Biotech Stock Mailbag: Generex, Part II

BOSTON (TheStreet) -- The more I dig into Generex Biotechnology(GNBT) and its insulin spray for diabetics, the more preposterous the story becomes.

I wasn't planning to spend a lot of time writing about this penny stock after last week's Biotech Stock Mailbag, but then the angry emails and comments came flooding in. On Tuesday, Generex issued a press release demanding I retract my "false and misleading" article. At the same time, I received a punchy letter from Generex CEO Anna Gluskin, via her attorney, in which she called me "malicious."

The Hostile React-o-Meter went to 11!

For a veteran reporter and columnist like myself who enjoys nothing more than exposing the modern day snake oil salesmen of the biotech age, Generex's all-bluster-no-bite protestations are a huge red flag.

As I burrow into Generex, it becomes apparent almost immediately that the company is using science and the quest to develop an alternative insulin delivery method not to actually help diabetics but as a ruse to perpetuate a 15 year-long stock promotion scheme. In the process, investors are getting fleeced while Generex management earns millions of dollars in compensation. [Gluskin was paid $1.15 million in total compensation for the company's 2008 fiscal year.]

I spoke with Gluskin briefly on Wednesday to ask her about Generex and Oral-lyn but she didn't want to comment without her lawyer on the phone. I agreed but they never called me back.

In a comment posted to last week's Mailbag, RJS9787 wrote, "Interesting take on Generex, Adam. Your two premises are completely false. First there have been numerous peer reviews for Oral-lyn dating back to the early part of this decade... In 2010, the two main independent researchers studying Oral-lyn, Dr. P. Raskin and Dr. P. Pozzilli, published the latest update for Oral-lyn's clinical development and this appeared in the peer-reviewed journal Diabetes, Obesity and Metabolism. All of the studies concluded by showing zero serious adverse effects attributed to Oral-lyn and that buccal spray insulin is non inferior, and often superior, to regular injectable insulin."

The February 2010 review article on Oral-lyn authored by Raskin and Pozzilli titled "Review of Clinical Trials: Update on Oral Insulin Spray Formulation" is helpful, but not in the way that RJS contends. Far from vindicating Oral-lyn, the article actually demonstrates quite clearly the lack of any credible clinical data to support the insulin spray's efficacy or safety.