Oramed: Oral Insulin For Type 2 Diabetes May Become A Reality (NASDAQ:ORMP)

Oramed Pharmaceuticals (NASDAQ:ORMP) is a great speculative biotech play to look into. The reason why I state that is because it is developing an oral insulin drug, known as ORMD-0801 for the treatment of patients with Type 2 Diabetes. The reason why I think it can provide traders/investors an opportunity is because it is gearing up to report results from its phase 3 study using this drug for this patient population in January of 2023. This will be results from a late-stage study known as ORA-D-013-1. It did present preliminary results from the use of ORMD-0801 for the treatment of patients with non-alcoholic steatohepatitis (NASH) about a week ago. However, the primary endpoint was just looking at safety. The secondary endpoint of liver fat reduction at 12 weeks was not revealed. Just that there was a positive trend in favor of ORMD-0801. It remains to be seen if this NASH indication can be moved forward, but regardless the entire future of this biotech hinges on the phase 3 study using ORMD-0801 for the treatment of patients with Type 2 Diabetes. Even then, it does have a backup clinical candidate in the pipeline known as ORMD-0901 which is an oral GLP-1 analog. There are many other biotechs though who are targeting GLP-1, so whether or not this drug eventually shatters the competition remains to be seen. Still, it is nice to see that this biotech it at least working on another drug to target Type 2 diabetes. There is a final opportunity in developing an oral virus like particle (VLP) Covid-19 vaccine known as Oravax. Data is supposed to be out in Q3 of 2022 and then again Q4 of 2022. While not guaranteed for success, it is nice to see another shot on goal in the pipeline. However, the broader strategy here is to apply oral vaccine technology towards other indications that would typically require a vaccine. If somewhat successful with Covid-19, then it’s possible to explore such other vaccine indications.

Oral Insulin For Type 2 Diabetes Might Become A Reality

The first program to go over involves the use of ORMD-0801 for the treatment of patients with Type 2 Diabetes. Type 2 Diabetes occurs as when the body is unable to use insulin properly to control sugar in the bloodstream. This is a larger market opportunity for sure. The reason why I state that is because T2D occurs in 95% of people with diabetes. Some symptoms of Type 2 Diabetes are:

• Blurry vision
• Fatigue
• Extreme thirst
• Frequent urination

As I noted before, this is a very large market opportunity. It is expected that the global market opportunity could double to $58.7 billion by 2025. This is a very good opportunity for Oramed Pharma.

In order for Oramed to eventually obtain FDA approval for ORMD-0801 for the treatment of patients with T2D, it has to succeed in one or both of the two ongoing phase 3 studies it has. The first phase 3 study which is currently ongoing is known as ORA-D-013-1. The goal for this trial was to enroll at least 675 patients, but happy to say that they were able to go over targeted enrollment to 710 patients. The primary endpoint of this study is improvement of glycemic control as assessed by A1c over a 26 week period. The secondary endpoint of this late-stage study is a change from baseline in fasting plasma glucose at 26 weeks. As far as a catalyst goes for this program, it is expected that topline results from the phase 3 ORA-D-013-1 study using ORMD-0801 for the treatment of patients with T2D, will be released by January of 2023. First and foremost, the biotech must meet the primary endpoint to succeed for this particular study. Of course, it may also have to do well in the 2nd phase 3 trial I will talk about below. However, should the drug do well in both studies and receive FDA approval, then it will have a few competitive advantages. One competitive advantage being that the drug is given orally instead of as an injection which is a huge improvement to quality of life. It just makes sense, patients would much rather take a drug orally instead of being injected. Secondly, the fact that it is given orally may give an advantage in terms of efficacy. That’s because the drug starts to work even before reaching the patient’s bloodstream. Lastly, the use of ORMD-0801 for T2D may have an advantage in terms of safety risks. Injectable insulin currently available on the market may cause weight gain and hypoglycemia (lower blood sugar range away from normal). Hopefully Oramed Pharma is successful, because it holds the potential to have the first FDA approved oral insulin drug. It would be huge, because the company already sees that an oral insulin drug would do well from a survey that was done. Such an IQVIA market survey showed that about 76% of physicians would likely prescribe oral insulin instead of injections.

In order to really assess whether or not ORMD-0801 is capable of helping patients with T2D, it has an ongoing second phase 3 study in which it is advancing, known as ORA-D-013-2. This trial is expected to enroll up to a total of 450 Type 2 Diabetes patients. These are patients who don’t receive an adequate glycemic control by diet only or diet and metformin monotherapy. This late-stage study is a double-blind trial that intends to randomize patients 1:1 into two specific cohorts:

• One cohort of patients receiving 8 mg ORMD-0801 at night
• Another cohort of patients receiving once placebo drug at night

The primary endpoint here is no different than the primary endpoint for the first phase 3 ORA-D-013-1 study noted above. That is, the efficacy of ORMD-0801 will be compared to placebo in terms of improving glycemic control as assessed by A1c over a 26 week treatment period. The secondary endpoint will be the comparing of ORMD-0801 to placebo in maintaining glycemic control over a 52-week treatment period. I will state that this program could be a bit of a wait. The main topline data in January of 2023 will be crucial of course to see if ORMD-0801 is successful in treating patients with T2D. The problem is that this second phase 3 study will take a big longer. Looking at clinicaltrials site the estimated primary completion date for it is not until at least April of 2023. This means that data from this particular study may not be available until the 2nd half of 2023.

Additional Shots On Goal

As I indicated above, Oramed is also exploring the use of oral drug ORMD-0801 for the treatment of patients with NASH. Oramed did report preliminary results from the phase 2 study. However, I believe that its future with respect to this indication remains to be seen. The reason why I state that is because of course the safety was reported to be good, the problem is that there was no mention of what the actual percentage of liver fat reduction was. Measurements such as MRI PDFF(%) by MRI, steatosis and fibrosis measured by FibroScan, lipids and HbA1c all showed clinically meaningful trends in favor of ORMD-0801. To be fair, the secondary endpoint was made to assess efficacy in reducing liver fat content in patients with NASH and T2D in a non-statistically significant manner. I believe there is more proof of concept to be done here, therefore, if it does advance forward it would be a great bonus for the pipeline. I would have liked to at least seen some numbers over the 12-week period.

While Oramed does have the two ongoing phase 3 studies using ORMD-0801 for the treatment of patients with Type 2 Diabetes, it is not leaving this drug as the only chance of moving a candidate forward for this indication. Having said that, it is pushing forward with a GLP-1 analog for Type 2 Diabetes. There, however, are two specific issues to be aware of though. The first issue being that this drug, known as ORMD-0901, is only being tested in a phase 1 for starters. Secondly, there are a host of competitors who are also developing their very own oral GLP-1 drug. I just wrote an article on Pfizer (PFE) discussing that the big pharma is gearing towards presenting data for its own oral small molecule GLP-1 drug for diabetes. The main premise is that it intends to hold an analyst and investor webcast presentation of oral GLP-1 data at the European Association for the Study of Diabetes (EASD) 2022. This data is going to presented on Wednesday, September 21, 2022 at 4:30 p.m. EDT. There are many other companies with GLP-1 agonists who currently have a portion of the market. Such companies are Novo Nordisk (NVO), Eli Lilly (LLY), AstraZeneca (AZN) and Sanofi (SNY).

Another opportunity lies with respect to Oramed’s use of an oral virus-like particle (VLP) Covid-19 vaccine, which is being explored in South Africa. There are two cohorts, cohort A and Cohort B, with 12 patients in each of them. Dosing in Cohort A has been completed and results are expected during Q3 of 2022. Thereafter, there is an intention for the company to also share results from Cohort B in Q4 of 2022. Hopefully it can at least get something going in targeting Covid-19, but there is something much deeper to be resolved here. If Oravax (oral vaccine) can be successful in Covid-19, then it may be possible to go after many other vaccine indications. Oramed has stated that the vaccine market is projected to reach $125 billion by 2028. In other words, Oravax for Covid-19 would act as a proof of concept, so that it could advance it towards other indications.

Financials

According to the 10-Q SEC Filing, Oramed pharmaceuticals had $29,892,000 available cash, $122,604,000 of short-term and long-term bank deposits and $7,309,000 of marketable securities. The reason for the amount of cash on hand that it has, is because of two financial transactions that were done back in 2021. The first financial transaction involved an agreement made in September of 2021 with Cantor Equity Distribution Agreement, with Cantor Fitzgerald & Co., in which Oramed from time to time can issue and sell shares of its common stock at an aggregate offering price of up to $100,000,000. As of August 10, 2022 it had sold and issued 1,061,363 shares of stock for net proceeds of $17,233,000. This means should it need additional cash in the coming months it could tap into this transaction if necessary. Then, in November of 2021 it was able to develop a securities purchase agreement with several institutional and accredited investors in a registered direct offering of 2,000,000 shares of its common stock at the Purchasers offering price of $25 per share. The net proceeds from doing this transaction, after deducting fees, was $46,375,000. Oramed believes that it has enough cash to fund its operations for at least the next 12 months. My guess is that it will intend to raise cash soon. My estimate would be that it would raise additional cash by early 2023. However, it could also choose to raise cash if it does release positive clinical data soon. For instance, if Oravax is successful in the Covid-19 cohorts causing the stock to trade higher, then it wouldn’t hesitate to raise cash immediately. It may even do so if the phase 3 study using ORMD-0801 for Type 2 Diabetes is successful. The bottom-line is that a cash raise will only be done early if it achieves positive results from one of the ongoing studies.

Risks To Business

Even though there is great opportunity for Oramed Pharmaceuticals to succeed in advancing a few products in its pipeline, there are several risk factors that traders/investors must be aware of. The biggest risk of all would be the set of results to be released from the first phase 3 study known as ORA-D-013-1, which is using ORMD-0801 for the treatment of patients with Type 2 Diabetes. There is no assurance that these results, to be readout in January of 2023, will meet the intended efficacy criteria. On the flip side, there is a second phase 3 study using ORMD-0801 for this patient population, but it is not likely going to be finished until the 2nd half of 2023 at the earliest. A second risk would be with respect to the NASH program. I would have liked to seen what percentage of liver fat reduction was achieved at 12-weeks. Based on that, I believe what will drive this biotech forward will likely be its oral insulin drug ORMD-0801 for Type 2 Diabetes. It’s possible that this drug may do well in NASH, but I would like to see more proof of concept data before saying it is effective for this specific indication. Another risk is the data readouts expected in Q3 and Q4 of 2022 for Cohort A and Cohort B respectively for use of Oravax for Covid-19. While I believe this catalyst could be good if positive, it could also act as a huge negative towards the stock if not successful.

Conclusion

The final conclusion is that Oramed Pharmaceuticals is a great speculative biotech play to look into. I think it has a great shot at success in developing its oral insulin drug, ORMD-0801, for Type 2 Diabetes. If one or both of the ongoing late-stage studies with this drug for this indication are successful, then it would drastically change the diabetes treatment market landscape. That’s because it would give patients an oral option, instead of having to receive injections. Other candidates in the pipeline like Oravax for Covid-19 and oral GLP-1 ORMD-0901 for Type 2 Diabetes provide additional shots on goal. Again, I’m hoping that ORMD-0801 can continue on for the NASH indication, but more data is needed to see if it actually helps with respect to this patient population. With the potential to change the diabetes treatment landscape, plus advance additional shots on goal with a few other indications, these are the reasons why I believe that Oramed Pharmaceuticals is a great speculative biotech play to look into.