Today I am going to discuss Generex’s (GNBT) Oral-Lyn insulin therapy for diabetes. This wil be a three part series so for the more advanced Generex invesotrs out there, hold your horses, part 2 and 3 will be out in the next couple of days.

Oral-lyn is one of these insulin devices that delivers insulin to patients without the needles and hardships involved with standard insulin delivery. The product has been in development for as long as I can remember. I clearly remember when this stock was the darling of Wall Street and the diabetic investment community, company executives even went on record stating that this drug was going to be on the market and through the clinical trial process by 2002. So what the hell happened? Well, to say Generex has hit a few bumps in the road would be an understatement. Back in the early 2000’s Generex had signed a development agreement with drug giant Eli Lilly only to watch them walk away from the entire deal in 2003, Lilly would do the same thing to a similar drug (AIR Inhaled Insulin) they were developing with Alkermes in 2008. And on top of that, a similar product from Pfizer called Exubera, which was an inhalable version of insulin, failed miserably among patients and doctors leading the company to pull the drug from the market and causing Pfizer to take a $2 billion charge. This pullback from larger pharma companies against an alternative insulin delivery system has led many in the pharma industry to the belief that an alternative delivery device via the mouth or inhaler is not a viable investment.

Alright, so how does Generex differ from the competitors and who exactly are the viable competitors left?

Generex’s lead product Oral-Lyn in a nutshell, is insulin delivered through its RapidMist delivery system, the RapidMist device basically delivers the insulin via buccal absorption (buccal absorption in this case simply means it is absorbed through the inner cheeks) from a spray/inhaler type device. This delivery system is supposedly their saving grace, because it is the delivery that was problematic for Pfizer’s failed drug and the many other competitor insulin delivery devices out there. You see, finding a way to deliver insulin to diabetics without the harsh needles has long been thought to be the holy-grail among pharma companies. For example, at one time Pfizer, Novo, and GlaxoSmithKline were all trying to develop/market an inhalable way to deliver insulin to patients, only to find out later that some of these inhalable devices could potentially increase the risk for lung cancer. This led to a backlash among inhalable devices in the insulin market and had most large pharma companies heading for the hills. That is where Generex’s drug is supposed to differ, you see the insulin wouldn’t make it into the lungs and therefore there would not be a lung cancer risk attached to the drug. Many on Wall Street however, are skeptical that the device can deliver on the expectations because of so many problems in the past with the larger pharma companies attempts to market an alternative insulin delivery method. So who is left standing with competitor devices in the diabetes arena?

Competitors, who are they?

Biodel Pharmaceuticals (BIOD): VIAtab, an oral insulin dose in Phase 2 trials

Mannkind Corporation (MNKD): Afresa, an inhalable form of insulin, NDA submitted Feb 2009, PDUFA date January 16, 2009

Emisphere Technologies (EMIS): They had an Oral Insulin indication they were pursuing, but discontinued this indication to focus on GLP-1 which is a potential treatment for diabetes, (article link here)

Out of all of these, the only one that I see as a reasonable competitor is Mannkind’s Afresa. Mannkind is run by Alfred Mann who has a knack for getting drugs and devices approved that most other companies would walk away from. And he seems dedicated to seeing through the NDA for Afresa. So how does Generex’s Oral-lyn match up? Well, I have to admit, one of the key concerns that I have about Generex’s product is the small amount of clinical trial data out there in comparison to Mannkind’s product. Mannkind’s Afresa has been tested up and down, in and out, and whatever other way you can think of. Afresa has also faired pretty well in the trials, but its big pitfall is that it is also an inhalable form of insulin, just like Pfizer’s failed Exubera. And word on the street is that most analysts think the product will have some kind of lung warning on its box or a demand that patients see a lung doctor sporadically for check-ups which would be a worst case scenario for Afresa.

Tomorrow I will go through what the medical community is saying about the device, the Shreya warning letter scandal (article here), the N.I.C.E. award, the “Going Concern Notice,” all followed up with my estimate for approval.