Biotech Stock Mailbag: Generex, Part II

A phase III study of Oral-lyn is underway that is supposed to enroll 750 diabetic patients and might offer a clearer picture of the product's efficacy and safety. Yet even here, Generex plays stupid games aimed at misleading investors, something that totally undermines the legitimacy of the study.

On March 10, 2009, Generex issued a press release announcing "successful phase III study data" for Oral-lyn, even though the study enrolled only 300 patients, just 60 of which had been on treatment for the requisite six months called for in the study's design.

On past conference calls, Generex has claimed it will file for Oral-lyn's approval with the U.S. Food and Drug Administration as long as the outcome of this single phase III study is positive.

Good luck with that. Never mind that the FDA almost always requires a minimum of two positive phase III studies for drug approvals; in diabetes, the regulatory bar is usually much higher.

Consider MannKind (MNKD), which conducted 44 studies of its inhaled insulin device Afrezza before seeking FDA approval. MannKind tested Afrezza in 5,300 patients total, including multiple phase III studies enrolling hundreds of patients each. Amylin Pharmaceuticals' (AMLN) phase III program for long-acting diabetes medicine Bydureon consists of six studies that enrolled more than 2,300 patients.

And Generex thinks it's going to get the FDA to review Oral-lyn based on some shifty Ecuadorian studies and a single phase III study?

Ha!

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Moving on, Charles D. writes, "As a former Cell Therapeutics (CTIC) long holder and now interested observer, would you please look into the rumor of Novartis (NVS) buying Cell Therapeutics at $2 per share? I find the very notion to be preposterous and laughable, but someone has generated enough momentum that it appears plenty of suckers are buying in. Unless hell freezes over and swine grow wings, I do not see this happening, and thousands are being duped (again, like I was) out of their hard-earned money. I enjoy your writing, especially when you twist the dagger. More journalists should have the same edge."

Novartis is not going to buy Cell Therapeutics for the reasons I outlined quite clearly Wednesday when I detailed the company's fiscal crisis and pixantrone's dwindling commercial potential.

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