agreement during the second quarter of fiscal year
2019, which increased the revenue recognition for the following period.
Cost of revenues
Cost of revenues consists of royalties
related to the License Agreement that will be paid over the term of the License Agreement in accordance with revenue recognition
accounting and the Law for the Encouragement of Industrial Research, Development and Technological Innovation, 1984, as amended,
including any regulations or tracks promulgated thereunder.
Cost of revenues for the nine-month period
ended May 31, 2019 increased to $90,000 compared to income of $86,000 for the nine-month period ended May 31, 2018. The increase
is attributable to additional milestone payments received under the License Agreement during the nine-month period ended May 31,
2019. The income in the nine-month period ended May 31, 2018 is attributable to a decrease in the royalties we were obligated
to pay to the IIA from 3.5% to 3% due to the amendment of the applicable regulations.
No cost of revenues was recognized during
the three-month period ended May 31, 2019 compared to income of $86,000 for the three-month period ended May 31, 2018. The change
is attributable to a decrease in the royalties we were obligated to pay to the IIA from 3.5% to 3% due to the amendment of the
applicable regulations.
Research and development expenses
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 contract research organizations, or CROs, independent
clinical investigators and other third-party service providers to assist us with the execution of our clinical studies.
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 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
manufacturing of the oral insulin and exenatide capsules, payments for patient recruitment and treatment, as well as salaries
and related expenses of research and development staff.
Research and development expenses for the
nine-month period ended May 31, 2019 increased by 22% to $11,322,000, from $9,245,000 for the nine-month period ended May 31,
2018. The increase is primarily due to expenses related to our Phase IIb three-month treatment clinical trial, food effect, clamp
and GLP-1 pharmacokinetics clinical trials and is partially offset by a decrease in expenses related to the scale-up process development
and production of our oral capsule ingredients and stock-based compensation expenses. Stock-based compensation costs for the nine-month
period ended May 31, 2019 totaled $161,000, as compared to $438,000 during the nine-month period ended May 31, 2018. The decrease
is primarily attributable to the progress in amortization and the forfeiture of awards granted in prior periods.
Research and development expenses for the
three-month period ended May 31, 2019 decreased by 8% to $3,861,000, from $4,194,000 for the three-month period ended May 31,
2018. The decrease is primarily due to lower expenses related to the scale-up process development and production of our oral capsule
ingredients and stock-based compensation expenses and is partially offset by increased expenses related to our Phase IIb three-month
treatment clinical trial, GLP-1 pharmacokinetics clinical trial and toxicology expenses. Stock-based compensation costs for the
three-month period ended May 31, 2019 totaled $68,000, as compared to $142,000 during the three-month period ended May 31, 2018.
The decrease is primarily attributable to the progress in amortization and the forfeiture of awards granted in prior periods.
Government grants
In the nine-month periods ended May 31,
2019 and 2018, we did not recognize any research and development grants. As of May 31, 2019, we incurred liabilities to pay royalties
to the IIA of $391,000.
General and administrative expenses
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 nine-month period ended May 31, 2019 decreased by 5% to $2,896,000 from $3,050,000 for the nine-month period ended May 31,
2018. The decrease in costs related to general and administrative activities during the nine-month period ended May 31, 2019 is
primarily attributable to a decrease in stock-based compensation costs and is partially offset by an increase in salaries and
related expenses. Stock-based compensation costs for the nine-month period ended May 31, 2019 totaled $532,000, as compared to
$765,000 during the nine-month period ended May 31, 2018. The decrease is primarily attributable to the progress in amortization
of awards granted to employees and directors during fiscal year 2017 and is partially offset by an increase due to awards granted
during fiscal years 2018 and 2019.
General and administrative expenses for
the three-month period ended May 31, 2019 decreased by 14% to $899,000 from $1,043,000 for the three-month period ended May 31,
2018. The decrease in costs related to general and administrative activities during the three-month period ended May 31, 2019
is primarily attributable to a decrease in salaries and related expenses. Stock-based compensation costs for the three-month period
ended May 31, 2019 totaled $203,000, as compared to $205,000 during the three-month period ended May 31, 2018.
Taxes on income
Taxes on income of $300,000 were recognized
for the nine-month period ended May 31, 2019 as compared to no taxes on income for the nine-month period ended May 31, 2018. The
increase is due to withholding taxes in connection with the receipt of a milestone payment pursuant to the License Agreement during
the more recent period.
No taxes on income were recognized for
the three-month periods ended May 31, 2019 and 2018.
Financial income, net
Net financial income decreased by 11% from
net income of $576,000 for the nine-month period ended May 31, 2018 to net income of $511,000 for the nine-month period ended
May 31, 2019. The decrease is primarily attributable to a decrease in fair value of the ordinary shares of D.N.A Biomedical Solutions
Ltd., or D.N.A, and Entera Bio Ltd., or Entera, which was classified in other comprehensive income in fiscal year 2018, prior
to the implementation of Accounting Standards Update, or ASU, 2016-01, “Recognition and Measurement of Financial Assets
and Financial Liabilities,” or ASU 2016-01, partially offset by an increase in income from bank deposits as a result of
an increase in interest rates.
Net financial income decreased by 97% from
net income of $180,000 for the three-month period ended May 31, 2018 to net income of $6,000 for the three-month period ended
May 31, 2019. The decrease is primarily attributable to a decrease in fair value of the ordinary shares of D.N.A and Entera, which
were classified in other comprehensive income in fiscal year 2018, prior to the implementation of ASU 2016-01, partially offset
by an increase in income from bank deposits and held to maturity bonds as a result of an increase in interest rates.
Other comprehensive income
No unrealized losses on available for sale
securities were recognized for the nine-month period ended May 31, 2019 as compared to losses of $203,000 for the nine-month period
ended May 31, 2018. The decrease is due to the implementation of ASU 2016-01, under which changes in fair value of the ordinary
shares of D.N.A and Entera that we hold are recognized as financial income or expenses.
No unrealized losses on available for sale
securities were recognized for the three-month period ended May 31, 2019 as compared to losses of $115,000 for the three-month
period ended May 31, 2018. The decrease is due to the implementation of ASU 2016-01, under which changes in fair value of the
ordinary shares of D.N.A and Entera that we hold are recognized as financial income or expenses.
Liquidity and capital resources
From inception through May 31, 2019, we
have incurred losses in an aggregate amount of $78,823,000. During that period 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 $77,736,000, net of
transaction costs. During that period, we also received cash consideration of $5,877,000 from the exercise of warrants and
options. We will seek to obtain additional financing through similar sources in the future, as needed. As of May 31, 2019, we
had $3,946,000 of available cash, $27,425,000 of short-term and long-term bank deposits and $4,223,000 of marketable
securities.
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 and beyond.
As of May 31, 2019, our total current assets
were $26,588,000 and our total current liabilities were $5,216,000. On May 31, 2019, we had a working capital surplus of $21,372,000
and an accumulated loss of $78,823,000. As of August 31, 2018, our total current assets were $31,037,000 and our total current
liabilities were $4,553,000. On August 31, 2018, we had a working capital surplus of $26,484,000 and an accumulated loss of $69,223,000.
The decrease in working capital surplus from August 31, 2018 to May 31, 2019 was primarily due to the cash used in operating activities.
During the nine-month period ended May
31, 2019, cash and cash equivalents decreased to $3,946,000 from the $4,996,000 reported as of August 31, 2018, which is due to
the reasons described below.
Operating activities used cash of $9,672,000
in the nine-month period ended May 31, 2019, as compared to $10,009,000 used in the nine-month period ended May 31, 2018. Cash
used in operating activities in the nine-month period ended May 31, 2019 primarily consisted of net loss resulting from research
and development and general and administrative expenses and is partially offset by changes in contract liabilities primarily due
to a milestone payment received during the period in the amount of $3,000,000 under the License Agreement, while cash used in
operating activities in the nine-month period ended May 31, 2018 primarily consisted of net loss resulting from research and development
and general and administrative expenses, as well as changes in contract liabilities due to the License Agreement and is partially
offset by changes in stock-based compensation.
Investing activities provided cash of $8,622,000
in the nine-month period ended May 31, 2019, as compared to $3,549,000 used in the nine-month period ended May 31, 2018. Cash
provided by investing activities in the nine-month period ended May 31, 2019 consisted primarily of the maturity of short-term
deposits and held to maturity securities and is partially offset by the purchase of short-term and long-term deposits and held
to maturity securities, while cash used in investing activities in the nine-month period ended May 31, 2018 consisted primarily
of the purchase of long-term bank deposits and held to maturity securities and is partially offset by the maturity of held to
maturity securities.
Financing
activities did not provide cash in the nine-month period ended May 31, 2019, as compared to $6,161,000 provided in the nine-month
period ended May 31, 2018. Financing activities in the nine-month period ended May 31, 2018 consisted of aggregate net proceeds
of $5,164,000 from our issuance of 572,702 shares of common stock under an At The Market Issuance Sales Agreement, dated April
2, 2015, or the Sales Agreement, with B. Riley FBR, Inc., as successor to FBR Capital Markets & Co., or FBR, as amended, and
proceeds from the exercise of warrants and options. Pursuant to the Sales Agreement, we may, from time to time and at our option,
issue and sell shares of our common stock having an aggregate offering price of up to $25,000,000 through FBR as sales agent,
subject to certain terms and conditions. Any shares sold will be sold pursuant to our effective shelf registration statement on
Form S-3
including a prospectus dated February 2, 2017, as supplemented by a prospectus supplement dated April 5, 2017. We will
pay FBR a commission of 3.0% of the gross proceeds of the sale of any shares sold through FBR.
We may also from time to
time consider alternative financing options, depending on market conditions and other factors.
Off-balance sheet arrangements
As of May 31, 2019, 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.
Critical accounting policies and
estimates
Our significant accounting policies are
described in the notes to the consolidated financial statements as of August 31, 2018 included in our Annual Report and in the
notes to the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.
Planned Expenditures
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
.