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Generex Biotechnology, and their wholly owned subsidiary Antigen Express, are developing promising new drugs to treat diabetes, as well as synthetic peptide vaccines targeting HER2/neu cancer and pandemic flu. The flagship product for Generex is Oral-lyn buccal insulin. Antigen Express' leading vaccine is the AE37 HER2/neu synthetic peptide vaccine to prevent breast cancer recurrence. I am not qualified to offer investment or medical advice, and make no claims that I am an expert in these areas. I am a layman and a shareholder in this company. The left side of Pipeline Review holds blogs regarding Generex and Antigen Express, while the right side offers items of due diligence mixed with my analysis which may be of interest to others seeking to learn about Generex's pipeline. If the left side only shows the latest blog, click on the word home to view them all.

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Monday, June 27, 2011

Feuerstein Trips Over Generex in TheStreet

"Ignorance more frequently begets confidence than does knowledge" ~ Charles Darwin

On June 24th, TheStreet's (TST) Senior Biotech Columnist Adam Feuerstein featured Generex (GNBT) Biotechnology and their buccal insulin spray, Oral-lyn, in his Biotech Stock Mailbag. Feuerstein put his spin on a press release Generex issued on June 16th, regarding the updated clinical and regulatory program planned for Oral-lyn. In the news release, Generex outlined the clinical path Oral-lyn will take before a submission for commercial approval will be made to the FDA. Generex had already announced this plan, which was made after the company received feedback from the FDA in late May, at their Annual Meeting on June 8th. The Annual Meeting was offered live via a webcast, and remains available on Generex's website .

Feuerstein began his latest blog about Generex by saying: "It's not in my nature to begin the Biotech Stock Mailbag with a congratulatory slap on my own back, so please allow me to indulge this one time as I revel in the latest failure acknowledged by Generex biotechnology. Last week, Generex finally admitted what every rational human being understood a long time ago: The company's experimental insulin spray for diabetes, known as Oral-Lyn, is not ready for regulatory approval. The ongoing phase III study of Oral-lyn, years behind schedule, is being shut down and cannot serve as the basis for a U.S. approval filing, Generex said."

Feuerstein's reporting that the current Phase III study is being "shut down" is completely false. On June 8th, Generex announced at their Annual Meeting that a "protocol approved" enrollment target of 500 patients has been met, and final results may be available by the end of the year. The company informed that the study results will play a key part in a future NDA, and in designing the next clinical steps to achieve that goal. Subsequently, in a press release issued on June 16th, Generex announced that Phase III "clinical trial 084 in patients with type 1 diabetes will be closed to allow a final data analysis to guide future clinical trial plans. Interim results demonstrated that the type 1 patients treated with Generex Oral-lyn™ maintained metabolic control (hemoglobin A1c) over the 12 month duration of the trial."

Feuerstein also stated in his article that "Generex updated the status of Oral-lyn based on information received in May from officials at the U.S. Food and Drug Administration. The agency, discussing Oral-lyn, raised a "variety of questions about preclinical, clinical, toxicology, manufacturing, and regulatory and product labeling issues related to the wide variety of formulations and prior protocol changes that were made historically."

Feuerstein omitted key parts of Generex's update. Generex, in their update, issued five sentences relating to feedback they received from the FDA, while Ffeuerstein chose to clip out only one. Here is the actual update: "Generex received written guidance from the US Food and Drug Administration (FDA) in late May in response to data submitted on Generex Oral-lyn™. There were no safety issues identified in the clinical trials, nor safety questions raised by the FDA. The FDA did not express any concerns about the RapidMist™ delivery device. There were a variety of questions about preclinical, clinical, toxicology, manufacturing, and regulatory and product labeling issues related to the wide variety of formulations and prior protocol changes that were made historically. Generex's new medical/regulatory team has already responded to the FDA, and is in the process of providing the additional information requested for complete clarification. The FDA guidance placed no limitations or restrictions on the types of patients included or trial designs of current or future clinical studies."

In my opinion, Generex's new medical and regulatory team are working fast to put Oral-lyn on a smarter track to win fuller label approval. The FDA guidance placed no limitations or restrictions on the types of patients included or trial designs of current or future clinical studies, which is a big plus for future labeling plans. Perhaps Feuerstein can explain why he avoided these details, which provide a wider and more accurate picture.

In the comment section of Feuerstein's latest blog about Generex, he stated that "Generex holds a shareholder meeting on June 8, at which a reverse stock split is approved. Management doesn't tell shareholders that another three years of clinical work on Oral-lyn will be required."

In reality, Generex's Senior Scientific Advisor, Dr Joseph Anderson, who previously served as Eli Lilly's Senior Medical Director, gave an update on Oral-lyn's regulatory and clinical standing early into the June 8th Annual Meeting. He clearly informed shareholders that the current Phase III study in Type 1 patients will not be sufficient for a NDA. Dr Anderson remarked on plans for a fuller label, beyond Type 1's, that would provide shareholders the maximum value that should be obtained with Oral-lyn.

Dr Anderson also told shareholders that until Generex completes a consensus meeting with the FDA, he would have a hard time giving guidance on when a NDA may be submitted. He estimated between 36 and 72 months. He said he believed the timeline may actually be significantly shorter, dependent upon pending FDA guidance from the consensus meeting. Dr Anderson informed that Type 1 patients represent less than 10% of people with diabetes, and they need to make include patients with Type 2 diabetes in an additional Phase III study.

Generex alerted that this consensus meeting with the FDA, to obtain agreement with the clinical plan and submission data package, is planned this year. The additional planned clinical studies include a key activity/effect study with the final formulation, and a series of small, well-designed phase 3 studies, potentially conducted as one study with multiple arms. Generex anticipates that these studies will be completed during 2013.

In the comment section which accompanies Feuerstein's blog, I noted his error in stating that Generex did not inform shareholders during the company's Annual Meeting that additional clinical work will be required to gain FDA approval for Oral-lyn. He quickly offered a snarly response, calling me a "dead ender", while avoiding my concerns. I was then blocked from being able to make any additional comments.

One day later, Feuerstein offered a new response. He said, "I stand corrected, sort of... Generex disclosed the FDA communication regarding Oral-lyn -- no imminent approval filing of Oral-lyn, more clinical trials required, taking years at an undisclosed cost -- during its June 8 shareholder meeting. The disclosure wasn't made in Generex's proxy statement or any other SEC filing prior to the shareholder meeting. Generex disclosed the new information at the meeting, presumably after many shareholders had already mailed in their proxy forms to vote on a reverse stock split, among other items. Selective disclosure? Certainly ill-timed disclosure, especially for a management team which desperately needed shareholder approval of the reverse stock split. To get the vote it needed, Generex did what it always does, kept shareholders in the dark."

His comments, in which he acknowledges being corrected on a key charge, require further correcting. Generex has been forewarning of the potential for additional clinical requirements for Oral-lyn, the most recent coming in March. On March 30th, Generex held a press conference and conference call from the NASDAQ MarketSite. While on the conference call, Dr Anderson informed shareholders that there may be a need for additional studies, beyond the ongoing one in Type 1 patients. Obviously, Generex needed to begin Type 2 late stage studies, and we have now heard that these studies are anticipated to be complete in 2013. A transcript of the press conference, and the conference call, where Dr Anderson gave his guidance regarding additional clinical studies, has been available at the SEC's EDGAR filing system since April 6th.

Feuerstein's ended his blog by saying, "I told you so". The blog contains the following disclaimer: "Full disclosure: Generex is suing TheStreet and me regarding prior published columns on Oral-lyn. That litigation is currently ongoing."

Feuerstein's "I told you so" moment may be a reference to a lawsuit Generex filed against Feuerstein, formerly a technology and commercial real estate beat writer, and TheStreet in response to two blogs Feuerstein wrote in March 2010. After the first blog, Generex demanded an apology for misleading or false comments, and TheStreet later placed a disclaimer above his first blog, noting certain inaccuracies, and saying that "TheStreet regrets the error". Generex's subsequent lawsuit had nothing to do with any of these latest developments.

On June 24th, after Feuerstein's latest blog was published, Generex's stock fell over 20%. Generex, like other small biotech companies that Feuerstein reports upon, are in precarious positions as they attempt to navigate the toughest of regulatory environments, while searching to raise large amounts of capital to fund their pipeline. In my opinion, readers of TheStreet deserve better, as do Generex's large base of over 37,000 shareholders.