What the Merck Deal Could Mean for Generex Print E-mail
By Vinny Cassano   
Wednesday, 08 September 2010 00:00

Generex (NASDAQ:GNBT) announced a move into the Mexican market on Tuesday when the company issued a press release detailing a marketing and distribution agreement with Merck S.A. de C.V.  Merck has agreed to market and distribute Generex's 'Glucose RapidSpray' product in Mexico

under the name 'Diabion GlucoShot.' RapidSpray is already on sale in retail pharmacies in both the United States and Canada, and Tuesday's PR also mentions the Middle East as a current retail location.  Generex is also preparing to introduce the product into additional Latin and South American countries before possibly going worldwide with RapidSpray.

This distribution agreement with Merck - undoubtedly a huge player in the global pharmaceutical market - hit the streets not long after Generex announced that Doctor Craig Eagle was named to the company's scientific advisory board. 

Dr. Eagle's appointment alone stirred the speculative pot because he is also serving as the Vice President of Strategic Alliances and Partnerships for the Oncology business unit at Pfizer Inc, so combine the Merck news with the Pfizer news and it looks like Generex is starting to rub elbows with the big boys. 

The most obvious of speculative theories, at this point, would have Merck making a move towards the diabetes side of the Generex pipeline with Pfizer possibly moving into the cancer side.  While I do understand the argument that there could be something to that theory, I do belive that it's still a bit early to completely buy off on such large scale event, but hey - the time is ripe for mergers & acquisitions right now, so one speculative train of thought is just as good as another's.

The Pfizer connection with Genrex is intriguing, as Pfizer just kicked CellDex and its cancer vaccine to the curb.  Is it possible that Pfizer is looking to partner with another company in the cancer vaccine market (such as Generex), or is the company looking to move away from the still-risky cancer immunotherapy pipelines?  CellDex didn't fit into Pfizer's strategic future, so for them to partner with another company in the cancer vaccine field, they'd have to find that product (and the licensing deal) to be significantly superior to the one at CellDex.

I'm still sceptical that anything will materialize with Pfizer as many are speculating, but I'm paying attention.

The same can be said for the Merck distribution deal, although I believe that there might be something more here.  I'll admit that the RapidSpray news took me by surprise.  I never expected that a powerhouse pharma would agree to market and distribute that product. 

RapidSpray does have some market potential, in my opinion, but I didn't think that potential was on a scale to attract Merck, so I'm inclined to believe that there might be something more going on that we don't know about yet.  RapidSpray has been an afterthought, for the most part, with the real potential lying with Oral-lyn.  However, it could be that Merck is getting its foot in the door now while waiting on Oral-lyn Phase III updates or results. 

This could be a developing story worth watching.

Regardless of which side of the Generex fence you stand on, I think you've got to respect the fact that the recent news bits involving Merck and Pfizer - although neither really that significant at this time - does return some legitimacy to Generex after that legitimacy was questioned by many after the stock price collapsed in the midst of hostile attacks from former friends, enemies, and a slew of bashers that look to create a mood of fear, panic and ucnertainty around the stock in cyberspace.

Nothing groundbreaking has occurred just yet, but this story is definitely worth watching and could still be developing.  I liked the recent events enough to add some more shares, even though I wasn't going to buy for above forty cents until we heard an outcome of the most recent reverse split vote. 

But hey, forty, forty two cents - the difference there is just a Bazooka Joe, so why not?

Disclosure:  Long GNBT

Vinny also authors the popular stock investing blog, VFC's Stock House.




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