Sunday, 10 October 2010 22:52
Late Friday, Generex Biotechnology Corp. (NASDAQ:GNBT) announced that they would be making a “key material announcement on Monday, October 11th, 2010 before market open.” This news could be related to some key points management stressed in their recent letter to investors.
Following the departure of Anna Gluskin as CEO, GNBT gave shareholders a "corporate update addressing management's strategic initiatives for growth" last week. They outlined a 3-prong approach to their “buccal drug delivery platform”. Two of the approaches concerned partnering and collaborations. GNBT is looking to find a strategic partner to further(fund?) the development and distribution of Generex Oral-lyn(TM) and other novel applications. Specifically, GNBT is looking for a US/EU partner for Oral-lyn(TM), their insulin spray for the treatment of Type I and Type II diabetes. For this to be eventually approved and marketed, GNBT will likely the need the help of a major pharmaceutical company.
Take notice: most small-cap biotechs don't survive(or thrive) and eventually investors are drowned with dilution. Those remaining and looking to establish their technology, typically share a common theme: partnering your program to give your pipeline time to mature. By modifying existing drugs already approved by the FDA, it translates to shorter and less expensive trials with presumably higher FDA approval chances. It cuts down on the money and time necessary for regulatory approval, but it can allow companies the chance to establish themselves, without endless capital raises. With changes in healthcare reform, you can expect the number of reformulations of drugs coming off patents to be a major theme over the next decade.
We should note that Oral-lyn(TM) is a part of FDA's "Treatment IND" program. They are the first diabetes-related product to receive an FDA Treatment IND approval and all drugs that have gone this route have historically achieved full approval from the FDA in time. Maybe this is why someone might be interested in partnering: GNBT might be several years from approval and marketing, which could help out some large pharmaceutical down the road(fearing a patent cliff or looking to get in the diabetes market globally).
They also hope to setup collaborations utilizing their proprietary liquid formulations of IV drugs for use in their RapidMist(TM) device. Here the idea is to validate their technology and help stay afloat to give AE37 a chance. Extending the patent life of a previously approved drug, drastically enhances the ROI for a large pharmaceutical.
Don’t forget this fact though: in their letter to shareholders, they also spoke of letting investors know the status of a reverse stock split prior to October 15th. You can be sure that if they announce a reverse stock split, it is going to drop 10-20% barring any other actionable news. They spoke of it being between 1-for-2 ~ 1-for-10. Final vote on this issue has yet to come.
They made two other announcements to put on your calendar. On Tuesday(10/12/10), GNBT will be holding a conferencall/webcast to field questions. The following week on Tuesday(10/19/10), GNBT will be giving a live video webcast from the NASDAQ Marketsite at 1PM EDT.
Disclosure: No positions
Recent article - http://biomedreports.com/generex-issues-letter-to-shareholders.html
Friday’s PR - http://bit.ly/crq7fJ
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