Oramed Vs. Novo Nordisk In Race For Oral GLP-1

| About: Oramed Pharmaceuticals (ORMP)

Summary

GLP-1 agonists are a new solution for insulin-dependent patients.

Novo’s GLP-1 injectables carry onerous side effects.

Given Novo’s failure in other oral diabetes drugs, Oramed looks to be top dog.

Risks involve safety and more efficacy data in future planned trials of oral GLP-1.

Two players, Oramed and Novo Nordisk, vie in development of an oral GLP-1.

As diabetes drug frontrunners scramble to create the next best thing, GLP-1, a powerful hormone designed to tell the pancreas when to release insulin, brings face-to-face two strong contenders for an oral version: Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) and Novo Nordisk (NYSE:NVO). Novo appears to be the weaker sister, while Oramed pounds forward with news of a finished 3-month Phase Ib study that showed safety and tolerance in its Type 2 diabetic patients. An application for its ORMD-0901 GLP-1 agonist is planned for submission to FDA around the middle of next year, kicking off the next line of clinical trials, to be done in the US.

This is vital on a number of levels. GLP-1 medicine, assumed by most as successor to commonly-used insulin, is only available in injected form but administered less often. Novo's leading GLP-1 product, Victoza, which started life as an injectable to treat diabetes Type 2, in 2010 with a host of adverse events, subsequently filed for admission as a weight loss substance. Not a good move. After approval in 2014 under a different moniker (though still the same compound), signs of risk for pancreatic cancer still appeared, not unlike its cousin drug, Victoza.

Nearly one year ago, Novo halted its relationship with Merrion Pharmaceuticals, after Novo spent countless millions over a prolonged period to formulate pill-form insulin. Intellectual property was bought back from Merrion for a paltry $3 million. Then, last month, Novo's new incoming CEO stating a repurpose of Novo's research goals to diabetes-related conditions like heart and kidney disease, ended their work into oral insulin. My question is: how hard did the Danish diabetes giant try? Phased trial progress for Novo's oral insulin had always been mysterious to investors here and abroad. Clinical trial results had not been presented in major conferences, and my source at Novo knew very little about its progress. But when Novo's raking in upwards of $2 billion for its injected GLP-1, why bother?

A word on scientifics: injectable Victoza and its skinny-making counterpart Saxenda, mentioned above, are made of the same drug - liraglutide. Hence, similar adverse effects. Novo's oral GLP-1 is made of semaglutide, a Novo-inspired brew of potentially dangerous liraglutide and degludec, marketed only in Europe. Ironically, side effects are potential dangerously low blood sugar and weight gain. I'm not sure I'm getting the point, nor will diabetic patients. Now Novo wants to pursue an oral version of its GLP-1, for Type 2 diabetes with the benefit of dropping pounds while keeping adverse glycemic events at bay. I think Novo's soon-to-be installed CEO should stage a rout of his research and development staff.

Most of what Novo hoped for in making oral GLP-1 came from Emisphere Technologies (OTCPK:EMIS), which licensed its patents to Novo that incorporated blends of proteins. Novo added in-licensed work from Merrion, originally bought from Elan Corp. (famous for its drug patches), back in 2003; Elan was ready to sell. This speaks to me of muddled tech knowledge and no surprise that Novo could not make oral insulin work. I'm also led to believe that Novo won't be able to produce an effective oral GLP-1 drug.

On the other hand, Oramed's ORMD-0901 is a pancreas stimulating biochemical compound called exenatide, distant biochemical relative to liraglutide but much nicer - less risk of cancer. It lasts longer in humans after tested by third parties showing effectiveness in lowering blood glucose for those in a diabetic state. Oramed has proven safety, tolerability and exciting hints at effectiveness.

Approximately 30 million people in the US suffer from Type 2 diabetes, with an even larger number worldwide as people adopt sedentary lifestyles augmented with fatty, sugary food. The American Medical Association declares obesity a disease, pushing up numbers for newly-diagnosed diabetics and drawing interest from pharma firms with dollar signs in their eyes. Especially because payors are rejecting 'me-too' diabetes drugs that simply rehash older products that come with a host of effects that will eventually put a greater strain on our already overburdened healthcare system.

GLP-1 has captured the R&D attention of 1) GlaxoSmithKline (NYSE:GSK) marketing a subcutaneous injection pen with possible thyroid cancer in users' futures; 2) Eli Lilly (NYSE:LLY), another injectable with a warning of thyroid cancer and the ever enjoyable pancreatitis, and 3) two offerings from AstraZeneca (NYSE:AZN) that warn of pancreas inflammation and kidney failure.

Skimpy pipelines and stingy pharmacy benefit managers who control what's sold to HMO members and what's not, drive much of which new drugs will reach desired pharmaceutical profits, much less blockbuster status. Type 2 diabetes is a market set to grow to $58.7 billion by 2025, up on a compound annual growth rate of 6.5% from last year's statistics. Novo worries that payors need a high degree of innovation to justify higher prices. Novo may not have it, but Oramed might.

I should mention a new player in alternative diabetes management - Intarcia Therapeutics, with a device to deliver GLP-1 in a pump placed under the skin, done in a doctor's office in minutes and meant to replace multiple GLP-1 injections. There is neither extant scientific documentation nor peer-reviewed articles on Intarcia's product and from my professional experience with implantables, they are not pleasant. Like MannKind Corp.'s (NASDAQ:MNKD) insulin inhalable, I doubt physicians will embrace this technology with open arms.

Another interesting point on Oramed and its clinical efforts: cost. Pharma pundits hold that new drug development takes 20 years and $500 million. Novo is a fine example, but not so with Oramed. As of fiscal year ended August 31, 2016, R&D spend was a mere $7.7 million with much progress into advancing clinical trials, including GLP-1. Oramed has, I believe, a strong knack in quick patient recruitment without the top-heavy bureaucracy of its larger competitor.

Oramed's Asian partner has been providing regular milestone payments; as of October, $29.5 million in total adds to the company's coffers. Runway is a respectable three years, not counting additional funds from China or other partnerships, including a potential licensing for Oramed's oral products. Oramed's balance sheet is pristine with no long-term debt and operating expenses are holding steady, if not retreating, showing capable cost restraint.

Whether Oramed's oral GLP-1's next round of studies continue to show safety, tolerance and greater promise of efficacy remains to be seen - that's always a primary risk in clinical development companies. Like its oral insulin product, reformulation may be necessary though that posed no problem for them in the past. Typical of small cap firms, Oramed may lack steady newsflow and low liquidity could hold investors back. Making orally-delivered products for diabetics is complex and therefore carries another significant risk.

Pharma majors have made promises and not delivered; worse, put diabetics at health risk. Even Novo's oral GLP-1 showed best efficacy at higher doses with increasingly bad side effects versus Novo's injectable GLP-1. If ORMD-0901 is approved, it will sell into a market expected to reach $7.3 billion by 2020. If Novo gets to market first, all the better for Oramed because groundwork for acceptance of oral GLP-1 will be laid. Take-away point: Type 2s want to wave goodbye to needles, injectors, inhalers and pumps. Everyone knows how to swallow a pill.

Oramed stands out as the potential leader in oral GLP-1. Its top-notch research and management team, I believe, will prevail in the company's quest to improve living conditions for diabetics. Clinical trials in its oral GLP-1 are progressing well, and effectiveness in lowering blood glucose without risky side effects is becoming a reality.

Disclosure: I am/we are 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.

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