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New Diabetes Drugs Gain Approval - Flozins Versus Oral Insulin
Sep. 14, 2014 2:15 PM ET | 10 comments | About: Oramed Pharmaceuticals Inc. (ORMP), Includes: JNJ, LLY, MNKD, NVO
Disclosure: The author is long ORMP. (More...)
Summary
Eli Lilly's newly-approved Jardiance for Type 2 diabetes, latest in the 'flozin' class, carries considerable side effects.
Oramed's insulin pill has no adverse events and is progressing in clinical studies.
Risks to investing in Oramed are typical of development-stage biotechs that include showing efficacy in larger trials.
Success for Oramed would position the company inside a huge global medical market.
Pharmaceutical companies are adept at rolling out new classes of drugs, despite potential harmful side effects, and Eli Lilly and Co. (NYSE:LLY) is no exception. Just recently, Lilly began selling Jardiance, a once-daily tablet for Type 2 diabetics, a 'flozin', with an onerous side effect profile that rivals medications like Bristol-Myers Squibb's (NYSE:BMY) anti-blood clot drug Plavix which has caused internal bleeding that results in vomiting coagulated blood. Medicine for diabetics, one of the largest populations of sick patients in the US, should look to more natural means for bringing insulin into the body. Oramed Pharmaceuticals, Inc. (NASDAQ:ORMP) offers a potential remedy and has been making good progress in clinical trials, as outlined below.
Flozins are not nice drugs. Side effects include dehydration, potential kidney or liver disease, and a host of genitourinary complications like vaginal discharge and yeast infection of the penis. Farxiga, a product of Bristol-Meyers Squibb and AstraZeneca PLC (NYSE:AZN) with approval earlier this year for Type 2 diabetes, went through 16 clinical trials with 9,400 subjects and tended to induce bladder cancer. Like Jardiance, the most common side effect was infections of the genitals. The FDA has ordered a whopping six post-approval studies for Farxiga and I'm waiting for the class action lawsuits to start.
Jardiance works by blocking the reabsorption of glucose in kidneys, allowing greater glucose excretion and thereby causing blood sugar levels to decrease. But surprisingly, Jardiance is contraindicated in patients over 65 that constitute nearly 26% of US diabetics. It is difficult to imagine why a multi-national drug firm would market a product that excludes a large part of users.
Johnson & Johnson (NYSE:JNJ) released its own flozin, Invokana that carries the typical list of side effects (excessive thirst, potential harm to organs involved in urination), but with an added distress: large, hive-like swellings on sex organs, plus nightmares and depression, leaving me to wonder which comes first. My contact at Novo Nordisk A/S (NYSE:NVO) feels Jardiance does not offer much over Invokana but may initially give Johnson & Johnson and other oral treatments a run for their money. My question is 'what is Big Pharma doing to diabetics?'
I believe Oramed's insulin pill will be superior to current and future offerings that depend on complex biochemical pathways as their method of action. Data from Phase IIa for Oramed's flagship product ORMD-0801 in Type 2 diabetics met endpoints of safety and physiologic effects on the body, with no hypoglycemic events and no serious side effects related to treatment. A larger multi-center Phase IIb is planned for later this year in addition to a pilot Phase IIa for Type 1 diabetes where the company, in August, reported its last patient completed treatment.
Oramed intends oral insulin to curb disease progression; by using ORMD-0801to reduce mealtime insulin doses fewer daily injections would be necessary, organs of the body would be subject to less externally-circulating insulin that cause harm, and patient quality of life would improve. Tighter regulation of blood sugar is possible by the drug's direct effect on glucose levels in the liver, more naturally imitating the release of insulin from the pancreas than do injectables. This is especially important in Type 1 diabetics who often experience wild swings in blood glucose where even rigorous insulin programs are not effective.
Lilly has not been entirely successful straying from its roots in creating one of the first human insulin analogs - Humalog - which remains a multi-billion dollar revenue generator. Development of more complicated diabetes medicines has not boded well for the company: Actos, approved in 1999 for Type 2s, had been under siege for years due to links to bladder cancer and banned in several countries outside of the US. Attempts by Lilly and partner Takeda Pharmaceutical Co. (TKPPY:OTC) to ward off big-money litigation recently failed. In late August both companies lost a bid to overturn a $9 billion punitive damage award for hiding cancer risks associated with the drug.
I have written much on MannKind Corp.'s (NASDAQ:MNKD) inhalable insulin product Afrezza and only mention here that potential safety concerns - lung cancer risk - have prompted the FDA to order post-marketing studies. There are issues related to the drug/device's marketability, most importantly whether general practitioners not entirely skilled in diabetes care can determine proper dosage levels for inhalable insulin to treat patients effectively. Endocrinologists, better trained, are expensive, but can our overburdened health care system support the ongoing use of specialist to prescribe Afrezza?
Shares of Oramed climbed earlier this year after reporting positive data in Type 1 diabetics that showed good responses in levels of blood glucose and insulin at different dosages of ORMD-0801, giving investors confidence of future efficacy in larger trials.
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The potential for gains has not abated; on the contrary, as the company moves forward in its clinical trials, I think more attention will be paid to the stock. Recently, Oramed was granted one of its key patents in Spain which has been recognized as the new Israel for innovative research in biotechnology. More than 3,000 companies in that country involve themselves in biotech research and development, specializing in small to mid-size firms, and have adopted the Israeli prototype for technological transformation that made Israel a model for start-ups that originated in the early 1990s.
Despite its promise, an investment in Oramed comes with risks. There is no history yet of taking treatments to market; enrollment in clinical trials may take longer than anticipated; late stage trials need to show efficacy and even then, after commercialization, physicians must accept the drug. The company had approximately $15 million in cash at the end of May but is efficient in containing costs. Still, going back to public or private markets could be challenging and will cause dilution, always a concern with current investors.
Regardless, Oramed's oral medications address a huge global market, estimated at $114.3 billion in 2016 in the US alone. Obesity is recognized by the American Medical Association as a disease, and obesity leads to diabetes, considered the seventh biggest cause of death in America. Ongoing diabetes research is yielding hazardous drugs, as evidenced by Lilly's newest offering. In contrast, Oramed's insulin pill, a medication that works more naturally with the body's chemistry, could change the future of diabetes care.
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