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Oramed Pharmaceuticals (NASDAQ:ORMP) is a great speculative biotech play to look into. The reason why is because it was able to achieve the primary endpoint in a phase 2 study, using its own oral insulin drug ORMD-0801, to reduce liver fat content in type 2 diabetes patients with non-alcoholic steatohepatitis (NASH). Where the bonus comes into play is that this very same oral insulin drug is being explored in an ongoing phase 3 study, for the treatment of patients with Type 2 Diabetes. The point here is that the positive NASH data just obtained a few months ago isn’t the only positive thing it has going for itself. It had achieved proof of concept in a phase 2 study using ORMD-0801 for the treatment of patients with Type 2 diabetes. It is currently exploring the use of this drug in this patient population in an ongoing phase 3 study and results from it are anticipated in January of 2023. If the primary endpoint is met from this late-stage study, then it will be able to move on and file a New Drug Application (NDA) to the FDA of ORMD-0801 for the treatment of patients with Type 2 Diabetes. Even if this phase 3 study doesn’t pan out, it is good to see that it has already established proof of concept in using ORMD-0801 for type 2 diabetes patients with NASH. Lastly, it is in the process of advancing its oral GLP-1 candidate ORMD-0901 for Type 2 Diabetes also.
ORMD-0801 For The Treatment Of Patients With NASH
As I stated above, Oramed Pharmaceuticals announced positive results from a phase 2 study using ORMD-0801 for the treatment of Type 2 Diabetes patients with NASH. This was a phase 2 double-blind randomized placebo-controlled study, which recruited a total of 32 patients with NASH and T2D. The breakdown of the population of each patient was as follows:
- 11 patients were given placebo
- 21 patients were given 8 mg of ORMD-0801
These patients took these treatments over a 12-week period. The primary endpoint referred to safety and that was met. The key to show was there was no difference in adverse events between ORMD-0801 and placebo. As far as the secondary objectives, they were all exploratory. However, what has been shown thus far is pretty good. Consider that for the 11 patients who took placebo, they achieved an adjusted mean decrease of 0.96%. On the other hand, those treated with ORMD-0801 achieved an adjusted mean decrease of 6%. More testing is needed with respect to NASH and T2D patients, but this program is on the right track.
Financials
According to the 10-Q SEC filing, Oramed had $160 million in cash and investments as of September 30, 2022. The reason for the large amount of cash on hand is because of cash raising activities over the last few years. Back in November of 2021, it entered into a securities purchase agreement with several institutional and accredited investors, in which Oramed agreed to sell an aggregate of 2,000,000 shares of its common stock for an offering price of $25 per share. The approximate net proceeds raised from this offering were $46,375,000. It believes that it has enough cash to fund its operations for at least the next 12 months. I don’t believe it will wait until then to raise cash, as such I expect a cash raise to happen at least in early 2023. What remains to be seen is if it chooses to raise funds before the release of the data from the ongoing phase 3 study using ORMD-0801 for T2D, or if it will do so afterwards. If the results are positive from this late-stage study, that is the primary endpoint is met, then I expect Oramed to raise cash immediately.
Risks To Business
There are several risks that investors should be aware of before investing in this biotech. The first risk to consider would be the release of the results from the ongoing phase 3 study, which is using ORMD-0801 for T2D. There is no guarantee that the primary endpoint will be met. Not only that, a failure in this late-stage trial would mean a huge setback for it. The reason why is because then it would have to hope that ORMD-0801 can still be used for T2D patients with NASH. Speaking of which, this phase 2 study for T2D patients with NASH only dealt with establishing proof of concept of liver fat reduction and other liver biomarkers. It now has to advance this program to a phase 2b study, in which it will test out the use of ORMD-0801 for this patient population with more robust endpoints for NASH. Liver fat reduction is only half the battle for a NASH drug. The required endpoints for approval of a NASH drug would be:
- At least one stage of fibrosis improvement with no worsening of NASH
- Resolution of NASH with no worsening of liver fibrosis
That means the next step would be for Oramed to meet with the FDA and then flesh out a phase 2b study, which will likely include these endpoints to move this program forward.
Conclusion
The final conclusion is that Oramed Pharmaceuticals is a great speculative biotech play to look into. The reason why I state that is because it is already in the process of testing out its oral insulin drug ORMD-0801 for the treatment of patients with Type 2 Diabetes. Not only is it huge because of the potential for this large market opportunity, but also since it will be the very first oral insulin drug. It has the ability to move forward in using this drug for Type 2 Diabetes patients with NASH also, which expands upon the potential market it can go after. In addition, it has an oral GLP-1 drug it is developing as a backup candidate for the treatment of patients with T2D. The downside is that this program is only in phase 1 clinical testing. With proof of concept established in using oral insulin for T2D, plus the ability to expand it into the T2D with NASH patient population, these are the reasons why it is a great speculative biotech play to look into.
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