"Our Chinese partner is already building factories for our product at a cost of hundreds of millions of dollars, " Oramed Pharmaceuticals Inc. (Nasdaq:ORMP) CEO Nadav Kidron told "Globes" this week. The Israeli company is developing an oral insulin pill. Eighteen months ago, Oramed, whose current market cap is $84 million, announced a $50 million investment in the company in stages from Chinese company HTIT, partially owned by Chinese company Sinopharm.
$30 million of this investment has already been transferred to the company. According to Kidron, this is only a small part of the Chinese company's investment in the project. Even though the product has not yet been approved for marketing in any country, the Chinese company has already begun investing in production facilities.
In May, Oramed announced that it had achieved the endpoints in its Phase IIb trial for its insulin pill. The product reduces blood sugar levels in adult diabetes patients without causing hypoglycemia events. Despite these successes, the company's share price has dropped 23% since the beginning of the year, and its market cap is far below the valuation given the company in the investment by HTIT.
The completion of its Phase IIb trial still leaves the company at least several years away from launching a product on the US market. Registration processes in the Chinese market have not yet begun.
Oramed's main competitor, Novo Nordisk, this week reported that it was discontinuing development of its oral insulin pill. "The parties paying for drugs (the insurance companies, G.W.) do not support the product's cost-benefit model," the company stated, meaning that they do not believe that the benefits will justify the cost. Novo Nordisk added, "In today's environment, truly ground-breaking innovation is needed to justify new products."
Will this also affect the viability of development for Oramed's product? "Novo Nordisk is going through a difficult period," says Kidron, "They replaced their CEO, and when a new manager steps in, he feels a need to make changes.
"Their positioning in the insulin market was a little different from ours," Kidron adds, "They offered oral insulin as a substitute for an injection, while we are offering it to patients at an earlier stage, before they need to take insulin by injection. We are therefore competing with different drugs designed to prevent the deterioration of the disease. Their drugs are innovative and patent-protected, and are therefore more expensive. The underlying technology of the products is also different, and our products are likely to be sold at a substantially lower price than the product Novo Nordisk was aiming at."
Published by Globes [online], Israel business news - www.globes-online.com - on November 17, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016