Mannkind

Oramed's Unparalleled Insulin Technology Pipeline Comes At A Time When Acquirers Need It Most:

Last year I wrote about the possibility of diabetes dynamo Novo Nordisk A/S (NVO) making a bid for Oramed Pharmaceuticals (ORMP) for its revolutionary insulin pill, ORMD-0801 that has entered Phase II clinical trials, the only one of its kind in the global pharmaceutical landscape. They should have listened. Now the Danish behemoth sits with a significant amount of regulatory egg on its face after a nasty FDA rebuff for Tresiba, a long-acting insulin injectable that may cause heart attacks.

Until Oramed, drug makers have failed to get insulin in pill form past the stomach. Attempts at inhaled insulin caused one company, Pfizer Inc. (PFE) to yank a clumsy device off the market after a short time with a $2.8 billion write-off and is bringing another, Mannkind Corp. (MNKD) to its knees financially from chasing the FDA in its multi-billion dollar mission.

Mannkind's stock has soared over 200% since the beginning of the year, from around $2 to a recent close of $6.72, despite its unconvincing inhalable drug Afrezza for diabetes dragging through clinical trials and stalled at the FDA. Rumors point to any number of multi-national drug firms that would love to own the company. But what would they be buying? Mannkind is in its third round of studies with the device/compound in over four years, with two FDA rejections. Al Mann is aging and should be retired (like myself). That's not to say the majors have done any better, they just have more money.

Drug companies came up with the short-acting Humalog pen, a $2.4 billion seller that injects insulin into the body and takes effect in 15 minutes, and the $5 billion long-acting Lantus, a once-a-day injectable that diabetics have trouble tweaking for the best absorption. Merck is battling lawsuits over its non-insulin pill Januvia because of pancreatitis. Pfizer made Exubera without listening to its focus groups, and ended up taking a $2.8 billion write-off. Makers of these products have a lot of cash to spend and face patent cliffs, but don't have enough research firepower to fill their shriveling pipelines.

Best in the 'wasted shareholder's money' category is Bristol Myers Squibb with the foolhardy purchase of Amylin for over $5 billion. Bristol got two drugs in the new GLP-1 analog class but struggled with FDA approval and ended up warning users of possible erratic heartbeats.

Diabetes is and will continue to be a hot area of innovative medicine. Until Oramed, there's little of much value out there. The insulin pill is just the beginning - Oramed is also developing ORMD-0901, a GLP-1 analog, one of the most sought-after classes of diabetes drugs for Type 2 diabetics. Phase Ib began earlier this year on positive data where blood insulin levels were 28% higher with ORMD-0901 taken after meals. But the FDA is investigating the GLP-1 drugs of Bristol Myers and Novo Nordisk for complaints of pancreatitis. This should give Big Pharma buyers even more reason to take a long, interested look at Oramed. Additionally last week's announcement of the cancellation of a $13 million banking deal makes me speculate that a buyout or a major partnership is on the short term horizon for Oramed.

Disclosure: I am long ORMP.

http://seekingalpha.com/instablog/1240561-ray-dirks/1982572-oramed-s-unparalleled-insulin-technology-pipeline-comes-at-a-time-when-acquirers-need-it-most