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.
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and uncertainties involved in Generex's business, but none of them include mention that Oral-lyn's approval in India was revoked."If a company chooses to trumpet one set of facts, it's important to correct the record if those facts turn out not to be true or the facts change," said Megan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), Eli Lilly ( LLY) and Sanofi-Aventis ( SNY), 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.