Generex Biotechnology Corporation (OTCMKTS:GNBT) is a micro-cap biotech player that has been on the rise of late despite an avalanche of growing debt and no clear route to near term monetization. But such is the case quite often in this sector, even in the case of the best opportunities. GNBT stock is moving higher in recent days following a couple catalysts.
In the first case, the company announced a letter of intent for the acquisition of a controlling equity interest in Emmaus Life Sciences, Inc, a biopharmaceutical company engaged in the discovery, development, and commercialization of innovative treatments and therapies, primarily for rare and orphan disease. Initial product development efforts are focused on Sickle Cell Disease (SCD), a genetic disorder. In the second case, the company just announced that it has achieved the elimination of its outstanding derivative securities.
Generex Biotechnology Corporation (OTCMKTS:GNBT) trumpets itself as a company engaged in the research, development, and commercialization of drug delivery systems and technologies.
As the company states, 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.
According to company materials, “Hema Diagnostic Systems, LLC (www.rapid123.com) is a rapidly growing biotechnology company involved in the development, manufacture, assembly, and distribution of diagnostics targeting primary as well as orphan infectious diseases. Hema Diagnostic Systems continues to expand its product line to meet the needs of the worldwide market. Point-of-Care test devices are made simple to use and are highly cost effective when incorporated into Hema Diagnostic Systems’ patented and patent pending delivery systems. The Rapid 1-2-3 Hema EXPRESS is a novel delivery system that is self-contained and easy to use.”
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In thinking about the potential benefits of a controlling position in Emmaus, Dr. Yutaka Niihara, MD, MPH, Chairman and CEO of Emmaus and Executive Chairman of Generex commented: “R&D efforts continue apace at Emmaus, as evidenced by these new patents securing our intellectual property portfolio. We are pleased to add diverticulosis and diabetes as prospective new indications for our PGLG product which we are currently developing for the treatment of SCD.”
Joseph Moscato, Generex President & CEO, stated: “I am gratified by the confidence Emmaus has expressed in Generex in providing this leeway to allow us to consummate the reorganization of our capital structure which will set the stage for our future successes.”
That said, our sense is that the biggest catalyst in recent action may actually be the cap table move through undercutting the company’s derivative liabilities.
As noted in the company’s most recent release, the consequent reduction in the number of shares coming into the market and the termination of the attendant price protection provisions will unburden the Company. In addition, the elimination of the derivative liability will greatly improve the Company’s balance sheet. Thus unencumbered, and with a reinvigorated management team and Board of Directors, the Company will proceed to execute its business plans and to attract value investors.
The chart shows just under 290% piled on for shareholders of the listing during the trailing month. Market participants may want to pay attention to GNBT stock. Generex has a track record that includes a number of dramatic bounces. What’s more, the company has witnessed a pop in interest, as transaction volume levels have recently pushed just shy of 410% above its longer run average levels. Since we last covered the name, the stock has moved 58% higher.
Now commanding a market cap of $15.8M, GNBT has virtually no cash on the books, which compares with a mountain of current liabilities, in excess of $9 million. One should also note that debt has been growing over recent quarters. The company is pre-revenue at this point. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of GNBT stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!