Generex Creates Own Regulatory Reality

TORONTO ( TheStreet) -- Generex Biotechnology ( GNBT) CEO Anna Gluskin may have run afoul of U.S. regulations governing experimental drugs when she spoke to investors earlier this year about the prospects for the company's Oral-lyn insulin spray.

Gluskin said at a January conference that the U.S. Food and Drug Administration had essentially granted a "mini-approval" for Oral-lyn and that Generex was moving ahead with plans to commercialize and market the diabetes treatment to doctors and a wide swath of diabetes patients in the U.S.

The FDA does not have a "mini-approval" process, and Generex has not filed an application seeking full marketing approval for Oral-lyn as a treatment for diabetes, according to FDA spokeswoman Karen Riley. Generex is still only about halfway through a single phase III study of Oral-lyn, according to the company's latest corporate update.

In September 2009, FDA permitted Generex to make the still-experimental Oral-lyn available to certain diabetes patients under the regulatory agency's expanded access program, known formally as a "Treatment IND" protocol. The FDA program grants access to experimental, unapproved drugs for patients with serious or life-threatening diseases who lack other treatment options.

The standards by which the FDA reviews an experimental drug for the expanded access program are different and less thorough than if FDA were reviewing the drug for final marketing approval, according to FDA regulations confirmed by Riley.

FDA rules do permit companies to recoup costs associated with granting expanded access to unapproved drugs, but companies like Generex are prohibited from marketing or generating any profits while operating under Treatment IND approvals.

Generex's Oral-Lyn is an insulin mist that patients spray into their mouths. The insulin is designed to be absorbed buccally (through the lining of the mouth) and into the bloodstream, in contrast to standard injectable insulin like those made by Novo Nordisk ( NVO), Eli Lilly ( LLY) and Sanofi-Aventis ( SNY)>, among others.

Generex did not comment on this story in response to a phone call and emails seeking comment.

Two videos of Gluskin making questionable statements about Oral-lyn were posted to the Web after her presentation at the OneMedForum 2010 Conference on Jan. 13 in San Francisco, a health care conference in which small biotech firms pitch themselves to investors.

In the first video, Gluskin presents the Generex story to attendees of the conference; the other video shows Gluskin being interviewed about Generex and Oral-lyn by conference organizers.

Gluskin, in the first video, explains to investors the Treatment IND for Oral-lyn:

"What that is, is a permission by FDA to distribute and treat patients with our product and to be able to charge for it. So it's like a mini-approval, the only difference between full-label approval and what we have here is that you can't under this IND sell product in the drugstore, but you can distribute it through doctor's offices, hospitals, dispensaries and directly to patients," says Gluskin.

Gluskin's explanation about the handling of expanded access drugs inaccurately characterizes the Treatment IND program as described in FDA rules and in comments about the Treatment IND law from the FDA published in the Federal Register on Aug. 13, 2009.

"FDA wishes to emphasize that the evidentiary standards for a treatment IND are not the functional equivalent of the amount and type of data needed for marketing approval. The standards provide a degree of flexibility that enables FDA to authorize a treatment IND on the basis of data often well short of that needed to obtain marketing approval," according to FDA comments published in the Federal Register.

In the second video, Gluskin explains Oral-Lyn's Treatment IND status by saying: "It is basically an approval that confirms that this format of delivery, particularly of large molecules such as insulin, is safe and efficacious, so we can treat the patients that refuse to take needles and we can also get paid for the drug."

Further FDA regulations pertaining to Treatment INDs state that "a sponsor or investigator, or any person acting on behalf of a sponsor or investigator, shall not represent in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation or otherwise promote the drug."

FDA spokeswoman Riley declined to comment on the Web videos in which Gluskin asserts that FDA granted Oral-lyn a "mini approval" and that Generex is making plans to commercialize and market the product. Riley said FDA has a policy of not publicly discussing unapproved drugs.

The FDA formally instituted an expanded-access drug program in the late 1980s under pressure from AIDS activists who felt that regulators were taking too long to approve promising HIV/AIDS drugs such as AZT. In the program's early years, most of the experimental drugs to which patients gained early access were already in late-stage clinical trials for cancer and HIV. The FDA later granted full marketing approval for most, if not all, of those experimental drugs.

The granting of a Treatment IND, however, is not an FDA endorsement that an experimental drug is effective and safe, nor does it guarantee that the drug will be later granted full marketing approval by FDA.

"A Treatment IND and full marketing approval are not the same things," says FDA spokeswoman Riley.

In 2004, FDA granted Treatment IND status for Maxim Pharmaceutical's skin cancer drug Ceplene, despite the fact that the same drug, then called Maximine, had failed a phase III study in skin cancer patients in 2000. Maxim Pharmaceuticals conducted a second phase III study of Ceplene in skin cancer later in 2004, and it also failed. The drug was never approved as a treatment for skin cancer.

In December 2009, FDA rejected Ampligen, a drug for chronic fatigue syndrome developed by Hemispherx Biopharma ( HEB), despite the agency allowing the company to treat patients with the drug under a Treatment IND program in the late 1990s.

And more recently, the FDA rejected the approval application for Cell Therapeutics' ( CTIC) lymphoma drug pixantrone, even though at the same time, the FDA said it was amenable to granting severely ill lymphoma patients access to the drug through an expanded access program.

FDA rules do not allow companies with drugs available under a Treatment IND to market unapproved drugs to doctors and patients.

This is a line that Generex CEO Gluskin appears to have crossed. In one of the videos from the January health care conference Gluskin says, "One of the reasons why we are talking about being on the market with Generex Oral-lyn, we have been granted three months ago by U.S. FDA, a Treatment IND."

Later in the same video, Gluskin, speaking about Oral-lyn, states, "We would like to gain obviously a full label but in the meantime we're also going to be marketing through a Treatment IND."

In the second video, when Gluskin is interviewed about Generex and Oral-lyn by organizers of the OneMedForum conference, she says the company is "starting to commercialize Oral-lyn through the doctors as we speak."

FDA law governing the Treatment IND program states: "A sponsor or investigator shall not commercially distribute or test market an investigational new drug." It is not clear whether Gluskin intended to suggest that Generex will commercially test market Oral-lyn.

The law goes on to explain that "this provision is not intended to restrict the full exchange of scientific information concerning the drug, including dissemination of scientific findings in scientific or lay media. Rather, its intent is to restrict promotional claims of safety or effectiveness of the drug for a use for which it is under investigation and to preclude commercialization of the drug before it is approved for commercial distribution."

In both videos, Gluskin says Generex will be able to charge patients for Oral-lyn or get "paid for the drug" as part of the Treatment IND program. While Gluskin's statements are not necessarily inconsistent with FDA rules, regulators allow companies only to recoup costs and not earn a profit.

"The sponsor may not commercialize an investigational drug by charging a price larger than that necessary to recover costs of manufacture, research, development, and handling of the investigational drug," the FDA regulations state.

FDA established the expanded access program to help patients who are seriously ill or near death gain access to unapproved drugs. How many diabetics fit into this category and would therefore be eligible to receive Oral-lyn is not clear.

On the two Web videos, Gluskin suggests that many diabetics, including those who simply don't want to inject insulin, will be able to request Oral-lyn under the Treatment IND program.

"The exciting news is a lot of patients are eligible," said Gluskin in the first video. "This is not a compassionate use. In case of compassionate use, you don't charge for the product. In case of compassionate use only people that can't use anything else are qualified. In our situation, if the patient says, 'I know I need insulin, but because it's injectable, I'm not going to take it,' they qualify for our program, and we know that with 25 million diabetics in this country, there is a lot of people who are going to be able to qualify under that."

The FDA Web site explains that expanded access to unapproved drugs is "sometimes referred to as 'compassionate use'..."

FDA granted Treatment IND status to Oral-lyn seven months ago, but to date no diabetes patient in the U.S. has participated in the program nor have any patients been treated with Oral-lyn, according to Steve Rubinfeld, president of TS Biopharma, the contract research company put in charge of the Oral-lyn expanded access program by Generex.

TS Biopharma is still identifying research sites, said Rubinfeld, the son of Joseph Rubinfeld, Generex's chief scientific adviser. On April 13, Generex said the John Muir Physician Network Clinical Research Center, located in the San Francisco suburbs, would participate in the Oral-lyn Treatment IND program. An employee of John Muir confirmed the center's participation in the Oral-lyn expanded access program, pending final approval from its institutional review board.

Currently, Dr. Dennis Gage of New York's Beth Israel Medical Center is listed as the only doctor participating in the Oral-lyn expanded access program, according to the U.S. government's ClinicalTrials.gov web site.

Gage would not comment on his involvement with Oral-lyn, referring all inquiries about the drug and the expanded access program to Generex.

In April 2008, Generex received authorization from Health Canada, the regulatory equivalent to the FDA in that country, to start a Special Access Program (SAP) for Oral-lyn. Like the FDA's Treatment IND program, Canada's SAP provides access to life-threatening conditions when conventional therapies have failed, are not available or unsuitable.

Since April 2008, Health Canada has authorized access to Oral-lyn on two occasions, each time for the same physician on behalf of the same patient, said Christelle Legault, media relations officer for Health Canada.

TheStreet previously reported that the drug regulators in India revoked their decision to approve Oral-lyn's use in that country in March 2009, but to this day, Generex has not said anything publicly about the Indian government's action, nor has the company informed investors that Oral-lyn is no longer for sale in India.

How much longer do investors need to wait before Generex produces something more tangible concerning Oral-lyn and its U.S. expanded access program than talk and promises?

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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