Analysis Of Oramed's Positive Phase IIa Safety Data Makes Opportunity Obvious

| About: Oramed Pharmaceuticals (ORMP)

Last week, Oramed Pharmaceuticals (NASDAQ:ORMP) released the results of a Phase IIa study in Type 2 diabetics for its oral insulin capsule ORMD-0801. Primary endpoints of safety and tolerability were met; these are measurements of side effects placed into categories that the FDA recognizes and condones. There are two levels - adverse effects (AE) and severe adverse effects (SAE). In a recent article written by Adam Feuerstein, a widely-read, though sometimes caustic columnist for The Street, claims were made that Oramed was deceiving the public with false claims of safety data.

This is not true because the distinction between levels of AEs was not recognized in the article. It is understandable, however - clinical data is often difficult for physicians to interpret, much less laymen, and jumping to inaccurate conclusions is not uncommon. Slight dizziness, nausea, constipation and headache are considered Level 1 AEs and of little concern to the FDA in a diabetes study, no matter how many subjects report them, and are extremely common in patients confined to a strange environment for a week's length of time. In fact, there were more patients with adverse events in the placebo group versus those taking ORMD-0801.

A review of AEs of top-selling drug Lantus, by Sanofi (NYSE:SNY) for Type 2 diabetics indicates hypertension and upper respiratory tract infection in 19.6% and 29% of users, respectively, still emergent after five years and considered by patients much more unpleasant than a little gas.

Secondary endpoints comprising pharmacokinetic data - how the drug is absorbed and passed through the body, would not be immediately available until presentation at an upcoming scientific conference, exactly what Oramed plans to do, and would not be included in the chart referred to in the article. Further, Oramed and the FDA did not design this early study to show efficacy; a much larger trial with statistical power would be required. It is possible that the study has not yet been unblinded or that efficacy data is still under analysis. Information of this sort might also be held back until presentation at a scientific forum as early disclosure could jeopardize acceptance at meetings or inclusion in publications.

Studies of this nature are intended to be short in duration with a limited amount of patients. That's why the FDA classifies them as Phase IIa. Oramed consulted with the agency in its trial design and if Oramed makes statements to meeting endpoints of safety, then they must be true or risk severe FDA sanctions. The FDA wanted Oramed to show one thing and one thing only - that ORMD-0801 was safe enough to proceed to a IIb trial.

Another point to consider is that results are not posted on the FDA's clinic trial website; it would be a breach of trust and a violation of competitive advantage among drug and device makers. Of particular concern was the article's inclusion of opinion from David Kliff of Diabetic Investor. I was surprised to read such an offhand and unjustified comment from Mr. Kliff, whose work I have followed for years. Surely he knows that small studies are needed early on in the clinical path of any drug, diabetes or otherwise, in order to prove to the FDA that more are warranted.

Oramed still faces plenty of risks. Although not intended to show it, there may be no evidence of efficacy in this small trial, possibly increasing the chance that none will emerge in the larger Phase IIb. Even upon eventual success and commercialization, oral insulin may face physician skepticism, limiting future revenues. However, the value of a pill versus injection would encourage diabetics into earlier treatment, a fact the FDA and its medical constituency cannot ignore.

A disease symbolic of an overweight and sluggish society, diabetes leads innovative research by virtue of the sheer number of sufferers - 350 million people worldwide for healthcare costs upwards of $245 billion. Oramed's oral insulin would create a new era of patient freedom and comfort, forever changing the existing therapeutic landscape.

Disclosure: I am long ORMP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.