Generex: What Happens in India, Stays in India

TORONTO (TheStreet) -- A little more than a year ago, on March 26, 2009, a directive issued by the Drugs Controller General of India (DCGI) revoked the approval of Generex Biotechnology's(GNBT) oral insulin spray Oral-lyn in India "with immediate effect till such time final review is taken by this Directorate." Dhiraj Singh, a press officer for India's Ministry of Health and Family Welfare, confirmed via email the revocation of Oral-lyn's approval in India.

After a thorough search of Generex Biotechnology's press releases, SEC filings, and earnings/sales conference call transcripts, it seems that Generex hasn't said anything publicly about the Indian government's action, nor has it warned investors that Oral-lyn is no longer for sale in India, the company's largest market opportunity to date.

The approval in India of Generex's oral insulin spray, known as Oral-lyn, in late 2007 was very much a material event for Generex, given the size of the country and the lucrative commercial opportunity for new diabetes treatments there. And Generex made sure that investors knew about Oral-lyn's Indian approval in press releases, regulatory filings and on conference calls.

Yet Generex went silent about India in March 2009, after the drug regulators there decided that the initial approval of Oral-lyn violated the country's drug laws because the insulin spray had not been tested in local human clinical trials. The Indian government revoked Oral-lyn's approval, stopped new imports and ordered the product removed from Indian pharmacy shelves.

As recently as last October, company executives denied any significant delays or problems with Oral-lyn in India when asked for an update by investors on a company conference call.

Generex CEO Anna Gluskin and General Counsel Mark Fletcher were asked to explain why the company chose to not disclose information about Oral-lyn's problems in India, but neither of them responded to emails or phone calls.

Likewise, Nona Masterson and Brian McGee, independent directors on Generex's board, did not respond to emails or phone calls. A third independent director, John Barratt, could not be located because he no longer works at Caldwell Partners, the last employer listed on his Generex-issued biography.