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Sunday, October 11, 2009

Readers Respond: GNBT

GNBT: A couple of comments regarding Generex:

Mannkind (MNKD) and Generex Biotechnology (GNBT) were mentioned in today's New York Times:
http://www.nytimes.com/2009/10/11/business/11novel.html

Best,
Shiela Wilson


Thanks so much for the response! I am interested in your crystal ball for 2011. I think GNBT can match or exceed their competitor Mannkind's (MNKD) current market capitalization of $686.81 million (figures per Yahoo Finance) which would give GNBT a price of $3.78 post Phase III, but pre-approval (during 2010). This is about 5 1/2 times the current price. Since GNBT product, unlike MNKD's, doesn't go into the lungs with the concomitant risks, I feel GNBT's market capitalization should set the bar, not the other way around. I am not familiar with NVD. How does their system differ from GNBT and MNKD, and which do you feel is superior? Do you agree with my thesis on GNBT's pre-approval price? ...and your thoughts on 2011?

Gillmore Viltati


VFC's Take: The New York Times article was a good one. My initial thoughts were that the article was too favorable to Mannkind's delivery system that utilizes the lungs, but it turns out that the Generex cheek-lining system gets the better press, in my opinion, and that's the way it should be. There's a lot to be said for a spray method of delivery that does not use the longs.

It's possible that those investors that don't have A-D-D and have a memory span of more than a day will keep this article in mind for the resumption of trading on Tuesday and maybe buy a few shares of GNBT.

Thanks for sharing the link, Shiela, it's good press.

In response to Gillmore, I do think that the GNBT market cap will eventually surpass that of MNKD's, but I don't believe that time will be until either just before the FDA is due to issue a decision or just after, depending on the market. I say "depending on the market" because it looks like biotech stocks are starting to trade up before an FDA decision and down after the decision is announced, whether that decision is positive or not.

It's my opinion that a diabetes insulin spray that does not effect the lungs is going to be a huge product, if approved in the US. If Oral-Lyn does receive a US approval, after already having been approved in various countries around the globe, then I think that GNBT will be a ten-bagger from its current prices sometime in 2011.

The development of additional products utilizing RapidMist could grow the company even more.

As for Novadel, that company also has an oral spray drug delivery system that utilizes the inner lining of the mouth vice the lungs, but even with two FDA approved products that company and its stock have gone nowhere. I sold my shares in that company a while ago and moved on; meanwhile the stock still hasn't moved.

That being said, an oral insulin is a whole lot bigger than anything NVD has and I get the feeling that Generex, with a growing global presence, will be able to market their product more efficiently. All just my opinion.

Keep in mind, however, that I also feel that in order for Oral-Lyn to achieve the success that I call deem as possible in this response, it needs to be accepted by the medical field and also by the patients involved. It's my opinion that if the Oral-Lyn Phase III results are positive, then the medical field should become believers. As for the patients, I think that taking a spray in the mouth has to be preferable to the inconveniences of a shot - but I can't speak for the patients themselves, I can only speculate.

I'll add shares of GNBT on any dips.

Disclosure: VFC is long GNBT and has no interestes in MNKD or NVD.

Paradysz Matera

5 comments:

  1. Your belief is that GNBT will be a 10-bagger in 2011. What stocks do you believe will be 10-baggers for 2010? Are there any stocks in this list that you would buy first to then roll to others?
    As a side note, are there any charities you support that readers can make contributions to as an indirect way of thanking you? You help us, we can therefore help others from our stock earnings...just a thought; one hand washes the other.

    Carson Wade

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  2. Good note Carson.

    Shiela

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  3. Two Fraudian slips???:
    In the last sentence of the first paragraph you said: "that does not use the LONGS" (lungs), and in the seventh paragraph you wrote: "inner lining of the mouth VICE the lungs" (versus). I found these entertaining even though obviously not intended.

    Best regards and success.

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  4. Hoe does GNBT's delivery system in the inner cheek differ from BDSI? Isn't BDSI's proprietary?

    Thanks.

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  5. PR's cant be definitive which explains why CEO of NVD used "if" type language. Nitro production had to be moved from bankrupt INYX in puerto rico which when you look at last 10-q, they spent their precious dollars on nitromist items, ie re-production setup costs. As for Zolpi, 1-2 qtrs of ramp up and sales force setup seems reasonable to me, could also be sooner with right development dollars coming from partner. My takeway from PR was that CEO used the words "could be launched by the LICESSEE as early..." which tells me its one party taking both which lowers execution risk. NVD never went out on a limb in any PR's like this so i rate it a buy based on their leading indications of a deal by year end, but most noteably by Nov 16th which is the date by which they must satisfy AMEX. We are near the event we all have been waiting for for years in my opinion. Ultimately, once the deals are in place and a valuation between 1-2 is in place, i see a buyout or merger happening from a strategic generic pharma.

    ReplyDelete

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