Oramed offloads Chinese rights to oral insulin in $50M deal

Oramed ($ORMP) has sold the Chinese rights to its Phase II oral insulin product in a $50 million (€47 million) deal. The agreement gives a subsidiary of Chinese pharma powerhouse Sinopharm rights to the drug, responsibility for further development and a stake in Oramed.

Oramed CEO Nadav Kidron

Jerusalem, Israel-based Oramed is receiving $3 million upfront, with a further $8 million in near-term installments set to follow if the company can strike "certain agreements with certain third parties." Hefei Tianhui Incubator of Technologies (HTIT), the Chinese firm on the other side of deal, is also buying $12 million of Oramed's stock and is positioned to hand over a further $26.5 million if certain milestones are hit. If HTIT succeeds in bringing the drug to market in China, Hong Kong or Macau, the territories for which it has rights, Oramed will pocket royalties of 10%. 

The deal gives tiny Oramed, which has a market cap below $90 million, an immediate boost to its finances and a potential source of future income. Oramed was down to its last $17 million at the end of August, but has been anticipating a cash injection from a Chinese partner for some time. In July, Guangxi Wuzhou Zhongheng Group appeared briefly to be on the cusp of wrapping up a deal, only for HTIT to steal ahead and nail down a nonbinding letter of intent with Oramed. HTIT and Oramed have tweaked the terms of their deal since then but the headline $50 million figure is the same.

Confirmation that Oramed is in line to receive $50 million from HTIT cheered investors, who sent the stock up 17% on the day of the news. While the news is significant for Oramed, the broader message from the deal is that China is looking to Israel for investment opportunities--and people in power in Israel are doing what they can to facilitate such deals. Chinese investors have signed multiple deals with Israeli companies in recent years. And, tellingly, the contract between Oramed and HTIT was signed at the Israeli parliament.

The broader implications of the deal weren't lost on Oramed CEO Nadav Kidron. "It's a hugely important deal not just for Oramed, but for Israel in general," Kidron told The Times of Israel. "There is great interest among the Chinese in all areas of Israeli tech, but especially in health and aging related technology," he said.

- read the statement
- and The Times of Israel's take