The purpose of this letter is to provide the Generex Biotechnology Corporation stockholders with an update on Company initiatives and a review of Company operations over the past year.
(a) Antigen Express
The clinical and regulatory program for the Antigen Express, Inc. (www.antigenexpress.com) proprietary AE37 immunotherapeutic breast cancer vaccine continues and we have made significant strides over the last twelve months. Presentations of encouraging interim data from the on-going Phase II clinical trial of the vaccine at the San Antonio Breast Cancer Symposium, the Annual Meeting of the American Society of Clinical Oncology (ASCO), and the recent ASCO Breast Cancer Symposium were well received. Earlier this year, we established a Scientific Advisory Board (SAB) consisting of globally acknowledged key thought and opinion leaders in the treatment of breast cancer to provide us with advice, guidance, and assistance on the further development of AE37. With input from the United States Food and Drug Administration (FDA) and the SAB, we have refined the End-of-Phase II package in respect of the vaccine and will submit the package to the FDA prior to an End-of-Phase II meeting with the FDA. We expect to submit our request for an End-of-Phase II meeting to the FDA before the end of September. In preparation for a Phase III trial, we will develop a Special Protocol Assessment (SPA) to demonstrate the efficacy of AE37 in breast cancer patients with low HER2 expression, a patient population roughly twice the size of the high HER2 expression population and representing a significant unmet need as they are ineligible for treatment with Herceptin. Antigen Express is in the midst of active discussions with prospective industry collaborators for the Phase III trial.
Note that the Antigen Express proprietary immunotherapeutic vaccines technology is a "platform" technology that can be used for a variety of other cancers as well as other therapeutic areas such as infectious diseases (influenza) and immune-metabolic disease (diabetes). Antigen Express and its future collaborations will leverage the success of the breast cancer vaccine to create additional products.
We are proceeding with the previously-announced spinout of Antigen Express, currently a wholly-owned subsidiary of Generex. We have engaged a New York City-based leading investment banking, securities, and investment management firm to act as exclusive placement agent for a private placement of Antigen Express securities in connection with the spinout to provide initial post-spinout funding for the company, which funding is necessary to continue to pursue the company's clinical and regulatory efforts. We are working with the investment bank to refine the structure and terms of the private placement, and to establish an appropriate initial up-to-date valuation of the company in order to prepare a private placement memorandum in respect of the transaction. We have identified a suitable reverse merger candidate on the Over-the-Counter Bulletin Board (OTCBB) suitable for an eventual up-listing to a national stock exchange in the context of new Securities and Exchange Commission (SEC) rules regarding the reverse merger process and recent revisions to national stock exchange listing qualification standards. The candidate has a capital structure and balance sheet that will facilitate a smooth and efficient post-merger transition and operation. Negotiations for the reverse merger are advanced.
We expect to complete the reverse merger and private placement before the end of this calendar year. Our intention remains to dividend a portion of post-spinout Antigen Express to the Generex stockholders; doing so will provide the post-spinout Antigen Express stock with significant liquidity, will permit it to access the capital markets independent of Generex, and will permit Generex stockholders to participate directly in the success of Antigen Express.
As described by Generex Board member and Senior Scientific Advisor Dr. James H. Anderson, Jr., MD, FFPM, FACE, at the annual meeting of the Generex stockholders in June, we have completed a comprehensive and detailed review and reevaluation of the clinical and regulatory program for Generex Oral-lyn™, our proprietary buccal insulin spray product. Under Dr. Anderson's direction, that program has been refined and improved with a view to: making the product more efficient, efficacious, and cost-effective; achieving FDA approval for product commercialization; enhancing the ability to obtain insurance reimbursement; and, making the product more attractive to prospective commercialization partners.
To achieve a wider acceptance by both diabetes health care professionals and patients, thus improving the prospects for commercial success, the Generex Oral-lyn™ formulation will be modified to increase the potency to allow most patients to be treated with just two to four sprays at mealtimes (instead of 10 to 20 used in past trials).
Several short studies will be conducted to meet FDA/European Medicines Agency (EMEA) regulations, and, importantly, provide data demonstrating the ability of Generex Oral-lyn™ (because of its unique, rapid absorption) to achieve metabolic results that are not possible with sub-cutaneously injected insulins, even with the newer rapid acting insulin analogs. This will allow our marketing partners to justify a price premium over injected insulin, and help insure a more rapid uptake of use in the medical community.
Our penultimate work will be a final Phase III trial (required by the FDA for marketing approval), which will confirm the safety and efficacy of the improved formulation and provide additional support for marketing and sales.
We will look to secure the requisite funding for the completion of the Generex Oral-lyn™ clinical and regulatory program following completion of the reorganization of Antigen Express.
In addition, our Generex Oral-lyn™ licensee in India (where the product is called Oral Recosulin), Shreya Life Sciences Pvt. Ltd. (www.shreya.co.in), has advised that it is close to completing the Indian clinical study needed to secure commercialization approval from the Central Drugs Standard Control Organization (CDSCO), Directorate General of Health Services, Ministry of Health and Family Welfare. We expect that there will be a period of data analysis following completion of the study and a consequent submission to the CDSCO. We are awaiting advice from Shreya as to the anticipated timing of these initiatives.
As Mark Fletcher, Generex President & Chief Executive Officer, described at the annual meeting of the Generex stockholders in June, over the past two years, executive management has streamlined operations by eliminating unproductive expenditures, created a lean and focused workforce, and selectively outsourced work in order to access talent, expertise, and experience in an economical, practical, and efficient fashion. We have also pursued a program of disposing of non-essential assets unrelated to our product development initiatives. Earlier this month, we relocated executive management into appropriately sized professional offices located at:
555 Richmond Street West
Toronto, Ontario, Canada M5V 3B1
Telephone and facsimile numbers and email addresses remain unchanged.
As noted at the stockholders' meeting, for the past year, in an effort to bolster corporate cash flow, members of executive management and some key employees have deferred significant percentages of their salaries, and the independent members of the Board have deferred 100% of their fees. In June, all parties accepted stock options in lieu of the then-outstanding deferred amounts. The deferrals have remained in place and will continue until the satisfactory completion of the corporate reorganization initiatives.
Our Form 10-K Annual Report in respect of the fiscal year ended July 31, 2012 will be filed with the SEC on or about October 15, 2012.
Mr. Fletcher stated: "This has been a challenging year. Despite a volatile marketplace, your management moved forward with the AE37 Phase II work, and analysis and planning for upcoming Generex Oral-lyn™ clinical and regulatory work, and yet has reduced expenditures significantly. We have an experienced, hard-working core team ready to grow the Company as investors expect."
Mark A. Fletcher,
President, Chief Executive Officer, & Director
Dr. David Brusegard, PhD,
Chief Operating Officer
Dr. Eric von Hofe, PhD,
Director & President, Antigen Express, Inc.
Dr. James H. Anderson, Jr., MD, FFPM, FACE,
Director & Senior Scientific Advisor
About Generex Biotechnology Corporation
Generex is engaged in the research, development, and commercialization of drug delivery systems and technologies. Generex has developed a proprietary platform technology for the delivery of drugs into the human body through the oral cavity (with no deposit in the lungs). The Company's proprietary liquid formulations allow drugs typically administered by injection to be absorbed into the body by the lining of the inner mouth using the Company's proprietary RapidMist™ device. Antigen Express, Inc. is a wholly owned subsidiary of Generex. The core platform technologies of Antigen Express comprise immunotherapeutic vaccines for the treatment of malignant, infectious, allergic, and autoimmune diseases. Antigen Express has pioneered the use of specific CD4+ T-helper stimulation technologies in immunotherapy. One focuses on modification of peptides with Ii-Key to increase potency while a second relies on inhibition of expression of the Ii protein. Antigen Express scientists, and others, have shown clearly that suppression of expression of the Ii protein in cancer cells allows for potent stimulation of T-helper cells and prevents the further growth of cancer cells. For more information, visit the Generex website at www.generex.com or the Antigen Express website at www.antigenexpress.com.
Cautionary Note Regarding Forward-Looking Statements
This release and oral statements made from time to time by Generex representatives in respect of the same subject matter may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by introductory words such as "expects," "plan," "believes," "will," "achieve," "anticipate," "would," "should," "subject to" or words of similar meaning, and by the fact that they do not relate strictly to historical or current facts. Forward-looking statements frequently are used in discussing potential product applications, potential collaborations, product development activities, clinical studies, regulatory submissions and approvals, and similar operating matters. Many factors may cause actual results to differ from forward-looking statements, including inaccurate assumptions and a broad variety of risks and uncertainties, some of which are known and others of which are not. Known risks and uncertainties include those identified from time to time in the reports filed by Generex with the Securities and Exchange Commission, which should be considered together with any forward-looking statement. No forward-looking statement is a guarantee of future results or events, and one should avoid placing undue reliance on such statements. Generex undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Generex cannot be sure when or if it will be permitted by regulatory agencies to undertake additional clinical trials or to commence any particular phase of clinical trials. Because of this, statements regarding the expected timing of clinical trials or ultimate regulatory approval cannot be regarded as actual predictions of when Generex will obtain regulatory approval for any "phase" of clinical trials or when it will obtain ultimate regulatory approval by a particular regulatory agency. Generex claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act.
SOURCE Generex Biotechnology Corporation