SaaS Interviews with CEOs, Startups, Founders
1187 The Chinese Gave Him $50M For Orally Delivered Insulin Capsul Idea, Will It Take Off?
24 Oct 2018
Chapter 1: What innovative technology does Oramed Pharmaceuticals offer for diabetes treatment?
You know, his his folks in the family developed a very interesting technology. 2006 convinced him to go ahead and start scaling in 2013 or sorry, in 2006, launched the company, ended up going public several years later to raise additional capital. They raised about they'll call it 100 million bucks total.
Additionally, they've got a Chinese firm that's put in about 12 million or 38 million bucks as actual customer, basically buying a license for the rights to this pill in China. The big differentiator, they're able essentially to deliver insulin worldwide.
orally which goes directly into the liver versus what we all do today or i believe what most people do today with diabetes which is injections which goes directly into the bloodstream very different models we'll see if it takes off this is the top entrepreneurs podcast where founders share how they started their companies and got filthy rich or crash and burn
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company. It was $160 million, which is the size of many IPOs. We're a bit strapped.
Chapter 2: How does oral insulin delivery differ from traditional injection methods?
We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everybody. My guest today is Nadav at Kidron.
He's the CEO and director of Oramed Pharmaceuticals, which he co-founded in 2006 to bring oral insulin to the millions of people with diabetes. Kidron holds a bachelor's degree in law and an international MBA. He's also a member of the Israeli Advanced Technology Industries and an international lecturer on Israelis or on Israel's entrepreneurial and innovative culture.
Nadav, are you ready to take us to the top? I'm ready. All right. Diabetes is a big problem. How are you helping?
What we try to do at Oramed is to take insulin, which currently can only be given as an injection, and we have the technology to take insulin and deliver it orally.
And so what, I don't have diabetes, so you have to help us empathize. What does that mean for someone with diabetes?
Okay, so you, thank God you don't have diabetes, but when you look around you, you know, almost 10% of the population suffers from diabetes. The lifestyle that we have results in many, many, many people who suffer from diabetes. The problem when someone has diabetes is,
When he starts with a type 2, he cannot produce enough insulin or there is an insulin resistance and they don't want to go on the injection. And what we offer them is a new paradigm, a new way to treat diabetes by giving them insulin as an earlier treatment and pushing away the point that they become insulin dependent where the major complications can happen at that point in time.
Okay, but is also the form factor, is that also a big difference? One is an injection, but you're taking orally?
Yeah, there's a huge difference because when you take an injection, it goes straight into your bloodstream. But when we give it orally, it actually goes into the liver. And the liver is the organ that regulates the secretion of the insulin into the bloodstream.
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Chapter 3: What funding milestones has Oramed Pharmaceuticals achieved?
Oh, so you have to do that with both? You haven't gone through with either of them yet?
With the American FDA, we're now doing another study that will take us into a phase three, which is the last trial you need to do in order to register the drug. And with the Chinese FDA, we're probably going to get to the market even before the United States.
Okay, interesting. Now, when you say $50 million deal, have they actually paid that cash all up front or it's just a signed contract with a bunch of contingencies right now?
So we got $30 million out of the 50. We should be getting a few more millions this year and some of it earlier next year as well.
That's great. So this is essentially helping you obviously fund the company. Have you raised outside capital or are you bootstrapped?
No, we raised. The company today is a public company on NASDAQ. The company, just the cash the company has today, it's about $50 million, 5-0, and there's more cash coming from the Chinese. Up to today, altogether, I would say probably over $100 million of money between the revenues and money was raised, went into the company. So it's a real interesting enterprise. Why do you go?
So what year did you go public in?
2013, we went up to NASDAQ.
Okay, and this was about seven years after you launched the company. I assume you were pre-revenue at that time, correct? Yeah, correct. So how do you go to public? I mean, most people assuming that I come from the software world, most people say, okay, you got to have at least a hundred million bucks in kind of annual revenue before you go public and get a good multiple.
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Chapter 4: How is the oral insulin technology developed and protected?
And they've been investing hundreds of millions of dollars into the facility, the building in China. And China is 5% of the global market of diabetes. So the value that they gave us, this $50 million, is based on $1 billion upfront value.
Wait, were they investing or they were a customer?
Yeah.
So they did both. $12 million was an investment and $38 million basically they paid in order, they paid some of it in order to get the license for China. I see. But if you look at the numbers, it gives you a valuation. Like I said, the market doesn't necessarily represent the right value because the market doesn't have the liquidity in it.
Now we are, and this is public in our filing, we are in discussions with potential partners And I think everybody understands that if we're going to do a deal, if we're going to strike a deal, it's not going to be based on the current market cap, but it's going to be based on the potential that everybody sees into this product.
What is your current market cap?
About $100 million.
Okay. And what did the Chinese group give you when they put $12 million in?
So they did it at about double than what the current market price is.
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Chapter 5: What regulatory challenges does Oramed face with the FDA?
There's no entrance for you at this point in time.
Ex-Israeli defense. There's something they teach you in Israel that makes you guys great founders. What are the keys?
Well, I think there's a few things. I mean, if you look today, and by the way, I'm also on the board of IETI, which is the umbrella organization for the high-tech and biotech in Israel. It's unbelievable what's happening today in Israel as far as new technologies are being developed. You have to come and see it in your eyes, and you're still not going to believe it.
I think there's many reasons why it's happening. Some people say because the army, you know, allows people to do it right. The fact that we cannot trade with our neighbors, so you want to go into areas where you can do things uh, electronically. So, so I think there could be many, many reasons, but the bottom line is Israel is booming and I'm very proud to be part of it, uh, with Oramed as well.
Very good. All right, let's wrap up with the famous five. Number one, what's your favorite business book?
Oh, wow. There's so many of them. Um, but I actually, I'll tell you my, my, you're going to laugh, but I think the best business book is a philosophy books that I read, which are not direct in business.
Um,
but it teaches you about philosophy, about the way you think, and I apply it to business. What's the name of the book? So I've been reading, I mean, I can tell you a few things. I'm listening now to a podcast, Philosophize It.
Philosophize It.
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Chapter 6: How does the partnership with a Chinese firm impact Oramed's business?
Number four, how many hours of sleep do you get every night? About five, hopefully six. And what's your situation? Married, single, kiddos? Married, three girls. Oh, wow. You got a full house. And how old are you? I'm 44. 44. Last question. What do you wish your 20-year-old self knew?
Oh, wow. To be able to differentiate between the important thing to the less important thing.
Important versus less important. There you guys have it. You know, his folks in the family developed a very interesting technology. 2006 convinced him to go ahead and start scaling it. In 2013, or sorry, in 2006, launched the company, ended up going public several years later to raise additional capital. They raised about, they'll call it 100 million bucks total.
Additionally, they've got a Chinese firm that's put in about 12 million, or sorry, 38 million bucks as an actual customer, basically buying a license for the rights to this pill in China, the big differentiator.
They're able essentially to deliver insulin orally, which goes directly into the liver versus what we all do today, or I believe what most people do today with diabetes, which is injections, which goes directly into the bloodstream. Very different models. We'll see if it takes off. Now, Bob, thank you so much for taking us to the top.
Thank you for having me over.
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