ORAMED PHARMACEUTICALS INC. (ORMP) stock intrinsic value fair value estimate & owner earnings analysis

Oramed Pharmaceuticals has changed dramatically over the past three years, and the company is not quite what it was even a year ago. It began as an Israeli developer of an oral insulin capsule built on its own oral-protein-delivery technology, and for most of its history it followed the classic clinical-stage pattern: modest license revenue, steady research spending, and cash burn financed by stock issuance and licensing deals. That business alone rarely produced positive cash from operations - looking back across the last nine fiscal years for which comparable data exists, operating cash flow was negative in eight of them, averaging a net outflow in the low double-digit millions after accounting for stock compensation (a real cost, though non-cash) and the company's minimal capital spending. That operating history is no longer the main story. Starting in 2023 and accelerating through 2025, Oramed redirected its cash and, ultimately, its own drug program into a portfolio of stakes in other healthcare companies: - It holds senior secured notes and warrants in Scilex Holding Company (Nasdaq: SCLX), received in a 2023 transaction and refinanced in 2024. Scilex has repaid $69.2 million of principal as of March 2026 and pays Oramed an ongoing royalty tied to one of its marketed products. - It owns roughly 17% of Alpha Tau Medical (Nasdaq: DRTS), an oncology company running five FDA trials of its Alpha DaRT radiation therapy, bought for about $38 million in 2025. - It holds smaller positions in BioXcel Therapeutics warrants, and shares of Nano and Pelthos. - Most significantly, on March 25, 2026, Oramed transferred its own oral-insulin technology and the obligation to keep funding its clinical development to a new entity, OraTech, which was simultaneously acquired by Lifeward (maker of the ReWalk exoskeleton). In exchange, Oramed received Lifeward equity and warrants worth up to roughly 45-49.99% of Lifeward's shares, plus the right to 4% of ReWalk product revenue for up to ten years. Oramed will continue to manage the ongoing insulin trial as a paid service, but Lifeward/OraTech now bears the cost of running it. In effect, the company that used to spend money developing a drug now mostly owns a diversified basket of stakes in other companies' drugs and devices, funded by capital raised over the prior decade rather than by profits - and it has already begun returning some of that capital to shareholders directly, paying a $10 million dividend in January 2026. This matters for how the shares should be valued. Projecting the historical operating cash flow forward on its own would badly understate the company, because that stream - roughly a $9 million net outflow most recently - says little about a balance sheet holding over $200 million of investment stakes that the company can realize directly through sale or repayment rather than through operating profit. So the estimate below starts from the audited value of what the company owned and owed as of December 31, 2025 (after the dividend paid in January 2026), and then treats the ongoing cost of running a smaller holding company - offset by the fee and royalty income it already has under contract - as a permanent drag against that value, since nothing in the filings points to an end date for that structure. Base case (about $3.25/share): Starts from the disclosed year-end fair value of the investment book - cash and near-cash of about $57 million, marketable securities of about $14 million, the Scilex notes and warrants at about $74 million, the Alpha Tau stake at about $72 million, and several smaller positions - less liabilities and the dividend already paid, for roughly $4.47 of net asset value per diluted share. From that, this case subtracts the present value of an estimated $3 million a year of ongoing net cost: a leaner general-and-administrative budget (research spending is now Lifeward/OraTech's obligation, not Oramed's) offset by the contracted Alpha Tau service fee (about $1 million a year through 2028) and the Scilex royalty. Bear case (about $1.25/share): The two largest positions carry real, named risk. Scilex itself discloses substantial doubt about its own ability to continue as a going concern - the reason Oramed had to agree to defer a note payment as recently as October 2025. Alpha Tau's value depends heavily on a single FDA approval process that has not yet concluded. This case applies meaningful haircuts to those two positions and to the less liquid ones (a real-estate investment, non-marketable securities, and the new Lifeward stake, which is under a 120-day lock-up), and assumes a higher net operating cost while the company works through the transition. Bull case (about $5.50/share): Gives substantial credit to the improvement already visible since year-end - Scilex has kept repaying principal on schedule, and Oramed's own reported net income for the first half of 2026 was $116 million, mostly further gains on the same positions already on the books at year-end 2025. This case credits roughly half of that additional reported gain as durable rather than a one-quarter mark that could reverse, combined with a lighter ongoing operating cost. The gap between these three numbers should be read as real rather than as caution for its own sake: this is now closer to a concentrated portfolio of early-stage healthcare positions than to a predictable operating business, and the same mark-to-market accounting that produced a $64 million profit in 2025 and $116 million in the first half of 2026 can move the other way just as quickly if either Scilex or Alpha Tau disappoints. Worth noting for context: the company's revenue was historically tied to a licensing agreement covering Greater China rights to its oral insulin technology; that agreement was terminated in October 2025 after the Chinese partner failed to meet its funding conditions, and it is not expected to contribute further. Given the complexity here and the real counterparty risk concentrated in two positions, a price around $1.75 per share - and only if Scilex and Lifeward continue servicing their obligations to Oramed without a material impairment of the notes, warrants or equity stakes Oramed holds in them - would offer a wide enough margin against the risks described above.