Thin-Skinned Generex Sues Critic, Tarnishing the Biotech's Already Sketchy Image

Last Updated Apr 8, 2010 12:56 PM EDT

Generex vs. Feuerstein on free speechCanadian biotech Generex (GNBT) certainly hasn't improved its already questionable image by suing TheStreet.com and its biotech reporter, Adam Feuerstein.

Generex is claiming that a series of articles Feuerstein wrote knocking the biotech's oral insulin spray constitute "business defamation, product disparagement, and injurious falsehood." They've sued for $250 million, which is nearly double Generex's $129 million market cap. Even before Feuerstein's bearish articles began to appear last month, Generex was only worth roughly $162 million.

Feuerstein's conclusions were harsh. He called Generex a "total bust" and accused the company of:

using science and the quest to develop an alternative insulin delivery method not to actually help diabetics but as a ruse to perpetuate a 15 year-long stock promotion scheme.
But it's hard to argue Feuerstein didn't do his homework:
  • He got expert opinions. Paul Robertson, a diabetes expert and past president for medicine and science at the American Diabetes Association, said absorption of insulin through the lining of the mouth is too erratic and potentially dangerous. Meanwhile, David Kliff, a diabetic who runs the well-respected Diabetic Investor newsletter, said "Generex is full of crap -- always."
  • He noted that while Generex claims its Oral-lyn oral insulin spray is approved in Ecuador, India, Lebanon and Algeria, the company doesn't book product revenues.
  • He reports that most of Generex's clinical trials have been small, while other drugs angling for diabetes approvals are tested in thousands of patients.
  • He points out that Generex is prone to hype. The company issued a press release claiming "successful Phase III study data" when it had data from just 60 of 750 patients in its late-stage U.S. trial.
  • He calls Generex out for promoting Oral-lyn's approval in India but failing to disclose that the drug had been pulled off the market.
These actions do anything but inspire confidence in the company. I like nothing more than to write positive articles about biotech companies who've been wrongly slammed by the media, like when many accused OncoGenex (OGXI) of practically giving away its cancer drug to Teva (TEVA), but in reality the deal terms had been cleverly structured. In this case, however, I'm going to follow mom's advice about when you can't say anything nice.

Free Speech photo by Flickr user Randy Son Of Robert, CC.

  • Trista Morrison

    Trista Morrison is a staff writer at BioWorld Today, a daily newspaper that