Why I'm Taking a Foothold in Generex Now

In response to a number of requests that I've received via email or comments asking for 'VFC's Take' on numerous stocks that readers have found, I'll do my best to address as many as I can, as long as everyone takes a few things into account while reading:

- I have not thoroughly researched all of the stocks that I'm about to comment on. I've done the initial DD but my opinions are mostly based on my first impressions of the stock. I'm merely providing VFC's Take, as requested. Use that as a starting point to do your own DD.

- Don't get testy if I don't like your stock. Remember, this is just my initial impression and I take into consideration some variables that other people don't, that's why VFC's Take is not always the mainstream impression.

- I appreciate all the recent feedback, and keep the stock tips coming; this is a great forum for all investors of all levels to share tips and insights. There's a whole lot of stocks out there, but there's only a few gems. Let's keep trying to find those gems.


IVOB.ob: An email from Noah regarding INVO Bioscience, Inc.:

Hi VFC!

What are your thoughts on IVOB? Do you think they're a good buy at this price?

Thanks and God bless!
-Noah

VFC's Take: I commented on IVOB on August sixth and after reviewing my write-up from that day, I am inclined to stick with my opinion that IVOB has potential.

Shares of the IVOB stock received a 20% bump on Friday after the company issued a PR that highlighted the [copied from the PR]

birth of the first baby conceived by the INVO procedure and INVOcell device.

Although the company and its product is gaining a foothold in the international market, it would be worth watching the FDA situation. The company is expecting a decision in on its 501k marketing clearance submission "by 2010" (according to the most recent quarterly report) and a positive decision there could significantly impact the stock price - if you're in before hand.

Watch the trading on Tuesday, it's possible that the stock could retreat after the latest run and that would offer a better buying opportunity - but if INVOcell is for real, any buy in the thirty cent range should prove to be a good buy, in my opinion.

Disclosure: No position.


GNBT: A follow-up comment from Gillmore regarding Generex:

What targets are you looking for in early 2010 and longer term into 2011 for GNBT...and the rational? (To me, the reasoning is more important than hitting a precise target. Would you agree?)

Wishing you much success,

Gillmore Viltati

VFC's Take: Regarding Generex, the focus of my interest and enthusiasm in the company is the RapidMist delivery system. RapidMist allows a drug to be administered to a patient through the inner lining of the cheek after a spray while the lungs are not involved. Regardless of any short term gains, it's my opinion that the longer term could prove to be highly profitable for investors based on the potential of RapidMist.

That being said, the biggest mover of the stock should be the advancement of Oral-Lyn, the company's diabetes insulin spray that utilizes the RapidMist method of delivery. Once Phase III results are finalized and the product gets put before the FDA for a decision, the stock could move on speculation.

It is my opinion, however, that the stock could spike to over a dollar based on speculation alone, as it did after the news that the FDA approved Oral Lyn under its Investigational New Drug program.

Since the company has ongoing Phase III trials for Oral Lyn around the globe, when things start to move for the product, they can move quick - and I wanted a foothold in the stock before that happened.

In short - I see risk in GNBT, but I think that the company is onto something with RapidMist; if management can maximize the value of that delivery system then I think that GNBT is going to be a global player and a winner of a stock.

On the other hand, Novadel (NVD) hasn't had much luck advancing their spry-delivery products, even with two FDA approvals, so I do have a bit of a bad taste in my mouth with spray delivery systems.

UPDATE:

GNBT: A couple of comments regarding Generex:

Mannkind (MNKD) and Generex Biotechnology (GNBT) were mentioned in today's New York Times:

Best,
Shiela Wilson

Thanks so much for the response! I am interested in your crystal ball for 2011. I think GNBT can match or exceed their competitor Mannkind's (MNKD) current market capitalization of $686.81 million (figures per Yahoo Finance) which would give GNBT a price of $3.78 post Phase III, but pre-approval (during 2010). This is about 5 1/2 times the current price. Since GNBT product, unlike MNKD's, doesn't go into the lungs with the concomitant risks, I feel GNBT's market capitalization should set the bar, not the other way around. I am not familiar with NVD. How does their system differ from GNBT and MNKD, and which do you feel is superior? Do you agree with my thesis on GNBT's pre-approval price? ...and your thoughts on 2011?

Gillmore Viltati

VFC's Take: The New York Times article was a good one. My initial thoughts were that the article was too favorable to Mannkind's delivery system that utilizes the lungs, but it turns out that the Generex cheek-lining system gets the better press, in my opinion, and that's the way it should be. There's a lot to be said for a spray method of delivery that does not use the lungs.

It's possible that those investors that don't have A-D-D and have a memory span of more than a day will keep this article in mind for the resumption of trading on Tuesday and maybe buy a few shares of GNBT.

Thanks for sharing the link, Shiela, it's good press.

In response to Gillmore, I do think that the GNBT market cap will eventually surpass that of MNKD's, but I don't believe that time will be until either just before the FDA is due to issue a decision or just after, depending on the market. I say "depending on the market" because it looks like biotech stocks are starting to trade up before an FDA decision and down after the decision is announced, whether that decision is positive or not.

It's my opinion that a diabetes insulin spray that does not effect the lungs is going to be a huge product, if approved in the US. If Ora-Lyn does receive a U.S. approval, after already having been approved in various countries around the globe, then I think that GNBT will be a ten-bagger from its current prices sometime in 2011.

The development of additional products utilizing RapidMist could grow the company even more.

As for Novadel, that company also has an oral spray drug delivery system that utilizes the inner lining of the mouth versus the lungs, but even with two FDA approved products that company and its stock have gone nowhere. I sold my shares in that company a while ago and moved on; meanwhile the stock still hasn't moved.

That being said, an oral insulin is a whole lot bigger than anything NVD has and I get the feeling that Generex, with a growing global presence, will be able to market their product more efficiently. All just my opinion.

Keep in mind, however, that I also feel that in order for Ora-Lyn to achieve the success that I'm calling possible in this response, it needs to be accepted by the medical field and also by the patients involved. It's my opinion that if the Ora-Lyn Phase III results are positive, then the medical field should become believers. As for the patients, I think that taking a spray in the mouth has to be preferable to the inconveniences of a shot - but I can't speak for the patients themselves, I can only speculate.

I'll add shares of GNBT on any dips.

Disclosure: VFC is long GNBT and has no interestes in MNKD or NVD.

Comments

[Raphael/Ant...:]

hi,
the article is quite positive, but need to know when phase 3 results are expected to be out.

Thanks

Oct 12 04:45 AM

[pacard:]

Since VFC seems to make the case for GNBT by constrasting it w/ MNKD, I thought someone should clarify a few things. VFC seems to be unknowledgeable and that's putting it nicely.

VFC likes GNBT because it's nasal delivery method doesn't affect the lungs. VFC stated, "It's my opinion that a diabetes insulin spray that does not effect the lungs is going to be a huge product.." The implication is that MNKD's inhaled delivery adversly affects the lungs. Now the facts. First, you're likely referencing Exubra's history. Note, the FDA did approve it AND those in the test group that were found to have lung cancer were ALL SMOKERS and the statistical number was inconsequential by ALL EXPERTS. (When Pfizer decided to end trials, candidates were transferred over to MNKD's Afresa. A bold move if you believe inhaled insulin caused the cancer because those people transferred to Afresa could have been identified w/ cancer and that would have jeopardized everything, right??) Fact: there was no proven link between Exubra and lung cancer. Exubra failed because it's inhaler was the size of a 12" bong and it offered no benetfits in terms of pharmokinetics. It was simply a different delivery method. Nothing more. As for MNKD, MNKD has intensive studies showing ZERO affect on the lungs! ZERO! It absorbs far more quickly, there's ZERO buildup in the lungs and it's pharmokinetics are superior to everything else out there. It's a hybrid insulin that's being delivered. This fact should not be lost. And, it's not just a different delivery method. It's been shown to reduce hypoglycemia and weight gain. And to boot, the inhaler is the size of a whistle! It will likely be a disposable inhaler....

Next VFC states, "if management can maximize the value of that delivery system then I think that GNBT is going to be a global player and a winner of a stock." (I'm assuming you mean using the nasal delivery method for other medicines). Yet, again you ignore or fail to disclose MNKD FACTS. They've patented the Technosphere platform which is the delivery method for it's hybrid insulin, and they are in major trials to leverage the technology in the area of onconlogy (cancer). According to the company the results have been quite impressive. In fact Al Mann stated on a company conference call, "the oncology department is all smiles these days." Seldom do you hear such bullish statements from a company's owner.

So based on the metrics you used for GNBT, if you were aware of the FACTS, you would come to the same or better conclusions regarding MNKD. I'll set aside Al Mann's track record.

Stick to the facts people, because you're not getting them here. There's an obvious slant to VFC's "opinion." And by the way, this isn't a knock on GNBT as much as it's a calling out of the article's author who has placed himself in the position of misleading people.

Disclosure: I'm long MNKD.

Oct 12 12:52 PM

[pacard:]

And by the way, I think it's a total disservice to readers to preface your (VFC's) opinions by stating these are just your "initial impressions." That to me means you haven't concluded your due diligence, don't know the facts but just want to get some press.

If you haven't done your homework you should withhold your opinions.

Last, for those that want facts visit MNKD's website and listen to the two webcasted company presentations: www.news.mannkindcorp....

Oct 12 01:39 PM

[Kov:]

I am just a newbie. Just reading for now.

Oct 15 12:09 PM