Diabetes Treatment That Works: Boston Therapeutics (BTHE)
Published Wednesday, November 14, 2012 by Paul Archie
Diabetes. It is everywhere you look, if you have an eye for such things. It is estimated that one dollar out of every ten spent on health care in the United States is related to diabetes. There are currently more than 25 million people in the U.S. with the disease. That number is expected to grow considerably over the next generation. You probably know people that are diabetic or pre-diabetic. What to do about it? That is a question that is driving nearly every major pharmaceutical company to search for answers.

Bristol-Myers Squibb (NYSE: BMY) shelled out over $5 billion in cash this summer to acquire Amylin Pharmaceuticals and their promising diabetes drugs. Merck & Co. (NYSE: MRK) isn’t satisfied with their successful daily drug Januvia and just released positive Phase II results for a weekly treatment. The list goes on, but the evidence is widely observable even in popular culture. Watch the television for a while and you will see multiple insulin- and diabetes-related treatments marketed. Companies are spending a pretty penny and the problem just keeps growing. The truth is that, without vast swaths of the population instituting major lifestyle changes, diabetes is here to stay.

That’s where Boston Therapeutics, Inc. (OTC: BTHE) comes in to the picture. Dr. David Platt, founder and CEO of the company, is an expert in carbohydrate chemistry and has a history of developing public companies around his scientific advances. His most recent company was Pro-Pharmaceuticals, since renamed Galectin Therapeutics, Inc. (NASDAQ: GALT), which employs Dr. Platt’s carbohydrate technology against fibrotic disease and cancer. This time around he has turned his attention to diabetes, and both patients and investors should be happy about that development.

Boston Therapeutics (or BTI) has several products in various stages of development. All of them have one purpose in common- they are designed to reduce the amount of glucose in the bloodstream following meals. These products are ingested orally, in a chewable form, and block the gastrointestinal enzymes responsible for breaking down complex carbohydrates into simple sugars. They are non-systemic (they stay in the gut) and have proven consistently safe over the course of many trials and tests. The mechanism is simple and directly attacks the blood sugar problem rather than treating the effects of a blood sugar problem.

The company recently announced approval from the FDA to file an Abbreviated New Drug Application (ANDA) for their product BTI-7 This formulation combines BTI’s technology with the generic metformin, which is a current standard of care drug for diabetics and pre-diabetics. In 2010, in the United States alone, approximately 50 million metformin prescriptions were filled. This is a huge development, which we covered extensively in a previous article in this space. The potential for this drug alone, especially when considering how attractive it might be as an acquisition target, makes the company’s current market cap of approximately $9 million look almost comically low.

The other two products in advanced development are basically two sides of the same coin. PAZ320 is a drug candidate that has recently completed a phase II clinical trial at Dartmouth-Hitchcock Medical Center in New Hampshire. Results should be forthcoming and if previous tests of the same technology are any indication they should be positive. PAZ320 is on the longer road to approval, but Boston Therapeutics has something of a shortcut in hand that makes them unique in the world of pharmaceutical development.

SUGARDOWN® is the over-the-counter version of PAZ320. Commercially launched in June 2012, it is currently available and producing revenues for the company. As with any new product, it will take some time to effectively market this exciting dietary supplement to the diabetes population. With the long-term goal of ubiquitous market acceptance (think Pepto Bismol or Tums), Boston Therapeutics is focused on educating health care providers on the benefits of SUGARDOWN™ as a dietary supplement. The company launched the product at a conference with the nation’s leading endocrinologists and believes that medical acceptance of the product can speed sales growth.

Still, marketing a new consumer product is not the easiest or cheapest thing to accomplish. According to BTI’s recent S-1 filing, the company is raising money to fund further development of all of their products, including the marketing and sales of SUGARDOWN®. The framework is there already… The facility and materials for mass production are in place. You can buy the product at SUGARDOWN® is distributed by a partner in Asia that is marketing the product and has invested in the company. For reference, it is estimated that there are 92 million adults in China with diabetes and 148 million more with pre-diabetes. The opportunity in China alone is huge.

The company just yesterday announced that Jonathan Rome is their new COO, charged with accelerizing the commercialization of SUGARDOWN® as well as the ANDA filing for BTI-7. Today the company announced that Mr. Rome has invested $625,000 of his own money in their S-1 offering. Considering his deep experience in all aspects of pharmaceutical sales, marketing and development, this is an excellent and timely development and a major step forward.

It is instructive to note that Boston Therapeutics has made it this far without accruing significant debt. Most companies with a marketable product or even one drug candidate in trials are several million dollars in the hole, but BTI manages limited resources very well and has kept liabilities well under $1 million. This bodes well for the future as the company manages the processes of commercialization and product development.

Boston Therapeutics has a story that is beautiful in its simplicity. The products themselves, though cutting edge, operate on the simple premise of safely limiting the conversion of glucose in the intestinal tract. The company is developing essentially the same product along three lines, all with tremendous potential. The SUGARDOWN® OTC product is already available, and acceptance of this product should make the marketing of a prescription drug much easier. BTI has an experienced management team that has already accomplished much more than most junior drug companies. They have done it with far fewer resources to boot, while avoiding the vast debt problems that plague many peers. They are well positioned in a burgeoning market and deserve a long look from potential investors.
More BTHE Coverage
Companies Taking Different Approaches to New Care in Diabetes
The Future of Diabetes Control: Treat the Cause Rather than the Symptom
Systemic Versus Non-Systemic Diabetes Drugs: Boston Therapeutics Delivers New Class of Chemistry
Boston Therapeutics Builds a Better Metformin Mousetrap
Boston Therapeutics (BTHE) Receives $1.10 Price Target from Taglich Brothers