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Adam Feuerstein on Biotech Stock Mailbag, decided to bash Generex (OTCQB:GNBT) with the fervor of a message board poster. I would shrug it off, but it looks like the stock has reacted to his blistering tirade. And moreover, he gives me a chance to once again revisit Big Pharma.

Myth #1. Big Business Knows What It’s Doing.

Adam Feuerstein says

If Ora-Lyn was real, Big Pharma would have snatched up the technology a long time ago.

The management of Big Pharma is not so impressive. If it were, the pipeline of the drug companies wouldn’t be so empty, and Pfizer (PFE) wouldn’t be doing a gargantuan merger with Wyeth (WYE) for $68 billion. And frankly, I am worn out by all their sincere commercials to warn me about cholesterol. You could almost forget cholesterol is an important substance essential for all animal life to build and maintain membranes and other functions.

And if Pfizer is so all-knowing, how come they didn’t know that diabetics would get nervous about inhaling stuff into their lungs? They couldn’t throw a few million to do a few focus groups? Dr. Gerald Bernstein, a former president of the American Diabetics Association never thought it would be well-received. He joined Generex’s team as an Executive VP.

On the FDA’s lukewarm reception of Mannkind’s (MNKD) Afrezza in which they ask for more information on its clinical utility? I take to mean that inhaled products have already been shown not to be well-received by patients. So, to Feuerstein’s observation that Al Mann could have bought Generex several times over for the money he’s spent on his inhaled insulin, my response is: It looks like he made a mistake.

We are not talking about the drug. Insulin is what Linus Pauling would call an orthomolecular substance. Something made by the body. Not likely to be rejected. So, all Generex is attempting to do is to prove it can be absorbed in the lining of the mouth, and it looks like it can. The FDA approved its use in its IND (Investigational New Drug) program. Why not? Insulin is a body-produced substance.

I agree with Feuerstein that Anna Gluskin would do well to conserve the company’s cash by taking more of compensation in options or shares. Also, I believe she is short-changing her own financial well-being.

The company from time to time reminds people that their main focus is drug delivery, which they have tested on a number of substances, and it seems to work. I had luck once with a drug delivery company called Alza. I learned of it through a junk mail letter. I owned it at 3, and sold at 18. My brother owned it at 3 and held it to 32, when it collapsed back to 18, where he sold it. From 18, I think it went to 200, when it got bought by Johnson & Johnson (JNJ) for $10.5 billion.

If Johnson and Johnson had such great management, why didn’t they buy it at $3. My answer is that Big Pharma is clumsy and not run by a bunch of geniuses. Remember, basically, the MBA is a care-taker degree. Bill Gates quit college after his second year, and he never looked back.

This piece does not address the company's other prospect, its vaccine technology, which may be no less interesting than the drug delivery company.

Disclosure: Long GNBT

Source: Generex Brouhaha: Big Pharma Is Actually Not So Smart