The Latest Diabetes Cat Fight
There are days when Diabetic Investors truly enjoys writing and today is one of those days. For years Diabetic Investor has been writing about the various shenanigans that have taken place in the never ending quest to develop a non-invasive glucose monitoring system. Almost every company in this space follows a similar path- first they come up with what they see as a great piece of technology that looks good on paper – next they find some venture money and begin work on their device – as the device progresses they continually try to raise even more money basically telling anyone who listen that they will succeed where everyone else has failed.
More often than not these companies dupe investors into investing by showing them all the well known diabetes statistics – diabetes is growing at epidemic rates – patients aren’t monitoring their glucose levels as frequently as they should – the glucose monitoring market is $6 billion and growing – and patients would test more frequently if there was “no pain” involved – they top it all off by stating that all the major players in conventional glucose monitoring would want this technology and would likely buy the company once they make it through the FDA.
The only problem is only one company has even come close to developing a non-invasive system and it was a total commercial bust. The infamous GlucoWatch, from the now defunct Cygnus Corporation, is the first and only non-invasive glucose monitor approved by the FDA. Once thought to be the hottest thing in diabetes, the GlucoWatch is now just one more technology that really didn’t work that well and failed miserably in the marketplace. It should be noted that Animas now owns the GlucoWatch and all the technology around the product.
What ends up happening in the non-invasive world is the company’s keep going back to investors asking for even more money as they are oh so close and with a few more millions they will achieve their goal. Eventually they run out of suckers to bilk, close up shop and comeback with the same worthless technology under a new name and start the process all over again.
For years Diabetic Investor looked at the quest to develop a needle free insulin delivery system much the same way as the quest to develop a non-invasive glucose monitor. Like non-invasive glucose monitoring the centerpiece of this quest is the widely held belief that the reason more patients aren’t using insulin has to do with the pain of injecting. It’s perfectly logical belief for someone who knows nothing about insulin as most non-insulin people see any injection as a painful event. They can’t imagine someone who willingly injects themselves three or more times each and every day.
Like non-invasive glucose monitoring many companies tried and failed to develop a needle free method for delivering insulin. That was until Inhaled Therapeutics, now Nektar Therapeutics (NASDAQ:NKTR), developed an inhaled form of insulin. The company partnered with pharmaceutical giant Pfizer (NYSE:PFE) and Exubera was born. From the beginning Diabetic Investor felt Exubera would be a commercial bust, once stating that we would run naked down Madison Avenue if Exubera ever reached blockbuster status. Yet, several respected analysts continued to state that Exubera would revolutionize insulin therapy and achieve peak sales of $3 billion. Once again Diabetic Investor proved to be very accurate in our Exubera assessment as Pfizer eventually pulled Exubera from the market and took a $4 billion charge to write off this disastrous investment.
Inhaled insulin looked all but dead as every company that had inhaled insulin under development killed their projects. A list that includes insulin giants Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). The sole remaining player is MannKind (NASDAQ:MNKD) who’s AFREZZA product just received some very bad news from the FDA and looks to be another multi-million dollar bust.
Watching all this is a small Canadian company Generex Biotechnology (NASDAQ:GNBT). Unlike others in the pursuit of a non-injectable form of insulin Generex pursed a path where the insulin would be absorbed buccally (the lining of the mouth). When Diabetic Investor first ran across Generex what impressed us was not buccal delivery rather the simplicity of their delivery device – think asthma inhaler. The patient would simply place this simple device by their mouth, push down and the insulin would be delivered. The big issue back than was would the product actually work, we knew they had the device part right but we weren’t sure if the insulin would be absorbed properly. As with many of these projects the devil is always in the details.
For years the company kept telling Diabetic Investor they would have more information and would be running extensive clinical trials. Each time Diabetic Investor pressed the company on when we would see more clinical data, real clinical data the standard answer was; it’s coming. Suffice it to say the clinical work that was conducted did not meet the rigorous standards followed by Exubera or AFREZZA.
One thing the company was particularly good at was writing and issuing press releases. So much so that Diabetic Investor once noted their true calling was not alternate insulin delivery systems but stock promotion. While initially impressed with the Generex, Diabetic Investor frankly got tired of waiting for this much hyped real clinical work to appear and realized that Generex really didn’t have much to offer.
That was until the company issued yet another press release today which demanded that TheStreet.com issue a retraction of what they claim is a false and misleading article written by Adam Feuerstien, which as posted on TheStreet.com website last Friday. The article basically states that Generex is not a good investment and outlines the reasons why. According to the Generex press release; “TheStreet.com columnist Adam Feuerstein makes erroneous claims about Generex and its flagship product Generex Oral-lyn(TM), an oral insulin spray currently in Phase III clinical trials for the treatment of Type I and Type II diabetes.”
Reading through the article all Diabetic Investor can say is that not only is Mr. Feuerstein on target, he could have been much harsher on Generex. For years this company has done nothing but make extravagant claims in the hopes of boosting the price of their stock. Like the many non-invasive glucose monitoring companies who have bilked investors out of millions of dollars and really had nothing in mind but to fatten their own wallets, Generex after years of claims has failed to deliver on any of their much hyped promises.
Like so many companies using the fear of needle concept as the cornerstone of their strategy, Generex is playing to uniformed investors who in reality deserve to be taken to the cleaners as even a small amount of due diligence would expose Generex for what it truly is; a very bad investment. Diabetic Investor actually thinks investors should thank TheStreet.com and Mr. Feuerstein for their work and preventing more investors from investing their hard earned money into this shame of a company.
Diabetic Investor is also assumed that it took Generex four days to respond to this article and that they would even bother responding at all. Seeing as they are experts on issuing press releases, the company is probably following the old adage that even bad publicity is better than no publicity at all.
Given their dubious statements and lack of any real concrete data Diabetic Investor believes it’s time for Generex to reexamine their open mouth insert foot communication strategy. We’ve said it a thousand times before; better to be thought a fool than to open your mouth and remove all doubt. The fact is the real fools here are any investors stupid enough to believe anything Generex says.
