Novo Nordisk Vs. Oramed - A Second Look At The Battle For Oral Insulin

| About: Novo Nordisk (NVO)
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Summary

Both Novo Nordisk and Oramed Pharmaceuticals are developing an oral insulin formulation. Both have successfully completed Phase II trials recently.

While Novo's formulation was shown to lower blood glucose compared to subcutaneous insulin, Oramed's was shown to maintain blood sugar levels compared to placebo.

While it may seem that Novo's formulation is more effective, there are a number of red flags with Novo's formulation.

Oramed's, for various reasons, may show a more favorable side effect profile, as well as obviate hypoglycemia issues.

On August 18th, PLM Investments published a detailed and informative article comparing Novo Nordisk's (NYSE:NVO) oral insulin formulation NN1953 with that of Oramed Pharmaceuticals' (NASDAQ:ORMP) ORMD-0801. Both have recently reported small-scale Phase II successes, with Oramed slightly ahead at Phase IIB and Novo at Phase IIA. Oramed's trial included 188 patients, with Novo's trialing 50. Oramed's was compared to placebo, while Novo's was compared to insulin glargine.

While the author's article was thorough, the comparison between the two oral insulin products was a bit apples to oranges, which the author admitted in the article itself. That being said, the main difference pointed out in the article was that Novo's product helped to significantly lower fasting glucose levels by an average of 45mg/dL, similar to insulin glargine. This is indeed an impressive feat, though strangely Novo has not brought much attention to it other than to say it was generally encouraging. Oramed's product, on the other hand, only served to keep glucose levels stable throughout the day. In the words of Chief Medical Officer Dr. Roy Eldor,

"In the placebo arm 24-hour glucose increased from 173 to 187 mg/dL while in the pooled active treatment arm, the 24-hour glucose remained at baseline of 168 mg/dL throughout the Study."

ORMD-0801 did not significantly lower fasting glucose levels, and this is true. While this can be seen as a negative, Oramed has never claimed to be seeking a replacement to subcutaneous insulin therapy for diabetics who need to consistently lower their blood sugar levels. It only claims to be after an early diabetic therapy that delays the onset of severe diabetes. In the words of Oramed (emphasis mine),

Oramed's oral insulin (ORMD-0801) has the potential to create a new paradigm in the treatment of diabetes by oral delivery of insulin at an earlier stage of treatment, potentially slowing disease progression and delaying or even eliminating late-stage complications.

This is also mentioned in the author's article, and I will dwell on that issue more here.

On the one hand, Oramed's goals could be seen as a cop out. If Oramed's oral formulation technology is not good enough to deliver enough insulin through the small intestine in order to actually lower blood sugar, then Oramed's trial may simply be seen as a salvage operation to prove that it keeps blood sugar from rising. That at least proves something.

But the salvage operation perspective I believe is incorrect. Though management will never be frank about this first hand while trials are ongoing for obvious reasons, I believe these results were Oramed's intention from the get go. First, there is the long-term side effect issue. Oral insulin delivery, for both Novo and Oramed, requires intestinal permeability. The absorption enhancers for both of these products make the gaps between cells in the intestinal wall become larger, so that insulin can pass through the portal vein and into the liver.

As the author points out, Novo's technology called GIPET for Gastrointestinal Permeation Enhancement Technology, targets the duodenum, the smallest section of the small intestine averaging 26 centimeters in length. The technology seems to work, which means that intestinal permeability was increased for those 26 centimeters for a long enough time for insulin to pass through and lower blood sugar just as effectively as insulin by injection, judging by evidence we have so far.

That's the positive. The potential negative to these results is what happens long term when the gaps between cells are widened every day in such a small and concentrated section of the intestinal tract? The answer is we don't know yet, because no long-term studies have been conducted.

A 2016 study on intestinal permeability enhancers (PES) for the UCD Conway Institute at Dublin, Ireland, had this to say in conclusion:

It has (sic) well known that small intestinal epithelial damage is caused by many of the PEs in current oral peptide clinical trials and the extent of the damage seems to vary between them. For the majority, histological damage is temporary repairable and it is not unlike the stress the intestine undergoes on a day-to-day basis from food, alcohol, and a range of therapeutics including aspirin. It is still unknown however if chronic repeat dosing of such PEs in man could overcome the body's natural ability to repair or create conditions for allergies or autoimmune conditions. Since some of these PEs...are currently in advanced clinical trials, it is conceivable that several enhancer-based formulations will soon be on pharmacy shelves for selected highly potent oral peptides with a high therapeutic index. Post-marketing surveillance will decipher the true toxicological effects of repeat dosing of selected PEs in such high doses. A conservative approach would suggest that PE-containing formulations should not be prescribed for patients with inflammatory bowel disease, irritable bowel syndrome or coeliac disease.

Oramed's technology, cited in the above paper, is called POD, or Protein Oral Delivery. While it is proprietary, we do know that it targets the small intestine rather than the duodenum (see author's article linked above), which measures an average 6 meters. This is about 23 times the length of the duodenum alone, and probably means that the effect of the absorption enhancers in ORMD-0801 is much less concentrated.

There would also be more time for proteases in the small intestine to digest some of the insulin before it gets absorbed, even given the fact that POD contains protease inhibitors to slow this process down and allow more intestinal insulin absorption.

Why, then, target the entire small intestine rather than the duodenum, which would have a more concentrated effect, indeed as we have seen in these two Phase II trials so far? Though this is speculation, long-term side effects may be the answer. A concentrated effect on 26 centimeters of small intestine may end up causing long-term damage to that critical section, potentially making Novo's formulation impractical for long-term treatment, though there is no hard clinical evidence yet because these formulations are so new.

Oramed's more spread out targeting, though less concentrated, may actually be designed to hinder long-term side effects so they would be less of an issue in any upcoming Phase III trial.

Another advantage of maintaining blood sugar rather than lowering it significantly is that it does not bring up issues of hypoglycemic events post treatment, the most common problem associated with insulin therapy targeted to lower blood sugar. A medication that only keeps blood sugar steady cannot cause hypoglyemic episodes, which by definition only happens when blood sugar is too low.

The author also pointed out a red flag in Novo's formulation, namely that it acquired this technology for only $13 million (see page 29) and only $3 million upfront from Merrion Pharmaceuticals, a very low price tag for something potentially so valuable that it could theoretically replace subcutaneous insulin therapy judging by the numbers and their equivalence to insulin glargine so far.

$10 million of the $13 million was a milestone advance. Could the answer to such a low price tag lay in the uncertainty over the side effect profile? These are questions we do not know the answer to yet, and only a long Phase III trial will answer.

The other red flag, or more precisely yellow, is the lack of attention that Novo's formulation is getting, and that the company just doesn't seem to be pushing it all that much. It was barely mentioned in Novo's latest conference call, and when a caller wanted more information on it, it was downplayed. In response to the question, Chief Science Officer Mads Krogsgaard Thomsen had this to say:

And then, on the oral insulin, that's a very different story because do bear in mind that when we did oral semaglutide in February last year, we had several subsequent updates before management made the phase 3 go decision, and the things here are actually slightly more complicated because in absolute potency terms, you need a lot more insulin than you do of oral semaglutide which I believe is one of the most potent biological molecules in the realm of diabetes.

So, we have those considerations. We also have considerations as to the target product profile, how will this stack up against, for instance, oral GLP-1, which segment should we use it for, is it a way to get early insulinization and what would the target product profile be there versus, for instance, leader injectable insulin degludec and so on? So, a lot of considerations management will have in the time to come and then we'll get back to you in the second half.

This lack of enthusiasm could be explained away by the fact that Novo is a huge company that needs to focus on its best sellers rather than on some "pie-in-the-sky" diabetes holy grail in an early Phase IIA trial. However, one more red flag here is that Novo just discontinued (see transcript link above) another oral insulin formulation that employed the exact same GIPET technology for what it called portfolio considerations.

Conclusion

While it looks like Novo's formulation may be more effective in terms of lowering glucose levels on a level equivalent, or near so to subcutaneous insulin, Oramed's so far looks effective in maintaining steady blood glucose levels. This may not be enough to treat late stage diabetics, but it may be very helpful to prediabetics and early stage diabetics who may do much better with some of the load taken off the pancreas.

Though speculative, Oramed's product may end up with a less serious long-term side effect profile due to the much larger and less concentrated target area in the small intestine vs. the duodenum alone. Add in the fact that Novo has already discontinued one of its GIPET products, acquired for only $13M, and the answer as to which product will be successful (possibly both) and to what degree, is not as clear cut as respective Phase II results may suggest.

For investors, obviously, Oramed has a much higher potential reward with a market cap of only $100M, with a potential downside on a failed Phase III of 30-50% considering the other possibilities for its absorption technology.

Cash can sometimes be an issue with biotechs of Oramed's size, but Oramed is very well capitalized at this point with over $35M in liquid assets thanks to two recent milestone payments, and an average quarterly burn rate of about $2M this past year, translating to over 4 years of run room. Novo is the much more conservative choice.

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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.