Lotus Pharmaceuticals (LTUS) announces new patent for controlled-release diabetes drug

Lotus Pharmaceuticals (LTUS), announced today that its wholly owned subsidiary, En Ze Jia Shi Pharmaceuticals, has been issued a patent by the State Intellectual Property Office of the People's Republic of China for controlled-release oral gliclazide. The patent covers the composition and preparation methods for the drug through 2030.

Gliclazide is commonly used to control mild to moderate adult-onset Type 2 diabetes. The drug belongs to the second generation of sulfonylureas, a class of anti-diabetic drugs that stimulate the pancreas to release more insulin. Lotus' novel controlled-release gliclazide tablet is formulated using osmotic pump technology, which encases the drug in a semi-permeable framework for a gradual, sustained release. The drug release is designed to be minimally affected by pH, gastric acid and food intake. In preclinical studies, the tablets demonstrated a similar rate of drug release in both in vitro and in vivo models.

According to the company's proprietary market research, the worldwide diabetic population is expected to reach 239 million people by 2010. China currently has about 40 million diabetic patients, with an additional 1.5 to 2 million patients diagnosed each year. China's diabetes drug market is estimated at RMB 7 billion (US $1.1 billion) annually and is expected to surpass RMB 10 billion (US $1.5 billion) in four years. Gliclazide accounts for approximately 28%, or RMB 1.25 billion (US $188.1 million), of the sulfonylurea market in China.

Chairman and Chief Executive Officer Mr. Zhongyi Liu stated, "We believe our controlled-release gliclazide tablet will have a meaningful impact on the clinical treatment of diabetes. The drug release rate of conventional oral gliclazide is uncontrolled, which can lead to unpleasant side effects due to quick drug release. Our controlled-release formulation has the potential to provide a more stable and sustained drug delivery compared to conventional gliclazide, resulting in fewer side effects, greater efficacy and an improved safety profile. In addition, the controlled-release tablet could potentially reduce dosing frequency. This is a significant benefit for diabetic patients, who generally require long-term daily medication."

Mr. Liu continued, "We expect to start clinical trials in 2012 after receiving authorization from the State Food and Drug Administration, with regulatory approval expected in 2014. Our market research indicates that the global gliclazide market will reach RMB 1.5 billion, or approximately $225.7 million, by that time. We aim to capture nearly one-tenth of this market, achieving peak sales of approximately $15 million per year. We expect a gross margin of about 60 percent and a net profit of about 30 percent for this product. The demand and market potential are significant, and given our 20-year patent protection, we expect to enjoy market exclusivity for controlled-release gliclazide through at least 2030."

Lotus Pharmaceuticals (LTUS) is our long term investment that has so much potential and products in the pipeline but the stock price still behaves like a new born baby. At the current price of $1.16, the shares trade at a P/E 2010 below 3, which is incredibily cheap. An upgrading to a major exchange would lead to much desired institutional interest.