Item 1.01. Entry into a Material Definitive Agreement.
On
March 18, 2021, Oramed Pharmaceuticals Inc., or the Company, entered into the definitive agreements described below in connection
with the formation of Oravax Medical Inc., a Delaware corporation in which the Company will hold a 63% equity interest, or Oravax.
Oravax is focused on the development of novel oral COVID-19 vaccines based on Oramed’s proprietary PODTM oral
delivery technology and Premas Biotech Pvt. Ltd.’s, or Premas, novel vaccine technology that was previously owned by Cystron
Biotech LLC, or Cystron, and later acquired by Akers Biosciences Inc., or Akers.
License Agreement
On
March 18, 2021, the Company and Oramed Ltd., the Company’s wholly-owned subsidiary, collectively Oramed, entered into a
License Agreement, or the License Agreement, with Oravax, pursuant to which Oramed will grant to Oravax an exclusive, worldwide
license under Oramed’s rights in certain patents and related intellectual property, or the License, in which Oravax will
receive certain rights relating to Oramed’s proprietary oral delivery technology to further develop, manufacture and commercialize
oral vaccines for COVID-19 and other novel coronaviruses based on Premas’s proprietary vaccine technology involving a triple
antigen virus like particle, or the Product.
In consideration for the grant of the License, the License Agreement
provides that Oramed will receive (i) royalties equal to 7.5% on net sales, as defined in the License Agreement, of each product
commercialized by Oravax, its affiliates and permitted sublicensees related to the License during the term specified in the License
Agreement, (ii) sublicensing fees equal to 15% of any non-sales-based consideration received by Oravax from a permitted sublicensee
and (iii) other payments ranging between $25 million to $100 million, based on certain sales milestones being achieved by Oravax.
The parties further agreed to establish a development and steering committee, which will consist of three members, of which two
members will be appointed by Oramed, that will oversee the ongoing research, development, clinical and regulatory activity with
respect to the Product. In addition, Oramed agreed to buy and Oravax agreed to issue to the Company 1,890,000 shares of common
stock of Oravax, representing 63% of the common stock of Oravax for the aggregate amount of $1.5 million. Akers agreed to contribute
to Oravax $1.5 million in cash and substantially all of the assets of Cystron, including a license agreement to the Premas novel
vaccine technology. Nadav Kidron, Oramed’s President and Chief Executive Officer, was one of the former members of Cystron.
The description of the
License Agreement is qualified in its entirety by the full text of the License Agreement, a copy of which is filed as Exhibit 10.1
to this Current Report on Form 8-K, or this Current Report, and is incorporated by reference herein.
Stockholders Agreement
Concurrently with the execution and delivery of the License
Agreement, Oramed entered into a Stockholders Agreement, or the Stockholders Agreement, with Akers, Premas, Cutter Mill Capital
LLC, or Cutter Mill, and Run Ridge LLC, or Run Ridge, entities controlled by Michael Vasinikovich and Craig Schwabe, former members
of Cystron, and collectively with Akers, Premas, Cutter Mill and Run Ridge, the Stockholders Parties. Pursuant to the Stockholders
Agreement, among other things, Oramed will have the right to appoint two out of the three members to the board of directors of
Oravax, or the Oravax Board, one of which is the Company’s Chief Executive Officer who will serve as the chairman of Oravax
Board, conditioned upon Oramed maintaining certain ownership thresholds. Akers will have the right, until the third anniversary
of the Stockholders Agreement effective date, to appoint one member to the Oravax Board. Oravax’s common stock held by the
Stockholders Parties will be subject to certain transfer restrictions. In addition, the Stockholders Parties will have certain
rights of participation in future financings as well as rights of first refusal and co-sale related to future potential transactions.
The description of the
Stockholders Agreement is qualified in its entirety by the full text of the Stockholders Agreement, a copy of which is filed as
Exhibit 10.2 to this Current Report and is incorporated by reference herein.