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Generex: What Happens in India, Stays in India

"We are investigating how the marketing approval and import license were granted to Generex Biotechnology and then later transferred to Shreya Life Sciences," DCGI's Surinder Singh told Mint in an April 15, 2009 story.

Surinder, who was not at DCGI at the time Oral-lyn was approved in 2007, further told Mint, "What was the basis on which the approval was given to the company? Until the investigation is complete and a decision is taken, the product cannot be sold."

Ram Shelat, director of domestic business at Shreya, told Mint, "Based on DCGI's letter, we have stopped sales and dispatches of the product. We have not placed any further order to Generex for import."

By April 2009, less than four months after Generex and Shreya began selling Oral Recosulin (Oral-lyn) in India, the diabetes treatment was yanked from the market. Yet it seems that Generex didn't disclose to shareholders or investors that its Indian business had unraveled.

Investors question Generex

Searching SEC filings for the 8-K form that Generex should have filed disclosing the Indian government's action against Oral-lyn on March 26, 2009 doesn't turn anything up. Subsequent quarterly and annual reports filed by Generex with the SEC do not contain any disclosure about the halt to Oral-lyn sales in India. And if the company issued any press releases discussing the India news, they're not posted to its Web site.

On an Oct. 19, 2009 conference call, a private investor asked Generex CEO Gluskin for an update on Oral-lyn sales in India.

"Are you seeing more doctors prescribing the medication there now as opposed to, let's just say, three months ago?" he asked, according to a transcript of the conference call.

Gluskin replied, "Our progress in India is monitored by our partner, Shreya Biotech. And as you know, a condition of our approval was Phase IV, so that Phase IV trial we just marked as surveillance is continuing. We do not have specific numbers on sales yet, but we certainly are working towards getting an update and we certainly would be continuously monitoring that situation."

The investor then asks a follow-up question about Oral-lyn in India, which prompted Generex Vice President for Finance Stephen Fellows to respond:

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