Generex even raised money from investors on four different occasions following the Indian government's action against Oral-lyn. The prospectuses for those stock offerings are supposed to inform investors of all the risk and uncertainties involved in Generex's business, but none of them include mention that Oral-lyn's approval in India was revoked.
"If a company chooses to trumpet one set of facts, it's important to correct the record if those facts turn out not to be true or the facts change," said Megan Gates, a partner at the life sciences law firm Mintz Levin and a specialist in securities law.
Gates is not privy to the reasons why Generex chose not to update investors about the Oral-lyn situation in India, but "if I was their counsel, I'd have a hard time swallowing an argument that this wasn't material information," she said.
Generex's Oral-lyn is an insulin mist that patients spray into their mouths. The insulin is supposed to be absorbed buccally (through the lining of the mouth) and into the bloodstream, in contrast to standard injectable insulins like those made by Novo Nordisk (NVO - Get Report), Eli Lilly (LLY - Get Report) and Sanofi-Aventis (SNY - Get Report), among others. Drug regulators in the U.S. and Europe have not approved Oral-lyn for sale. Generex is one of a handful of companies, MannKind (MNKD) most notable among them, which are trying to develop alternative insulin delivery technologies.