Generex Biotech Soars On Strong Rodman & Renshaw Coverage

Yesterday, Rodman & Renshaw, a New York-based investment bank, initiated coverage of Generex Biotechnology Corp. (GNBT) with a “market outperform” rating and an 18-month price target of $6.00. The report is raising eyebrows because that target is nearly triple the current share price.

The coverage follows a tide of small firms that have jumped on Generex. Earlier this year, Jesup & Lamont initiated coverage of the company with a “buy” rating and a $3.25 price target and Torc Investments and Research reiterated its rating and slapped a $3.50 target on the stock. But this time, the initiation is having a real impact because Rodman & Renshaw is one of the more credible firms to cover emerging growth companies.

In the report, Analyst Navdeep Jaikaria writes that “Oral-lyn, could be a significant player in the non-injectable insulin market. We believe that Oral-lyn’s product profile, combined with strong clinical data and expected rapid growth in the global diabetic population, could result in greater than $600 million in revenues by 2013. Generex also has two other smaller products in diabetes and an early-stage cancer vaccine pipeline.”

In March of 2006, data from a clinical trial showed the company’s insulin product Oral-lyn was effective in controlling blood sugar levels in adolescents and young adults with type 1 diabetes. The stock proceeded to double on the news and traded for a brief time over $5.00 per share. But it is important to keep in mind that more significant catalysts are still far off. Late stage clinical trials of Oral-lyn will not begin until later this year and possible Food and Drug Administration approval probably will not come until 2010, according to Jaikaria.

Nonetheless, Generex is trading higher in the early afternoon hours by $.28, or 15.55%, to $2.08 on very heavy volume of 19.1 million shares, substantially higher than its normal daily volume of 923,457 shares. This is on top of yesterday’s 42% move on 19.1 million shares.