Liking the Risk/Reward in Generex

Shares of Generex touched just above seventy six cents on above average volume on Monday morning after a New York Times article over the weekend highlighted the company's Ora-Lyn insulin spray product that uses the inside lining of the cheek to deliver insulin to the bloodstream. Mannkind's (MNKD) insulin spray was also highlighted, although it was noted in the article that MNKD's spray utilizes the lungs to deliver the insulin, which could possibly raise more long term concerns than Ora-Lyn. The NYT article, which at first glance appeared to favor the Mannkind product, actually looked preferential to Ora-Lyn, in my opinion, when it was all said and done.

The article also undoubtedly drew new interest to the company and its stock, judging by the early Monday price action, but I still think that it might be a little bit too early to rule out another pullback for the short term. Possible news of an FDA approval for the product most likely will not come until late 2010.

It is my opinion that a diabetes insulin spray that has no effect the lungs, such as Ora-Lyn, is going to be huge - if approved. Oral-Lyn could also become a global force as the product is being tested in ongoing Phase III trials around the globe as well as here in the United States. Additionally, the product is currently approved for sale in both Ecuador and India, according to the company's website.

While there are inherent risks with every investment, I like the risk/reward profile of GNBT because if Ora-Lyn is eventually approved in the United States and the company can bring additional drugs to market utilizing RapidMist, then GNBT is going to turn into a real winner of a stock, in my opinion.

That being said, there is the hurdle of the FDA and then gaining the acceptance of the medical community. As for the patients, I cannot speak for any of them but I would consider an 'insulin inhaler' preferable to the inconveniences of an insulin shot, but that subject is addressed in the NYT article and shots do not seem to be a concern for many diabetics.

For the time being, my strategy is to buy the dips with GNBT.

Disclosure: Author is long GNBT

Comments

[stocklegged:]

Thanks. I am also long GNBT....
Just one more thing. What do you think about NVD? Will it stay in oblivion or explode with 2 current products approved and another one FDA should give the response soon?
I think ( I might be wrong) the company is very well positioned at this price level.

Oct 13 07:25 PM

[stocklegged:]

.........and AF is an idiot, for sure!

Oct 13 07:27 PM

[doctordave:]

If MNKD's Afresa is approved with a clean label then GNBT will be too late at the gate, IMO.

Oct 14 02:17 PM