Oramed receives $5 million charity from Zhongheng Group?

Oramed Pharmaceuticals (NASDAQ: ORMP) has received $ 5 million investment from Wuzhou Pharmaceutical, a subsidiary of Zhongheng Group (中恒集团). Zhongheng purchased 696,378 restricted shares of common stock for $7.18 per share.

Israel’s Oramed is a biotech company focused on oral delivery solutions for drugs currently delivered via injection. The company is developing an oral insulin capsule (ORMD-0801) and an oral exenatide capsule (ORMD-0901).

The concept of oral insulin has been proposed for several decades. However, it is extremely difficult to make it a reality because insulin is destroyed by enzymes in the digestive system.

Oramed’s Protein Oral Delivery technology platform combined a pH sensitive capsule with protease inhibitors and absorption enhancers (e.g., SNAC, SNAD). The protease inhibitors protect protein (e.g., insulin) from degradation by proteases once capsule degrades in the small intestine.

Here are the ingredients of ORMD-0801 according to the patent US2011142800: insulin, SNAC (N-(8-[2- hydroxybenzoyl]amino)caprylate), EDTA, Aprotinin, soybean trypsin inhibitor, omega-3 fatty acid. These are all common materials without intellectual property.

Oramed is racing Novo Nordisk to develop the world’s first oral insulin. In 2008, Novo Nordisk partnered with Merrion Pharmaceuticals to develop oral insulin based on Merrion’s GIPET technology which uses patented absorption enhancers to activate micelle formation, increasing absorption.

Novo Nordisk has successfully completed a single dose Phase I trial with oral insulin NN1956 and plan to initiate the Phase IIa trial in 2015H1, while NN1952, NN1954, and NN1956 have been discontinued for reasons unknown.

Currently, Oramed is ahead of Novo Nordisk, which has yet to start Phase IIa trial. (In fact, Novo’s Phase I data from 84 patients are more trustworthy than Oramed’s Phase IIa data from 20 patients.) The potential of ORMD-0801 appears to be undoubtable. However, many investors have ignored the fact that ORMD-0801 is not a substitute for insulin injections, but rather a new earlier treatment option.

As far as I know, only the most difficult-to-control patients with type 2 diabetes are recommended with insulin therapy. Although insulin has the potential of achieving the most effective reductions in blood glucose, early insulin therapy seems to be more cost than benefit[1]. The test dose for ORMD-0801 is 16 mg/day (≈ 400 IU), which is 20 to 40-fold that of Insulin glargine or NPH insulin.

Adam Feuerstein criticized Oramed for “completely worthless” Phase IIa data, which was exaggerated to a certain extent due to the negligence on the levels of adverse events. While the primary objective of the trail is safety and tolerability, ORMD-0801 showed trends to reduce blood glucose compared to placebo.

Here are the Phase IIa data (8+8 mg ORMD-0801 vs placebo, n=10 vs 10):

Mean nighttime glucose concentrations (mg/dl): 139.73 vs 165.85 (-26.12 mg/dl)

Mean daytime glucose concentrations (mg/dl): 152.55 vs 175.99 (-23.44 mg/dl)

Mean fasting glucose concentrations (mg/dl): NA (-25.10 mg/dl)

Morning fasting serum insulin: Day 2: 11.93 vs 9.01; Day 9: 15.70 vs 9.85

Morning fasting C-peptide: Day 2: 1.66 vs 0.94; Day 9: 1.69 vs 0.85

Oramed initially designed an 8+16 mg dose group which showed less effect versus the 8+8 mg group. The company attributed the abnormal phenomenon to the manufacturing problem which resulted in diminished and inconsistent release of insulin.

Although the results from Phase IIa trail were promising, the sample size was too small, and the treatment period was too short. Risks still abound for Oramed in later trials, especially for efficacy. Oramed planned to enroll 200 patients with type 2 diabetes in the Phase IIb trial.

Oramed has intended to partner with Big Pharma for a long time. Unfortunately, the company is still single so far. Novo’s CEO has stated publicly that they have no interest in acquiring Oramed, because they doubt Oramed’s methodology[2]. It is common to see Big Pharma enrolling thousands of patients in late stage trials for type 2 diabetes. However, Oramed can’t do that.

Another concern is the bad management of Oramed. No one on the management team has worked at a successful start-up. The Director of R&D (Ehud Arbit), a neurosurgeon, was dismissed by Sloan Kettering for 2 cases of operating on the wrong side of a patient’s brain. In April, the Chief Scientific Officer (more specifically, CEO’s mom)  sold all of her shares in Oramed.

[1] Diabetes Care. 2005, 28(1), 222-224.

[2] Forrest Wilson. Does Oramed Pharmaceuticals Pass The Smell Test?

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