October Issue and Emisphere Commentary
It’s only appropriate on the day we send out the October issue which covers the coming battle in the type 2 oral medication market, that Emisphere Technologies (NASDAQ:EMIS) released results of phase 2 study for the their oral insulin project. While Diabetic Investor agrees with Emisphere that insulin in a pill form has the potential to be a blockbuster product, there is little else we agree on.
While the company has not yet fully analyzed the data from this study it would be difficult to classify the results as encouraging. The study consisted of 71 patients, 35 taking the oral insulin, 36 taking a placebo. According to a press release issued by the company, “The four-arm study evaluated the safety and efficacy of low and high fixed doses of oral insulin tablets versus placebo patients with Type 2 Diabetes Mellitus on existing oral metformin monotherapy. Results showed that the total number of patients achieving a hemoglobin A1c (HbA1c) decrease more than 1.1% among the 35 patients dosed at the 10 mg QID dose of oral insulin was statistically significantly higher than the 36 placebo patients. A dose response was observed in Hba1c for the 10 mg QID and 5 mg QID doses of oral insulin versus placebo in patients enrolled with Hba1c values above 7.5% and being treated with 1,500 mg per day or more of metformin, however, these values did not reach statistical significance.”
First and foremost while a 1.1% decrease in A1c is ok, it could hardly be classified as great nor are the results better than existing therapies. Looking at the clinical data for Januvia™ the recently approved DPP4 from Merck (NYSE:MRK) and real life experience for Avandia from GlaxoSmithKline (NYSE:GSK) and Actos marketed by Lilly (NYSE:LLY) the results for Emisphere are sub-par. These existing therapies have shown much better A1c reduction when used alone or in combination with other oral medications.
Diabetic Investor also finds it disturbing that the company stated in their press release, “The study also demonstrated it was possible to deliver a fixed dose of insulin without the need to frequently monitor the patients’ blood glucose or to titrate the dose for any reason. Blood glucose was measured on a monthly basis.” It is important to note this study lasted just 90 days and while according to the company there were no significant differences in number of hypoglycemic events it is doubtful that the Food and Drug Administration (FDA) would allow further studies where glucose monitoring is done just once a month. (Perhaps this is why the company did not conduct this study in the US instead conducting this study in India.) Hypoglycemia can be serious side effect of insulin therapy which is one reason why physicians recommend patients using insulin check their glucose levels at least four times each day.
During the call today the company implied they are very close to signing a deal with a major pharmaceutical company. As we point out in the October issue which is attached to this email, the market for diabetes drugs could reach nearly $30 billion by 2011. It is also well known that with the epidemic growth rate of diabetes and pre-diabetes that nearly every major pharma company is looking to get a slice of this market. While it is possible that a major pharma company will sign an agreement with Emisphere, once again proving the greater fool theory of investing, Diabetic Investor isn’t convinced.
Having followed Emisphere for quite some time this is not the first time we have heard the company mention that they are moments away from signing a deal. In fact we would go as far as stating that this is the one consistent theme in every conversation we’ve had with the company. Emisphere reminds Diabetic Investor of the little boy who cried wolf, only in this case it’s not sheep that will get slaughtered but investors in Emisphere.