Big Pharma: Where's the Risk Management? 15 comments
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Novo Nordisk (NOVO) wrote down $280 million for its investment in inhaled insulin in January of 2008, but this is dwarfed by Pfizer’s (PFE) write off in November of 2007 of $2.8 billion for its investment in Exubera, its entry into the inhaled insulin market. By March of 2008, Lilly (LLY) also gave up the ghost, and wrote down its efforts in the area.
Interestingly, in 2000 Lilly had taken shown an interest in insulin taken in through the buccal tissues inside the cheek with a $1 million investment in Generex (GNBT). More about this delivery system later.
Somebody Didn’t Do Their Market Research
It ended up that patients were not comfortable inhaling insulin. You would think that this is something that these companies would seriously look into before embarking on billions in research and FDA approvals. And of course they must have done some market research, but their market researchers let them down. Or maybe diabetes patients thought they would like it, but when it came down to cases, they had second thoughts about putting that stuff in their lungs. Apparently insulin patients don’t like to snort.
The Attraction
The market for insulin is estimated to be a billion dollars a year, but for Big Pharma the real attraction is that this is another chronic condition requiring a lifetime of drug-taking, like the cholesterol drugs, the statins, which have been so popular.
For patients who have to stick themselves with a needle, and sometimes more than once a day, the appeal of something you just spray on the inside of your check has to be a boon, a vast improvement in quality of life.
Big Pharma Not Even Good at Their Own Game
Maybe it was a lot to expect Pfizer to come up with a new big drug on their own, maybe this is not their job no matter how much they spend on research. Their game is buying the start up companies that come up with the drugs. Pfizer bought Lipitor by buying Warner Lambert, and now, playing defense, it is making a gargantuan purchase of Wyeth for $68 billion to protect against the fall off in sales of Lipitor when it comes off patent in 2010.
Odds Are Good Drug Delivery Through the Cheek Will Work
Meanwhile, tiny little Generex has been plodding along on its Phase III trial of its insulin product Ora-Lyn, which gets sprayed inside the cheek, which Lilly put a million into some years back. Phase III is going okay per their announcement in April, and they may not even need quite so many patients because of how well things are going.
But it’s not a new drug they are trying out; insulin has been around since the 1920s. It’s a new method of drug delivery. That other methods of delivery could work for insulin delivery has been established by Pfizer and Novo in the lung. And Generex has preliminarily tested their in-the-cheek drug delivery method on 150 drugs and it appears to get stuff in the blood stream.
Pfizer, Novo Nordisk, and Lilly have all spied the opportunity in insulin, but are letting Generex go along without buying the company, or at a minimum, making a licensing deal.
It is not likely that Generex will now make the same deal they would have made three years ago, or two years ago, or even two months ago. Things are moving along swimmingly. And not only is this going well, but their Phase I test of a prostate cancer vaccine went well (and we know what a good Phase III did for Dendreon, DNDN). And beyond that, their stock popped on the swine flu news, because Generex works in that area, too.
My take is that Big Pharma is stumbling around. Even if Pfizer had to spend a few billion for Generex, it looks like it would be a good defensive move, considering how much money they spent on Exubera, and especially when you consider how much they are spending for Wyeth. At the very least, one or another of these companies should be spending whatever millions it takes to get a licensing deal done.
So, it is not only the banks that have ignored risk management, the big drug companies look like they are also remiss. For investors, Generex appears to be a once in a lifetime bargain. Many are trading this stock, witness the millions of shares trading hands, but the traders may be no smarter than Big Pharma management, in and out of a company that may take its place among Big Pharma. It is hard to recommend purchase of stocks for the long term in what can only be a bear market rally, Generex may do well even in this horrific environment, especially when Phase III of its insulin test is completed.
Disclosure: Long GNBT
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This article has 15 comments:
To upndown1313, This article does not compare Generex to Pfizer. The article simply suggests an opportunity for a big company to buy or license from Generex. And mentions the big company's failures in the insulin market. Also it's probably reckless to say Oral-Lyn will "never" get approval in a major market because the delivery method is highly variable and unreliable. If clinical trials are going well then it's hard (foolish?) to argue with results.
On Jul 07 06:51 PM Oil wrote:
> Generex has additional factors in it's favor. It's bioequivalent
> study has shown their "Metcontrol" chewing gum to be interchangeable
> with Metformin tablets. Article here; finance.yahoo.com/news...;.v=1
> Metformin according to research is the 2nd most prescribed drug for
> type 2 diabetes. Generex plans to begin applying for approval in
> first quarter 2010. Also the wholly owned subsidiary Antigen Express
> claims to currently have the technology to vastly out produce the
> traditional method of vaccine production. Article; www.telegram.com/artic...
>
>
> To upndown1313, This article does not compare Generex to Pfizer.
> The article simply suggests an opportunity for a big company to buy
> or license from Generex. And mentions the big company's failures
> in the insulin market. Also it's probably reckless to say Oral-Lyn
> will "never" get approval in a major market because the delivery
> method is highly variable and unreliable. If clinical trials are
> going well then it's hard (foolish?) to argue with results.
On Jul 07 06:51 PM Oil wrote:
> Generex has additional factors in it's favor. It's bioequivalent
> study has shown their "Metcontrol" chewing gum to be interchangeable
> with Metformin tablets. Article here; finance.yahoo.com/news...;.v=1
> Metformin according to research is the 2nd most prescribed drug for
> type 2 diabetes. Generex plans to begin applying for approval in
> first quarter 2010. Also the wholly owned subsidiary Antigen Express
> claims to currently have the technology to vastly out produce the
> traditional method of vaccine production. Article; www.telegram.com/artic...
>
>
> To upndown1313, This article does not compare Generex to Pfizer.
> The article simply suggests an opportunity for a big company to buy
> or license from Generex. And mentions the big company's failures
> in the insulin market. Also it's probably reckless to say Oral-Lyn
> will "never" get approval in a major market because the delivery
> method is highly variable and unreliable. If clinical trials are
> going well then it's hard (foolish?) to argue with results.
Additionally many small biotech firms have money problems until they put out a winning product.
Lastly, no I do not wonder why Generex's sales are negligible in Peru because they're not sold in Peru. But I do often wonder why people who have nothing but negative comments about a company/stock follow along with the blog posts. I think it's because you lost a lot of money in it by timing a trade poorly and want to see what the stock does next, or maybe just whine. When speculating on stocks you win some and you lose some.
On Jul 07 10:59 PM Jolly_Rancher wrote:
> Sure buccal absorption works. Absolutely. But how much insulin is
> required to lower blood sugar level? The answer is about somewhere
> between 5 and 10 times the amount consumed using injection. Have
> you bothered to read the studies? Haven't you wondered by now why
> "sales" in Peru are negligible? The answer is people have tried Oral-lyn
> gum and are tired of chewing ten pieces of gum to reach desired blood
> sugar level. The cost in money and time is too much. GNBT is a company
> constantly on the edge of bankruptcy spered time and again by pumpers
> who help the company issue new shares to feed the extremely overpaid
> upper management. Good luck!
On Jul 08 12:45 AM Oil wrote:
> You seem to be mixing up information. The Metcontrol gum is not the
> same as Oral-Lyn. The gum is not insulin, it is a new way of delivering
> Metcontrol which is different from insulin (but sometimes used in
> combination with it). There is no chewing of 10 pieces... A mere
> two pieces of the gum was found to be interchangeable with one tablet.
> Interchangeable means you can use either because the results are
> the same.
>
> Additionally many small biotech firms have money problems until they
> put out a winning product.
>
> Lastly, no I do not wonder why Generex's sales are negligible in
> Peru because they're not sold in Peru. But I do often wonder why
> people who have nothing but negative comments about a company/stock
> follow along with the blog posts. I think it's because you lost a
> lot of money in it by timing a trade poorly and want to see what
> the stock does next, or maybe just whine. When speculating on stocks
> you win some and you lose some.
On Jul 08 10:59 AM Jolly_Rancher wrote:
"...GNBT is a pump and dump dream which I have never invested
> in short or long ..."
Obviously you are lying your face off, if you didn't have some sort of incentive to comment on GNBT you would not be posting here. I thought paid bashing of stocks was limited to the yahoo message boards.
> Sorry not impressed, either with oral-Lyn data that has been presented or the concept of a metformin chewing gum. Based on PhII results, PhIII will not get approval fro Oral-Lyn.
**********************...
Recent Oral-lyn Phase II results:
ADA Scientific Sessions 2008 "Insulin Analogue (Basal + Pre-Prandial Injection) vs. Human Insulin (Basal Injection + Prandial Oral Insulin (Generex Oral-lyn™) in Type-1 Diabetes Mellitus: A 372-Day Comparison"
Conclusion: "A regimen consisting of basal BID s.c. NPH and prandial orally-absorbed regular insulin (Generex Oral-lyn™) attained lower pre-meal glucose, HbA1c and Fru concentrations, than a regimen using basal and pre-prandial insulin analogue injections in Type-1 DM during a 372-day period."
professional.diabetes....
ADA Scientific Sessions 2007 "Comparison of Pre-prandial s.c. Regular Insulin vs Prandial Oral Insulin (Oral-lyn) in Adult Type-1 DM Subjects Receiving Basal s.c. Twice Daily Isophane Insulin (NPH)"
Conclusion: "Near normalization of parameters of DM metabolic control was achieved in all subjects. Direct comparison of HbA1c concentrations during CP demonstrate a superior effect of Generex Oral-lyn™ over subcutaneously injected regular insulin."
professional.diabetes....
"It is not like the inhaled insulin, so it doesn't get into the lungs,” said study investigator Philip Raskin, MD, professor of medicine at The University of Texas Southwestern Medical Center in Dallas. “People seem to like it, and it does seem to lower the blood sugar [the way] it is supposed to.”
Dr. Raskin is among the researchers involved in an international phase 3 study of 750 patients.
www.renalandurologynew.../
On Jul 09 08:27 AM singh wrote:
> i wished this article was posted 1 month ago when GNBT was .36cents
For example, see this announcement of Oral- Recosulin to be sold in India,
www.biospectrumasia.co...
but Shreya's website doesn't list it...
www.shreya.co.in/?q=no...
Can someone show me revenue?
Now on to salaries....
Ms. Anna E. Gluskin $729,000
Ms. Rose C. Perri $576,000
Dr. Gerald Bernstein M.D $200,000
Mr. Mark A. Fletcher Esq. $433,000
These seem pretty high to me for a 9 year old company with few results to show for it, i.e. no phase 3 in any developed country, and teetering on the edge of bankruptcy. The yearly fix of new issue keeps these dogs hunting. On the other hand, these people do have less than 2% stake in the company which was mostly acquired through options for ZERO dollars per share.
Good Luck!
On Jul 08 11:42 AM Shiftless wrote:
>
>
> "...GNBT is a pump and dump dream which I have never invested
On Jul 10 01:40 PM Shiftless wrote:
> Quote me properly, dear mentally deranged individual. I understand
> misquoting and the twisting of facts is how you make money for your
> masters, but I will not lie down and take it. This stock is about
> potential breakthroughs and applications of delivery mechanisms.
> If the mouth-absorption technique proves effective it could be implemented
> in nearly every type of heart disease medicine, they require the
> fastest blood absorption rate possible. Currently earnings is not
> a reason to buy this company, but future potential blockbuster drugs
> and deliver mechanisms are.
Sour grapes is no way to run a business. Pfizer should have locked up the rights to this a year ago because it works, and (more importantly), patients will use it.
Agree with you 100%.
"Great Potentials" count the most
for any company.