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RJSteffens (< 20)

Analyzing Generex and Throwing Darts with Pfizer's Craig Eagle, M.D.



August 21, 2010 – Comments (3) | RELATED TICKERS: GNBT , PFE , DNDNQ

Dr. Craig Eagle, Vice President of Strategic Alliances and Partnerships for the Oncology business unit at Pfizer (PFE), is a recent addition to Generex (GNBT) Biotechnology's scientific advisory board. Last week, my friend and I had the opportunity to meet Dr. Eagle at an informal meet up at the Capital Grille in NYC. I was primed to talk with Dr. Eagle about Generex's active pipeline of diabetes drugs and cancer vaccines. As we waited for his arrival, many NYC based brokers stood near us at the bar, and we felt like we had a glimpse of life with the movers and shakers. As their Blackberries buzzed non-stop, we joked that our phones must be broken.

 The Eagle Has Landed 

He is a friendly guy with no hint of arrogance, and he was surprisingly open to
numerous topics of discussion. Fresh beers in our hands, we were the only guys
in a NYC bar talking about peptides the way others talk about the Yankees or
Mets. TC and I listened, as Dr. Eagle began by telling us the scientific promise
he sees in Generex as a whole. To show how amateurish I am, I placed down a copy
of a recent Seeking Alpha analysis I had written about Antigen Express and their
AE37 HER2/neu peptide-based breast cancer vaccine. Later, I noticed Dr. Eagle
use the paper as a coaster for his beer.

Dr. Eagle explained why he felt that Generex contains great scientific value in
its pipeline; from the the potential for revenue streams from the Rapidmist
delivery system, to a positive opinion about prospects for Oral-lyn, to how AE37
could have the potential to completely change how breast cancer is treated. Dr.
Eagle's words reminded me of similar sentiment given earlier in the year by one
of the original founders of Amgen (AMGN), Dr. Joseph Rubinfeld, who joined
Generex in mid-2009 to act as the company's chief scientific advisor, and
mentioned the vast potential he envisions for the technologies and science of
Generex and Antigen Express.

 Pharma Interest in Generex's AE37 Breast Cancer Vaccine?

We must have talked to Dr. Eagle for an hour straight, the poor guy, as I delved
into Ii-Key hybrids, CD4 T Helper Cells, and other peptide based vaccines such
as E75 and GP2. To look cool, I mentioned other vaccine researchers I admire,
such as the Mayo Clinic's Keith Knutson and UW's Mary Disis. To be honest, that
didn't make me look any cooler. He fluently discussed numerous details of the
research I mentioned, as I tried to relate this to Generex's Ii-Key hybrid
technology. I believe that he appeared equally passionate. Our discussions led
me to feel that there is some sort of pharma interest in AE37, and that this
interest was born from the positive interim results from the ongoing
multi-center Phase II HER2/neu breast cancer vaccine study being conducted with
the United States Military Cancer Institute.

We know that in December 2009, AE37 data as a preventative HER2/neu breast
cancer vaccine was presented at the San Antonio Breast Cancer Symposium. Lead
researcher from the USMCI, Col George Peoples, reported to the symposium that at
a median follow-up of 13 months, there were NO relapses in 49 patients receiving
the AE37 vaccine for breast cancer while relapses were observed in 5 of 71
patients in the control group. Col. Peoples also reported data regarding a
significant increase in DTH levels which illustrated that AE37 was providing the
desired immunological effect, and that there were no serious levels of toxicity
reported for any of the subjects receiving AE37. Generex's management has
publicly stated that they have begun discussions with pharma companies in light
of this data, and I feel this is the reason they signed on Dr. Eagle as a
scientific advisor.

Dr. Eagle explained that in his role he helps get them up to snuff on protocols,
and offers guidance to them in their next developmental and regulatory steps.
His role, among others, is to get them ready for a potential partner to take the
risk in partnering with them on, let's say, AE37 for their pending Phase III
breast cancer study. He told us, upon questioning, that his obligation is to
help them no matter which partner eventually emerges with the right pocket book.
As a result of my own due diligence, from analyzing Roche (RHHBY.PK) and
Genentech's (DNA) blockbuster breast cancer drug Herceptin, as well as
Dendreon's (DNDN) metastatic prostate cancer vaccine Provenge, I feel AE37 as a
preventative breast cancer vaccine should currently be valued over $1 billion.
Yet, we see that Generex's market cap is currently in the low range of $100

To give a brief on that analysis, consider that while only 25% of breast cancers
have levels of HER-2/neu expression high enough to be candidates for treatment
with Herceptin, those cancers expressing lower levels are expected to be good
candidates for AE37. The advantage of this is that the immune system, once
activated, is capable of detecting lower levels of the target protein than is
Herceptin and that the anti-tumor activity lasts long after termination of AE37
treatment. And also consider that since AE37 is being developed to prevent
cancer recurrence, I hope it will eventually make a vaccine such as Provenge,
designed to treat metastatic cancer, one that stays in the back room of the
pharmacy. AE37 may lead to longer and healthier lives, while Dendreon's
significant advance has been shown to extend the last stage of life by a few
precious months. I hope both may prove to be great medical advances that take us
beyond this era of Herceptin, and they usher in a new era of immunotherapeutic
vaccines that may revolutionize how cancer is treated.

Throwing Peptides As Darts

Throughout our discussion, Dr. Eagle would make an analogy to study data as
being like throwing darts. Yes, he knows the seriousness of the disease being
researched, but the analogy was to simplify a complex statistical metric to help
TC and I understand. He said if one person in the bar throws a dart for a
bullseye, that this would not be significant. The amount of times an attempt was
made is very important, as well as other factors including the distance to the
board. To establish the bulls eye as a trend among a group of people playing
darts, it would then be important to know how many are actively involved. I
asked if that meant the study has to be powered enough and with a properly
defined endpoint. He said yes, and that this is an area that is very important.

I referred to the Phase I results for AE37 in both breast and prostate cancer
patients as also being positive. For prostate cancer subjects in the Phase I,
results were presented at the 25th Annual EAU Congress this past April. I talked
about how out of 32 subjects, 23 patients had positive DTH responses following
immunization, and the median progression-free survival for DTH responders was 18
months compared to 1 month for DTH non-responders. (You can see those results
here.) He again reminded me of the analogy of throwing darts. I mildly protested
that similar DTH responses have been found in AE37's Phase II breast cancer
study. I guess I was trying to increase their score!

The Darts are Aimed at Saving Lives

In reality, Generex and Antigen Express are not playing darts, but appear to be
entering a transformative period of development where the goal is
commercializing medical advancements that will better peoples lives. A partner
for AE37 may or may not be close at hand, but I do feel the vaccine technology
of Antigen Express is closer to gaining widespread attention based on all of the
promising early results. I sure hope so, because like other Generex
shareholders, I'd like the focus to return towards the pipeline and not NASDAQ
or a reverse split of our shares.

In my opinion, a pharma could be watching for further AE37 data that is deeper
into the Phase II breast cancer study and with a higher amount of patients
included in order to make that judgement call. That would mean more darts need
to be thrown by AE37 in order to establish the current trend as being
significant. In the meantime, Dr. Eagle is helping them get ready. When that
data can be made available is not something I can guess, and I've over
speculated enough. Dr. Eagle gave no signal about big pharma's current interest
in potentially partnering with Generex for AE37. I developed that opinion
strictly on my own.

I also know these things can change in a heartbeat, and for the last week I have
been conflicted about even writing this blog. However, I feel other shareholders
may be interested in our discussions with Dr. Eagle. While speculating is a
fool's game, it is hard not to notice that we were not only talking to Generex's
scientific advisor, but also Pfizer's Vice President of Strategic Alliances and
Partnerships for the Oncology business unit.

I'll never think of darts in the same way again.

3 Comments – Post Your Own

#1) On August 21, 2010 at 11:29 PM, RJSteffens (< 20) wrote:

The author is long GNBT. I forgot to add that part! ~ RJ.

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#2) On August 24, 2010 at 12:35 AM, JPG101 (< 20) wrote:

Another good reason not to invest in Pfizer!



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#3) On August 27, 2010 at 10:52 PM, RJSteffens (< 20) wrote:

I just noticed the first couple of paragraphs were not pasted into the blog from my blogspot. This should be the start-

In July, my friend TC and I attended Generex's (GNBT) Annual Meeting of Shareholders. While at the meeting, I had the opportunity to meet Joseph Moscato, the managing partner at Seahawk Capital based in New York City, a consultant of Generex's who has advised them on strategic planning and business development opportunities over the past year and a half. He is also quite a colorful character and we enjoyed talking to him about his consultancy role at the company. Near the end of our trip at Generex's hometown of Toronto, TC and I spoke to Joe about catching up near his NYC office since we both live nearby.

Last week, TC and I made our way to the Capital Grille in downtown NYC to join Joe and to learn about his company. I was mainly interested in gauging Joe's long term sentiment for Generex and to determine if it matched my own. While spending time with Joe, I found it very comforting that he knew in great detail many aspects of the company and that his vision is long term with hopes to help them reach their full potential. I realize that is an easy sentiment for him to portray, but it takes deep due diligence to talk with the depth of knowledge about Oral-lyn and AE37 that we shared while standing near the bar. We appreciated learning that Joe shares in our belief that Generex is headed for great success.

To our surprise, we learned from Joe that someone else would also join us later in the evening for an informal introduction. Dr. Craig Eagle...

etc the blog then continues as presented above.

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