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Matt Winkler
Matt Winkler
Articles (113) 

Something Strange Is Going On With Oral Insulin

Novo Nordisk recently abandoned program despite promising results

Something is rotten in the state of Denmark.

Shakespearean quotes are often limited in their dramatic effect, but in this case the line from "Hamlet" can be taken a bit more literally. Nearly two months month ago on the day before Halloween, Danish diabetes giant Novo Nordisk A/S (NYSE:NVO) (OCSE:NOVO B) unexpectedly called it quits on what was becoming a more and more promising oral insulin formulation.

The candidate, dubbed NN1953, had encouraging results in a Phase IIa trial. This was reported back on Aug. 5 in Novo’s investor conference call. Aside from a single paragraph of commentary, nothing more was said on the subject – that is, until the whole thing was suddenly canceled.

Phase 2a trial with oral insulin OI338GT (NN1953) completed during the first half of 2016, Novo Nordisk completed a small eight-week phase 2a trial with the once-daily oral insulin analogue OI338GT compared with subcutaneous insulin glargine U100 in 50 insulin-naïve adults with type 2 diabetes. The trial investigated the safety, tolerability as well as pharmacokinetic and pharmacodynamics profiles of OI338GT. The results were generally encouraging with a decrease in fasting plasma glucose of approximately 2.5 mmol/L for both treatment arms, and OI338GT generally appeared safe and well tolerated.

Novo Nordisk is currently assessing the therapeutic use and investment needs of the oral insulin program, and an update will be provided in the second half of 2016.

Seems simple enough. Oral insulin results saw an equivalent decrease in fasting plasma glucose to subcutaneous insulin glargine, the Sanofi SA (NASDAQ:SNY) No. 1 bestseller. Now, the prudence of having a subdued tone when it comes to potential megablockbusters at the end of small Phase II trials is understandable. You don’t want to start levitating expectations too highly or generating more excitement than you can absorb.

But it’s one thing to exercise caution. It’s another to exercise a near complete blackout.

The paragraph above is essentially all Novo ever said about NN1953 publicly, and now it appears it is the only thing it will ever say about NN1953. The program is now dead. No Phase III trial will be conducted. Not even a Phase IIb to see if indeed results could be replicated in a larger patient sampling. Strange, considering results were generally encouraging, in Novo’s words.

But it gets stranger.

Oramed is the last oral insulin standing

Novo’s rather abrupt departure from the oral insulin scene has left Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) shareholders caught between confused excitement and mild panic. This is also understandable. On the one hand, Novo’s exit gives Oramed easier access to diabetes markets if its own oral insulin candidate ORMD-0801 succeeds. On the other hand, if Novo decided to ax its oral insulin program without even attempting a Phase IIb, doesn’t that hint to the entire venture of oral insulin being doomed?

Oramed shares dove over 10% on the news but have been holding in a steady range since then. There are two questions that need to be answered to determine where Oramed goes from here. The first is, why did Novo shutter NN1953? The second is, can Oramed’s own ORMD-0801 oral insulin succeed in its own right?

If Novo abandoned NN1953 because it thought the program was a failure, then the implication for Oramed’s oral insulin program would be quite negative. If, however, there is an ulterior motive here, then Novo may have just abandoned a multibillion-dollar market to Oramed, assuming ORMD-0801 succeeds and gets approved. But why would Novo do that?

Stranger than fiction

The fact that no further trials will be conducted may be strange, but the origins of NN1953 and how it ended up in Novo gives a clue. NN1953 is the result of deals with two separate, small drug delivery companies. One is Emisphere Technologies Inc. (EMIS), and the other is Merrion Pharmaceuticals.

The deal with Merrion came first, in November 2008, and involved an absorption technology called GIPET for Gastrointestinal Permeation Enhancement Technology. The original deal with Emisphere was inked two years later in December 2010 for a different absorption technology called SNAC. Novo was pursuing oral insulin formulations with both of these technologies although the Phase IIa trial that was conducted was based on Merrion’s GIPET.

The timing of the deals with both companies is strange as is the incredibly low price that Novo was able to command for these technologies with a potential to unlock the Holy Grail of the diabetes market. Emisphere got just $5 million on signing with Novo for SNAC, and Merrion got only $13 million for GIPET when the latter folded into a private health care investment fund in late 2015. The initial deal with Merrion in November 2008 occurred in the thick of the 2008 financial crisis when the entire financial sector was in the midst of a major panic, and the VIX was at an all-time high. The following deal with Emisphere in December 2010 was timed perfectly with Emisphere’s imminent bankruptcy. Here’s Emisphere’s 10-Q from just before December 2010, filed on Nov. 12 of that year:

We anticipate that we will continue to generate significant losses from operations for the foreseeable future and that our business will require substantial additional investment that we have not yet secured. As such, we anticipate that our existing cash resources will enable us to continue operations through approximately December 2010 or earlier if unforeseen events arise that negatively affect our liquidity.

Emisphere was at the end of its rope and had to cave to any demands in order to survive. Yes, this is capitalism and there is no guilt in swooping up assets on the cheap, but it goes deeper. Merrion had to fold five years later in December 2015 due to a missed debt payment of $5 million. It sold the rights to GIPET to Novo for just $3 million in cash up front in order to pay that debt.

This was seven years after the initial deal in 2008 and just months before positive Phase IIa results were reported. It took seven years for Novo Nordisk to complete a small Phase IIa trial?

Further, Emisphere is still in serious financial straits and was forced to give Novo exclusive rights to 3 indications for its SNAC technology. That means no other company will ever be allowed to develop this technology if Novo decides to bury it. In order to get these exclusive rights, Novo had to wait for Emisphere to drain its resources and basically be desperate.

Now, Novo owns GIPET outright; Merrion has folded entirely, Emisphere is still hanging by a thread but has lost the rights to license SNAC out to anyone save for one nonexclusive, undisclosed, indication. Why has it taken so long for Novo to develop these technologies after the initial deals, themselves timed perfectly for times of desperation from their development partners?

It just doesn’t look like there is any enthusiasm on Novo’s part to actually work hard on these promising technologies and make them into something that could conceivably be blockbuster. If so, then why take so long, and why, after Phase IIa success providing hard evidence for the first time ever that oral insulin can be just as effective as subcutaneous, scrap the whole project without a second thought?

Oral GLP-1 continues

Here’s another oddity. While oral insulin has been scrapped, Novo’s oral GLP-1 program continues. Here Novo is putting in some serious investment. Novo has invested $2 billion in manufacturing facilities to scale up its SNAC formulation of the pancreatic beta cell activating drug. For this reformulation, Novo has proceeded to Phase III on the back of promising Phase II results. But why ditch oral insulin after a positive Phase II if you’re going forward with oral GLP-1 after a positive Phase II?

It looks like it has to do with possible effects on future markets. Diabetes is a progressive disease, and the longer one has it, the more medications one has to take, the more money goes to big diabetes corporations like Novo Nordisk. It has been shown that diabetics who start insulin earlier reduce the morbidities of the disease as it progresses, therefore reducing future dependence on higher and higher doses of diabetes medications.

GLP-1 receptor agonists, however, only serve to activate pancreatic beta cells that are still functional. Eventually, these die off and insulin is required. GLP-1 drugs don’t “lighten the load” on the pancreatic cells. They activate them. Therefore, an oral GLP-1, which would encourage earlier dosing over injectables, is less likely to prevent insulin itself from eventually, at some point, becoming a necessity.

By contrast, early insulin treatment, which would be much easier with an oral formulation, would directly lighten the load on the pancreas if introduced early enough, potentially allowing patients to be less reliant on diabetes medications as they get older. Insulin introduced directly allows the beta cells to rest whereas GLP-1 agonists encourage them to work, eventually burning them out.

A possible answer

Here are possible answers to all these questions, given the facts. Why did Novo kill its oral insulin project despite positive results? Possible answer: Because oral insulin would encourage early insulin adoption even among prediabetics, which would lower the demand for more diabetes medications as the disease worsens. This is how Novo makes its money. Then why invest $2 billion in oral GLP-1 manufacturing and move it to Phase III? Because early GLP-1 may have less of a chance of decreasing demand for insulin down the line.

It’s possible that Novo Nordisk never had any intention of clinically developing oral insulin beyond a small Phase IIa. If results were positive, they may have intended to bury it there from the outset. But they needed to see if it would even work first and get their hands on the tech with exclusivity first in case it did.

Results indicate that it does, at least in small trials. But Novo has exclusive rights now, thanks to its seven years of dilly-dallying with Merrion’s GIPET technology, which allowed it to acquire the whole thing outright as Merrion struggled to make a $5 million debt repayment.

Bristol-Myers did the same thing recently

In fact, this very thing happened earlier this year in May, when a partnership between Bristol-Myers Squibb Co. (NYSE:BMY) and India’s Biocon (NSE:BIOCON) was scrapped right after favorable Phase I results that were similarly only tersely reported. It took 10 years since the signing of the original partnership in 2007 to finish Phase I. Following the publication of those results, Bristol-Myers inexplicably pulled the rug out from under the deal, leaving Biocon holding the bag. Biocon was ready to proceed, but its partner decided against it, giving little to no explanation as to why.

According to Biocon, results from its oral insulin trial showed a clear linear relationship between the dose of administered insulin tregopil (Biocon’s product) and the decrease in postprandial glucose excursion rates, but no further trials were conducted.

Why Bristol-Myers would pull out of such a deal with no explanation is even more puzzling, as it divested from its diabetes business back in 2014, selling it to AstraZeneca PLC (NYSE:AZN). This is perhaps a question for another day. It establishes a repeating pattern though of development stopping despite good trial results.

As for Oramed, it needs to keep in mind that Big Diabetes probably does not want to see oral insulin come to market and shouldn’t partner with anyone with a conflict of interest on the endeavor. Merrion is the best case in point here.

As for Oramed’s shareholders, Novo’s Phase IIa results show that oral insulin is indeed possible, and the good results are paradoxically more likely to be the exact reason why Novo axed the program in the first place. Oramed’s oral insulin results themselves being successful, along with recent results using the same technology for GLP-1, now put Oramed in the position of the last man standing. Expect Novo Nordisk to put up a fight as ORMD-0801 progresses down the pipeline, and if oral insulin does make it to market, Novo may then decide to revive its old program.

Judging by the insider buys since November, Oramed’s staff certainly thinks it is possible.

Disclosure: No positions.

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