Global Phase III Trial on Track Generex’ lead product candidate, Oral-lyn, a proprietary insulin formulation that is delivered directly into the mouth, is in late-stage preparations for a global, 750-patient, multi-center, open-label Phase III trial in patients with Type 1 diabetes mellitus (T1DM) in the U.S., Canada and the E.U. We anticipate the initiation of a Phase III trial by 3Q/4Q07, which combined with strong clinical data and Oral-lyn’s product profile, could lead to Oral-lyn’s potential approval and launch in the 2009-2010 time frame.
Anticipating the Two-Pronged Strategy of Seeking Approval in Eastern Europe & South East Asia While Conducting Pivotal Studies in North America to Promote Global Accelerated Adoption of Oral-Lyn Upon Approval Recall that Oral-lyn is already approved in Ecuador. The high quality dossier includes the evaluation of Oral-lyn in 59 clinical trials including the dosing of 1,500 patients so far. Thus, the Ecuador dossier has potential for use in the registration of Oral-lyn in several international markets without conducting additional clinical trial work. Generex is using a two-pronged approach for commercialization of Oral-lyn in large markets, such as Southeast Asia and Eastern Europe. We believe Generex could have Oral-lyn approved in 2-3 jurisdictions in these regions by 2010.
Targeting the Enrollment of a Significant Number of Patients in Eastern Europe Could Lower Overall Clinical Trial Costs We expect the study to cost approximately $15 MM spread out over the course of two years. We believe that Generex is able to conduct this trial at a lower cost by targeting enrollment of approximately 350 patients in Eastern Europe with the balance to be enrolled in the U.S and Canada. The CRO enlisted for enrolling patients outside of the U.S. also specializes in conducting trials locally. Thirty-five sites have already been enlisted in Russia with the rest to be enlisted in Italy, U.K., Bulgaria, and other Eastern bloc countries.
The Prevalence of Diabetes in Eastern Europe is Expected to Continue to Grow The International Diabetes Federation (IDF) estimates that there are currently approximately 23.9 MM people with diabetes in Eastern Europe and that estimate is likely to increase to 28 MM by 2025. Further, IDF estimates that direct costs of diabetes care in the Russian Federation are approximately 4-6 BN euros, with many people dying due to lack of access to insulin. We believe the availability of a buccal delivery product like Oral-lyn could improve access to insulin therapy in these regions. We anticipate the experience clinical trial sites in Eastern Europe will gain in treating patients with Oral-lyn will serve to help promote Oral-lyn’s adoption in Eastern European markets.
GNBT – Poised to be a Player in Treating Diabetes with Oral Insulin With Oral-lyn, Generex is poised to be a significant future player in the insulin therapy market. We believe the strategy of launching Oral-lyn in favorable regulatory environments will deliver significant shareholder value-creating milestones in 2H07/2008. Our analysis derives a fair value of $6, and thus, we reiterate our Market Outperform rating and view GNRX shares to be attractive at current valuations.
