Tuesday, February 04, 2014 9:53:18 PM
New Questions around Recent Phase IIa '801 Data
Trigger Weakness; Sell-off Overdone
ORMP shares are down 28% intra-day today, with the weakness, we believe, based on a negative media article on the P2a safety data announced last week for lead asset ORMD-0801 (oral insulin). Our bottom line is that the P2a data for '801 very much were (and still are) fine and acceptable to us, and thus we find the criticisms in the article a bit harsh and unfair. To recap our investment thesis, while ORMP is still at a fairly early stage of development, based simply on the large commercial opp'y that exists for novel oral therapies for diabetes (a market dominated by injectables), we see blockbuster potential for '801 as well as ORMD-0901 (an oral GLP-1 analog). Therefore, with the stock now trading ~50% below the YTD high seen just 2-3 weeks ago (on Jan. 13), we find today's weakness very overdone and recommend being opportunistic at current levels.
• P2a '801 data under attack. Today's weakness appears to stem from an article appearing on a well-known blog site that has questioned ORMP's P2a data for
'801 in Type 2 patients. (Recall that ORMP announced the P2a data on Jan.
30, concluding: 1) '801 to be "safe and well-tolerated"; and 2) "the study met
all primary and secondary endpoints.") In today's article, the author takes a
decidedly negative view of the strength and integrity of the P2a data and also
questions the method and timeliness of disclosure of additional (i.e., more
specific) details that were made available for that data.
• We see nothing wrong. As alluded to in the note we published on Jan. 30, we found the P2a study results very much in line with our expectations. There were few details provided, but this was also as expected, as the release (as is common practice) was meant to convey only top-line results. Fuller details are typically reserved for medical/scientific conferences, and we confirmed that day with ORMP that was its intention (likely ADA '14 in SF). To its credit, ORMP did voluntarily post additional details of the data on its website that day (which we easily found, viewed, and were able to download); in fact, as
shown in p.2 of this note, '801 showed even less adverse events than placebo. Thus, today's weakness, on a fundamental basis, seems very overdone.
• A look ahead. With the P2a safety data for '801 now behind the company, we're next expecting the following events (and potential stock catalysts) to be coming out of ORMP over the balance of the year: 1) initiation of a P2a trial for '801 in Type 1 diabetics (potentially by the end of 1Q14); 2) initiation of a P2b trial for '801 in Type 2 diabetics (late 2Q14/early 3Q14); 3) initiation of toxicology studies for '901 (end of 2Q14); 4) presentation of the full P2a dataset in Type 2 diabetics (likely at the ADA meeting, June 13-17); 5) issuance of US IP for ORMP's assets and technology (difficult to predict timing); and
6) clarity around whether '801 can be pursued via an NDA 505(b)(2) strategy
(which would enable accelerated developmental timelines).
• Valuation/risks. Our current PT is based on an '801 and '901-driven DCF taken out to 2028, using a 25% discount rate and a 0% terminal growth rate. Key risks include: negative clinical trial data for either '801 or '901; regulatory delays/ setbacks, a failure in obtaining US patents; and any dilutive financings.
IMPORTANT DISCLOSURES AND CERTIFICATIONS.
MLV & Co LLC is a provider of research and execution services. MLV is a member of FINRA. MLV does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Please see important disclosures on page 3 - 5.
ORMD-0801: Phase IIa Safety Data
Below, we include a summary of adverse events (AEs) as reported by the company for ORMD-0801’s Phase IIa study. Subjects on placebo reported the greatest number of AEs (50%) followed by subjects dosed with ‘801 at 690 IU (40%) and 460 IU (30%). Data demonstrate that subjects on ‘801 experienced fewer AEs than subjects on placebo. Though we don’t have information on whether any of the AEs were Grade 1-4, according to the company, the AEs were not serious in nature. We expect ORMP to release more details around the data at an upcoming scientific conference.
As a reminder, sample sizes in Phase IIa studies are significantly smaller than later phase studies due to the germane purpose of Phase 2a trials (i.e., safety profiles). In this case, there were 30 subjects. As a result, we view the below data as supportive of the main purpose of demonstrating the safety of ‘801 as viewed in light of placebo.
Recent ORMP News
- Scilex Holding Company Announces Repayment in Full of the Remaining Balance of Convertible Debentures and Early Payment of the Senior Secured Promissory Note, Paving the Way for Future Growth and Innovation • GlobeNewswire Inc. • 03/19/2024 01:00:00 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 03/06/2024 10:00:35 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/20/2024 01:42:26 PM
- Oramed Letter to Shareholders • PR Newswire (US) • 02/20/2024 01:30:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/30/2024 10:30:32 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/23/2024 09:45:15 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/19/2024 09:45:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:43:05 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:41:41 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:40:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:39:04 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:37:19 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:36:18 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:34:53 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:33:47 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/08/2024 09:32:23 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 01/02/2024 06:13:58 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/21/2023 02:26:42 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/18/2023 09:45:10 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 11/09/2023 10:10:24 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/26/2023 08:34:25 PM
- Sorrento Therapeutics, Inc. Announces the Consummation of the Previously Announced Sale of Substantially All of the Common Shares, Preferred Shares and Warrants that Sorrento Held in Scilex Holding Company • PR Newswire (US) • 09/22/2023 03:38:00 PM
- Oramed Announces $101,875,000 Short-Term Senior Secured Note Transaction with Scilex Holding Company • PR Newswire (US) • 09/21/2023 10:11:00 PM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM