Attached files
| file | filename |
|---|---|
| 8-K - GENEREX BIOTECHNOLOGY CORP | v199177_8k.htm |
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
Page
1
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator: Mark
Fletcher
October
12, 2010
10:00
a.m. ET
|
Operator:
|
Good
day, ladies and gentlemen, and thank you for standing
by. Welcome to the Generex Biotechnology Conference to discuss
the global medical direct acquisitions. At this time all
participants are in a listen-only mode. Later, we will conduct
a question-and-answer session, and instructions will follow at that
time. If anyone should require assistance while the conference
is in progress, please press star and then zero on your touch-tone
telephone to reach an operator. As a reminder, this conference
may be recorded. I would like to introduce your host for today,
Mr. Mark Fletcher. Sir, please go
ahead.
|
|
Mark
Fletcher:
|
Good
morning, everyone, I’m Mark Fletcher, Interim President and CEO of
Generex. Assisting me with our call this morning are
a number of people on our team; I’ll just run through that list with you
now. Dr. Eric Von Hofe, President of Antigen Express, our
wholly-owned sub; Dr. Craig Eagle, of our Scientific Advisory Board; Dr.
Gerald Bernstein, our Vice President of Medical Affairs; George Markus,
our Vice President for Regulatory and Scientific Affairs; two Advisors to
the company, Dr. David Brusegard and Dr. Joseph Rubinfeld, and Stephen
Fellows, our Vice President of
Finance.
|
|
|
I’m
obligated to start off by making a reference to forward-looking statements
and the (State Harbor Statement) under the Private Securities Litigation
Reform Act of 1995. During this conference call, management
will be discussed financial projections, information or expectations of
the company’s products or markets or otherwise make statements about the
future, which statements are forward-looking and subject to a number of
risks and uncertainties that could cause actual results to differ
materially from the statements made. Each risks and
uncertainties are detailed in the company’s filings with the
SEC. Our foreign 10K Annual Report in respect of our fiscal
year ended July 31, 2010, will be filed with the SEC on October
14.
|
1
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
Once
again, thank you to all of you who are joining us for this call to discuss
recent developments here at Generex. First and foremost, I’d
like to say on behalf of our entire team that we remain committed to the
successful development and commercialization of our rich pipeline of
products. We’ve been moving to streamline our efforts as well
as act on items which we believe are critical to the long-term success of
our organization. A major step forward for us in positioning
Generex Oral-lyn, as well as our other diabetes-related products, for the
future, is our recently announced agreement to acquire 51 percent of
Global Medical Direct, a private
company.
|
For those
of you unfamiliar with GMD, it is a nationwide durable medical equipment and
pharmaceutical provider specializing in direct-to-consumer diabetes supplies and
medications. GMD provides its growing roster of more than sixty-five
thousand patients with an easy-to-use, cost-effective and convenient way for
them to obtain their diabetes supplies and medications through their health
plans or employer and government payors such as Medicare and
Medicaid. GMD provides its patients with blood-glucose meters, test
strips, lancets, insulin, insulin pumps, and diabetes maintenance medications
and supplies. GMD manages the reimbursement process for patients,
dealing directly with insurers and payors.
|
|
We
see this acquisition being a great benefit to our company on a number of
different levels. First, their business has been growing at a
double-digit level, both top and bottom line, for five years, with
projected calendar 2010 revenue of $30 million and net income
of approximately $8 million. For our $25 million investment we
acquired 51 percent of this fast-growing company at approximately six
times this year’s earnings. The acquisition is scheduled to
close in January 2011. In the interim, we are conducting a full
audit of the business to ensure that our purchase price is based on
independently verified information.
|
2
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
Secondly,
GMD operates in a diabetes space, creating a host of complementary,
revenue-generating opportunities for both companies. Having a
platform to cost-effectively reach out to a growing patient base
of sixty-five thousand and their physicians for our Generex
Oral-lyn Treatment (IND) program as well as when we complete the FDA
approval process for the product, will be of great benefit to both of our
companies.
|
|
|
Additionally,
the ability to quickly reach this patient base for our Glucose RapidSpray,
as well as our other diabetic products, should (produce) our revenue from
the outset.
|
|
|
Thirdly,
GMD has a sophisticated distribution hub which will serve as a co-location
for our commercialization of Generex Oral-lyn and our other proprietary
products in this category.
|
|
|
Fourthly,
and perhaps most importantly, is that GMD has a staff of professionals
that have an in-depth knowledge of the insurance and government
reimbursement system. Their expertise in setting up patients
under this system will be of great importance to the treatment (IND)
program as well as once we achieve full FDA approval. This
knowledge will also be of great value down the road for our vaccine
platform.
|
|
|
All
in all, we believe this acquisition is a win-win scenario, and we look
forward to working with GMD’s management to forward both of our
operations.
|
|
|
Now
before I move on to talk about some of the other items on our agenda, I
would like to turn the call over briefly to Dr. Eric Von Hofe and Dr.
Craig Eagle to briefly discuss our vaccine platform and our initiatives
for the future. Eric?
|
|
Eric
Von Hofe:
|
OK,
thanks a lot, Mark. I’d just like to say initially that this is
a very exciting year for Antigen Express, as I’m sure you all are aware
that we are going to have the first approval of an active immunotherapy
for cancer this year, which clearly changed the environment, and I think
it made people realize that active immunotherapy is a reality and can
succeed in the clinic. Secondly, we announced positive interim
results from our Phase II trial of our (IIkey) hybrid against HERC2
positive breast cancer. So it’s been a very good year from that
perspective. So what I’d like to do is just give a very brief
overview of the different projects of Antigen
Express.
|
3
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
So
those are our primary clinical projects in the oncology
space. We also have done some clinical trials with influenza,
as we’ve announced, and while it’s faded from the public attention, we
still believe that having synthetic (peptide) is important in preparedness
for pandemic influenza. We also believe that this could have a
place for the clinic for seasonal
influenza.
|
|
|
Finally
I’d also like to say that we’re working on a diabetes (inaudible) so this
is an immuno-modulator whereby we can inhibit the autoimmune process which
is the basis for Type-I diabetes. This is the pre-clinical
stage, but we’re very hopeful to bring that into the clinic in the
not-too-distant future. So those are our primary projects, we
also have a few pre-clinical projects such as (HPB) which is the causative
agent in cervical cancer, that we’re also pursuing. So I think
we have a rough pipeline, and as I said at the beginning, I feel very
positive about both the pipelines, the development of potential Antigen
Express as well as the recurrent environment for developing those
projects. So with that, I’d like to turn it over the Craig for
his comments.
|
|
Craig
Eagle:
|
Thanks
Eric. For the people on the phone, my name is Craig Eagle, and
I’m an MD by training in Australia, and I’ve been working with Generex for
the last six to nine months as part of its Scientific Advisory Board, and
really what I want to do and discuss today was two very high-level
concepts particularly around Antigen Express and the immune
portfolio. And the first is around the science. We
all every day depend upon the immune system to protect us from diseases
whether it be cancer or infections. And we know, and certainly
many companies in the field of cancer technology are looking at ways to
augment the immune system to attack cancer. One of the things
that Antigen Express is working on is looking at it from two
angles. One is to stimulate the immune system in itself, that’s
(two key) protein, and the other is to (inaudible) direct and stimulate
the immune system to a specific target. Now the beauty of this
approach and the reason that I think there’s a lot of potential research
required here to prove whether these compounds achieve treatment in cancer
centers around the fact that, as Eric mentioned, the
platform.
|
4
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
In
particular the platform of stimulating the immune system and directing it
is a platform that has been recommended in the scientific world of
(immuno-) oncology, and at the moment, the forerunner is looking at HERC2
breast cancer. Now the beauty of looking at HERC2 breast cancer
as the forerunner is that Antigen Express, I believe, has designed the
right experiments to test whether the vaccine works, but also HERC2
expression breast cancer is an area that has already shown and been well
defined to have benefit from treatment, in particular, people may be
familiar with a product called Herceptin, and Herceptin was a breakthrough
for treating patients with that particular
cancer.
|
And so
the vaccine will then add and be able to augment potentially the immune system
in a (robified) cancer population that still needs further
treatment. Also, what makes it exciting from the Antigen Express
point of view, in my view, is related to the fact that they can build on that
cancer immunology to then branch out to other cancers where there could be
positive results. In particular, the signs would suggest that the
HERC2 expression, just like Herceptin, has been used in other cancers, could be
explored with further research on its benefit there.
|
|
Finally
I just want to move along to other areas, and Eric mentioned those, and
that is the immune system could be used in (antigen effectives (ph) or as
an immune modulator for areas like diabetes. So now when you
look across multiple and different biotech companies, and certainly from a
research point of view, there are probably three criteria that are key to
remember. The first is that, as Eric mentioned, in the Antigen
Express space there’s a platform. A platform to stimulate the
immune system to achieve what it needs to achieve to control cancer,
infections and other diseases, and it’s just a case of producing, testing
and doing the right research to develop those products
forward. The second area, then, is to do the right experiments
and the right testing, and Eric and the team at Antigen Express have been
working very hard to make sure that the trials that they are doing are
trials that we (to the) right questions from a scientific point of
view.
|
5
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
So
the quality of the trials has to be paramount and above all very important
to show whether the (products) worth or not. And finally the
third area is actually an overall direction for the potential treatment of
patients in a (robified) population. So I’ve already mentioned
that HERC2 breast cancer is well defined and there is a very significant
unmet medical need with women with cancer of the breast who get their
cancer progressing despite the best standard of care, and so there’s
certainly potential here to actually save lives and help women with breast
cancer. So all in all I think that Antigen Express creates a
great, stable platform to actually explore and research these compounds
moving forward. I’ll hand over now to Gerry Bernstein who can
then further discuss the metabolic aspects of
Generex. Gerry?
|
|
Gerald
Bernstein:
|
Thank
you, Craig. The Generex metabolic platform is extremely well
placed to deal with the continuously expanding numbers of people not only
with Type-II diabetes, but in addition, with the bottom of the iceberg,
pre-diabetes, and the CDC has called out for aggressive treatment of
pre-diabetes. And all of this is geared to reducing risk for
cardiovascular and microvascular complications. To remind you,
Oral-lyn is human regular insulin in a liquid formulation that is blown
into the mouth with a simple device that allows the insulin to penetrate
the lining of the mouth and go directly into the bloodstream, something
like nitroglycerin. What that allows is a very rapid entry of
the insulin, a very early peak, and a return to baseline without any tale
of activity, therefore minimizing the risk for
hypoglycemia.
|
6
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
The
ease of use and the hypoglycemic risk reduction are critically important
for patient and physician acceptance of the product, and I’d remind you to
think of nitroglycerin and how quickly that works, it’s a very similar
mechanism. Secondly, the particles that (come) out of this
device, it looks like an (inaudible) device, are two large to go into the
lungs, and the acceleration out of the device is not strong enough to
drive it down even if it could. So, in no way, under any form,
do our Oral-lyn particles enter the
lungs.
|
The
importance of all of this, again, it is a safe, simple, fast and flexible means
of providing insulin into a population that is going to need it. The
second product which incorporates Metformin is utilizing medicinal
gum. One of the inhibitors of aggressive Metformin use is the size of
the pill, the bitterness, and a number of other
factors. Incorporating it into a good-tasting gum will increase the
number of people who will access Metformin. Metformin and insulin,
along with lifestyle changes, are basically the bulwark of treatment not only
for existing clinical Type-II diabetes, but for the pre-diabetic
population.
|
|
The
other product, Glucose RapidSpray, which is an over-the-counter form of
glucose, is particularly important because what is allows people to do is
that, whether they have mild episodes of hypoglycemia, they are able to
restore their blood glucose to normal and eliminate the disruptive
symptoms by utilizing only the amount of glucose that is really necessary
and not affording additional risk by running the blood sugar up to very
high levels as happens with the larger dose. It is not a rescue
item, but in terms of quality of life, it plays a very important
role. And the concept of restoring glucose on a dose basis is
something that we’ve been able to get people to accept and utilize with
great satisfaction. Now Oral-lyn is used currently either
through protocols or commercially around the world, and I will pass on to
George Markus so he can discuss some various protocols and the condition
of Oral-lyn at the present
time. George?
|
|
George
Markus:
|
Good
morning everyone. I would like to now provide the Regulatory
and Scientific Affairs status update for the three key areas, we’ve got
Generex Oral-lyn, (for med) control, as well as Insulin for
Pets. For each of these projects there are two key areas that
we will now update the status for, and that will be for clinical studies
as well as for regulatory registrations. For Generex Oral-lyn,
our currently global pivotal study that is being conducted on subjects
with Type-I diabetes is near completion of the enrollment
phase. It is believed that earlier estimates of required
subjects for the non-inferiority designed study will be reached
soon. This milestone is significant as the treatment phase will
formally end following a six-month period after the last subject enrolls
in the study.
|
7
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
Its
agency has agreed to have our marketing application submitted following
the treatment phase of the study, Generex would start submitting
electronic CTDs to global agencies as early as 2Q 2011. With
this in place, the final updated clinical data would be submitted to
global agencies following the completion of the follow-up phase of the
study which would be approximately six to eight months later, and this
would be approximately 4Q 2011.
|
All
historic clinical studies conducted to date have been formally written up as
study reports in ICH format. This will assist us for all future
regulatory submissions for global marketing application. Other
clinical studies are also being planned to support various label claims, and
they are actively being pursued. Communications with global agencies
will continue in order to facilitate the approval contract. And
finally our treatment IND is actively ongoing with (AE US). Regarding
the med control products, a major phase of our (inaudible) development has been
completed.
|
|
Our
formulated gum tablet has been determined to be bioequivalent to the
innovator. With this milestone, minor esthetic adjustments are
still required, and this should be completed in the upcoming
months. It is anticipated that our marketing application may
commence sometime in 2011, which will only follow the completion of (scale
up) operations mandated by registration guidelines along with other
similar bioequivalence confirmation studies. Communications
with global agencies are planned in order to facilitate the approval
contract.
|
Our last
segmented project, highlighted here, is Insulin for Pets. (inaudible)
studies have demonstrated the significance of the product using
dogs. Future studies are now being planned for animals with
diabetes. This will require development of the finished product and
conduct of various clinical studies on animals. (inaudible) dogs and
cats at this point in time to establish and confirm
(inaudible). These activities including various registrations are
scheduled for 2011 and 2012. At this point, I would like to hand over
the status (inaudible) to Dr. David Brusegard.
8
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
David
Brusegard:
|
Good
morning. I’m a consultant to Generex, and I was part of the due
diligence team that traveled the campus, and my goal was to in fact
examine the business process, the business practices and the potential for
growth of GMD in context of joining with Generex. We have to
find necessary and creative synergies, as George has pointed out, the oral
(rim) product, while not approved today, is very close. We have
the treatment IND in place, but one of the Catch 22 issues with the
treatment IND is we are not allowed to market using traditional marketing
activities, which means that we need a way to speak to doctors, consumers,
and patients in the absence of the traditional marketing
methodology. What I discovered in looking at GMD for some time,
is that they have in fact a contact
engine.
|
|
|
They
have a one-to-one relationship with patients which is second to none, they
actually speak to them on a regular basis, talk to them about their
medication use, sell them new strips and other related
products, and continue to contact them. In addition,
they recruit on an ongoing basis up to two thousand or more individuals
which means their actual reach of diabetics who require treatment is well
beyond that sixty-five thousand. Their seven-eight-plus-person
call center allows them to execute on that reach. We can’t
afford mass marketing, but this gives us some of the reach we
need.
|
To
complement this, they have an education engine which is not only a newsletter,
but the ability to package in their product mailouts scientific information
which can display, and not necessarily promote, but inform, consumers about
Oral-lyn and other related products. This allows us to actually reach
doctors and, potentially, insurers through the consumer who is the first point
of contact. They also have a compliance monitor which we found
extremely interesting, and most interesting to doctors and insurance
companies.
9
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
By
compliance monitor, I mean they actually keep track of the utilization of
testing products by consumers. This is extremely important for
the prevention of future complications and ossifications from
patients. Both doctors and insurers are extremely interested in
the compliance behavior of consumers. GMD gives us that ability
to utilize that information to work closer with doctors, clinics and
insurers and bring some of the issues we have to the fore. One
of our biggest issues is obviously the need to get traction on
reimbursement for our product.
|
The
product is not currently on formularies, but positioning the GMD gives us the
ability to talk about reimbursement for the (in-zone) component of our product
with insurers. It also gives us the partnership with a company that
understands for every state in the union, the reimbursement process with the
exception process has relationships with payors and their billing departments on
an ongoing basis. Lastly, this is a selling engine for pharmaceutical
products related to diabetes. Not only does this position well our
Oral-lyn product and the Metformin product, but anything else we should bring to
that particular platform.
|
|
If
existing substantial revenue and double-digit growth we’ve examined from
detail—and even in the process of extensive health reform through the
Obama administration, they have managed to maintain that growth, which is
an Herculean achievement from some perspectives. Now all in
all, our conclusions on this business were that (inaudible) it solved a
significant number of the challenges that face Generex, and through this
acquisition gave us a platform for the launch of Oral-lyn when it was
finally approved, but also the ability to execute on the treatment IND
right now and also to move our current products into that market right
now. Thank you. I’m now going to call on Dr. Joseph
Rubinfeld to give us a final update on his
project.
|
|
Joseph
Rubinfeld:
|
Good
morning, everybody. As you are well aware, I joined the
Scientific Advisory Board of Generex eighteen months ago, and one of the
reasons I was drawn to it is because of the two platform technologies that
they have. And that’s very important to have platform
technologies as well as products. The platform technologies
actually fit well into my background. One was in cancer, and I
was one of the initial founders of the oncology division in Bristol-Myers,
and after that I went on to become the co-founder of Amgen, and out of
Amgen, actually (Kiron) and Applied Biosystems were spinouts, and then I
was also founder of (Supagen), and one of the things we did at both
Bristol-Myers and (Supagen) was also concentrate on drug
delivery.
|
10
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
And
so the second platform technology that actually Generex has is the buccal
delivery system, and that can be applied across the board to many
products, so it’s not just Oral-lyn that I was looking at, but a whole
host of products. So the science in Generex is very
exciting. Now, as with most biotech companies things take
longer than people want, but that’s not a knock because the whole idea in
the biotech industry is to stay around until you have a big
hit. And I bring, just as an example, Rituxan, which launched,
actually, Genentech into the cancer business, was almost a dead product
from my time, and at the last minute was rescued, and also Herceptin was
the follow-on that was mentioned before. So there are many
examples in biotech where the initial thrust is not as good as you want,
but then it turns out to be very advantageous. And I think
that’s what Generex has, and we are now, as you’ve heard from the other
speakers, really moving things
along.
|
|
|
We
have reorganized, we have a scientific advisory board, between Greg Eagle
and myself we have over seventy years of experience in this
business. We’re really doing things and getting things moving,
and I believe in the future and the coming months, and as you saw our
program really is for 2011, and that’s just around the
corner. So I think that Generex has crossed a milestone now,
it’s almost finished with the actual enrollment phase of Oral-lyn, the
vaccine is moving forward into the clinic, it’s actually in patients, so
all in all, I think that people have to look to the future, think of
Generex as one of the coming stars in biotech, and really put their
efforts behind the team here, which is trying to build a very big biotech
company. Thank you.
|
|
Stephen
Fellows:
|
Thank
you very much, Dr. Rubinfeld. I will now address the last item
on our agenda which is the NASDAQ listing. There’s been a great
deal of discussion among management and stockholders about the NASDAQ
listing. As you are all aware, we have a vote coming up on
Friday, which will determine whether or not we remain listed on
NASDAQ. I would like to reiterate that based on the current
stock price, management intends to seek no more than a one for four
reverse split. Most people have very strong opinions regarding
this issue, but I must emphasize that we believe the liquidity and
corporate (inaudible) that the NASDAQ listing provides are extremely
valuable assets to us at this time as we seek to add top caliber talent to
our management team and establish partnerships for our pipeline of
products. In addition, an Exchange listing in almost all cases
provides stockholders with better valuations as many institutions and
small cap funds are prohibited from owning or investing in non-Exchange
listed companies.
|
11
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
While
I’ve stated publicly that either way we will work to reach our corporate
goals, we believe this course of action, that is remaining on NASDAQ,
coupled with the right (inaudible) we intend to proceed with if the
reverse stock split is approved, will enable our current stockholders to
have the opportunity to participate in solidifying our company’s future
without significant dilution. In closing, I would like to thank
our scientific team, our management team, our Board of Directors, our
advisors and our stockholders for the support that they have given to us
as we navigate Generex towards the realization of a very promising
future. We intend to work tirelessly to build our company into
a driving force in diabetic care and a groundbreaking company in
immuno-therapeutic vaccine treatment for cancers and viruses. I
am confident that we have the vision and dedication to reach these goals
for the benefit of all of our stockholders. Allow me to thank
you all once again for joining us, and now Karen, our operator, will begin
a formal question-and-answer
session.
|
|
Operator:
|
Ladies
and gentlemen, if you have a question at this time, please press star
followed by the number one key on your touch-tone telephone. If
your question has been answered, or if you decide to remove yourself from
the queue, you may press the pound key. Once again, if anyone
does have a question, please press star and then one at this
time. One moment for our first question, and our first question
comes from the line of (David Carlin) of Legend
Securities.
|
|
(David
Carlin):
|
Hi
Mark, how are you.
|
12
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
Mark
Fletcher:
|
Not
bad (David), how are you.
|
|
(David
Carlin):
|
Great. Congratulations
on your recent announcements here. The question I had is,
coincidentally, and I doubt you’ve had a chance to really dig into the
details yet, but Pfizer is purchasing King Pharmaceuticals, and it seems
that one of the reasons for this purchase, which they are paying a pretty
significant premium for the company, is to expand their distribution
channels in this case primarily in the pain and pain management sectors;
are there any similarities that you could draw with your purchase of
Global Medical in terms of what you’ve discussed as far as adding
distribution channels and marketing platforms for your diabetic products,
and also, kind of part two to the question is, this acquisition versus the
resources it would take to go out and build a distribution channel
yourself.
|
|
Mark
Fletcher:
|
Yes,
actually there are some very valid comparisons. Clearly with
the acquisition of King Pharmaceutical, Pfizer is looking to access a
distribution chain, and that’s exactly what we are seeking to do with this
acquisition of Global Medical Direct, the distribution chain for Generex
Oral-lyn and our other diabetes-related products. And you are
quite correct, Pfizer is paying a 40 percent premium to the stock price
for King Pharmaceutical which is an indication of the value to
organizations like Generex for distribution networks of this
sort.
|
|
Joseph
Rubinfeld:
|
Again,
Mark, $3.6 billion is a far cry from $25
million.
|
|
Mark
Fletcher:
|
That’s
very true, very true.
|
|
(David
Carlin):
|
And
Mark, just kind of a follow up item, versus the cost of building it
yourself and the time it would take, can you touch on the value of the
acquisition in that regard.
|
|
Mark
Fletcher:
|
Well,
certainly. Global Medical Direct is a company that’s been
around for more than five years, and a great deal of time, effort and
money has been spent building it to where it is, a very successful and
growing organization. In my view, our valuation for 51 percent
interest in this business is spot on; the amount of money that it would
take for Generex to create this kind of a distribution chain on its own
would be prohibitive.
|
13
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(David
Carlin):
|
Great,
thank you.
|
|
Operator:
|
And
our next question comes from the line of (Steve Frazier), a private
investor.
|
|
(Steve
Frazier):
|
Yes,
hi Mark. Congratulations on your interim CEO position, I hope
all is going well, you seem like you’re very active in it, you got thrown
right into it. First question is how is the search for the new
CEO, has it started already?
|
|
Mark
Fletcher:
|
I
believe that the special committee’s intention is to engage a search
firm. The last I heard was that they were interviewing a number
of different candidates for that executive search position, and they will
proceed to look at candidates.
|
|
(Steve
Frazier):
|
OK,
so as far as you know, they have actually started that search; we just
don’t have a time frame as of yet as to whether you become the permanent
CEO or whether some more suitable replacement is found. We
don’t have a time frame as of yet?
|
|
Mark
Fletcher:
|
That’s
right. There is no specific time frame at this
point.
|
|
(Steve
Frazier):
|
OK,
that’s fine. I guess the next question regarding your split,
many investors are concerned because they feel companies are shorted right
after their stock is reversed they’re right back down. I happen
to believe that’s the case for companies without revenues, but I think for
companies that have revenues I don’t think that is the case and we can
actually excel from there. I’m not negative to the reverse
split any longer provided the revenues from this purchase were to kick in
fairly quickly. Now I think the purchase here is looking to be
finalized by January of 2011, and if it is, is that when we would start
actually recognizing revenue from the
company?
|
|
Mark
Fletcher:
|
That
is correct. Our closing for the GMD acquisition is scheduled
for January of 2011, and of course only 51 percent of GMD will result in
the consolidation of our balance sheets and our access to GMD revenue, so
there will be revenue on go-forward basis, and I agree with you that in
terms of a reverse stock split, not only the revenue but the fact that
Generex has a very robust and mature pipeline ought to provide
a great deal of value support for the stock on a post-reverse stock split
basis, particularly when we proceed with the rights offering and bring
some money into the bottom line.
|
14
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(Steve
Frazier):
|
That’s
the next question, is on the rights offering, but the pipeline is mature
now, and it’s still not putting the stock very well, so the reverse split
is not really the catalyst, I think it’s revenues, and like you said, 51
percent of the new company’s revenues are approximately $4 million of net
profit is what is projected for 2010, and hopefully that will be
increasing in double digits that growth going forward, and when you add in
Generex products, like the Glucometer and RapidSpray and everything else
into there, it should increase the profits much more substantially, but as
far as the rights offering, from reading it, I know it’s one share and two
warrants, can you explain a little more, I don’t recall whether
warrants—was one of them going to be basically at a zero cost warrant, and
another one was going to be at some (insulated) price in the
future?
|
|
Mark
Fletcher:
|
Well
unfortunately the SEC has a lot of very stringent rules related to
disclosure of offerings and offering terms and those rules prohibit me
from saying anything beyond what we put in the press release related to
the rights offering yesterday. The plan is to issue units
consisting of one share and two separate warrants, but at this point I
can’t say anything about the pricing of the units or the warrant terms,
that will have to wait until we file a rights offering circular with the
SEC.
|
|
(Steve
Frazier):
|
OK,
well, warrants in general I would think have at least a five year term on
them, so even though I guess you can’t say that, at this point
either?
|
|
Mark
Fletcher:
|
No,
unfortunately not. I would get a rap on the wrist from the SEC
if I were to do that. And you’re a lawyer, you should know
that.
|
|
(Steve
Frazier):
|
I
do know that (chuckles). Well, as far as the record base on the
rights offering, are you able to tell us, is it basically going to be the
reverse split date or is there going to be some time in the future
whenever the proper information is filed with the SEC as the terms of the
rights offering, is that going to be the record date for shareholders of
record?
|
15
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
Mark
Fletcher:
|
The
record date will be sometime after the reverse stock split takes
place.
|
|
(Steve
Frazier):
|
OK,
so anybody who’s buying stock at this point will still be able to take
advantage of the rights offering when it
happens.
|
|
Mark
Fletcher:
|
That’s
right, as long as they still hold the stock on that record
date.
|
|
(Steve
Frazier):
|
OK,
yes, I understand, that’s no problem. Now, if I could ask Dr.
Bernstein about the Metformin gum? Are you still there Dr.
Bernstein? OK. We met up at the ATM, I was there
with another gentleman, with Rick Stephens (ph), and we had a nice
conversation up there, and I do appreciate all the time that you gave us
up there on that. Metformin gum I thought was kind of on the
back burner so let me ask some questions because it sounds now like the
bioequivalent (use) has made a statement on that, and it looks like at
this point we should be able to move forward with the next Metformin
gum?
|
|
Gerry
Bernstein:
|
That’s
correct, and we actually had a meeting with the gum company during the
E.A.S.T., I believe it was, and ironed out some of the production issues
that maybe are things that we usually don’t pay too much attention to that
were inhibiting the progress, and I think on both sides everybody went out
very happy that we were going to be able to move forward on
it.
|
|
(Steve
Frazier) :
|
Any
time frame, though, on that?
|
|
Gerry
Bernstein:
|
I
have to pass it on to somebody
else.
|
|
Mark
Fletcher:
|
George
Markus will refer to that.
|
|
George
Markus:
|
We’re
anticipating the commencement of some major activity in
2011.
|
|
(Steve
Frazier):
|
As
far as 2011, is that calendar year
2011?
|
|
George
Markus:
|
Yes,
that’s right.
|
|
(Steve
Frazier):
|
OK,
so would that be to start production, or would that be to just submit
required documents and actually the sales might not start until 2012, or
are we looking to start in 2011.
|
16
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
George
Markus:
|
Sales
definitely would not start in 2011. With some additional
R&D refinement, we would be expecting to scale out some final R&D
work and then if possible do the submissions in 2011, and the agency
timelines for these kinds of submissions are usually not less than a year,
so our approval would be anticipated sometime in 2012 if that was the
case.
|
|
(Steve
Frazier):
|
OK,
gotcha. And how are we coming along on the Metformin tab that
we had discussed at the ATM meeting a few months
back.
|
|
George
Markus:
|
That
is the product that we’re talking about. It looks like a
tablet, but it’s a gum tablet.
|
|
(Steve
Frazier):
|
Oh,
OK. I thought there was going to be a dissolvable tab
underneath the tongue as well that you’re looking
at.
|
|
George
Markus:
|
Not
at this point in time, no.
|
|
(Steve
Frazier):
|
OK,
I remember having that conversation, not with you specifically but with
Mitch Wilson (ph) up there in the question-and-answer session, but I guess
the gum is the closer product at this
point.
|
|
George
Markus:
|
That
is correct.
|
|
(Steve
Frazier):
|
OK. And
if I could ask Dr. Brusegard about the website, how are we coming along on
redesigning Generex’s website that you had mentioned you were working on
several months ago.
|
|
David
Brusegard:
|
We
are doing extremely well on that, and we actually wanted to make sure that
we could integrate GMD’s activities and ours with theirs, so that
website’s modification program is well underway, and at the same time we
now need to bring the two companies together so that in time we can cross
sell, cross market and cross educate. So there’s a little more
work to be done, but we are clearly on top of
it.
|
|
(Steve
Frazier):
|
OK,
from what I heard on the conference call here, are we limited on what we
can advertise as far as the treatment IND sites, since now we have the
Generex PX IND.com site, I thought they were going to be able to put some
little ads on diabetic websites to try to direct people and educate them
about the treatment IND site.
|
17
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
David
Brusegard:
|
We
can put very straightforward informative text links on other websites, and
that product is underway, we’re waiting final approve of the verbiage from
the FDA and the IRD.
|
|
(Steve
Frazier):
|
OK,
so we’re still waiting on that, because that was two and a half months
ago, and I thought that you were expecting that within
days.
|
|
David
Brusegard:
|
We
have made multiple submissions, and it turns out that their activities are
(inaudible) and not events, so it’s taking us some time to navigate
through that particular field.
|
|
(Steve
Frazier):
|
OK,
I can understand that, that’s great. Thank you for
that. Is Dr. Rubinfeld still on the conference
call?
|
|
Joseph
Rubinfeld:
|
Yes,
I’m still here.
|
|
(Steve
Frazier):
|
OK,
I just wanted to check on the white paper status, I know I had asked a
question at the shareholders meeting, I know you weren’t able to attend,
but I had asked and (Mitch Wilson) had answered that you’ve made many,
many, many changes to everything that you’re writing up on your white
paper that was to come out some time earlier this year. Are we
still expecting this white paper, are we going to finalize anything, or
are we pretty much not going to see that at this
time.
|
|
Joseph
Rubinfeld:
|
I’ll
confirm that with (Joe Moscotto), but there is a draft in circulation at
the moment, so I can ask Joe to sort of update where we
stand.
|
|
Mark
Fletcher:
|
I
can address that. Dr. Joe is correct, we do have a draft in
circulation, and we’re in the process of making some refinements to
it. I hesitate to say exactly when we will be finished with it
because in the case of this particular white paper there are quite a few
cooks in the kitchen, but we are working on it, and we will be in a
position to release something in due
course.
|
18
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(Steve
Frazier):
|
OK,
a lot of cooks, but are we talking maybe January, if you can give maybe a
few months’ time frame, you don’t have to give an exact
date.
|
|
Mark
Fletcher:
|
I
would say within the next few months,
yes.
|
|
(Steve
Frazier):
|
OK,
within the next few months. That’s fine. I guess if
I could ask Dr. Von Hofe, we have several different, obviously, virus
vaccines between (AD) and HIV and swine and everything going on in phase
I, are they all pretty much going to stay in phase I, or are we going to
get one of them out of phase I so that when a pandemic does happen, we can
actually get a product out there?
|
|
Eric
Von Hofe:
|
Right. We’ve
done a phase I trial with peptides that were initially derived from the H5
avian influenza, and they have to (inaudible) a region that was analogous
to the H1N1 swine from last year. So, we are still pursuing
that actively, what we’re trying to do now is to get a complete
combination of peptides together which would be sufficient to generate a
response in greater than 80 percent of the people who receive that
vaccine. So as soon as we have that formulation, what we plan
to do is then to do trials of that formulation which would still be of the
phase I phase II trial to advance, so we are definitely still working on
that line. The issue there also is that while we believe it’s
clearly very important for pandemic, it can also have benefit in
individuals in vaccination against the seasonal flu, particularly with the
elderly and the very young, who don’t respond that well to the traditional
vaccine alone. So, yes, we are moving forward with
that.
|
|
(Steve
Frazier):
|
OK,
wonderful. I’m glad to hear Dr. Eagle (inaudible), but I’m glad
to hear you’re there. I guess the last question would be more
of a statement, well I guess it is a question, can you give us an update
as to why Anna Gluskin was actually removed from all positions except for
the Board of Directors position?
|
|
Mark
Fletcher:
|
Unfortunately
we can’t do that at this point. What transpired was between the
Board of Directors and Ms. Gluskin, and at this point we can’t make any
comment on it.
|
|
(Steve
Frazier):
|
OK. From
the shareholders’ view though, and I hope the Board does listen to this, I
know that the Board is not there, but from the shareholders’ view, Ms.
Gluskin and Ms. Perri are still Board members, so they need to be involved
with future Board reviews and Board decisions, and whether they remove her
from her executive position with Generex, she still needs to be involved
in the Board positions otherwise they will potentially open themselves up
to liability because they’re not allowing the Board members that were
actually voted into the Board to actually have a say, so I hope they are
involving them in that process.
|
19
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
Thank you
very much for allowing me all this time, you gave me a lot of time, and
especially with other questions, and if you have time for other questions, but
again, I do like to feel as far as—because it does have revenue and it does have
a lot of synergy—so I’m not opposed to a split, but there are a lot of strong
feelings out there, and hopefully some of those will be satisfied
here. Thank you very much for your time.
|
Mark
Fletcher:
|
Thank
you, Mr. (Frazier).
|
|
Operator:
|
Thank
you, and our next question comes from the line of (Scott Kovak) a private
investor.
|
|
(Scott
Kovak):
|
Good
morning, gentlemen, how are you
today.
|
|
Mark
Fletcher:
|
Not
bad, how are you.
|
|
(Scott
Kovak):
|
Good. A
couple of questions specifically about the GMD acquisition; in your press
release yesterday you not only talked about that acquisition, but you also
included the request to shareholders to support the reverse split; the
question that I had is can you please talk about the relationship between
the reverse split and that looming acquisition, in other words, as
currently negotiated, is the reverse split required to move forward with
that, if it’s not, without the reverse split, if it’s not approved,
where’s the cash going to come from, in other words, what’s the Plan B if
the reverse split is not approved.
|
|
Mark
Fletcher:
|
The
GMD acquisition will go forward without regard to whether or not the
reverse stock split is approved, and you are quite right, as a development
stage company, Generex will have to raise additional capital to proceed
with this development effort, and we’ll also need somebody to fund the GMD
acquisition. Without regard to whether we stay on NASDAQ or
move to the over-the-counter bulletin board, we will be raising
money. As we’ve said before, our view is that we can raise
money on more attractive terms, the NASDAQ capital market rather than the
bulletin board, but either way, we will proceed. Our feeling is
that the GMD acquisition will provide additional value to the Generex
brand that will support the stock on a post-reverse stock split
basis.
|
20
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(Scott
Kovak):
|
I
understand. Can you please offer—I know in the past the number
of 750 million potential shares in the shelf offering as potentially being
offered and then floated, given the potential of a 4 to 1 stock split, are
you reducing that 750 million by one fourth, or do you still want to keep
that 750 million as a total offering after the stock splits 4 to
1.
|
|
Mark
Fletcher:
|
Well
the way proposal that’s put forward to the stockholders is crafted, in the
event of a four to one split, the 750 million would still remain as the
authorized capital number, but I would exhort people not to make the
assumption that Generex is going to be issuing 750 million shares in the
near future. That’s simply the amount of stock that’s
theoretically available in the treasury. [NOTE/CORRECTION: In
the event that the reverse stock split proposal is approved by the
stockholders and the Board of Directors selects a reverse stock split
ratio of 1-for-4, Generex’s authorized shares of common stock would be
reduced from 750,000,000 to
500,000,000.]
|
|
(Scott
Kovak):
|
Yes,
well I’m sure you would agree that although you don’t want stockholders to
assume it could go that high, if you have the ability—then still—are you
considering that a poison until
then?
|
|
Mark
Fletcher:
|
I
don’t follow how it would be a poison
pill.
|
|
(Scott
Kovak):
|
Well
then you have that many shares in your coffer that if there were some sort
of an approach by somebody to accumulate a large position, then you would
obviously be able to issue more shares that were company
friendly.
|
|
Mark
Fletcher:
|
We
could only issue that stock for valuable consideration, so, we couldn’t
simply issue the stock, it would have to be issued to exchange for
something of value, namely cash.
|
21
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(Scott
Kovak):
|
Or
company support. OK, my final question, and I’ll let you
guys move on, and thank you for the specificity in this call, it was
greatly appreciated, and a very simple question, in the past few months
since the proxy been filed, has Generex spent any money specifically
focused on soliciting shareholder support for the reverse split, and if
so, how much.
|
|
Mark
Fletcher:
|
We
have spent some money on our proxy solicitation agent, Morrell &
Company, and I’ll ask Mr. Fellows if he has any idea how much it is at
this point.
|
|
Stephen
Fellows:
|
About
$25,000 in proxy solicitation fees.
|
|
(Scott
Kovak):
|
OK,
and was there any focus specifically on large shareholders or was it a
global effort without consideration to the
size.
|
|
Stephen
Fellows:
|
It’s
a global effort, but we are focusing on larger shareholders and Generex
representatives have made contact with some of the larger holders to keep
them in the loop and to solicit their votes in favor of the
split.
|
|
(Scott
Kovak):
|
OK,
thank you for your time.
|
|
Mark
Fletcher:
|
Thank
you very much.
|
|
Operator:
|
Thank
you, and would you like to take the next
question?
|
|
Mark
Fletcher:
|
Sure.
|
|
Operator:
|
Alright,
our next question comes from the line of (William Hanschumaker) of
C&H.
|
|
(William
Hanschumaker):
|
Gentlemen,
thank you very much for letting me speak. I’m a private
contractor and pretty nervous, I’ve never done this before, but I’m a
proud shareholder of 160,000 shares for five and a half years, and I’m
really impressed listening to the Board and it sounds like we have quite a
team now, and first and foremost on the list things I want to talk about,
but now I’m so impressed—I have a thirty-year-old son that has an
autoimmune disease for five years, and it’s called polymyositis, and his
CPK count is 2,900, but he has a great doctor, and we’re going to arrange
bringing him to Boston, and we’re stabilizing it, but my main concerns
when I’m (inaudible) every conference call in five and a half years, and
I’m very nervous, so please bear with me, but first and foremost I really
do not think that Anna has gotten the right solicitation, I don’t think
she’s a malicious person, I think that she has really been destined to
take this company forward, and we need companies like Generex to find
cures for people like my son, and I have eight brothers and sisters and my
wife has eight brothers and sisters, and they have diabetic and breast
cancer, and we lost two friends that are in their 20s to cervical cancer,
and my parents and half of my family have
cancer.
|
22
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
|
I’m
sorry about babbling, but I really am a proud shareholder, and I would
like to know—about the reverse split—I mean I’m not totally against it,
but I’ve lost a lot of money because everything I have, I’m 59 years old,
and I’m self-employed, I could build you a nice house, but I’m not a
scientist, and you guys sound like you are really on track, and I really
hope that we are going to go forward, and I’m going to stay with this
company till the end, and I don’t think anyone ever calls in my
position. I know you’re not a scam, I’ve been following you and
I listen to every single conference call, and I’m just so upset looking on
the Apple message board every day, there’s so many hackers and bashers,
and this is what the problem is, and you guys are normally good, but what
else can you do for us. I’m begging you, I pray that this
doesn’t fall (inaudible). So much money I lost in ten years,
twice on a reverse split with another drug company, and (inaudible) and
Delphi went belly up, and we were devoting all that stock for ten years,
and all of a sudden there was all those zeros in my account
when they came out of bankruptcy.
|
|
Mark
Fletcher:
|
I
can tell you that we’re definitely not scammers, speaking personally, the
key to my future is the same as the key to Generex’s future. I
too am a stockholder and I understand your concerns about a reverse stock
split but I have to say that I think that in the case of Generex, the
combination of the GMD acquisition together with the status of our
pipeline of products, puts us in a position where we can not only maintain
value on a post reverse stock split basis, but increase it. And
that is our goal.
|
23
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
(William
Hanschumaker):
|
It
sounds like a good goal. I mean, I think in the long run you’re
probably correct that—why wouldn’t anyone invest in a company that’s
(inaudible) institution, and if it’s a penny stock, they’ve restricted it
in a lot of cases, but since it goes to $4.00 after a split and then it
goes down to $0.08 again, but I just keep on buying I keep dollar cost
averaging, and I’m all the way from $2.00 down to $0.62, that’s my dollar
cost average, but I’m staying, I’m sticking with
it.
|
|
Mark
Fletcher:
|
We
appreciate that, and myself and everybody else on this call today is going
to work very hard to not only make sure that that doesn’t happen but make
sure that the opposite happens, that the price will go
up.
|
|
(William
Hanschumaker):
|
Yes,
and I really think that is true, I don’t think there is a liar amongst
you, I really don’t.
|
|
Mark
Fletcher:
|
Thank
you very much, we appreciate that.
|
|
(William
Hanschumaker):
|
And
if anyone on the Board and they are a scientist, boy, I’m totally
impressed with everything I’ve heard, every single word, and it sounds
like the scientists and doctors that are present might even know what
polymyositis is, that my son has.
|
|
Mark
Fletcher:
|
Thank
you very much, sir, we definitely appreciate your
support.
|
|
(William
Hanschumaker):
|
Yes,
thank you. If someone knows (Dr. Weinblatt) in Brigham and
Women’s, he’s fantastic, and anyone has any suggestions or remarks
concerning polymyositis, I’d be—it sounds like, you, Generex,
might even in ten years have a cure for my son, and I really think that’s
the kind of company you are. And I appreciate
you…
|
|
Mark
Fletcher:
|
Thank
you very much. We appreciate that. I’m told that we
have time for one more question due to time constraints today, so Karen,
who is our next caller.
|
|
Operator:
|
Our
final question for today comes from the line of (Michael Pacefic), and
pardon that I got that wrong, of (City
Tummel).
|
|
(Michael
Pacefic):
|
How
are you doing.
|
24
GENEREX
BIOTECHNOLOGY CORPORATION
Moderator:
Mark Fletcher
10-12-10/10:00
a.m. ET
Confirmation
# 17067266
|
Mark
Fletcher:
|
Not
bad, (Michael), how are you.
|
|
(Michael
Pacefic):
|
Good,
good, thanks. I’m going to keep this extremely brief, I am a
private shareholder, and I know in the past that we voted down a potential
reverse split, and I just wanted to know if this next vote will be the
final vote.
|
|
Mark
Fletcher:
|
Yes,
it will. Because of the signing of the NASDAQ rule, this is our
last kick at the can for reverse stock split, so if it’s not approved at
the meeting on Friday, then we move on and we don’t pursue that for the
foreseeable future.
|
|
(Michael
Pacefic):
|
OK,
and I may have mistakenly read this but didn’t it say if we came to a
material agreement that we would get another extension, or did I
misread.
|
|
Mark
Fletcher:
|
I’m
not sure what you’re referring to, but again, the way the NASDAQ rules
work, the end of the line is this Friday, October 15. And if
NASDAQ has no further discretion that’s because of the SEC rules, the
discretion ends on October 15, and no further extensions are in the
offing.
|
|
(Michael
Pacefic):
|
Alright,
sounds good, and I appreciate all your help, and keep up the good
work. Take care.
|
|
Mark
Fletcher:
|
Thank
you very much. So I would reiterate that we thank
everyone for joining us today, I want to give my personal thanks to all
the members of our team that participated in today’s call, we as always
appreciate your time and effort. Thank you very
much.
|
|
Operator:
|
Ladies
and gentlemen, thank you for participating in today’s
conference. This does conclude the program, and you may now
disconnect. Everyone, have a good
day.
|
END
25