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Sinopharm Gets $600M Boost For Oral Insulin Candidate

Published 08/07/2018, 03:02 PM
Updated 07/09/2023, 06:32 AM

Oral insulin just got a $600 million bet in China. Earlier last month, Shenzhen-listed biotech Harbin Gloria Pharmaceuticals took a $600 million stake in a subsidiary of SINOPHARM GROUP (OTC:SHTDY) (SHTDF) whose lead product is an oral insulin candidate being codeveloped with Israeli biotech Oramed Pharmaceuticals (NASDAQ:ORMP).

It was Hans Gruber, fictional villain of Die Hard fame, who once said, “Steal $600 million and they will find you, unless they think you’re already dead.” On Wall Street, a $600 million deal will seldom go unnoticed. But if it happens in Beijing, it can often slip by quietly. Yet, money is money no matter where the deal goes down.

3 years ago Sinopharm gained the marketing rights to oral insulin candidate ORMD-0801 with a $50 million licensing deal in milestones plus 10% royalties on net sales. At that time ORMD-0801 hadn’t even completed Phase II clinical trials.

Now it has, and Sinopharm and its partners are now less than a year away from proving, for the first time since insulin injections became a diabetes therapy nearly a century ago, that oral insulin can stabilize long term blood sugar levels. ORMD-0801 has already shown in early phase II trials that it can keep nighttime glucose in a tight range through the night, a nagging problem for those on insulin injections which can lower fasting nighttime blood glucose too quickly, causing fluctuations in the night.

What Sinopharm’s ORMD-0801 still has to show is that it can lower or stabilize HbA1c blood sugar levels too, the 90-day measure that is the gold standard endpoint of nearly all insulin-related clinical trials. This has never been proven before.

The 90-day trial, enrolling 240 patients, is scheduled to complete in about 10 months. If it succeeds, a pivotal Phase III trial with the same endpoint is planned. So then why the $600 million investment in Sinopharm specifically now? Perhaps because waiting for the results of the trial could make the investment either much more expensive, or else worthless. If oral insulin can affect 90-day blood glucose levels, then it can probably do the same over 12 months and the chances of approval increase dramatically. If it can't, then there's little chance that a Phase III trial will succeed anyway. That’s why the current 90-day trial may be more important for Sinopharm and its partners than the eventual Phase III pivotal trial. Gloria is placing its bets now, with a 10-month headstart.

Important to keep in mind here is that Sinopharm is not aiming to replace insulin shots for Chinese diabetics. Instead it’s looking to delay the need for them for longer. That’s why an oral insulin pill need not necessarily lower HbA1c levels significantly. Keeping them from rising compared to placebo may be enough. In other words Sinopharm is trying to carve out a new market by prolonging the time between diagnosis and the initiation of daily injectable insulin therapy.

China actually has the largest diabetes population in the world, about 114 million patients. China however doesn’t have the same resources to pay for diabetes drugs that the United States does, so it is often overlooked as a leading diabetes market. Chinese diabetes spending habits are also starting to change as the country grows more affluent. By 2022, China will take up about 8% of the global diabetes market by spending. Given China’s share of the global market, that means that Sinopharm’s initial $50 million investment values ORMD-0801 at around $600M in capital value.

Oramed (NASDAQ:ORMP) CEO Nadav Kidron estimates the cost of the drug to be between $3-400 a month, cheaper than injectable insulin, and the price tag would give Sinopharm an 80-90% margin. If oral insulin is not only more convenient, but cheaper than insulin injections, then being able to delay the onset of daily insulin injections has a dollar value behind it beyond just the convenience of not having to self-administer daily shots.

Whether or not an oral insulin product could be viable in the diabetes market, we will find out in about 10 months.

Disclosure: No positions in any stocks mentioned.

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