By Michael Fitzhugh
Generex Biotechnology (OTCPK:GNBT) has hit TheStreet.com (TSCM) and its senior columnist Adam Feuerstein with a $250 million libel suit for trashing the company and its Oral-lyn inhaled insulin program. Feuerstein reported that the company was vocal about Oral-lyn's approval by the Drugs Controller General India, the Indian equivalent of the FDA, but said nothing in SEC filings or public announcements about an apparent revocation of that approval in March.
In a series of online columns, he called Generex “a total bust” and questioned the soundness of Oral-lyn's clinical testing and the underpinning of its claimed foreign commercial success in India.
On March 19, Feuerstein accused Generex of “using science and the quest to develop an alternative insulin delivery method not to actually help diabetics but as a ruse to perpetuate a 15 year-long stock promotion scheme.”
The Generex suit seeks $250 million in damages for “business defamation, product disparagement, and injurious falsehood,” the Canadian company said in a statement.
Shares of Generex have fallen from a 52-week high of $1.14 to close to their 52-week low of 45 cent per share in recent trading days, despite the announcement of new funding agreement with the private investment group, Seaside 88.
Feuerstein's reporting and the subsequent suit have stirred up passionate defenders of Generex as well as discussions about the market viability of inhaled insulin products, such as Pfizer's (NYSE:PFE) ill-fated Exubera and Mannkind's (NASDAQ:MNKD) Afrezza, which received a complete response letter from the FDA on March 15 that seeks further data in support of Afrezza’s “clinical utility.”
Generex's suit has drawn derision from industry and media observers. Reuters blogger Felix Salmon called the suit “silly” and pointed out that its headline $250 million threat is more than twice Generex's market cap.
TheStreet.com has yet to publicly respond to Generex's suit.