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Introducing Revolutionary Cancer Immunotherapy While Redefining the Treatment for T1D, T2D (NASDAQ: GNBT)
Written by Michael Vlaicu Featured Jan 14, 2010
Generex Biotechnology Corporation
(Public, NASDAQ: GNBT)
This past year, small cap biotech investors were witness to some of the most profitable gains ever recorded. The only way to encapsulate it would be through two simple words, “FDA Approval”. Yes, any company with high probability of approval on their blockbuster drugs saw their shares literally explode beyond technical analysis comprehension. Companies like Dendreon Corporation (NASDAQ: DNDN), Human Genome Sciences (NASDAQ: HGSI), and MannKind Corporation (NASDAQ: MNKD) went from relatively unknown bench warmers to being the MVP trades of the year, having their share prices gain multi-hundred percentages while leaving investors hungry, salivating for the next candidate. Many tried, yet only a few succeeded to truly join the winner’s circle. So, now comes the tough question, how do we find a major exchange stock, one that has the right volume to attract institutional investors, as well as the ability to generate buzz within the investment community. After having our team spend months conducting due diligence, we strongly believe we have found it, and boy are we ever excited. The following is a compilation on our first company profile for the new year, Generex Biotechnology Corporation (NASDAQ: GNBT). To truly grasp the market potential of this company, one has to look at the main products, so of which already approved and marketed,while others are on the verge of being approved to be marketed in the US & Worldwide global markets. The tip of the iceberg hasn’t even been scratched on this remarkable company, hopefully this analysis will shed some light and once again garner attention while shares are still highly undervalued. Perhaps one of the best kept secrets of 2009, Generex looks to break into the spotlight during 2010 and establish itself as a highly profitable and dominant player within the biotech industry.
About Generex Biotechnology Corporation
Generex Biotechnology Corporation (NasdaqCM: GNBT) is a leader in drug delivery for metabolic diseases through the inner lining of the mouth. Generex has developed a proprietary platform technology for the delivery of drugs into the human body through the oral cavity (with no deposit in the lungs). The Company’s proprietary liquid formulations allow drugs typically administered by injection to be absorbed into the body by the lining of the inner mouth.
Generex’s flagship product, Generex Oral-lyn™, an oral insulin spray for the treatment of diabetes, is approved for sale in India, Algeria, Lebanon and Ecuador, and is in Phase III clinical trials with over 347 patients being enrolled in 74 clinical sites around the world, including sites in the United States, Canada, Bulgaria, Poland, Romania, Russia and Ukraine. Also, Generex has developed MetControl™, a proprietary Metformin medicinal chewing gum, which is currently being prepared for submission to various regulatory authorities throughout the world.
Generex’s product pipeline includes: Generex Oral-lyn™, MetControl™ Metformin Gum, Glucose RapidSpray™, BaBOOM!™ Energy Spray, Crave-NX™ Day Diet Aid Spray, Fentanyl Spray, Morphine Spray, Breast and Prostate Cancer Vaccine and Avian Influenza Vaccine.
Generex’s wholly owned subsidiary, Antigen Express, Inc., concentrates on developing proprietary vaccine formulations that work by stimulating the immune system to either attack offending agents (i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements (i.e., self proteins and allergens). Clinical development of Antigen’s synthetic peptide vaccines designed to stimulate a potent and specific immune response against tumors expressing the HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a Phase II clinical trial and patients with prostate cancer and against avian influenza in two Phase I trials. Additional development efforts includes seasonal influenza virus, H5N1, HIV, HPV, melanoma, ovarian cancer, allergy and Type I diabetes mellitus.
Product, Trials, and Phases Matrix
The Rise of the Tides
After reaching a low of $0.45 per share during the end of November 2009, the company’s stock bounced off the support and never looked back. News has been flooding the headlines lately, causing shares of the company to recently gain some much needed momentum. With cash burn of nearly $8.2M annually, something needed to be done in order to save the company from digging itself into a deep financial hole. While it does have a respectable $26.2M cash on hand, you can rest assured liabilities, cost of clinical trials and marketing / distribution efforts would eventually catch up. Worst of all, a second dilution may have been on many investors minds, plaguing / negating any thoughts of entering a position in the company. Amidst all of this, salvation came at hand, two official company press releases in the form of 7000 stores (most speculating this pharma giant to be CVS) generating an order of $800,000 for Company’s proprietary Crave-NX(TM) 7-Day Diet Aid Spra.
Finally, a viable reocurring revenue stream which will see its balance sheet turn positive, and thus allow it to easily flow (either in Q3/Q4) into its much anticipated phase III breast cancer immunotherapeutic vaccine, and its long awaited NDA on its type I, type II innovative insulin treatment, where approval is almost certain due to USFDA’s Treatment Investigational New Drug program. It is important to note that 39 companies, according to a BioWorld report have attained this status, and all 39 have attained FDA approval. Both events are scheduled to come into fruition sometime mid-to-end 2010. Additionally, in a recent PR, Generex noted that, “This latest FDA approval will permit the Company to charge for the product to recover costs.” meaning that they have the ability to obtain a small portion of sales which could potentially help generate some further revenues.
For a list of complications derived through needle based insulin intake, visit the following link.
Another overlooked factor which gives Generex’s Oral-Lyn treatment a significant advantage over the pre-existing ones is patients who are prescribed with Trypanophobia. This condition is the extreme and irrational fear of medical procedures involving injections or hypodermic needles. People who suffer from vasovagal trypanophobia fear the sight, thought, or feeling of needles or needle-like objects. The primary symptom of vasovagal trypanophobia is vasovagal syncope, or fainting due to a decrease of blood pressure.
The Cancer Immunotherapy Index has perhaps never been a hotter investment. It has appreciated at a 100% annualized rate since its creation by Mentor Capital, July 10, 2009. In fact it has been so successful that in response to the resulting investor interest, Mentor Capital plans to initiate an actively managed Cancer Immunotherapy Index fund in January 2010. A significant majority of Mentor Capital cash proceeds that spring from its $140 million in freely tradable warrants are targeted to be invested through the fund. Some of the companies included will be: Dendreon (NASDAQ:DNDN), Oncothyreon (NASDAQ:ONTY), ImmunoCellular Theraputics (OTCBB:IMUC), Antigenics (NASDAQ:AGEN), Biovest International (BVTI.PK), Celldex Therapeutics (NASDAQ:CLDX ), Northwest Biotherapeutics (OTCBB:NWBO), CEL – SCI Corp. (AMEX:CVM) and Generex Biotechnology (NASDAQ:GNBT). This ensures that institutional investors will be made well aware of Generex in the upcoming year, after all, they have a network just like we do — you can bank on it that they will be using it to communicate the hottest companies to each other.
A Quick Backgrounder on Generex’s Ii-key Hybrid Vaccine AE37 for Breast Cancer can be found by clinking this link.
To understand Generex’s wholly owned subsidiary, Antigen Express, Inc. unique cancer technology, visit this link. In short, the immunotherapeutic agent being developed by Antigen Express is a peptide derived from a tumor-associated protein that has been modified to enhance stimulation of CD4+ T helper cells. The target protein is encoded by the HER-2/neu oncogene, which has been found to be over-expressed in a variety of tumors, including breast, ovarian, prostate, lung, colon, stomach and pancreas.
Market Potential of Crave-NX, Oral-Lyn, and Breast Cancer Immunotherapy Vaccine
World Diabetes Market
Diabetes effects approximately 170 million people worldwide and is increasing, with the WHO predicting 300 million diabetics by 2025. The US alone has 20.8 million people suffering with diabetes. This equates to approximately 6% of the population. It was the 6th most common cause of death as recorded on US death certificates.
The Global Diabetes drugs treatment market was valued of $15 billion in 2005. Oral anti-diabetics were the leading category of drugs – $8.19 billion – and showed a growth rate of 6.3% from the total global sales in 2004. The total sales for insulin products increased by 16.5% to total global sales of $6.83 billion in 2004.
The Global Diabetes Market Will Exceed $21 Billion by 2011. All figures verified using this source.
Cancer Immunotherapy Market
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The global market for immunotherapies to treat cancer was worth $19.6 billion in 2006 and will reach $23.7 billion by the end of 2007. At a compound annual growth rate (CAGR) of 9.5%, the global market will be worth more than $37.2 billion by 2012.
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Monoclonal cancer treatments have the largest share of the global market. In 2006 they were worth more than $10.4 billion and will reach more than $16.1 billion by 2012, a CAGR of 6.2%
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Cancer vaccines have the greatest potential for growth, growing at a CAGR of 35.2% to reach more than $5.4 billion by 2012. All figures verified using this source.
Global Weight Loss Market
According to a new market research report, ‘Global Weight Loss and Gain Market (2009 – 2014)’, published by Markets andMarkets ( www.marketsandmarkets.com), the total global weight loss market (www.marketsandmarkets.com/Market-Reports/global-weight-loss-and-gain- market-research-28.html) is expected to be worth US$586.3 billion by 2014, out of which the North American market will account for nearly 43% of the total revenues. The global market is expected to record a CAGR of 10.1% from 2009 to 2014. All figures verified using this source.
Reuters Rates Generex “Outperform”
The Market Financial is not the only investment source which seems potential in Generex. Reuters has given the stock an “Outperform” rating in a report dated January/11/2010. The Reuters report file is available for download here (.pdf) This rating is defined as, “An analyst recommendation meaning a stock is expected to do slightly better than the market return.”
Some notable highlights include:
*Generex also exceeds competitors in Liquid Assets. Cash minus all liabilities amounted to 11.0 versus industry average of (4.0).
*Generex also showcased significant yearly growth.
Institutional Ownership
Q3′09 saw institutional ownership explode, signalling bullish sentiments across the board. Not only that, but they are increasing their initial investments in GNBT as well.
All stats and charts provided by Tracked.com
*Notice that in the last 3 months, there has been almost as many trades and buys by insiders as there was in the last 12 months.
January/13/2010 OneMed Conference
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Some important highlights are:
- IND Treatment Status means that doctors in offices, and anywhere else can sell it. Only diff between full lavel approval is
that they can sell in drug stores and such. - Monthly events
- Expecting a partner sooner than expected
- New 23 year patents
Company Overview by Dr. Joseph Rubinfeld, Chief Scientific Advisor
*The following is a compilation of the three part press releaseases issued by the company
With over 40 years experience in the roller-coaster ride of drug development and commercialization, I have been fortunate to have been one of the founders and leaders of a number of multi-billion dollar ventures, including the development of amoxicillin, as well as the founding of Amgen Inc. and SuperGen, Inc. And now, as I have taken on the role of Chief Scientific Advisor for Generex Biotechnology Corporation and am preparing a white paper on the significant proprietary scientific technologies amassed by this still relatively unknown biotechnology company, I feel it is important to reflect on the pivotal year of 2009 which has set the stage for what I believe is an important future in numerous areas.The collapse of the financial markets in 2008 left the biotechnology world in disarray with sources of capital all but disappearing overnight. This placed many small companies completely reliant on capital financing on the verge of bankruptcy and Generex was no exception. However, through the coordination of efforts of management and a team of new advisors to the company, Generex was able to retire onerous debt and raise traditional capital through a series of common stock offerings at progressively higher prices throughout 2009. Today, Generex has a significant amount of capital to deliver exceptional results and while most people focus on Generex Oral-lyn(TM), the company’s buccall insulin spray product (and for good reason as it recently received approval for the use under the USFDA’s Treatment Investigational New Drug program), what is often overlooked are two other very promising drug programs with vast market potential.
In 2003, Generex acquired Antigen Express, Inc., a fledgling biotech company with a number of novel early-stage opportunities. In 2009 we began to see a path to success as the science we acquired has begun to move through the clinical trial process for two potential blockbuster immunotherapeutic vaccine technology programs. First, and furthest along, is its immunotherapeutic synthetic vaccine technologies for cancers (breast, cervical, and prostate). Positive Phase II results for its breast cancer vaccine in 2009 have enabled the company to make preparations for a Phase III study which we hope to commence some time in calendar 2010. According to the National Cancer Institute, over 250,000 women were diagnosed with some form of breast cancer in 2009, and it is the second leading cause of cancer death among women. While this represents a substantial market opportunity for Generex, more importantly, the potential benefit for the millions of women throughout the world prone to breast cancer is staggering and after all, the true goal of every scientist in biotechnology, along with the business opportunity, is to better the life of people suffering from illness. I am pleased to be a part of this important effort at Generex.
When examining the science at Generex, one need not look any further than the treatment of diabetes to understand the vast potential of its proprietary drug delivery system and its flagship buccal insulin spray product, Generex Oral-lyn(TM). While I believe the true value of this drug delivery system is largely overlooked, it is easy to focus on its use for the treatment of Type 1 and Type 2 diabetes mellitus. In the United States alone, the American Diabetes Association estimates that 7.8% of the population (approximately 24 million people) has some form of diabetes. Additionally, there are over 1.6 million new cases of diabetes diagnosed each year. It is the seventh leading cause of death in the U.S. and leads to a host of related illnesses, including heart disease. The annual direct medical cost of diabetes in the U.S. was estimated to be over $116 billion in 2007.As with any disease, the treatment for diabetes depends on its severity with each patient. The generally accepted treatment for Type 2 diabetes is a combination of proper diet and a metformin pill regimen. As the disease progresses to insulin dependence, insulin injection therapy is the most common treatment. This therapy is lifelong and often very painful resulting in poor compliance. With such a large percentage of our population affected by this disease, it is hard to find any individual who has not been touched in some way by the progressively debilitating effects of diabetes. As a researcher and now a scientific advisor, I believe the potential of Generex Oral-lyn(TM) for the treatment of diabetes and the use of its proprietary drug delivery system has the potential to represent one of the most important advancements in the treatment of this disease in decades.
In 2009, Generex made significant advancements toward the commercialization of this drug delivery opportunity. The most significant of these advancements took place in September of 2009 when the United States Food and Drug Administration granted approval for the use of Generex Oral-lyn(TM) under the USFDA’s Treatment Investigational New Drug program. Under the structured Treatment IND protocol, Generex Oral-lyn(TM) is available to patients with serious or life-threatening Type 1 or Type 2 diabetes mellitus, with no satisfactory alternative therapy available, and who are not eligible to participate in the Company’s on-going Phase III clinical trial. This approval will allow many patients in desperate need of insulin treatment alternatives to get the help they need and brings the Company one step closer to commercialization in the United States. Additionally, 2010 should be a watershed year for Generex as we have over 375 subjects enrolled in our on-going global Phase III clinical trial of Generex Oral-lyn(TM). We expect to complete this pivotal study in 2010 and the study results will form the nucleus of submissions to regulatory authorities for product approvals in the United States, Canada, Europe, and other jurisdictions. We at Generex are confident that the efficacy and safety data of this and previous studies will provide convincing evidence that Generex Oral-lyn(TM) is not only a viable alternative to current treatments, but may indeed become the preferred method of delivery for insulin treatment.
While I find this commercialization opportunity at Generex reason enough for one to be excited about what the future holds for this Company in 2010 and beyond, it might just be the tip of the iceberg for this truly dynamic Company. I will discuss my thoughts regarding what I believe is the true and vast untapped potential of the science at Generex in the third and last part of this series.
For most people when it comes to Generex, the focus is squarely on its flagship buccal insulin spray product, Generex Oral-lyn(TM), and its application in the diabetes arena. That focus is understandable as there is no doubt that, in order for the Company to achieve near-term large scale commercial success, Generex Oral-lyn(TM) must lead the way. I also believe that in addition to the other promising drug programs such as cancer vaccines and synthetic influenza vaccines, what is often overlooked when people evaluate Generex is that the success of Generex Oral-lyn(TM) may well validate Generex’s proprietary RapidMist(TM) drug delivery method and open up a myriad of lucrative opportunities for the Company.
In order to understand the magnitude of successfully delivering a protein-based molecule through an other-than-injectable delivery method, all one has to do is look at the billions of dollars that have been spent by some of the world’s largest pharmaceutical giants in failed efforts for delivering insulin through the lungs. And here is our Company, which stands on the verge of succeeding in not only accomplishing this task but, also accomplishing it without entering the pulmonary system and at a fraction of the cost of even one of the failed efforts by big pharma. Should Generex obtain FDA approval for Generex Oral-lyn(TM), it will enter the multibillion dollar market for diabetes treatment in the U.S. and it will also have the key to replicating this delivery for a broad based group of similar drug therapies for a variety of illnesses. Indeed, a complete success down the road would be the approval of the delivery system itself, enabling Generex to partner with other drug companies to extend the patent lives of their drugs through a less invasive delivery method. In each case, there would be the potential for large royalty streams on proven drugs for years to come.
Taking this one step further, if Generex were to become a large revenue generating company through the success of Generex Oral-lyn(TM), and its delivery method was also validated by use with other drug therapies, it would be then be possible for Generex to create a host of “super generic” drugs using its proprietary RapidMist(TM) drug delivery method and needing only to demonstrate bioequivalence, opening further multibillion dollar opportunities. Now of course this would be down the road a ways and a good many things would need to go in our favor for this to become a reality. However, it is not inconceivable that a multibillion dollar broad based drug company can grow out of our small and relatively unknown Company.
I chose to be the Chief Scientific Advisor to Generex because of the vast potential I see for the technologies and science possessed by this Company. People have called me “The Grandfather of the Industry” or “The Sage of Biotech” but in the end, I am just a researcher and an entrepreneur at heart. I see Generex as an opportunity for me to stay on the biotechnology rollercoaster which I love and ride it to a multibillion dollar success as everyone at the Company works diligently to have a positive impact on the lives of people with diabetes, cancers, influenzas or the many other diseases we may address down the road.
A Brief Roadmap on Generex
*All statements are assuptions based on SEC reports, recent news and interviews
1. Moving from R&D to market penetration with their OTC drugs.
2. Enjoying sales of OTC products to offset their operational expenses monthly.
3. Using revenues from sales of its OTC to expand Oralyn globally.
4. Given that Oralyn is globally and approved in US and Canada, expect that they will expend all energy to develop Breast Cancer, Prostate Cancer, Cervical, and Flu drugs to market.
5.Overseas markets are awaiting Oralyn, approvals from FDA .If approved, will expand to Europe, Middle East, Canada, and manyother parts of the globe simultaneously.
6.Reducing expenses, creating a market Globally for all its products.
7.Reducing float and outstanding shares (OS) , by repurchasing shares in company.
8. No more dilution of shares, may seek partnerships and receive royalties. Buyout has not been named as an option.
Why Investors are Bullish on Generex
- N.I.C.E UK update expected by end of January, 2010
- A/E 37 is expected to be a multi-blockbuster likely
- Oralyn close to finish line on first (and perhaps only) Phase III completion in USA
- IND Treatment Status for Oral-Lyn (no drug granted special access by the FDA has been denied approval)
- Special access in Canada for Oral-Lyn
- Oralyn India already approved
- Oralyn South Korea already approved
- Oralyn Lebanon already approved
- Insulin Supply Deal with Sanofi Aventis
Generex Biotechnology Corporation ( GNBT) Short Interest
Growing short interest for this type of high potential company only makes it easier for the price to increase substantially when a squeeze takes place.
| 12/15/2009 | 3,909,646 | 4,954,013 | 1.000000 |
| 11/30/2009 | 4,057,850 | 1,249,555 | 3.247436 |
| 11/13/2009 | 4,400,836 | 1,817,335 | 2.421588 |
| 10/30/2009 | 4,412,683 | 3,402,832 | 1.296768 |
| 10/15/2009 | 3,495,941 | 5,091,425 | 1.000000 |
| 9/30/2009 | 3,556,704 | 4,046,748 | 1.000000 |
| 9/15/2009 | 2,959,062 | 15,376,844 | 1.000000 |
| 8/31/2009 | 2,813,291 | 4,465,507 | 1.000000 |
| 8/14/2009 | 2,333,955 | 4,681,219 | 1.000000 |
| 7/31/2009 | 2,234,153 | 6,415,204 | 1.000000 |
| 7/15/2009 | 3,491,061 | 2,198,176 | 1.588163 |
| 6/30/2009 | 4,529,429 | 6,625,617 | 1.000000 |
| 6/15/2009 | 3,076,758 | 27,950,608 | 1.000000 |
| 5/29/2009 | 4,566,637 | 5,893,002 | 1.000000 |
| 5/15/2009 | 2,846,964 | 5,371,214 | 1.000000 |
| 4/30/2009 | 2,123,523 | 9,899,962 | 1.000000 |
| 4/15/2009 | 2,543,875 | 2,062,408 | 1.233449 |
| 3/31/2009 | 2,480,968 | 2,571,716 | 1.000000 |
| 3/13/2009 | 3,376,818 | 6,719,789 | 1.000000 |
| 2/27/2009 | 2,435,920 | 1,083,153 | 2.248916 |
| 2/13/2009 | 1,637,527 | 345,594 | 4.738297 |
| 1/30/2009 | 1,982,150 | 544,295 | 3.641683 |
| 1/15/2009 | 1,925,761 | 1,068,763 | 1.801860 |
Technical Analysis
There are a number of key bullish indicators when trying to identify a long-term uptrend. The first being, a general rising support level, with healthy consolidation along the way. Secondly, having high volume “buy” days which exceed the volume of the more often “sell” days. The next is a steady RSI which stays above the 50 marker more often than below. Money Flow Index (MFLI) should also display that more money pressure is being placed by buyers through purchasing the stock, rather than selling it for liquid cash. All of these factors are present with Generex, now lets take a closer look:
Notice that the MACD divergence is beginning to turn positive, signalling the start of a bullish trend. The Money Flow Index indicates that the stock is neither engaged in over-selling or over-buying, but is rather set in the 50s, and trending upward which makes it prime and ready for an exchange to the buyers side of the market. We are currently sitting at a major support level at $0.68, next resistance should be upper $0.7s to low $0.8, with a breakout to $1.00 should these be broken. The company recently finalized its financing giving stock warrants (as per the latest 10-Q) at $0.76, $0.79 and $1.00 pps levels, so expect these to be small resistances, though not major, as they only represent 3x to 4x daily average volume. Looking at the recent trend, the buys (green bars) days have had higher volume than the selling (red bars) days, representing a long-term bullish signal, as the stock continues to climb, consolidates, and continues upward. This pattern is seen from the 0.1 level all the way to the current 0.61 level, as the green buying days have always had higher volume than the smaller red selling days. During last week, a doji was formed which represents indecision by the market. The recent news offset this indecision, trending it for a bullish run-up. Expect another test of the $0.80s in the coming days / weeks.
Disclosure: Long GNBT
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