Wanting to believe

Wanting to believe

This morning Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO) and Roche all reported 2013 full year results but the biggest news in this wacky world of diabetes came from a small Israeli company Oramed Pharmaceuticals (NASDAQ:ORMP). Oramed is developing insulin that is delivered orally in the form of a pill and today announced results from a recently completed Phase 2a Clinical Trial.

According to a company issued press release:

“30 patients with type 2 diabetes took part in the trial in an in-patient setting for one week. Endpoints of safety as well as pharmacodynamic and pharmacokinetic effects were evaluated against a placebo control.”

The release also contains the following:

“We are extremely pleased with the results which give a solid validation for Oramed’s platform technology in general and our oral insulin program in particular,” stated Oramed CEO Nadav Kidron. “Following on the results from this type 2 diabetes study we are gearing up to start a multi-center Phase 2b study later this year. We are also excited about the potential of this drug for type 1 diabetes and plan to initiate a Phase 2a FDA study for this indication in the near term.”

Although the market has just opened already over 1 million shares of Oramed have changed hand which is over twice the average daily trading volume, with shares up over 2%.

Now Diabetic Investor does not wish to minimize this announcement but the fascination with Oramed is perfect example of what we like to call the wanting to believe syndrome that is so prevalent in the wacky world of diabetes. In theory any insulin that does not require the patient to inject should be a blockbuster drug. This is the same theory behind two very notable inhaled insulin’s Exubera, which turned out to be a $4 billion disaster for Pfizer (NYSE:PFE) and Afrezza which is turning out to be a disaster for MannKind (NASDAQ:MNKD) founder Al Mann.

This is also the same theory that has cost investors billions of wasted dollars in the pursuit of the Holy Grail of diabetes devices, a truly non-invasive glucose monitor. Just as everyone thinks more patients would adopt insulin therapy and be more compliant with this therapy if insulin could be taken orally, everyone thinks that if patients did not have to prick their fingers to perform a glucose test they would be test their glucose more frequently.

The wanting to believe syndrome is also driving the development of the artificial pancreases. Yes a true close loop insulin delivery system seems to be the answer to everyone’s prayers. While not a cure the proponents of this quest seem to believe that a true closed loop insulin delivery system will make life easier for the handful of Type 1 patients who can afford this luxury. And just like the quest for a non-injectable form of insulin and a non-invasive glucose monitor, the quest for a true closed loop insulin delivery system has seen millions invested with limited; some would say little, success.

Even with this record of consistently over-promising and under-delivering what none of the people inflicted with the wanting to believe syndrome actually consider what would happen should by some miracle their particular product actually made it all the way to market. Let’s say for example that Oramed and their insulin pill goes all the way; that the drug which is still in very early stages continues to progress through the lengthy and very expensive clinical trial process. Then let’s further believe that the FDA approves the drug, which is by no means a certainty and as we have seen lately an equally long and difficulty process, just ask the folks at Novo who’s hopes were dashed when the agency asked the company for more data on their once-promising now languishing long-acting insulin Tresiba®.

Ok so let’s say Oramed makes it, the next thing they’ll need is a partner most likely a well-heeled partner who has a wealthy of experience with the diabetes market and the insulin market in particular. A partner who will actually want to promote this new miracle drug which hopefully will not cannibalize their already established, highly profitable existing insulin franchises. A partner who won’t screw up launching this new miracle drug like Lilly did when they partnered with Amylin and really screwed up the launch of Byetta.

Yet even if the Oramed survives the clinical trial process, gets through the FDA and the company finds a partner the quest is not over, as someone has to pay for this new miracle drug and that someone may not want to provide Oramed and/or their partner the premium price an oral insulin will likely demand. That the people who pay for diabetes treatments, namely health insurers, really don’t care about the convenience of an insulin pill or that patients using this miracle drug would likely be more compliant with their therapy because it’s not injected, no what these folks care about is money. Keep in mind should the Oramed drug survive this process it will come to market after generic insulin’s are commonplace, both long and short-acting generic insulin’s.

The fact is people inflicted with the wanting to believe syndrome become blinded by the realities of the diabetes market; a market which is becoming more competitive each day full of potholes that can derail even the best of products. Yet this isn’t even the most amazing aspect of the wanting to believe syndrome perhaps the most amazing fact is Oramed has proved essentially that they can do more studies, WOW. They haven’t proved their miracle drug is better than existing medications or that patients using this miracle drug experience fewer side effects or achieve better outcomes. All they have proved is that this one week study – a whole seven days- was that they could do more studies which will hopefully last more than a week.

Please pardon Diabetic Investor for being so blunt about this but after more than 20 years of covering this industry it’s gets a little tiring to see everyone get so excited over data which is completely worthless. Frankly we have been down this road many times and unfortunately we suspect that Oramed has the best of intentions but they are far from reaching the Promised Land.  This doesn’t mean they cannot or won’t reach the land of milk and honey rather that this quest will take longer and be more treacherous than even they anticipate.

Along the way the company should be comforted by the fact that there are plenty of people who are inflicted with the wanting to believe syndrome; people who will blindly follow the company and continue to invest in it.  This is after all the wacky world of diabetes where anything can and usually does happen.