What happened
Shares of Oramed Pharmaceuticals (ORMP 0.86%) are plunging today, down by 76.7% as of 11:23 a.m. ET. The steep decline came after the company announced top-line results from its late-stage clinical study evaluating experimental oral insulin ORMD-0801 in treating type 2 diabetes.
Oramed said that the clinical study didn't meet its primary endpoint of improving glycemic control compared to placebo in patients with type 2 diabetes. The trial also failed to meet its secondary endpoint of mean change from baseline in fasting plasma glucose at 26 weeks.
So what
This late-stage flop was especially disappointing because the previous clinical studies evaluating ORMD-0801 produced positive results. Investors seemed to be optimistic at least through late last week, with Oramed's shares soaring more than 100% between Oct. 1, 2022, and Jan. 5, 2023.
Now, though, there's little reason for optimism about Oramed's near-term prospects. The company said that it expects to discontinue the development of oral insulin programs targeting type 2 diabetes.
Today's news certainly provides a cautionary tale about investing in biotech stocks. Positive results from early-stage clinical studies don't always translate into success in late-stage studies. Indeed, between 2006 and 2015, more than 40% of all experimental drugs that entered phase 3 testing failed to win regulatory approval, according to an analysis conducted by the Biotech Innovation Organization, BioMedTracker, and Amplion.
Now what
It's not the end of the road for Oramed despite the major setback. The company continues to evaluate ORMD-0801 in a phase 2 clinical study targeting nonalcoholic steatohepatitis (NASH).
