The Dream Of The Insulin Pill: Oramed Vs. Rivals

| About: Oramed Pharmaceuticals (ORMP)

Oramed Pharmaceuticals (NASDAQ:ORMP), a tiny Israeli company, listed on the Nasdaq, tripled in value since December, although recently it fell back sharply. In the past 52 weeks the stock price ranged from $5.00 to 31.73.

The company has about 11 employees in Jerusalem, farms out most of its work, does not have an approved product to sell, or any revenue and its best guess for an FDA approval of its drug is 5 years or more.

But the company has an amazing public relations operation which helps it to raise money.

It also helps that the project, creating an oral insulin is the "holy grail" of diabetes research and if successful, it could result in a billion dollar business.

Oramed's product is called ORMD-0801, an oral insulin capsule which would replace, at least to some extent, daily insulin injections. The company claims that it has successfully completed a Phase 2a safety trial but detailed figures from the trial have not been released.

Oramed owns delivery-system patents in Israel, Europe, Japan, New Zealand and elsewhere. The company hopes to have a U.S. patent approved during 2014.

Having completed Phase 2a, Oramed claims that it is now ahead of the Danish pharma giant, NovoNordisk (NYSE:NVO) which is not planning to start its Phase 2 for a year or two.


It is claimed that the Phase 2a trial of ORMD-0801 has met the safety goals. The study lasted for a week, involved 30 patients with type 2 diabetes. The FDA required a safety study as a condition for allowing a larger 2b trial.

The Phase 2b will run for one year and will test the effectiveness of the drug.

The ORMD-0801 is targeted for individuals with early stages of type 2 diabetes. Oramed said that the insulin pill may slow the degeneration rate of the disease and make it easier for patients to start early treatment. While the pill could not eliminate the eventual need for injections, it could at least delay the need for it by many years.

Before the U.S. trial, Oramed already had several small phase 2 trials, including a 2010, six-week study in 29 patients with type 2 diabetes in South Africa. The trial found that the formulation was well-tolerated, did not have serious side effects, and showed preliminary evidence of effectiveness.

To outsmart the body's digestive system, Oramed created a specially-coated capsule that packages insulin with several helper compounds to block protein-degrading enzymes and enhance insulin's absorption into the blood.

By introducing a protease inhibitor and adding various adjuvants, Oramed claims that it significantly enhanced the absorption of peptides and proteins across the intestinal wall when insulin is delivered orally, without modifying the active compounds. The adjuvants used are all approved ingredients with a long history of pharmaceutical use.

The adjuvants are there to protect the active compounds in the transition through the harsh chemical environment of the gastrointestinal tract and promote its transport across the intestinal wall and into the general blood circulation.

The precise choice of adjuvants and their composition in relation to the active components are the subject of Oramed's patents.


Novo Nordisk's candidate NN1954, an oral basal insulin analog intended as a tablet treatment, generated successful results from a single-dose Phase 1 trial in 2013.

Peter Kurtzhals, head of diabetes research at Novo Nordisk, said in an interview that the insulin is delivered through enteric coated tablets targeting the duodenum, facilitated by the rise in pH that occurs when a substance passes from the acidic environment in the stomach into the intestine.

Novo is helped by partner Merrion Pharmaceuticals' GIPET technology.

Merrion Pharmaceuticals is a Dublin, Ireland-based specialty pharmaceutical firm that specializes in making injected drugs more absorbable.

GIPET uses specifically designed oral formulations of patented absorption enhancers designed to facilitate transport of drug and increasing absorption.

The drug and enhancer are not bound to each other chemically, but are both ingredients of the tablet, with no interaction between active pharmaceutical ingredient and absorption enhancer.

The drug and absorption enhancer are simultaneously released following dissolution of the coating and a general disintegration of the tablet.

"The oral insulin project is currently in Phase 1 clinical development. Contingent on successful outcome of these trials, Phase 2 will be initiated within 1-2 years," said Kurtzhals.

The Danish diabetes giant plans to invest up to $3.65 billion on developing diabetes tablets intended to replace traditional insulin injections.

Through 2020 the company plans to develop six diabetes pills along with potential production facilities.

Novo believes it has designed a more stable molecule than natural insulin that can slow the time of degradation to minutes.

In Novo's Phase 1 trial 83 people were enrolled, it began in May of 2013 and ended in October.

Oral insulin has been a "holy grail" of sorts among diabetic treatments, both for its potential value as a desirable alternative to frequent injections and also for the difficulty in overcoming its delivery obstacles. As a large protein, unprotected insulin is digested in the gut rather than absorbed as a useful compound, and overcoming this has been problematic.

The next step for Novo is to move into a multiple-dose Phase 1 study.

The delivery platform was originally developed by Irish drugmaker Elan, and Merrion holds a number of European and U.S. patents, including the use with peptide complexes which are notoriously difficult to administer.

Other companies are getting into the race to create an oral version of insulin.

Previous efforts to develop an insulin pill have fallen short because insulin molecules were either too large to pass through stomach membranes or the pills degraded too quickly to become effective.

But some recent studies show two pills have proved successful in increasing insulin absorption into the bloodstream.

Emisphere Technology (OTCQB:EMIS), a New York based company, has developed a pill that allows insulin to enter the circulatory system, mimicking the physiological production and excretion of insulin.

Another pill, developed by Nobex Corp in partnership with GlaxoSmithKline (NYSE:GSK), uses patented polymer technology to resist enzymatic degradation and promote absorption into the bloodstream.

Biocon, a large Indian firm, had previously conducted a Phase 3 study in India with IN-105, which did not meet its primary endpoint.

Rani Therapeutics, a San Jose, California based company is developing oral methods of delivering insulin for which it has received an investment of over $10 million from Google Ventures and InCube ventures.


These are gigantic markets.

According to the International Diabetes Foundation, about 90 percent of the more than 382 million diabetes sufferers worldwide are in the type 2 category. The number of diabetes patients is expected to rise to 600 million by 2035.

According to Thomson Reuters Pharma, consensus analyst forecasts suggest that the overall diabetes drug market, worth $37 billion a year at present, will reach more than $57 billion by 2018.

Oral insulin could make it easier for diabetics to start treatment earlier, slow the progression of the disease and delay the need for injections. Unlike injections, the ingested version of insulin passes directly into the liver, which regulates the secretion of insulin into the bloodstream.

Oral insulin could also save billions of dollars in healthcare costs by helping to delay the multitude of complications arising from type 2 diabetes. By giving insulin earlier, the pancreas would gain a rest and complications such as blindness and amputations could be reduced.

Novo Nordisk says that the global market for diabetes tablets, if they become reality, could be worth more than $18 billion a year.

A long, long way to go

The FDA is going to be extra careful in approving noninjectable insulin candidates, given the problems it had with the segment in recent years. To win approvals, companies probably will have to show not only the usual safety and efficacy, but that their products are better than past noninjectable candidates.

If all goes well, Novo believes its oral insulin could be available by the end of this decade or early next decade. Oramed's most optimistic prediction is 5 years minimum.

There is no guarantee that either firm's formulation will be a success, as evidenced by the disappointing results in late-stage testing of another insulin pill, developed by Indian biotechnology company Biocon. In 2011, Biocon announced that its oral insulin drug failed to meet treatment goals for lowering blood sugar in a multi-center clinical trial conducted in India. The company subsequently partnered with Bristol-Meyers Squibb (NYSE:BMY) to further develop its oral formulation.

Other unique, non-injectable forms of insulin haven't been successful, either. Pfizer's (NYSE:PFE) novel insulin inhaler Exubera, which allowed people breathe the hormone in through their lungs, gained FDA approval in 2006, but turned out to be a flop. Pfizer withdrew the product after only about a year on the market due to poor sales, a result of safety concerns and complicated dosing requirements.

Investors' summary

Oramed has raised $16 million on December 25, 2013, five days after it said it had successful results in an early-stage type 1 diabetes study. On Jan. 24, the company filed a shelf registration to raise as much as $100 million.

Oramed claims it has investors from New York, including the Sabby Healthcare Fund and the AWM investment company. The chief scientist's office of the Economy Ministry invested close to $2 million in the company in 2009 as well.

In addition to oral insulin, Oramed is also working on an oral GLP1 analog, oral exenetide. This would be a competitor to drugs like Byetta from AstraZeneca (NYSE:AZN).

Byetta is given by injection, but among the frequent side effects is nausea. But it is considered beneficial because diabetics who inject it, eat less and lose weight. With the oral insulin pill, oral exenetide could work synergistically.

In recent days Oramed has been heavily criticized, especially concerning its recent 2a trial. The data published do not back up the claim about the drug's safety. The trial was too short and too small for this type of a drug. The company may respond to the criticism in time and it promised detailed statistics about the trial at an upcoming scientific conference.

Besides the trial questions, if one compares the huge investment made and cautious statements issued by diabetes industry giant NovoNordisk about the prospects of the insulin pill, one must either be skeptical of Oramed's claims or assume that the company is made up of geniuses. Which is entirely possible but not proven so far.

On the other hand, great innovations often come from very small outfits backed by university research, and often succeed, especially in the medical field. It is also true that giants in any industry are not in a particular hurry to undercut their own existing business with rushing innovations into practice, until they are forced to do so by credible competition.

The bottom line is that Oramed has to prove itself with convincing data before its current high stock price can be justified.

One good thing coming out of this is the increase in competition. To create oral insulin is a major, worthwhile project and some company or companies will certainly accomplish it.

Which one, it is difficult to predict at this point. It could be any one of the companies mentioned in the article or maybe none of them and a different one will appear in the field and succeed.

At this stage it is difficult to pick a winner but isn't it the ability to pick a winner out of an industry in a state of confusion and uncertainty that makes knowledgeable and lucky investors rich?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.