Oramed Pharmaceuticals Inc. a developer of oral drug delivery systems, announced that its subsidiary Oramed Ltd. entered into a Share Purchase Agreement with D N A Biomedical Solutions Ltd. (formerly Laser Detect Systems Ltd.), an Israeli company listed on the Tel Aviv Stock Exchange, for the sale of most of its holdings in Entera Bio Ltd., for $1.15 million, and a commitment by D N A to invest $250,000 in Oramed. Oramed will also transfer to Entera the patent that is currently being licensed to Entera and will be entitled to receive 3 per cent royalties.
Nadav Kidron, chief executive officer of Oramed, commented: “We have made a strategic decision to focus our resources on our core technology. This transaction will strengthen our balance sheet and help finance the phase II clinical trials of our orally ingestible insulin capsule (ORMD0801). At the same time, if Entera Bio is successful in its development of products based on this patent, we stand to gain, as well.”
Currently, Oramed and D N A each hold 50 per cent of Entera's outstanding share capital on an undiluted basis. Following the transaction Oramed will hold 3 per cent of Entera's outstanding share capital on an undiluted basis.
As consideration for the Entera shares, Oramed will receive a promissory note issued by D N A in the principal amount of US $450,000, with an annual interest rate of 0.45 per cent, to be paid within four months from closing, and 8,404,667 ordinary shares of D N A, having an aggregate market value of approximately US $700,000.
In addition, D N A will invest $250,000 in Oramed's investment round, for which it will receive 781,250 shares of Oramed common stock and five-year warrants to purchase 273,438 shares of common stock at an exercise price of $0.50 per share.
As part of the transaction, Oramed Ltd. and Entera entered into a Patent Transfer Agreement according to which, Oramed will assign to Entera all of its right, title and interest in and to the patent that it has licensed to Entera since August 2010. Under this agreement, Oramed Ltd. is entitled to receive from Entera royalties of 3 per cent of Entera's net revenues (as defined in the agreement) and a license back of that patent for use in respect of diabetes and influenza. The assigned technology differs from Oramed’s main delivery technology that is used for oral insulin and is subject to a different patent application.
The closing of all of the abovementioned transactions will take place concurrently on the first business day following the satisfaction of all the closing conditions. If the closing does not occur by March 31, 2011, Oramed will have the right to terminate the agreements.
Upon the closing, Oramed, Entera and D N A will terminate the Joint Venture Agreement, entered into on June 1, 2010 in connection with the formation of Entera. Zeev Bronfeld, one of D N A's directors and controlling shareholders, holds more than 5% of Oramed's outstanding share capital. Accordingly, pursuant to Israeli law, the closing of the transactions is subject to the approval of D N A's shareholders.
Oramed Pharmaceuticals Inc. is a technology pioneer in the field of oral delivery solutions for drugs and vaccines presently delivered via injection. Oramed is seeking to revolutionize the treatment of diabetes through its patented flagship product, an orally ingestible insulin capsule currently in phase II clinical trials.