When Pfizer (PFE) pulled the plug on its lung-absorption insulin offering Exubera in October of 2007 and wrote down $2.8 billion, a bunch of smaller companies were carried down with it. Nektar dropped for about a year after Pfizer returned all rights to its products used in the development of Exubera.
Commingled with Exubera was Generex (GNBT.PK), a small biotech firm, also working on an alternate strategy for insulin absorption, whose stock has never really recovered. Their product, Ora-lyn, is absorbed through the buccal tissues inside the cheek, and does not go into the lung at all.
Now in Phase III, Generex will soon be announcing that the last patient is enrolled, and six months later the FDA should announce its findings. The FDA has already given it Investigational New Drug (IND) approval, and in recent years this has also led to final approval.
Patients destroyed Exubera's chances. They had to do lung function tests that made patients weary about the treatment. If the lungs are safe for Exubera, why did they have to take such tests. Then concerns were raised over the possibility of lung cancer or other lung disease, so that it didn't have much chance even before the drug appeared on the market.
However, a great possibility exists for Generex. Pfizer thought it might raise as much as $2 billion in annual revenue from such a product. Absorption through the buccal lining does not appear to have nearly the risk to health as lung absorption, and diabetes patients doctors exclaim that their patients will do anything not to have to inject themselves with a needle.
We suggest that at a market cap of $90 million, Generex is greatly undervalued, perhaps by a billion. We are not addressing Generex's cancer vaccine program, which could be valued at even more.
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