Oramed Pharmaceuticals Inc.: Form 10-Q for the period ended Jun 30, 2025

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.

Overview of Operations

We are a pharmaceutical company engaged in the research and development of innovative pharmaceutical solutions with a technology platform that allows for the oral delivery of therapeutic proteins.

We have developed an oral dosage form intended to withstand the harsh environment of the gastrointestinal tract and effectively deliver active insulin or other proteins. The excipients in the formulation are not intended to modify the proteins chemically or biologically, and the dosage form is designed to be safe to ingest.

On January 22, 2024, we along with our wholly-owned subsidiary Oramed Ltd., entered into a joint venture agreement with Hefei Tianhui Biotech Co., Ltd., or HTIT, and its subsidiary Technowl Limited, or HTIT Sub, to focus on developing and commercializing products based on our oral insulin and POD™ technology, utilizing HTIT’s manufacturing capabilities.

On February 7, 2025, we and HTIT entered into a Joint Venture Agreement, or the JV Agreement, amending the initial JV Agreement signed on January 22, 2024. To execute the JV Agreement, we formed OraTech Pharmaceuticals, Inc., or OraTech, which will serve as the joint venture entity. We currently hold 100% of OraTech shares. OraTech was formed to advance the development and commercialization of oral insulin, combining our proprietary technology and funding with HTIT’s manufacturing capabilities. Through this partnership, OraTech is expected to have the technology, resources, and production capacity to bring oral insulin to market. The agreement also outlines the spin-off of OraTech, or the Spin Off, requiring regulatory filings and the distribution of the majority of OraTech’s shares held by us to our shareholders. Both we and HTIT agreed to a 120-day lock-up period post-listing, restricting share sales.

Under the JV Agreement’s terms, the initial closing, or the Initial Closing, which was initially set as April 30, 2025 but has not yet occurred, will include an investment of $40,000,000 by HTIT and $7,500,000 by us into OraTech. Additionally, we will transfer all our intellectual property rights to OraTech. The second closing, which was initially set as to close by May 31, 2025, contingent on the listing of OraTech’s shares on Nasdaq, involves a $20,000,000 investment by HTIT and an additional $7,500,000 investment by us, or the Second Closing, which was initially set as to close by May 31, 2025. Upon completion of the Initial Closing and the Second Closing, OraTech will issue shares to both HTIT and us, resulting in ownership of 50% for each of HTIT and us, excluding the impact of the contemplated distribution of OraTech shares to our shareholders.

As part of the JV Agreement, HTIT will receive $20,000,000 at the Initial Closing and $10,000,000 at the Second Closing under a supply agreement with OraTech. The supply agreement covers both raw materials (insulin, SBTI, etc.) and finished insulin capsules for clinical and commercial applications.

Due to ongoing U.S.-China trade tensions, HTIT is currently unable to obtain the necessary regulatory approvals to complete its capital contribution and fulfill its closing obligations under the JV Agreement. These delays have also raised concerns regarding HTIT’s ability to provide supply and manufacturing support in the near term.

As a result, the closing of the JV Agreement is currently on hold. Consequently, we paused plans to initiate a Phase 3 clinical trial in the U.S. pending further clarity. We are evaluating whether a modified structure with HTIT is feasible under current conditions and concurrently exploring alternative partners and pathways to advance the program independently.

2023 Scilex Transaction and 2024 Refinancing

On April 14, 2025, Scilex effected a 1-for-35 reverse stock split of its issued and outstanding common stock. As a result, every 35 shares of Scilex common stock were automatically reclassified into 1 share of common stock, with fractional shares rounded up to the nearest whole share. The numbers below reflect the reverse split effect, except of the Subsequent Penny Warrants that were outstanding as of the reverse stock split date, that were not adjustable under the reverse split.

2023 Scilex Transaction

On September 21, 2023, we entered into and consummated transactions, or, collectively, the 2023 Scilex Transaction, with Scilex Holding Company, or Scilex, pursuant to which Scilex issued to us:

a. A senior secured promissory note, or the Tranche A Note, with a principal amount of $101,875,000, maturing on March 21, 2025 and bearing interest of SOFR plus 8.5%, payable in-kind. Scheduled principal payments are due on December 21, 2023, March 21, 2024, June 21, 2024, September 21, 2024, and December 21, 2024, with the balance due on March 21, 2025. In January 2025, we extended Tranche A Note maturity from March 21, 2025 to December 31, 2025. As per the Tranche A Note terms, if the Tranche A Note is not repaid in full on or prior to March 21, 2024, an exit fee of approximately $3,056,000. Since the Tranche A Note was not repaid by March 21, 2024, we are entitled to the above-mentioned exit fee at the maturity date of the Tranche A Note. As of May 14, 2025, Scilex has repaid $69,200,000 of the amount due under the Tranche A Note and refinanced $25,000,000 as part of the 2024 Refinancing (as defined below). On September 20, 2024, we and Scilex entered into an extension agreement, or the Extension Agreement, to extend the due date of the September 21, 2024 payment under the Tranche A Note. Pursuant to the Extension Agreement, Scilex paid us $2,000,000 on September 23, 2024, which payment is to be applied as follows: (i) $1,700,000 to the payment due under the Tranche A Note on March 21, 2025 and (ii) $300,000 to purchase the Transferred Warrants as mentioned above. On January 21, 2025, we entered into an amendment to the Tranche A Note, or the Tranche A Extension agreement, extending the maturity date from March 21, 2025, to December 31, 2025 or the Extended Maturity Date. Interest will continue to accrue and be payable on the Extended Maturity Date. In consideration of the extension, we received 92,858 shares of Scilex common stock.

b. Warrants to purchase up to 128,572 shares of Scilex common stock with an exercise price of $0.35 per share, or the Closing Penny Warrants, and additional warrants, or the Subsequent Penny Warrants, for 57,143 (after the implementation of the reverse stock split) and 6,500,000 (which were not affected by the reverse stock split) shares of Scilex common stock with an exercise price of $0.35 and $0.01 per share, respectively. The Closing Penny Warrants vested on September 21, 2023, and the Subsequent Penny Warrants vested during 2024. On October 30, 2024, we exercised 128,572 Closing Penny Warrants and 57,143 Subsequent Penny Warrants that were exercisable at such time. As a result, we hold 187,715 shares of common stock of Scilex. As of June 30, 2025, the Closing Penny Warrants and the Subsequent Penny Warrants are fully vested and exercisable.

c. Transferred warrants, or the Transferred Warrants, to purchase 114,286 shares of Scilex common stock with an exercise price of $402.5 per share, fully exercisable and expiring on November 10, 2027. On September 20, 2024, we sold the Transferred Warrants for consideration of $300,000 (see below). As a result, as of May 14, 2025 we do not hold any Transferred Warrants.

2024 Refinancing

On October 7, 2024, we and certain institutional investors, or the Note B Holders, entered into certain agreements with Scilex, pursuant to which the Note B Holders purchased in a registered offering, or the 2024 Refinancing, (i) new tranche B of senior secured convertible notes of Scilex in the aggregate principal amount of $50,000,000, or the Tranche B Note, which Tranche B Note is convertible into shares of Scilex common stock and (ii) warrants, or the Tranche B Warrants, to purchase up to 214,286 shares of Scilex common stock with an exercise price of $36.4, or Tranche B Warrants. We purchased 50% of Tranche B Note and Tranche B Warrants and therefore hold an aggregate principal amount of $25,000,000 under the Tranche B Note and 107,143 Tranche B Warrants.

Scilex received from us, in consideration for our part in Tranche B Note and the Tranche B Warrants issued to us, an exchange and reduction of the principal outstanding balance under the Tranche A Note of $22,500,000.

Royalty Purchase Agreement

In addition to the Tranche B Note, on October 8, 2024, we and certain institutional investors, or the RPA Purchasers, entered into a Purchase and Sale Agreement, or the RPA, with Scilex and Scilex Pharmaceuticals Inc., or Scilex Pharma. Pursuant to the RPA, the RPA Purchasers acquired the right to receive, in the aggregate, 8% of net sales worldwide for 10 years of certain purchase receivables, or the Purchased Receivables with respect to ZTLido (lidocaine topical system) 1.8%, SP-103 (lidocaine topical system) 5.4%, and any related, improved, successor, replacement or varying dosage forms of the foregoing. We acquired the right to receive 50% of the Purchased Receivables, as more fully described in the RPA and therefore hold the right to receive 4% royalties.

In consideration for our interest in the Purchased Receivables, we exchanged and reduced $2,500,000 of the principal balance under the Tranche A Note.

Following the refinancing as described above, on October 8, 2024, Scilex used $12,500,000 of the net proceeds from the proceeds of the Tranche B Note for the repayment of the outstanding balance under the Tranche A Note.

ZTLido Rest of the World Binding Agreement

We and certain other institutional investors and Scilex entered into a binding term sheet, or the ROW License Term Sheet, regarding a license and development agreement, with respect to services, compositions, products, dosages and formulations comprising lidocaine, including without limitation, the product and any future product defined as a “Product” under Scilex Pharma’s existing (i) Product development agreement, dated as of May 11, 2011, with Oishi Koseido Co., Ltd. , or Oishi, and Itochu Chemical Frontier Corporation, or Itochu, as amended, and (ii) the associated commercial supply agreement, dated February 16, 2017, between Scilex, Oishi and Itochu, as amended.

To implement the agreement, we and the other institutional investors agreed to operate through a joint venture. Accordingly, on January 2, 2025, the institutional investors formed RoyaltyVest Ltd., or RoyaltyVest, a company incorporated in the British Virgin Islands. On February 12, 2025, they transferred to us 50% of the issued and outstanding shares of RoyaltyVest.

Tranche B Note Consent

On January 2, 2025, we and other Tranche B Noteholders entered into deferral and consent agreements with Scilex or the Tranche B Note Consent, deferring Scilex’s first amortization payment under the Tranche B Note to October 8, 2026. In consideration, we received approximately $877,000 and 71,249 shares of Scilex common stock.

In addition, as part of the Tranche B Consent and contingent upon certain conditions that were met:

1. Scilex and the Tranche B Noteholders agreed to a 10-year, assignable 4% royalty on global net sales of Gloperba and Elyxyb in certain territories outside of the United States, or ROW, of which, we are entitled to 2% royalties. Gloperba, an oral liquid colchicine formulation for gout, and Elyxyb, an oral solution for acute migraine treatment, represent key assets in Scilex’s portfolio. The definitive agreement was signed on February 28, 2025.

2. The Tranche B Noteholders had the option, through RoyaltyVest, to fund up to 50% of the cash purchase price for ROW product rights to Gloperba and Elyxyb (excluding Elyxyb in Canada) and will receive proportional revenues from commercialization and licensing. As of June 30, 2025, RoyaltyVest exercised its option to Ex-U.S. product rights of Gloperba for $500.

Royalty Purchase Agreement — Gloperba and Elyxyb

Following the Tranche B Note Consent, on February 28, 2025, we entered into the RPA with the RPA Purchasers, pursuant to which Scilex Pharma sold rights to receive 4% of worldwide net sales of Gloperba, Elyxyb, and related products. We are entitled to 50% of these royalty payments. Under the agreement, Scilex Pharma will make quarterly payments to the RPA Purchasers for a term of 10 years, beginning with sales from the first quarter of 2025.

ZTLido License Agreement

Following the ROW License Term Sheet, on February 22, 2025, we, through our 50% ownership in RoyaltyVest, entered into a license agreement with Scilex, or the ZTLido License Agreement. Under the ZTLido License Agreement, RoyaltyVest acquired exclusive rights to develop, manufacture, and commercialize lidocaine-based products, including ZTLido (lidocaine topical system 1.8%) and SP-103, in the ROW Territory. As part of the ZTLido License Agreement, RoyaltyVest and Scilex will each receive 50% of the net profits from the commercialization of these products. Given our 50% ownership in RoyaltyVest, we effectively hold a 25% in the profits generated under this agreement.

Gloperba Rest of World License Agreement

On February 28, 2025, we through RoyaltyVest, entered into a worldwide (excluding the U.S.) license agreement for Gloperba products, as defined under the License and Commercialization Agreement between RxOmeg Therapeutics LLC and Scilex, dated June 14, 2022, as amended on January 16, 2025, or the Gloperba License Agreement. Under the Gloperba License Agreement, RoyaltyVest was granted an exclusive (including as to Scilex Pharma) license to all product-related rights worldwide to develop, manufacture, obtain regulatory approvals for, commercialize, and otherwise exploit the Gloperba products in the licensed territory. RoyaltyVest and Scilex will each be entitled to receive 50% of the net revenue generated from the commercialization of the Gloperba products.

Subsequent penny warrant agreement

As of June 30, 2025, we held 6,500,000 Subsequent Penny Warrants which are fully vested and exercisable. The Subsequent Penny Warrants were not subject to adjustment in connection with the 1-for-35 reverse stock split effected by Scilex in April 2025, and accordingly, continue to entitle us to purchase 6,500,000 shares of Scilex common stock. On July 14, 2025, the Company entered into an option agreement (the “Option Agreement”) with Scilex, granting Scilex the right to repurchase the Company’s remaining 6,500,000 Subsequent Penny Warrants for a total purchase price of $27,000,000. In exchange for the Option Agreement, Scilex agreed to pay to the Company a non-refundable fee of $1,500,000 in two equal installments. The repurchase is structured in two tranches: $13,000,000 for 3,130,000 Subsequent Penny Warrants on or before September 30, 2025, and $14,000,000 for 3,370,000 Subsequent Penny Warrants on or before December 31, 2025. If Scilex completes the full repurchase and pays the associated option fee, the maturity of the Tranche A Note will be extended to March 31, 2026. Until the earlier of the expiration or termination of the Option Agreement, the Company has agreed not to exercise the Subsequent Penny Warrants. The fulfilment of the Option Agreement is subject to the ability of Scilex to have sufficient cash. If the agreement is terminated without completion, the Company may exercise the Subsequent Penny Warrants, subject to applicable Nasdaq shareholder approval thresholds.

BioXcel

In order to diversify our investments as a part of our use of cash strategy, on March 4, 2025, RoyaltyVest, participated in a registered direct offering by BioXcel Therapeutics, Inc. (Nasdaq: BTAI), or BioXcel, acquiring 188,383 shares of BioXcel’s common stock, 3,811,617 pre-funded warrants and accompanying warrants to purchase up to an additional 4,000,000 shares for a total consideration of $14,000,000. The warrants have an exercise price of $4.20 per share, are immediately exercisable, and will expire five years from the date of issuance. The pre-funded warrants have an exercise price of $0.001 per share, are immediately exercisable with no expiration date.

BioXcel is a biopharmaceutical company leveraging artificial intelligence to develop innovative medicines in neuroscience and immuno-oncology. Its lead programs focus on treatments for agitation in neuropsychiatric disorders and other central nervous system conditions.

Subsequent to June 30, 2025 and through August 12, 2025, RoyaltyVest has sold 80,612 shares of BioXcel common stock and 1,358,942 pre-funded warrants. Following these transactions, RoyaltyVest continues to hold 3,000,000 warrants and no longer holds any shares or pre-funded warrants of BioXcel.

Alpha Tau Transaction

On April 24, 2025, Oramed Ltd. entered into a share purchase agreement with Alpha Tau Medical Ltd. (Nasdaq: DRTS), or Alpha Tau, a clinical-stage oncology company developing a proprietary alpha-radiation cancer therapy platform known as Alpha DaRT™. Pursuant to the agreement, Oramed Ltd. purchased 14,110,121 ordinary shares, no par value per share, of Alpha Tau in a registered direct offering at a price of $2.612 per share, for an aggregate purchase price of approximately $36,900,000. The closing of the transaction occurred on April 28, 2025. In connection with the investment, Oramed Ltd. has the right and has nominated two directors to Alpha Tau’s board of directors. In addition, during the three months ended June 30, 2025, we purchased an additional 87,930 shares of Alpha Tau for an aggregate amount of $250,000. Subsequent to June 30, 2025 and through August 12, 2025, the Company purchased an additional 59,123 ordinary shares of Alpha Tau for an aggregate purchase price of $187,000.

Concurrently, Oramed Ltd. and Alpha Tau entered into a services agreement, pursuant to which Oramed Ltd. will provide Alpha Tau with investor relations and public relations services. As consideration, Alpha Tau agreed to pay Oramed Ltd. a non-refundable fee of $3,000,000 over three years and to issue to Oramed Ltd. warrants to purchase up to 3,237,000 ordinary shares of Alpha Tau at exercise prices ranging from $3.474 to $3.90 per share, subject to shareholder approval. The term of the services agreement is three years, with limited termination rights.

Alpha Tau’s Alpha DaRT™ platform is designed to deliver highly localized alpha radiation to solid tumors, potentially offering a novel treatment solution for patients with otherwise difficult-to-treat cancers. Alpha Tau has recently shown encouraging clinical progress, particularly in pancreatic and head and neck cancers, where interim data demonstrated strong disease control and early signals of extended survival. With U.S. Food and Drug Administration approvals secured for upcoming U.S. trials and ongoing global studies, Alpha Tau is entering a critical phase of clinical validation. As investors, we believe Alpha Tau represents a compelling opportunity—combining innovative science, a scalable platform, and growing regulatory momentum.

Impact of Current Events

On October 7, 2023, the State of Israel was attacked by Hamas, a group designated as a terrorist organization by the United States, and the State of Israel subsequently declared war on Hamas. Since that time, Israel has been engaged in a multi-front armed conflict with combatants located in Gaza, the West Bank, Syria, Iran, Lebanon and Yemen. The situation in the region remains volatile and the possibility of renewed conflicts persists. As of August 13, 2025, we believe that there is no immediate risk to our business operations related to these events. For further information, see “Item 1A. Risk Factors,” under “We are affected by the political, economic and military risks of having operations in Israel” in our Annual Report.

Real Estate Investments

On November 7, 2024, our Board of Directors, or the Board, approved investments of up to $10,000,000 in real estate assets. This decision aligns with our strategic approach to capital allocation, leveraging opportunities in the current real estate market where we have identified attractive investment prospects. With interest rates expected to decline and valuations presenting favorable entry points, the Board believes these investments could provide long-term value appreciation and potential income streams, further strengthening our financial position. As we continue to evaluate our business strategy, including potential structural changes, these investments are intended to enhance financial flexibility and maximize shareholder value. On February 13, 2025, the Board approved increasing the real estate investments to up to $30,000,000.

Real Estate Transactions

On September 4, 2024, we entered into a loan agreement, or the Profit Sharing Loan Agreement, with Rabi Binyamin 4 Tama 38 Ltd., or the Borrower, to finance a real estate project, or the Rabi Binyamin Project. According to the terms of the Profit Sharing Loan Agreement, we agreed to loan NIS 5,500,000 (approximately $1,523,000), or the Loan Principal, to the Borrower. NIS 4,700,000 (approximately $1,307,000) was loaned upon signing the Profit Sharing Loan Agreement and an additional NIS 800,000 (approximately $237,000) will be loaned upon certain milestones which are expected to occur in the second half of 2025. Upon completion of the Rabi Binyamin Project, we entitled to receive the Loan Principal and the greater of: (i) 20% annual interest of the Loan Principal and (ii) 40% of the Rabi Binyamin Project profits.

In January 2025, we entered into an agreement to acquire a parcel of land in Mevaseret Zion, Israel for a total purchase price of NIS 5,800,000 (approximately $1,586,000). The transaction is structured in installments, and as of August 12, 2025, we have completed payment of the full purchase price.

Loan to Hapisga Project

On March 24, 2025, we entered into a loan agreement with Hapisga Project – New Talpiot Ltd. to finance a purchase of a real estate asset in Jerusalem, Israel in the amount of up to $22,650,000 (“Hapisga Loan”). The loan has a one-year maturity, and a caveat was registered on the property reflecting a commitment to register a first-ranking mortgage on a property which valued at approximately NIS 3,000,000,000 (approximately $890,000,000), providing significant collateral coverage. The loan bears an annual interest rate of 12%. On the same date, we entered into a loan agreement with Tova Chochma Im Nachala Ltd. (“Tova Chochama”) in the amount of $5,000,000. The loan bears an annual interest rate of 12% with a maturity date of 12 months. In May 2025, Tova Chochma repaid an amount of $500,000. Tova Chochama can repay the loan at any time. This loan is also secured by the registration of the caveat for Hapisga Loan. The loans were granted by us in April 2025.

Results of Operations

Comparison of six and three months ended June 30, 2025 and 2024

The following table summarizes certain statements of operations data of the Company for the six and three months ended June 30, 2025 and 2024 (in thousands of dollars except share and per share data):

Revenues

On February 7, 2025, we and HTIT entered into the JV Agreement, amending the original agreement signed on January 22, 2024. Pursuant to the terms of the JV Agreement, we and HTIT irrevocably released and waived (i) any claims and demands against each other party in connection with our existing Technology License Agreement with HTIT, or TLA; and (ii) all rights, obligations and liabilities set out and arising with respect to the performance of the TLA.

We recognized $2,000,000 revenue related to the HTIT License Agreement in the six months ended June 30, 2025 while there were no revenues for the six months ended June 30, 2024. We did not recognize any revenue on the three months ended June 30, 2025 or 2024.

Cost of Revenues

On February 18, 2025, we received approval from Israel Innovation Authority, or the IIA, to transfer all of its IIA-funded technology to OraTech in accordance with the terms of the JV Agreement. This approval was granted upon the condition that we pay the aggregate IIA grant amount, plus accrued interest, less all royalties paid to date.

On February 27, 2025, we fulfilled our payment obligation by remitting approximately $2,046,000 to the IIA, and as result we have no further obligations to the IIA. $1,987,000 of the amount is recognized in cost of revenue during the six months ended June 30, 2025. The amount of $59,000 was recognized in previous periods. There were no costs of revenue for the three months ended June 30, 2025 and for the six and three months ended June 30, 2024.

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 trials.

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-trial visits, training and program management.

Clinical trial and preclinical 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 six months ended June 30, 2025 increased by 24% to approximately $3,240,000, compared to approximately $2,621,000 for the six months ended June 30, 2024. The increase was primarily driven by costs related to preparations for a new Phase 3 clinical trial (ORA-D-013-3).

Research and development expenses for the three months ended June 30, 2025 decreased by 28% to approximately $1,034,000, compared to approximately $1,442,000 for the three months ended June 30, 2024. The decrease is mainly due to a decrease in the stock-based compensation expenses and a decrease in clinical trial expenses.

General and Administrative Expenses

General and administrative expenses include the salaries and related expenses of our management, consulting expenses, legal and professional fees, travel expenses, business development expenses, insurance expenses and other general expenses.

General and administrative expenses for the six months ended June 30, 2025 increased by 8% to approximately $3,762,000 compared to approximately $3,476,000 for the six months ended June 30, 2024. The increase was mainly due to stock-based compensation expenses, which partially offset by a decrease in legal expenses and D&O insurance expenses.

General and administrative expenses for the three months ended June 30, 2025 decreased by 14% to approximately $1,455,000 compared to approximately $1,693,000 for the three months ended June 30, 2024. The decrease was mainly due to a decrease of stock-based compensation expenses.

Interest Expenses

There were no interest expenses for the six and three months ended June 30, 2025, compared to interest expenses of $853 and $261 for the six and three months ended June 30, 2024, since the Short-Term Borrowings (as defined below) received from Israel Discount Bank Ltd. were terminated during the second quarter of 2024.

Financial Income, Net

Net financial income were approximately $12,808,000 for the six months ended June 30, 2025, compared to financial income of approximately $19,322,000 for the six months ended June 30, 2024. The decrease was primarily due to the revaluation of the investment in Scilex, RoyaltyVest and a decrease in interest income on deposits, partially offset by the revaluation of Alpha Tau.

Net financial income were approximately $15,366,000 for the three months ended June 30, 2025, compared to financial income of approximately $14,234,000 for the three months ended June 30, 2024. The increase was primarily due to the revaluation of Alpha Tau, partially offset by the revaluation of the investment in Scilex and RoyaltyVest.

Tax on income

During the six months ended June 30, 2025, we recognized tax expenses on income of approximately $458,000 compared to tax on income of approximately $1,634,000 for the six months ended June 30, 2024. The tax on income is primarily attributable to the 2023 Scilex Transaction and the 2024 Refinancing.

During the three months ended June 30, 2025, we recognized tax benefit on income of approximately $126,000 compared to tax expenses on income of approximately $1,634,000 for the three months ended June 30, 2024. The tax benefit is mainly due to a change in the tax provision in the three months ended June 30, 2025.

The provision for tax on income in the interim period is determined using an estimated annual effective tax rate.

Liquidity and Capital Resources

From our inception through June 30, 2025, we have incurred losses in an aggregate amount of approximately $170,970,000. During that period and through June 30, 2025, 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 approximately $255,384,000, net of transaction costs. During that period, we also received cash consideration of approximately $28,001,000 from the exercise of warrants and options. We expect to seek additional financing through similar sources in the future, as needed. As of June 30, 2025, we had approximately $15,797,000 of available cash and approximately $22,865,000 of short-term bank deposits. In addition, we hold a variety of interests in certain investments, including in Scilex, Alpha Tau and others, as further detailed in this Quarterly Report on Form 10-Q.

From inception through June 30, 2025, we have not generated significant revenues from our operations (other than recognizing deferred revenue related to the HTIT License Agreement, as described above). Although, we have increased the research and development activities related to the new Phase 3 clinical trial, our research and development activities have been significantly reduced while we conducted a strategic review process, following the termination of the ORA-D-013-1 and ORA-D-013-2 Phase 3 trials. Following the preparation and expected initiation of the revised phase 3 trial (ORA-D-013-3), we expect to increase our research and development expenses, either directly or through OraTech.

Based on our current cash resources and commitments, we believe we will be able to maintain our current planned activities and the corresponding level of expenditures for at least the next 12 months.

As of June 30, 2025, our total current assets were approximately $99,026,000 and our total current liabilities were approximately $3,693,000. On June 30, 2025, we had a working capital surplus of approximately $95,333,000 and an accumulated loss of approximately $170,970,000. As of December 31, 2024, our total current assets were approximately $143,221,000 and our total current liabilities were approximately $5,685,000. On December 31, 2024, we had a working capital surplus of approximately $137,536,000 and an accumulated loss of approximately $176,616,000. The decrease in working capital surplus was mainly due to a decrease in cash and cash equivalents and short-term deposits that was partially offset by an increase in fair value investments.

During the six months ended June 30, 2025, cash and cash equivalents decreased to approximately $15,797,000 from approximately $54,420,000 as of December 31, 2024. The decrease was mainly due to investments in Alpha Tau, RoyaltyVast and Hapisga, partially offset by the decrease in short-term deposits.

Operating activities used cash of approximately $7,054,000 in the six months ended June 30, 2025, compared to approximately $600,000 provided in the six months ended June 30, 2024. Cash used in operating activities primarily consisted of research and development expenses, general and administrative expenses and the change in fair value of investments.

Investing activities used cash of approximately $31,237,000 in the six months ended June 30, 2025, compared to approximately $124,653,000 provided in the six months ended June 30, 2024. Cash used in investing activities in the six months ended June 30, 2025 consisted primarily of investments at fair value in Alpha Tau and Hapisga, partially offset by proceeds from short-term deposits. Cash provided by investing activities in the six months ended June 30, 2024 is mainly due to proceeds from short-term deposits and from Scilex.

Financing activities used cash of approximately $371,000 in the six months ended June 30, 2025, compared to cash used for financing activities of approximately $49,550,000 in the six months ended June 30, 2024. Cash used for financing activities in the six months ended June 30, 2025, consisted primarily of purchase of treasury shares. Cash used in financing activities in the six months ended June 30, 2024 was mainly due to loan repayment.

On August 8, 2023, we borrowed an aggregate of $99,550,000 pursuant to loan agreements from Israel Discount Bank Ltd., or the Short-Term Borrowings. The Short-Term Borrowings matured on dates ranging from August 11, 2023 to May 24, 2024, bore interest ranging from 6.66% to 7.38%, were secured by certificates of deposits issued by Israel Discount Bank Ltd. having an aggregate face amount of $99,550,000. The net proceeds of the Short-Term Borrowings were used to fund the Tranche A Note. The Short-Term Borrowings were paid in one payment of principal and interest at each respective maturity. As of June 30, 2025, we had repaid the entire Short-Term Borrowings amount.

Critical accounting policies and estimates

Our critical accounting policies are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report.

Planned Expenditures

In previous years, we primarily invested in research and development. We expect that in the upcoming years our research and development expenses will continue to be our major operating expense, either directly or under the JV Agreement; however, if this clinical trial is conducted through OraTech, these costs will be borne by OraTech and not by us.

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We may not realize the value of the Option Agreement and Subsequent Penny Warrants that we expect.

Our ability to realize the full value of the Option Agreement, or to complete the repurchase of the Subsequent Penny Warrants under its terms, is subject to significant uncertainty. There can be no assurance that Scilex will make the required payments or complete the repurchase within the agreed timeline, if at all. If the Option Agreement is terminated or Scilex fails to fulfill its obligations, our ability to monetize or exercise the warrants remains limited due to both regulatory and practical constraints. Specifically, Nasdaq Listing Rule 5635(d) requires shareholder approval for the issuance of securities exceeding 20% of a company’s outstanding shares at below-market prices. As a result, we may be unable to exercise or sell the full amount of the warrants without triggering such restrictions. These limitations may prevent us from realizing the full economic benefit of the Penny Warrants.

Our various real estate and other investments, including, but not limited to Alpha Tau, a clinical-stage company, involve significant risks and might not provide long-term value appreciation and potential income streams that we expect to receive.

As of the day of this report, we have various real estate and other investments, including, but not limited to Alpha Tau, a clinical-stage company, which constitute a part of our business strategy. We believe that these investments could provide long-term value appreciation and potential income streams, further strengthening our financial position and maximizing shareholder value.

However, these investments involve significant risks and might not provide long-term value appreciation and potential income streams that we expect to receive. For example, if Alpha Tau fails to achieve positive clinical results or obtain regulatory approvals, the value of our investment could decline materially, which may adversely affect our financial results. Additionally, conditions in the real estate market might change, which, in turn, might affect the value of our real estate investments.