EXECUTIVE INFORMATIONAL OVERVIEW Employees 43 · 3/9/2010 · BaBOOM!™ Energy Spray Energy...

†BOLD WORDS ARE REFERENCED IN THE GLOSSARY ON PAGES 69-72.

Novel Drug Delivery and Immunotherapeutic Platform Technologies

Snapshot March 9, 2010

Generex Biotechnology Corporation (“Generex” or “the Company”) is a specialty pharmaceutical company focused on developing drug delivery systems and technologies to treat cancers, allergies, and autoimmune and infectious diseases. Generex’s primary platform technology, RapidMist™, is a device and liquid formulation combination that delivers macromolecule† drugs (e.g., insulin) into the bloodstream via the inner lining of the mouth (the buccal mucosa). The Company’s lead product, Generex Oral-lyn®, is a buccal insulin spray that uses the RapidMist™ platform to treat Type 1 and Type 2 diabetes. Having demonstrated safety and efficacy in clinical trials to date, Generex Oral-lyn® is approved for sale in Ecuador, India, Lebanon, and Algeria. A global Phase III clinical trial with Generex Oral-lyn® is ongoing in preparation for North American and European registration. Generex’s wholly owned subsidiary, Antigen Express, Inc., develops immunotherapeutic vaccine candidates using proprietary platform technologies that modulate the immune system to elicit specific responses.

Recent Financial Data

Key Points

The global Phase III program for Generex Oral-lyn® has enrolled 387 of up to 750 Type 1 diabetes patients. Interim data from the trial found no adverse events and showed that Generex Oral-lyn® appeared to maintain non-inferiority to injectable insulin given at mealtime.

Pfizer Inc., Eli Lilly and Co., and Novo Nordisk A/S have discontinued the development or sale of inhaled alternatives to injected insulin due to health concerns that emerged from lung deposition. In contrast, Generex Oral-lyn® delivers insulin directly to the inner lips and cheeks of the mouth, where it is absorbed into the bloodstream without entering the lungs.

Generex also markets three over-the-counter (OTC) products, which are sold by retail chains, regional distributors, and online stores, as well as through Generex Biotechnology MENA, the Company’s branch office located in Dubai. Several additional candidates are in development, including two pain relief products based on the RapidMist™ platform as well as a proprietary metformin chewing gum that may have a shortened path to commercialization, as metformin is already an established standard of care treatment for Type 2 diabetes.

Antigen Express’ most advanced compound is a breast cancer vaccine in Phase II clinical trials, with vaccines for prostate cancer and the avian flu in Phase I development, and a second-generation Phase I combination vaccine to treat breast and ovarian cancer.

Generex’s management team is skilled in technology development, various legal fields, and the design and launch of pharmaceutical products and devices. The Company’s intellectual property portfolio includes 146 issued and 116 pending U.S. and foreign patents.

On October 31, 2009, Generex’s cash and cash equivalent position was nearly $26.3 million after raising roughly $31 million from May 2009 to September 2009.

Ticker (Exchange) GNBT (NASDAQ)

Recent Price (03/09/2010) $0.63

52-week Range $0.08 - $1.14

Shares Outstanding* 248.5 million

Market Capitalization ~$156.6 million

Average 3-month Volume 2,872,670

Insider Owners +5% 5%

Institutional Owners 2%

EPS (Qtr. ended 10/31/2009) ($0.03)

Employees 43

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Generex Biotechnology Corporation

33 Harbour Square, Suite 202 Toronto, Ontario, Canada M5J 2G2

Phone: (416) 364-2551 Fax: (416) 364-9363

www.generex.com

*As of December 10, 2009.

CRYSTAL RESEARCH ASSOCIATES, LLC EXECUTIVE INFORMATIONAL OVERVIEW® PAGE 2

Table of Contents

Snapshot ....................................................................................................................................................... 1

Recent Financial Data ................................................................................................................................... 1

Key Points ..................................................................................................................................................... 1

Executive Overview ....................................................................................................................................... 3

Growth Strategy ............................................................................................................................................ 8

Intellectual Property ...................................................................................................................................... 9

Company Leadership .................................................................................................................................. 11

Core Story ................................................................................................................................................... 16

Diabetes ................................................................................................................................................ 16

Generex’s Technology Platform ........................................................................................................... 21

Generex’s Product Portfolio .................................................................................................................. 23

Generex’s Distribution Channels .......................................................................................................... 32

Antigen Express’ Technology Platform ................................................................................................ 35

Antigen Express’ Product Pipeline ....................................................................................................... 36

Competition ................................................................................................................................................. 43

Recent Milestones ....................................................................................................................................... 48

Key Points to Consider ................................................................................................................................ 49

Historical Financial Results ......................................................................................................................... 50

Risks ............................................................................................................................................................ 55

Recent Events ............................................................................................................................................. 63

Glossary ...................................................................................................................................................... 69


Executive Overview Generex Biotechnology Corporation (“Generex” or “the Company”) is engaged in the research, development, and commercialization of drug delivery systems and technologies. Generex’s proprietary RapidMist™ platform technology is a device and formulation combination that allows large molecule (macromolecule) drugs, typically administered by injection, to be absorbed into the body via the buccal mucosa—the lining of the inner mouth. Using this technology, the Company has developed Generex Oral-lyn®, a buccal insulin, as a pain-free alternative to injectable and inhalable insulin for Type 1 and Type 2 diabetics. Presently, Generex Oral-lyn® is under evaluation in global Phase III clinical trials, and it has been approved for commercial marketing and sale in India, Lebanon, Algeria, and Ecuador. Beyond Generex Oral-lyn®, Generex markets an over-the-counter (OTC) line of products comprising a glucose spray, an appetite suppressant, and an energy spray. As well, Generex is developing two pain relief sprays using the RapidMist™ platform as well as a proprietary metformin chewing gum product called MetControl™. Metformin is a generic product used to regulate blood glucose (sugar) levels by reducing liver glucose production and improving the insulin sensitivity of cells. Although metformin has a broad range of beneficial effects for this complex disease, nearly 10% of patients who take conventional metformin tablets experience treatment-limiting adverse reactions. MetControl™ has demonstrated bioequivalence to metformin tablets but may avoid some of the adverse side effects associated with the current delivery method. Further, the Company’s wholly owned subsidiary, Antigen Express, Inc., uses core platform technologies to develop immunotherapeutic vaccines to treat malignant, infectious, allergic, and autoimmune diseases. An overview of Generex’s product portfolio, including the vaccines being developed by Antigen Express, is provided in Figure 1.

Product Indication

Preclinical Clinical Market

RAPIDMIST™

Generex Oral-lyn® Diabetes

Glucose RapidSpray™ Diabetes

BaBOOM!™ Energy Spray Energy

Crave-NX™ Diet Aid Spray Diet

MetControl™ Metformin Gum Diabetes

Fentanyl Oral Spray Pain

Morphine Oral Spray Pain

LMW Heparin Oral Spray Deep Vein Thrombosis

IMMUNOMEDICINES

AE37 Vaccine Breast Cancer

AE37 Vaccine Prostate Cancer

AE-AI Vaccine Avian Flu

AE-O Vaccine Ovarian Cancer

AE-IG Vaccine Genetic

AE-M Vaccine Melanoma

AE-H Vaccine HIV

Source: Generex Biotechnology Corporation.

Development Stage

Figure 1


GENEREX'S PRODUCT PORTFOLIO


Diabetes Diabetes presents in two forms: Type 1, where the pancreas produces little or no insulin; and Type 2, where the body does not produce enough insulin or cannot properly use the insulin produced. In addition, in a condition called impaired glucose tolerance (IGT), patients experience blood glucose (sugar) levels that are higher than normal but are not high enough to be classified as diabetes. All variations of the disease relate to abnormalities in the body that affect the production and utilization of insulin, a hormone that converts blood sugar into energy for cells. In Type 1 diabetes, the immune system attacks cells in the pancreas that produce and release insulin, called beta cells. This autoimmune reaction results in the permanent destruction of beta cells and causes elevated blood glucose levels that may lead to a variety of harmful and lethal complications. As a result, patients with Type 1 are dependent on insulin therapy to maintain glucose levels as close to normal as possible. Type 2 diabetes accounts for 90% to 95% of all diabetes cases globally. Originally, it was thought that Type 2 was an adult-onset disease, but young children are now presenting with the condition (Sources: the U.S. Centers for Disease Control and Prevention [CDC] and the International Diabetes Federation [IDF]). Unlike Type 1, which is a permanent condition, Type 2 may be prevented or more easily managed. Depending on the patient’s condition, compliance, and disease progression, insulin therapy and diabetes medications may be necessary. IGT is an intermediate state between normal and diabetic levels of blood glucose caused by a patient’s inability to metabolize glucose properly. Many patients with IGT are unaware that they have the condition and therefore do not seek treatment, thus increasing their likelihood of developing the more severe Type 2 diabetes. Patients with IGT are 5 to 15 times more likely to develop Type 2; however, this risk may be reduced when adhering to a specific treatment plan consisting of a healthy diet, physical activity, and weight maintenance (Source: CDC). Greater details of Type 1 and Type 2 diabetes and IGT are provided on pages 16-21 of this Executive Informational Overview® (EIO®). Generex’s Technology

Illustrated in Figure 2, Generex’s RapidMist™ technology is a vehicle to aid in the absorption of medicines through the buccal mucosa—the semi-permeable membrane of the cheeks and lips. The technology includes a patented device design that resembles an inhaler as well as a novel formulation that uses surfactants (absorption enhancers) to improve the permeation of the buccal cavity, enabling the delivery of macromolecule drugs, such as insulin, into the bloodstream. The buccal route avoids oral ingestion of the medicine into the gastrointestinal (GI) tract. Passing through the GI tract is a common delivery method for macromolecules but may reduce a product’s efficacy. While the appearance of RapidMist™ is similar to a typical pulmonary inhaler, the technology differs greatly. Inhalers deliver drugs into the lungs, whereas RapidMist™ is absorbed through the buccal mucosa. Moreover, the larger size of the particles dispensed from RapidMist™ prevents the risk of entry into the lungs. Lung deposition of some pharmaceutical agents (e.g., insulin) may decrease pulmonary function and increase the risk for lung cancer.

RapidMist™ technology has demonstrated to be safe and effective in clinical testing and is used in the Generex Oral-lyn® product (briefly described below and more fully detailed on pages 23-28 of the Core Story). Generex Oral-lyn® and Glucose RapidSpray™ (detailed on pages 28-29), a glucose spray also developed using the RapidMist™ platform, comprise the Company’s Diabetes Management System. Generex Oral-lyn® Using the RapidMist™ technology platform, the Company developed Generex Oral-lyn®, a liquid formulation of human insulin used to treat Type 1 and Type 2 diabetes patients. Generex believes that the provision of a convenient, safe, and non-injectable form of insulin may improve patient compliance among diabetics, potentially reducing the progression of the disease and the risk of diabetes-related complications.

RAPIDMIST™

Figure 2

Generex Biotechnology Corp.



To use Generex Oral-lyn®, patients seal their lips around the opening of the device and spray, refraining from inhaling or swallowing for several seconds. The insulin formulation administered contains surfactants that enable the rapid absorption of the insulin into the bloodstream via the buccal mucosa. The controlled size of the particles emitted from the device prevents accidental inhalation of insulin into the lungs. In the past, Pfizer Inc. (PFE-NYSE), Eli Lilly and Co. (LLY-NYSE), and Novo Nordisk A/S (NVO-NYSE) discontinued the development or sale of inhaled alternatives to injected insulin due to health concerns that arose from lung deposition.

Generex Oral-lyn® is approved for sale in India, Lebanon, Algeria, and Ecuador and has received Special Access Programme (SAP) authorization from Health Canada. In addition, in September 2009, the U.S. Food and Drug Administration (FDA) granted the Company approval to treat patients with Generex Oral-lyn® under the FDA’s Treatment Investigational New Drug (IND) program. Both Canada’s SAP and the U.S.’s Treatment IND program provide greater access to experimental drugs for patients with serious or life-threatening diseases when no alternative treatment exists. Generex also received permission from the FDA to charge for the product in order to recover costs.

Ongoing Phase III Trial

A six-month study of Generex Oral-lyn® has commenced and may include up to 750 Type 1 patients. The Phase III trial consists of 70 clinical sites in various locations throughout the U.S., Canada, Russia, and Eastern Europe. To date, the Company has enrolled 387 patients. The purpose of the study is to compare the efficacy of Generex Oral-lyn® combined with the RapidMist™ Diabetes Management System against standard mealtime injections of conventional human insulin. The Company plans to use the data collected from its Phase III program in pursuing regulatory approvals from Health Canada, the European Medicines Agency (EMEA), and the FDA. Generex is preparing its regulatory applications concurrently with the progression of the late-stage trials. Interim results released in March 2009 reported no adverse events to date, with the product appearing to maintain non-inferiority to injectable mealtime (prandial) insulin.

Market Opportunities

The IDF estimates that there are 285 million people living with diabetes globally. By 2030, the condition could afflict as many as 439 million people. The high growth rate reflects the increased likelihood of risk factors associated with the disease, including an aging global population and the escalating obesity epidemic. India presently has the largest diabetic population in the world, comprising nearly 50.8 million individuals, followed by China with 43.2 million people (Source: the IDF’s Diabetes Atlas 2009).

While the majority of complications associated with diabetes are manageable through the effective execution of a treatment plan, each year roughly seven million adults die from diabetes-related complications. This may correspond to an anomaly recognized by the IDF: while 70% of diabetics live in developing countries, the world’s wealthiest countries account for 80% of medical care expenditures. In particular, the U.S. spends approximately $198 billion annually to cover healthcare expenses relating to diabetes treatment, which accounts for more than half of spending globally on diabetes.

Over-the-Counter Products

Using the RapidMist™ platform, Generex has developed and expanded its OTC product line to include Glucose RapidSpray™ (an oral glucose spray); Crave-NX™ 7-Day Diet Aid Spray; and BaBOOM!™ Energy Spray. Retail outlets throughout the U.S. and Canada sell the OTC products, as do strategic online venues including Amazon.com, Inc.’s (AMZN-NASDAQ) and the Walgreen Company’s (WAG-NYSE) websites. Currently, BaBOOM!™ and Crave-NX™ are under consideration for commercial sale by several national and regional retailers and drugstore chains in North America. Beyond the U.S. and Canada, Generex initiated shipments and generated sales of its OTC product line in the Netherlands, Australia, and New Zealand in December 2009.

The Company’s present strategy to increase its OTC product line’s revenues includes expanding existing distribution channels and broadening the scope of its advertising and marketing beyond North America. Generex is pursuing European registrations for these products, with plans to expand to South African, Baltic, and Nordic markets, among others, in 2010. To implement this strategy, the Company has entered into several licensing and distribution agreements (as detailed on pages 32-34) and established a wholly owned subsidiary, SIA Generex Biotechnology BALTIC, to support its registration efforts in the Baltic region and Europe for both its OTC line and Generex Oral-lyn®.


Antigen Express, Inc. Generex’s wholly owned subsidiary, Antigen Express, seeks to research, develop, and commercialize immunotherapeutic, prophylactic, and diagnostic product candidates to address cancer and other disease markets with significant unmet needs. Antigen Express has established key collaborative agreements to aid in the advancement of its candidates, including arrangements with the Mayo Foundation for Medical Education and Research (Mayo Clinic), the Walter Reed Army Medical Center (WRAMC), the Saint Savas Cancer Center in Athens, Greece, and the Brooke Army Medical Center (BAMC). The Company employs several proprietary technologies to stimulate particular immune system responses to pathogenic antigens. With these platforms, Antigen Express has developed a pipeline of vaccine product candidates to treat cancers, infectious diseases, allergies, and autoimmune disorders. Technology Platform Antigen Express has developed an Ii-Key hybrid technology for stimulating T helper (Th) cells to recognize specific disease-causing proteins. Located on the invariant chain (Ii) protein is a region that is able to bind to a major histocompatibility complex (MHC) class II molecule. Antigen Express’ scientists termed this region “Ii-Key” and can formulate it to include a specific antigenic component. When the hybrid is used, the Ii-Key binds to the allosteric site on the MHC class II molecule, which then allows the antigenic component linked to it to be presented to Th cells to stimulate a specific immune system response. In this manner, Antigen Express is able to control the type of elicited immune response by altering either the specific antigenic component linked to Ii-Key or the administration method for the Ii-Key hybrid peptide. The Company has also developed an Ii suppression technology focused on inhibiting the Ii protein, which typically ensures that MHC class II molecules only present foreign antigens to Th cells. Th cells then recognize the foreign antigen and signal an immune system response. The Company has developed a process to suppress the Ii protein and therefore allow MHC class II molecules to present antigens produced internally, such as from a cancer cell, to Th cells. Studies have demonstrated that this technology can elicit an immune response that prevents further growth of an existing tumor in cure models and impedes the initiation of growth in prevention models. Pipeline Candidates Using these core technologies, Antigen Express has developed numerous product candidates that are in various stages of development and clinical testing. The AE37 vaccine is the Company’s most advanced peptide vaccine using the Ii-Key hybrid technology. In both a Phase I trial in breast cancer patients and a Phase I trial in prostate cancer patients, AE37 was shown to be safe and well tolerated in addition to producing the desired immunological activity. Presently, Antigen Express is studying the vaccine in randomized Phase II clinical trials to investigate efficacy in breast cancer patients. In addition to the more advanced candidates listed below, Generex’s subsidiary is also developing a diagnostic diabetes test, an allergy immunotherapy, and immunotherapeutic vaccines for melanoma, the human immunodeficiency virus (HIV), the human papillomavirus (HPV), H1N1 (swine flu), and acute myelogenous leukemia. Breast and Prostate Cancer Vaccines According to the American Cancer Society (ACS), breast cancer is the second-leading cause of cancer-related death in women globally. Antigen Express has developed a therapeutic breast cancer vaccine that has completed Phase I clinical trials and is currently in Phase II. Trials to date have demonstrated safety and tolerability in node-negative breast cancer patients. Antigen Express designed the fully randomized and controlled Phase II study of its breast cancer vaccine to determine efficacy by preventing recurrence in two types of breast cancer patients: node-positive and high-risk node-negative. The Company reported interim results from its Phase II trial in December 2009. At a median follow-up of 13 months, there were no relapses in patients receiving the AE37 breast cancer vaccine (0 of 49 patients), while relapses occurred in 5 out of 71 patients in the control group. Positive Phase II results for its breast cancer vaccine in 2009 have enabled the Company to begin preparations for a Phase III study, which could commence in 2010.


Antigen Express announced results from a 29-patient Phase I trial with AE37 in prostate cancer patients in June 2009. Data from the study showed that the vaccine is safe, well tolerated, and produces the desired immunological response in patients. These results are consistent with those of prior clinical trials of AE37 in breast cancer patients. The Company has established agreements to initiate a Phase II clinical trial in 2010. In March 2009, Antigen Express began a Phase I clinical trial in breast and ovarian cancer patients using a novel combination vaccine. This new vaccine candidate consists of the AE37 compound used in the breast cancer vaccine and a second peptide vaccine. Antigen Express believes that the new combination may further improve efficacy over extended periods. H5N1 Avian Influenza Vaccine Antigen Express’ Ii-Key hybrid technology is being evaluated in preventive vaccines for infectious diseases, including H5N1 avian influenza. Antigen Express has entered into collaborative agreements with the University of Rochester and the Lebanese-Canadian Hospital in Beirut, Lebanon, to clinically advance and develop the Company’s synthetic avian flu vaccine. Antigen Express believes that synthetic vaccines can be manufactured more easily, rapidly, and with fewer costs than traditional egg- or cell culture-based vaccines. The peptides used in this inoculation are similar in all strains of H5N1, suggesting that the vaccine may remain efficacious if the virus mutates. Antigen Express initiated Phase I clinical trials of its avian flu vaccine in 2007. As of August 2009, over 100 volunteers received the immunization with no serious side effects observed. Corporate Information In September 2007, Generex Biotechnology Corporation incorporated in Delaware to acquire Generex Pharmaceuticals Inc., which incorporated in November 1995 in Ontario, Canada. After completing a reverse acquisition with Green Mt. P.S. and a reorganization, the companies officially merged into Generex Biotechnology Corporation in April 1999. Generex Pharmaceuticals remained as the wholly owned subsidiary and acquired sole responsibility for the Company’s Canadian operations. In August 2003, Generex acquired Antigen Express. In May 2008, the Company established Generex Biotechnology Corporation MENA, which serves countries in the Middle East and North Africa. The Company formed Generex Biotechnology BALTIC, a limited liability company, in the Republic of Latvia in June 2009. Generex presently trades on the NASDAQ Stock Market under the symbol “GNBT.” In July 2008, NASDAQ notified the Company that it was not in compliance with Marketplace Rule 4310(c)(4) (now known as Listing Rule 5550(a)(2)), which requires a minimum bid price per share of at least $1.00 for 30 consecutive business days. The initial 180-day compliance period ended January 20, 2009. After a temporary suspension of the minimum price rule by NASDAQ due to market conditions and an extension granted to the Company for meeting all other initial inclusion criteria, Generex’s current compliance period closes on May 5, 2010, at which point its stock could be delisted if the necessary criteria is not met. Headquarters and Employees Generex has executive and administrative offices in Toronto, Ontario, Canada, in addition to laboratory and pilot manufacturing facilities. Antigen Express conducts research and development (R&D) activities in a leased office and two laboratories at the Massachusetts Biotechnology Research Park in Worcester, Massachusetts. The Company has established branch offices in Dubai Healthcare City, United Arab Emirates (UAE), under Generex Biotechnology Corporation MENA. Generex presently employs 43 full-time individuals, including Antigen Express and Generex MENA employees, as well as executive officers and individuals employed by management companies who provide services for the Company full time.


Growth Strategy Generex is leveraging a multifaceted growth strategy. The Company strives to provide patients with novel biopharmaceutical products that offer improved safety and efficacy over existing therapies. To do so, Generex is developing and commercializing its buccal delivery technology to administer large molecule drugs (e.g., insulin) as well as its proprietary vaccine formulations, which are based upon two platform technologies being developed by Antigen Express, the Company’s wholly owned subsidiary. Generex’s growth strategy includes achieving several key milestones, as listed below. Conduct and complete Phase III clinical trials of Generex Oral-lyn® in the U.S., Canada, and Europe,

including select Eastern European countries (e.g., Russia, Ukraine, Bulgaria, and Romania) Commercialize Generex Oral-lyn® in countries where the Company has obtained regulatory approval

to market and sell the product, including Ecuador, India, Lebanon, and Algeria

o Undertake additional commercial manufacturing runs of Generex Oral-lyn® at PharmaBrand, S.A.’s facilities in Ecuador and at Catalent Pharma Solutions in North Carolina, expanding the facilities to meet anticipated demand for the product in India, Lebanon, and Algeria, as well as in other jurisdictions where government approvals are pending

o Pursue post-approval clinical studies and marketing efforts in India, Lebanon, and Algeria

Expand the patient base in the U.S. under the FDA’s compassionate use program (detailed on page

26 under “Regulatory Efforts and Approvals”) as well as in Canada, where Generex Oral-lyn® is available under the SAP for patient-specific, physician-supervised treatment of Type 1 diabetes

Establish global strategic relationships to develop and distribute Generex Oral-lyn®, working with

multinational licensed distributors in the Middle East, Eastern Europe, Africa, and Asia to obtain regulatory approval to register, import, market, distribute, and sell the product in those countries

Conduct and complete clinical trials of Antigen Express’ synthetic peptide vaccines, including a Phase

II breast cancer study, a Phase I prostate cancer trial, and a Phase I study in patients with breast or ovarian cancer

Conduct and complete a Phase I clinical trial of Antigen Express’ synthetic peptide vaccine against

avian influenza (H5N1) In addition to the aforementioned initiatives, the Company’s growth strategy entails expanding distribution channels for its OTC products. The Company’s development strategy for its OTC products focuses on three key objectives: (1) demonstrating the expansion of Generex’s proprietary RapidSpray™ technology; (2) creating a brand name in the marketplace with Glucose RapidSpray™ and Crave-NX™ (particularly

in the diabetes shelf space) and on a mainstream scale with BaBOOM!™ Energy Spray; and (3) obtaining additional revenue from the OTC line while attaining registrations and approvals worldwide

for Generex Oral-lyn®. As the Company implements its strategy to increase sales within its current product portfolio, Generex plans to develop other related products simultaneously for potential future sources of revenue. In addition, the Company seeks to position its existing human diabetic products (e.g., Generex Oral-lyn® and Glucose RapidSpray™) to compete in global veterinary markets, as roughly 1 in 500 pets develops diabetes and may require insulin therapy.


Intellectual Property One of Generex’s most valued assets is its intellectual property (IP) portfolio of patents and trademarks. The Company’s IP portfolio entails 146 issued patents and 116 pending patent applications worldwide. In the U.S., Generex holds 21 issued patents (listed in Table 1) and four pending patent applications pertaining to its drug delivery technologies, including oral administration of macromolecular formulations (e.g., insulin) as well as pain relief medications such as morphine and fentanyl. Generex possesses eight issued Canadian patents and five pending Canadian patent applications also relating to its drug delivery technologies. The Company’s remaining patents and pending patent applications protect its proprietary technologies in Japan, Mexico, Australia, New Zealand, Brazil, Lebanon, Morocco, and several European countries.

Currently, Antigen Express holds nine issued U.S. patents, three Australian patents, 12 other foreign patents, five pending U.S. patent applications, three pending U.S. provisional patents, and 16 foreign patent applications—all of which concern technology to modulate the immune system by activating antigen-specific Th cells. Antigen Express holds several of these patents under exclusive licenses from the University of Massachusetts. Table 2 (page 10) summarizes some of Generex’s applications filed under the Patent Cooperation Treaty (PCT)—a vehicle that enables an entity to seek patent protection simultaneously in over 140 countries. The PCT does not grant an international patent but facilitates the process of obtaining a patent in each member country and bestows additional benefits to the applicant, including priority over more recent third-party applications.

Patent No. Patent Name Issue Date

7,255,102 Metered dose spray device for use with macromolecular pharmaceutical agents such as insulin 08/14/2007

7,115,561 Medicament composition and method of administration 10/03/2006

7,087,215 Methods of administering and enhancing absorption of pharmaceutical agents 08/08/2006

7,070,799 Method for administering insulin to the buccal region 07/04/2006

6,979,668 Cleaning compound for and method of cleaning valves and actuators of metered dose dispensers containing pharmaceutical compositions

12/27/2005

6,849,263 Pharmaceutical compositions for buccal delivery of pain relief medications 02/01/2005

6,451,286 Pharmaceutical compositions for buccal and pulmonary administration comprising an alkali metal alkyl sulfate and at least three micelle-forming compounds

09/17/2002

6,436,367 Aerosol formulations for buccal and pulmonary application 08/20/2002

6,432,383 Method for administering insulin 08/13/2002

6,375,975 Pharmaceutical compositions for buccal and pulmonary application 04/23/2002

6,350,458 Mixed micellar drug delivery system and method of preparation 02/26/2002

6,350,432 Pressurized container having an aerosolized pharmaceutical composition 02/26/2002

6,315,984 Pressurized container having an aerosolized pharmaceutical composition 11/13/2001

6,312,665 Aerosol formulations for buccal and pulmonary application 11/06/2001

6,294,153 Aerosol pharmaceutical formulation for pulmonary and nasal delivery 09/25/2001

6,290,987 Mixed liposome pharmaceutical formulation with amphiphiles and phospholipids 09/18/2001

6,271,200 Proteinic drug delivery system using aerosolized membrane-mimetic amphiphiles 08/07/2001

6,231,882 Mixed micellar delivery system and method of preparation 05/15/2001

6,221,378 Mixed micellar delivery system and method of preparation 04/24/2001

6,214,375 Phospholipid formulations 04/10/2001

6,193,997 Proteinic drug delivery system using membrane mimetics 02/27/2001

Table 1


INTELLECTUAL PROPERTY

Issued U.S. Patents

Sources: United States Patent and Trademark Office (www.uspto.gov) and Crystal Research Associates, LLC.


As the commercial aspects of Generex progress globally, the Company expects to continue to develop a solid portfolio of IP registered worldwide. Generex plans not only to expand its portfolio geographically by broadening coverage in new markets where the Company seeks to do business, but also by obtaining new patents for additional products, formulations, and device inventions. Trademarks Generex is also developing a portfolio of trademarks to distinguish and protect its product candidates. The Company owns the trade names for RapidMist™, Generex Oral-lyn®, MetControl™, Glucose RapidSpray™, Crave-NX™, BaBOOM!™, and NicoBreak™. Generex is also using Oral Recosulin™ in several jurisdictions.

Publication No. Title Pub. Date

2009/015456 02/05/2009

2007/062494 Orally absorbed pharmaceutical formulation and method of administration 06/07/2007

2006/102752 Compositions for oral transmucosal delivery of metformin 10/05/2006

2004/054636 07/01/2004

2004/016244 Pharmaceutical compositions for buccal delivery of pain relief medications 02/26/2004

2004/016243 Methods of administering and enhancing absorption of pharmaceutical agents 02/26/2004

2001/087268 Micellar pharmaceutical compositions for buccal and pulmonary application 11/22/2001

2001/072278 Method for administering insulin to the buccal region 10/04/2001

2001/066085 Micellar pharmaceutical compositions for buccal and pulmonary application 09/13/2001

2001/017506 Proteinic drug delivery system using membrane mimetics 03/15/2001

2001/015666 Mixed micellar pharmaceutical delivery system and method of preparation 03/08/2001

2000/056291 Pharmaceutical solubilized in aerosol propellant 09/28/2000

2000/037053 06/29/2000

2000/037052 Pulmonary drug delivery 06/29/2000

2000/037051 Aerosol formulations for buccal and pulmonary application 06/29/2000

2000/018371 Proteinic drug delivery system using membrane mimetics 04/06/2000

1999/040932 Mixed micellar pharmaceutical delivery system and method of preparation 08/19/1999

Sources: World Intellectual Property Organization (www.wipo.int) and Crystal Research Associates, LLC.

Table 2


INTELLECTUAL PROPERTY

Filed under the Patent Cooperation Treaty (PCT)

Pharmaceutical formulation in mixed micellar form and dispenser for oral delivery of agents as a spray

Cleaning compound for and method of cleaning valves and actuators of metered dose dispensers containing pharmaceutical compositions

Large molecule drug delivery system using aerosolized membrane-mimetic amphiphiles


Company Leadership Management Generex’s management team possesses a wide range of experience in areas such as domain and technical expertise; technology development; corporate, commercial, and securities law; and the design and launch of pharmaceutical and device products. Table 3 summarizes key individuals in Generex’s management, followed by detailed biographies.

Anna E. Gluskin, Chairman, President, Chief Executive Officer, and Director Ms. Gluskin holds a Master’s degree in microbiology and genetics from Moscow State University and presently plans, coordinates, and manages Generex’s business activities while providing technical leadership throughout the Company’s product programs. Ms. Gluskin spends much of her time seeking new opportunities to utilize Generex’s platform technology effectively. She has served as chairman since November 2002, president and chief executive officer (CEO) since October 1997, and director since September 1997. She also held comparable positions with Generex Pharmaceuticals, Inc. from its inception in 1995 until it was acquired by Generex in October 1997. Rose C. Perri, Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary, and Director Ms. Perri has an extensive background in management and operations. She has served as Generex’s chief operating officer (COO) since August 1998, treasurer and secretary since October 1997, and director since September 1997. She was also acting chief financial officer (CFO) from November 2002 to April 2005, at which time she was appointed CFO. Ms. Perri was an officer of Generex Pharmaceuticals from its formation in 1995 until its acquisition by Generex. Since 1995, she has been responsible for managing Generex’s daily operations, fiscal planning, and budgeting. Ms. Perri obtained a Bachelor’s degree from the University of Toronto and completed the Business Administration Studies program at York University.

Anna E. Gluskin Chairman, President, Chief Executive Officer, and Director

Rose C. Perri Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary, and Director

Mark Fletcher, LL.B. Executive Vice President and General Counsel

Gerald Bernstein, M.D., F.A.C.P. Vice President, Medical Affairs

Stephen Fellows, CA Vice President, Finance

Slava Jarnitskii, MBA Financial Controller

Eric von Hofe, Ph.D. President of Antigen Express

Minzhen Xu, M.D., Ph.D. Vice President, Biology at Antigen Express

George Markus, M.Sc. Manager of Regulatory Affairs

William D. Abajian Senior Executive Advisor, Global Strategic Alliances and Business Development

Jaime Davidson, M.D., F.A.C.P., Consultant Medical Director

F.A.C.E. Joseph Rubinfeld, Ph.D. Chief Scientific Advisor

Table 3


Management


Consultants


Mark Fletcher, LL.B., Executive Vice President and General Counsel Mr. Fletcher has served as Generex’s executive vice president and general counsel since April 2003. From October 2001 to March 2003, Mr. Fletcher engaged in the private practice of law as a partner at Goodman and Carr LLP, a law firm in Toronto. From March 1993 to September 2001, Mr. Fletcher was a partner at Brans, Lehun, Baldwin LLP, also a Toronto-based law firm. An expert in corporate, commercial, and securities law, prior to joining Generex he maintained a diverse practice that included mergers and acquisitions, public and private equity, and debt financings. He has represented public and private entities, including NASDAQ companies, investment banks, and pension funds. His clients included health service and biotechnology companies as well as software, technology, and construction firms. Mr. Fletcher received a Bachelor of Laws (LL.B.) from the University of Western Ontario in 1989. In 1991, he was admitted to the Ontario Bar. He is a member of both the Law Society of Upper Canada and the Canadian Bar Association. Gerald Bernstein, M.D., F.A.C.P., Vice President, Medical Affairs Dr. Bernstein has served as a director for Generex since October 2002 and as vice president of medical affairs since October 2001. Dr. Bernstein acts as a key liaison for Generex to medical, scientific, and financial communities and consults with Generex under agreements for research, medical affairs, and development activities. He is also an associate clinical professor at the Albert Einstein College of Medicine as well as an attending physician at Beth Israel Medical Center, Lenox Hill Hospital, and Montefore Medical Center, all located in New York. He was formerly a director of the Beth Israel Health Care Systems’ diabetes management program. Dr. Bernstein was president of the American Diabetes Association (ADA) from 1998 to 1999 and was a member of its Board of Directors and executive committee for many years. He received the ADA’s Banting Medal for Service in 1999. Dr. Bernstein presently serves on several ADA committees and on the Board of Directors of the ADA Research Foundation. He became Board certified in internal medicine in 1966 and in endocrinology and metabolism in 1973. Dr. Bernstein graduated from Dartmouth College and Tufts University School of Medicine. Stephen Fellows, CA, Vice President, Finance Mr. Fellows has served as Generex’s vice president of finance since June 2009. Mr. Fellows has approximately 20 years of experience in financial management and accounting reporting for both public and private companies. From August 2005 to December 2008, he served as CFO of Sona Mobile Holdings Corporation, a public software company that developed software applications for mobile devices. From September 1996 to August 2005, Mr. Fellows worked with 3Com Corporation (COMS -NASDAQ) , where he served in several positions, including the director of finance of the Corporate Accounting Group in Marlborough, Massachusetts, and the director of finance and operations of 3Com’s Canadian subsidiary. From January 1992 to August 1996, Mr. Fellows worked with Pennzoil Corporation, where he spent time in the international mergers and acquisitions group in Houston, Texas, as well as four years as controller for Pennzoil Canada. Mr. Fellows received a Bachelor’s of Business Administration (BBA) from Wilfrid Laurier University in 1988 and earned his Chartered Accountant (CA) designation while articling with Arthur Andersen & Company in Toronto in 1990. Slava Jarnitskii, MBA, Financial Controller Mr. Jarnitskii is Generex’s financial controller. He began his employment with Generex Pharmaceuticals in September 1996. He has worked with Generex since its acquisition of Generex Pharmaceuticals. Before his employment with the Company, Mr. Jarnitskii received a Master’s of Business Administration (MBA) from York University in September 1996. Eric von Hofe, Ph.D., President of Antigen Express Dr. von Hofe has been president of Antigen Express since April 2005. He joined Antigen Express in November 2003 as the vice president of technology development. He has extensive experience with technology development projects, including through previous positions at Millennium Pharmaceuticals, Inc. (MLNM-NASDAQ). At Millennium, Dr. von Hofe first served as the program director, target validation and later as director of programs and operations, discovery research. Prior to that, Dr. von Hofe was


director of new targets at Hybridon, Inc. (now Idera Pharmaceuticals, Inc. [IDRA-NASDAQ]), where he coordinated in-house and collaborative research that critically validated gene targets for novel antisense medicines. Dr. von Hofe also held the position of assistant professor of pharmacology at the University of Massachusetts Medical School, where he received a National Cancer Institute (NCI) career development award for defining mechanisms by which alkylating carcinogens create cancers. He received a Ph.D. from the University of Southern California in experimental pathology and was a postdoctoral fellow at both the University of Zurich and the Harvard School of Public Health. His work is published in 28 peer-reviewed journal articles and he has been an inventor on four patents. Minzhen Xu, M.D., Ph.D., Vice President, Biology at Antigen Express Dr. Minzhen Xu is vice president of biology at Antigen Express. Dr. Xu received an M.D. from Shanghai Medical University in China and a Ph.D. in immunology from University of Massachusetts Medical School. He has been with Antigen Express since its inception and serves as the Company’s chief experimentalist. George Markus, M.Sc., Manager of Regulatory Affairs Mr. Markus holds a B.Sc. (honors) in theoretical chemistry from Dalhousie University and an M.Sc. in analytical chemistry from McGill University. He is an instructor at the Academy of Applied Pharmaceutical Sciences in Toronto. In his more than 20 years in the industry, he has been president and CEO of Consolidated Clinical Research of Canada Inc., a site-management organization that manages the coordination of clinical research sites; has worked in quality assurance, special projects, and clinical operations; and has served as a director, regulatory affairs for Dimethaid Research Inc. (now Nuvo Research Inc. [NRI-TSX]). Mr. Markus also held regulatory affairs positions with Pasteur Merieux Connaught (now a division of sanofi-aventis SA [SNY-NYSE]), Biovail Corporation International (BVF-NYSE), Sanofi Winthrop (a subsidiary of sanofi-aventis), Genpharm Inc. (a subsidiary of Merck and Co., Inc. [MRK-NYSE]), and Sandoz Canada Inc. (a subsidiary of Novartis AG [NVS-NYSE]). Consultants William D. Abajian, Senior Executive Advisor, Global Strategic Alliances and Business Development Mr. Abajian has served in senior management and executive positions for the past 25 years, with pivotal roles in the development and launch of a number of pharmaceutical and device products. In 1988, he founded and became CEO of CPG, Inc. (a closely held company sold to Millipore Corporation [MIL-NYSE] in 2002). CPG invented, manufactured, and sold deoxyribonucleic acid (DNA) synthesis products, chromatography media, and molecular biology kits to researchers in over 40 countries worldwide. Previously, Mr. Abajian served as the vice president of sales and marketing at Electro-Nucleonics, Inc. (now owned by Pfizer) between 1981 and 1988. Electro-Nucleonics invented, manufactured, and sold blood chemistry systems and diagnostic kits globally. It also launched the first FDA-approved acquired immune deficiency syndrome (AIDS) test. At Electro-Nucleonics, Mr. Abajian was responsible for procuring $50 million of hospital instrumentation sales and opening up a veterinarian market, as well as was key to brokering an agreement that required the Armed Forces and American Red Cross to purchase HIV tests from Electro-Nucleonics. In 2004, he founded The Abajian Group, LLC, which advises CEOs on strategic planning and assists in the commercialization of technologies and sales and marketing. He continues to serve as a trustee of Eva’s Village, a nonprofit organization, and of St. Joseph’s Hospital, both in Paterson, New Jersey, where he previously held the positions of chairman of the OPEC Committee, a member of the hospital’s Finance and Pension committee, and Executive Committee member. Jaime Davidson, M.D., F.A.C.P., F.A.C.E., Consultant Medical Director Dr. Davidson became the medical director for Generex in July 2006. He is the president of the Endocrine and Diabetes Associates of Texas and is a clinical associate professor of internal medicine at the University of Texas Southwestern Medical Center in Dallas, Texas. Dr. Davidson chaired the Diabetes Consensus Guidelines for the American College of Endocrinology and serves as director of the annual Intensive Diabetes, Endocrinology, and Metabolic Diseases course for the University of Southern California Keck School of Medicine. He serves as a council member for the Texas Department of Health


Services, appointed by Texas Governor Rick Perry. In 2006, Dr. Davidson received awards from the American Association of Clinical Endocrinologists (AACE) for his contributions to the improvement of endocrine health for underserved populations. He also received the ADA’s Harold Rifkin award for his international contributions in the diabetes field. In the past, he has held positions with the National Diabetes Advisory Board, the National Institutes of Health (NIH), the CDC, the Institute of Medicine, and was on the Boards of Directors of the ADA, the AACE, and the American College of Endocrinology. For six years, he was a regent of Midwestern State University in Texas appointed by then Governor George W. Bush. He also served in the President’s Council for fitness and sports, chaired the Texas Diabetes Council of the Texas Department of Health for several years, and guided the establishment of the Texas Diabetes Institute with the University of Texas Health Science Center. His experience in clinical pharmacology began with a clinical pharmacology fellowship at the Lilly Laboratory for Clinical Research and it continued with multiple clinical trials. He also was an advisor to the FDA on the Endocrinology and Metabolism Advisory Board. He completed internal medicine training at Scott and White Hospital (now Texas A&M University) and endocrinology training at the University of Indiana. Joseph Rubinfeld, Ph.D., Chief Scientific Advisor Dr. Rubinfeld became chief scientific advisor for Generex in August 2009. Dr. Rubinfeld is one of the original founders of Amgen, Inc. (AMGN-NASDAQ) . He has a 50-year history in pharmaceutical and consumer product development, with accomplishments including the development of the multi-billion dollar antibiotic amoxicillin as well as the invention and development of the first synthetic biodegradable detergent. In 1984, Dr. Rubinfeld won the prestigious Common Wealth Award for Science and Invention. Dr. Rubinfeld began his career as a research scientist with several pharmaceutical and consumer product companies, including Schering-Plough Corporation (now part of Merck) , Colgate-Palmolive Company (CL -NYSE), and the former Upjohn Company (now part of Pfizer). He served for 12 years at Bristol-Myers Squibb Co. (BMY -NYSE) where, in addition to helping to develop amoxicillin and cefadroxil, he was instrumental in licensing Bristol-Myers’ original anticancer line of products, including mitomycin, etoposide, and bleomycin. After cofounding Amgen in 1980 and serving as its chief of operations, Dr. Rubinfeld also cofounded the Industrial Biotechnology Association (IBA) in 1981, which was the precursor to the Biotechnology Industry Organization (BIO). As well, he has served as an advisor or Board member to a number of biotechnology companies, including AVI BioPharma, Inc. (AVII -NASDAQ), Quark Pharmaceuticals, Inc., and CytRx Corporation (CYTR -NASDAQ) . In 1991, he founded SuperGen, Inc. (SUPG-NASDAQ), a drug development company based in Dublin, California, where he served as chairman, CEO, and president until 2003 and as a member of the Board of Directors until 2005. During that time, he oversaw the company’s initial public offering (IPO) and its rise to a multi-billion dollar market capitalization, fueled by the commercialization of four anticancer drugs, including pentostatin and decitabine, and the issuance of over 20 drug patents in his name. Board of Directors Generex’s Board of Directors oversees the conduct of and supervises the Company’s management. Table 4 provides a summary of Board members, followed by detailed biographies.

Anna E. Gluskin, Chairman, President, Chief Executive Officer, and Director Biography on page 11.

Anna E. Gluskin Chairman, President, Chief Executive Officer, and Director

Rose C. Perri Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary, and Director

John P. Barratt Director

Brian T. McGee, CA, CPA Director

Nola E. Masterson, M.S., Ph.D. Director

Table 4



BOARD OF DIRECTORS


Rose C. Perri, Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary, and Director Biography on page 11. John P. Barratt, Director Mr. Barratt has served as an independent director since March 2003. He is also the chairman of the Generex Compensation Committee and the Corporate Governance and Nominating Committee and a member of the Audit Committee. Mr. Barratt serves as the Board liaison officer of Caldwell Partners International Inc. (a human capital professional services company), a role he commenced in July 2006. From April 2005 to July 2006, he served as COO of Caldwell. From January 2002 to February 2007, he was the court-appointed responsible person and liquidation manager of Beyond.com Corp. (an electronic fulfillment provider), Debtor-in-Possession, a U.S. Chapter 11 Bankruptcy case in which he reported to the bankruptcy court and to the U.S. Trustee’s Office. From September 2000 to January 2002, Mr. Barratt acted in the capacity of COO of Beyond.com. Between 1996 and 2000, Mr. Barratt was partner-in-residence with the Quorum Group of Companies, an international investment partnership specializing in providing debt and equity capital coupled with strategic direction to emerging technology companies. Between 1988 and 1995, he held a number of positions with Coscan Development Corp., a real estate development company, the last position of which was executive vice president and COO. Mr. Barratt currently serves on a number of boards, including Brascade Corp. (now Brookfield Investments Corp.) and BAM Split Corp., and is a member of the Board of Directors and chairman of the Risk Policy Committee of the Bank of China (Canada). He also serves on the Advisory Boards of the following Brascan SoundVest funds: Diversified Income Fund (BSI.UN-TSX), Total Return Fund (BST.UN-TSX), Rising Distribution Split Trust (BSD.UN-TSX), and Focused Business Trust (BSF.UN-TSX). In addition, Mr. Barratt is a member of the Advisory Board of the Brascan Adjustable Rate Trust I (BAO.UN-TSX) and Crystal Fountains Inc. Brian T. McGee, CA, CPA, Director Mr. McGee has served as an independent director since March 2004 and is presently the chairman of Generex’s Audit Committee. He has been a partner of Zeifman & Company, LLP (now Zeifmans LLP) since 1995. Zeifmans is a chartered accounting firm based in Toronto. Mr. McGee began working at Zeifman after receiving a B.A. in commerce from the University of Toronto in 1985. A significant element of Zeifmans is public corporation accounting and auditing. Mr. McGee is also a CA. Throughout his career, Mr. McGee has centered on public corporation accounting and auditing, among other areas. In 1992, he completed courses focused on international taxation and corporation reorganizations at the Canadian Institute of CAs and, in 2003, he completed corporate governance courses on compensation and audit committees at Harvard Business School. In April 2004, he received a Certified Public Accountant (CPA) designation from the American Institute of CPAs. Nola E. Masterson, M.S., Ph.D., Director Ms. Masterson has served as an independent director since May 2007. Since 1982, she has been the CEO of Science Futures Inc., an investment and advisory firm. Ms. Masterson is currently managing member and general partner of Science Futures LLC, I, II and III, which are venture capital funds invested in life science funds and companies. She is also a senior advisor to Techno Venture Management (now TVM Capital), an international venture capital company, and a member of the Board of Directors of Repros Therapeutics Inc. (RPRX-NASDAQ). Ms. Masterson was among the first biotechnology analysts on Wall Street, working with Drexel Burnham Lambert and Merrill Lynch (now part of Bank of America Corporation [BAC-NYSE]). She is also a co-founder of Sequenom, Inc. (SQNM-NASDAQ), a genetic analysis company located in San Diego, California, and Hamburg, Germany. She also started the BioTech Meeting in Laguna Nigel, California, an annual Biopharmaceutical Conference in Europe, and was nominated to the 100 Irish American Business List in 2003. Ms. Masterson began her career at Ames Company (a former division of Bayer AG [BAYRY-OTC]), and spent eight years at Millipore in sales and sales management. Ms. Masterson has 31 years of experience in the life science industry. She received a Master’s in biological sciences from George Washington University and continued Ph.D. work at the University of Florida.


Core Story Generex Biotechnology Corporation (“Generex” or “the Company”) focuses on the application of its proprietary buccal drug delivery technology, RapidMist™, to formulations of large molecule (macromolecule) drugs. RapidMist™ is a novel device and formulation combination that enables large molecules to be absorbed through the buccal mucosa—the permeable lining of the inner lips and cheeks. While the device’s appearance resembles that of a pulmonary inhaler, the size of the particles sprayed from the RapidMist™ device are designed to be too large to enter the lungs and thus are absorbed by the mouth. Generex has applied this technology to its insulin product for Type 1 and Type 2 diabetes, called Generex Oral-lyn®, as well as to three over-the-counter (OTC) products and several pain relief sprays. The Company is also developing MetControl™ medicinal gum as a novel delivery method for metformin, a blood glucose (sugar)-lowering agent that is typically administered in tablet form (which is a standard of care treatment for Type 2 diabetes patients). Antigen Express, Generex’s wholly owned subsidiary, develops novel immunotherapies to treat malignant, infectious, allergic, and autoimmune diseases. The subsidiary’s most advanced candidate is a therapeutic breast cancer vaccine. After receiving positive Phase II results from its breast cancer vaccine in 2009, Generex is preparing for a Phase III study, which the Company aims to commence in 2010. The accompanying pages provide background information on diabetes and its treatment options, which center on the administration of insulin. Following, pages 21-28 describe Generex’s RapidMist™ technology and its application as an alternative form of insulin delivery with Generex Oral-lyn®. Pages 28-34 detail the remainder of the Company’s product portfolio and its distribution channels. Subsequently, pages 35-42 examine the operations of Antigen Express, highlighting its proprietary technologies and vaccine initiatives. DIABETES The International Diabetes Federation (IDF) estimates that there are nearly 285 million people living with diabetes globally and an additional seven million individuals developing the disease annually. Deaths resulting from diabetes are due to the disease’s severe complications. The most common forms of diabetes are Type 1 and Type 2, described below. As well, in a condition called impaired glucose tolerance (IGT), patients experience blood glucose levels that are higher than normal but are not at diabetic levels. Type 1 (Insulin-dependent Diabetes). This condition is an autoimmune disease where the pancreas

produces little or no insulin. This form of diabetes can present at any age. In Type 1, the immune system permanently destroys the insulin-producing beta cells. As a result, sugar in the bloodstream cannot convert into energy and transport to cells. This inability causes the glucose level in the bloodstream to rise. Once this has occurred, it is irreversible and patients become dependent on insulin therapy, which entails insulin injections three to five times daily to regulate blood glucose levels. Without insulin, Type 1 diabetes can rapidly become fatal. This type of diabetes accounts for 5% to 10% of all diabetes cases.

Type 2 (Non-insulin-dependent Diabetes). In the U.S., approximately 90% to 95% of all diabetes

cases are Type 2 (Source: U.S. Centers for Disease Control and Prevention [CDC]). Whereas Type 1 diabetes results from an inability to produce insulin, Type 2 presents when the body does not produce enough insulin or cannot properly use the insulin produced. As the blood sugar level rises and the demand for insulin increases, the pancreas begins overproducing insulin and becomes strained, gradually losing its ability to produce the hormone. In addition to insulin therapy, Type 2 diabetics may take oral medication to stimulate the production of insulin by the pancreas or to help the body use insulin more effectively. Researchers believe that Type 2 is manageable and preventable. In the past, the medical community referred to Type 2 as adult-onset diabetes, which has become a proven misnomer. This disease has surfaced in young children and the likelihood of children developing the disease is increasing in conjunction with the obesity epidemic (Sources: CDC and IDF).


Insulin is a hormone that is naturally secreted by the pancreas to regulate the level of glucose—a type of sugar in the bloodstream. Patients with diabetes either produce little to no insulin or have become resistant to the effects of insulin. Without this hormone, the blood sugar level in the body begins to escalate. If left untreated, high blood glucose levels over long periods can lead to dangerous or lethal complications. To help prevent the onset of diabetes-related complications, patients may need to self-administer insulin to maintain a healthy glucose level. This strategy is most effective when combined with lifestyle choices, such as a healthy diet, exercise, glucose level monitoring and, if necessary, additional diabetes medications beyond insulin (as addressed on page 20). Risk Factors for Developing Diabetes While the underlying cause of diabetes remains unknown, several factors can increase the risk of developing the disease. Nevertheless, some people with a seemingly high risk for Type 1 or Type 2 never develop diabetes. Due to this inconsistency, researchers continue to investigate potential environmental triggers that may have a more substantial role. People are at a higher risk for developing diabetes if they exhibit the risk factors summarized in Table 5.

IGT is a condition closely related to diabetes where a person’s glucose levels are elevated, but not high enough to be classified as diabetes. Often, patients with IGT have normal glucose levels while fasting, but experience high blood sugar levels two hours after a meal. The IDF estimates that IGT could affect 344 million people globally in 2010. People with IGT are 5 to 15 times more likely to develop diabetes than individuals who do not have raised blood glucose levels. This condition is preventable through a healthy diet, exercise, and weight control. A loss of 5% to 10% of body weight and increased exercise can minimize the effects of insulin resistance, which allows insulin produced in the body to be more efficient. The American Diabetes Association (ADA) estimates that making such lifestyle changes may reduce or prevent the onset of Type 2 by up to 58%. Yet, physicians rarely diagnose patients with IGT and consequently, the disease often remains untreated. Further, of those diagnosed, approximately 50% ultimately develop Type 2 (Source: IDF). Complications Each year roughly four million adults die from diabetes-related complications (Source: IDF). Diabetics are at least two times more likely to develop heart disease or to have a stroke than are healthy patients (Source: National Diabetes Information Clearinghouse [NDIC]). Diabetes is also a leading cause of blindness and renal (kidney) failure, which is partially due to the likelihood of developing hypertension (high blood pressure). In addition, roughly 60% to 70% of diabetes patients have mild to severe forms of diabetic nerve damage, which can sometimes lead to lower limb amputations (Source: NDIC). Table 6 (page 18) summarizes the complications that may result from extended periods of elevated, uncontrolled blood glucose levels.

Type 1 Diabetes Type 2 Diabetes

▪ Family history of Type 1 ▪ Family history of Type 2

▪ Caucasian ethnicity ▪ Non-Caucasian ethnicity

▪ Having other autoimmune diseases ▪ Age over 45

▪ Having a history of childhood viruses ▪ Inactivity or a body mass index (BMI) over 25

▪ Early exposure to solid foods or cow's milk ▪ Hypertension or cardiovascular disease

▪ Mother's age at childbirth ▪ IGT or insulin resistance

▪ Having a mother with preeclampsia ▪ Gestational diabetes

▪ Polycystic ovary disease

Table 5

RISK FACTORS FOR DEVELOPING DIABETES

Sources: MedicineNet, Inc., the Mayo Foundation for Medical Education and Research, and Crystal Research Associates, LLC.


Patients with IGT may also experience one or more of these symptoms prior to developing full-onset diabetes due to their already elevated glucose levels. For example, cardiovascular disease may develop in IGT patients even before the onset of Type 2. Diabetes patients can often manage the majority of these conditions by maintaining near-average blood glucose levels through the effective execution of a treatment plan, such as that enabled by Generex’s Diabetes Management System (encompassing Generex Oral-lyn® and Glucose RapidSpray™). Current Treatment Options for Diabetes Treatment for Type 1 and Type 2 diabetes is a lifelong commitment and requires a multifaceted regimen. Because there is no known cure for diabetes, the objectives of treatment are to prolong life, improve quality of life by reducing symptoms, and prevent complications. Table 7 summarizes aspects of a generalized treatment plan for diabetes patients.

Insulin is required for the survival of Type 1 patients and is sometimes required for Type 2 patients, depending on the disease’s progression and the individual’s response to insulin. Insulin taken in pill form often becomes ineffective due to interference by digestive enzymes. At present, patients typically inject insulin with shots, jet injectors, pens, or pumps. Descriptions of various insulin administration techniques are provided on page 19. There are three characteristics by which insulin types are categorized. (1) Onset: the length of time before the insulin is active in the bloodstream (2) Peak time: the period of time that insulin is operating at maximum strength (3) Duration: the total amount of time that insulin effectively lowers blood glucose levels

▪ Hyperglycemia (short-term high blood sugar) ▪ Nephropathy (kidney damage)

▪ Hypoglycemia (short-term low blood sugar) ▪ Foot damage

▪ Neuropathy (nerve damage) ▪ Skin and mouth conditions

▪ Coronary artery disease ▪ Osteoporosis

▪ Heart attack or stroke ▪ Diabetic retinopathy/Blindness

▪ Atherosclerosis (narrowing of the arteries) ▪ Cataracts

▪ High blood pressure ▪ Glaucoma

▪ Diabetic ketoacidosis (ketone [acid] build up in the blood) ▪ Alzheimer's disease

Type 1 and Type 2 Diabetes

Sources: Mayo Foundation for Medical Education and Research and Crystal Research Associates, LLC.

Type 2 Diabetes Only

Table 6

COMPLICATIONS OF DIABETES

▪ Blood sugar monitoring ▪ Weight control ▪ Low-dose aspirin therapy

▪ Healthy diet (meal plan) ▪ Insulin therapy (to prevent heart disease)

▪ Exercise ▪ Diabetes medication (if needed)

TREATMENT PLAN FOR TYPE 1 AND TYPE 2 DIABETES

Table 7

Source: Mayo Foundation for Medical Education and Research.


Insulin Devices Administering insulin is possible through a variety of devices; however, complete patient compliance can be difficult to attain. Pharmaceutical companies, including Generex, continue to research and develop non-injectable insulin delivery techniques believing that an alternative to injections may lead to enhanced patient compliance and ultimately improved glucose control. Insulin Injection At present, patients inject insulin with shots, jet injectors, pens, or pumps. The abdomen, upper outer arms, thighs, buttocks, and hip areas are all potential insulin injection sites. Each location varies in absorption rate and the length of efficacy, depending on the consistency of the fatty tissue at the individual injection site. In 2007, the ADA rejected the belief that insulin injections are painful, stating that improved technologies, which use smaller and thinner needles, often cause less pain than a finger prick (Source: Clinical Diabetes 25:39-40, ADA 2007). Pulmonary or Inhaled Insulin Patients use pulmonary delivery devices to inhale puffs of dry insulin from a respiratory inhaler. Once inhaled, the thin inner lining of the lungs absorbs the particles of medicine. The first inhaled insulin product to obtain U.S. Food and Drug Administration (FDA) approval was Pfizer’s Exubera® in 2006. Due to the product’s low adoption rate, Pfizer announced the removal of Exubera® from its pipeline in late 2007. Additionally, in April 2008, Pfizer and partner Nektar Therapeutics (NKTR-NASDAQ) revealed that clinical trials of Exubera® demonstrated increased lung cancer rates in patients. Shortly thereafter, the European Medicines Agency (EMEA) announced the requirement of a lung cancer caution on the medication’s label. Since Pfizer’s announcement, both Eli Lilly and Novo Nordisk have terminated the development of their respective inhaled insulin products. It is important to distinguish between conventional pulmonary inhalers and Generex’s RapidMist™ platform. RapidMist™, although similar in appearance to traditional inhalers, differs immensely as Generex’s technology delivers drugs through the buccal mucosa (the permeable lining of the inner lips and cheeks in the mouth), while Pfizer’s Exubera® and Eli Lilly and Novo Nordisk’s pipeline candidates delivered the drug directly into the lung. It is the delivery into the lung that leads to a decrease in pulmonary function and an increased risk for developing lung cancer. Generex believes that these events may enhance its position, as several key companies have discontinued the development and sale of potentially competitive products. Buccal or Sublingual Spray Buccal insulin devices spray liquid insulin into the mouth, where it is primarily absorbed through the buccal mucosa. Some researchers believe that the buccal mucosa has low permeability, so multiple puffs may be required to achieve effects equivalent to insulin injection techniques. Nevertheless, administering insulin via buccal spray can be as effective in lowering blood sugar as injection methods, although the amount of insulin required for dosage may vary. Generex’s RapidMist™ spray includes absorption enhancers to improve the permeability of the agent into the buccal mucosa. Incorporating this technology is Generex Oral-lyn®, a proprietary oral insulin spray product designed to replace prandial injections of insulin. Generex Oral-lyn® has entered Phase III clinical trials and is approved for sale in Ecuador, India, Lebanon, and Algeria. Greater details on the RapidMist™ technology and Generex Oral-lyn® are provided on pages 22-28. Other Methods Researchers are studying additional methods of insulin delivery, including a skin patch and an intranasal product (which is absorbed through the nasal mucosa). Investigators are also testing ocular, rectal, and oral administration of insulin, but have reached barriers with each of these methods. These techniques exhibit low absorption rates, poor bioavailability, and other roadblocks to developing a successful insulin therapy. In particular, digestive enzymes in the stomach interfere with insulin swallowed in pill form, making the therapy ineffective.


Non-insulin Therapies for Diabetes Because of the nature of Type 2 diabetes, patients affected by the disease are able to use a variety of supplemental medications to improve their insulin utilization with or without insulin therapy. In general, diabetes medications produce the following results: Stimulate beta cells in the pancreas to release more insulin to lower blood glucose levels (e.g.,

sanofi-aventis’ Amaryl® or Novo Nordisk’s Prandin®); Prevent the liver from producing and releasing insulin in addition to increasing absorption rates of

glucose into muscle tissues (e.g., metformin); Increase the pancreatic release of insulin and cease sugar production by the liver when glucose

levels are elevated by using dipeptidyl peptidase IV (DPP-IV) inhibitors (e.g., Merck’s Januvia™); Improve efficacy of insulin by increasing muscle and fat cell sensitivity while reducing sugar

production in the liver (e.g., GlaxoSmithKline plc’s [GSK-NYSE] Avandia®); Decrease the absorption rate of glucose into the bloodstream by blocking enzymes that assist in the

digestion of starches (e.g., Bayer’s Precose®); and Increase the pancreatic release of insulin only when blood glucose levels are elevated by using

incretin mimetics (e.g., Amylin Pharmaceuticals, Inc. [AMLN-NASDAQ] and Eli Lilly’s Byetta®). Oral combination therapy, the combination of two medicine classes administered together in one tablet, may be required to improve efficacy for Type 2 patients over time, such as with Bristol-Myers’ Glucovance®. Additionally, some Type 1 diabetes patients may receive a pancreas transplant, which is effective roughly 50% of the time. If the patient’s body accepts the new pancreas, replacing this organ may successfully eliminate Type 1 diabetes because the insulin-producing and insulin-regulating beta cells are located in the pancreas. However, approximately 50% of these surgeries fail because the body rejects the foreign organ, and the remainder of patients whose bodies accept the new organ may be subject to life-long immunosuppressive drugs with serious side effects (Source: ADA). Consequently, physicians only resort to pancreas transplants for patients who cannot control their glucose levels or who are experiencing severe diabetes complications. Additional procedures being researched as potential cures for Type 1 diabetes include stem cell transplants, which jumpstart the immune system by transplanting the patient’s own stem cells, and islet cell transplants, where islet cells (mainly composed of beta cells) from a donor pancreas are transferred into the patient’s pancreas. Transplant surgeries for Type 2 patients are not successful because the body has either developed a resistance to insulin or cannot produce enough insulin to maintain a normal glucose level—problems that are not resolved by replacing the pancreas. Market Opportunities With roughly 285 million people suffering from diabetes worldwide, the disease now affects 7% of the global population (Source: IDF). In the next 20 years, the IDF predicts that the global diabetic population is likely to near 439 million people. India currently has the largest diabetic population at 50.8 million people living with diabetes, followed by China with 43.2 million and the U.S. with 26.8 million (Source: IDF Diabetes Atlas 2009). In addition, an estimated 344 million people have IGT, which has a high risk of progressing to Type 2. Nauru, an island located in the South Pacific Ocean, has the highest prevalence of diabetes in the world at 30.9% of its population. The United Arab Emirates (UAE) possesses the second highest prevalence, with diabetes affecting approximately 18.7% of its population. Diabetes affects approximately 24.5 million people in the Middle East and North Africa, a region with a diabetes population that is set to double by 2025 (Source: IDF, October 2009). To address and better serve the needs of this large diabetic market, Generex established Generex MENA, which serves countries in the Middle East and North Africa.


Collectively, developing countries are home to nearly 70% of the world’s population of diabetics. To date, Generex Oral-lyn® has been approved in several developing countries, including Ecuador, India, Lebanon, and Algeria. The Company is also pursuing approvals in developed countries, such as the U.S. and areas of Europe. The wealthiest countries in the world account for more than 80% of total expenditures for medical care. Based on these estimates from the IDF, the expenditures in poor, developing countries are likely to be insufficient. Patients in countries with struggling economies may not be able to afford even the least costly diabetic products on the market, which could mean the difference between life and death. For example, the U.S. (with 26.8 million diabetics) spends approximately $198 billion annually to cover healthcare expenses relating to diabetes treatment, which represents more than half of spending globally on diabetes. Nevertheless, diabetes remains a leading cause of death in the U.S (Source: CDC). In contrast, India, which has the world’s largest diabetic population, spends $2.8 billion annually on diabetes, representing only 1% of global spending. Worldwide, nearly four million adults die annually due to diabetes-related complications. Of the adults diagnosed with diabetes in the U.S., roughly 25% use insulin or a combination of insulin and supplemental oral medication (Source: CDC, 2009). RNCOS, a market research and information analysis company, anticipates the global insulin market to expand at a 15% compound annual growth rate (CAGR) from 2010 to 2012, when the insulin market is expected to reach $18.5 billion, which is just a portion of the much larger diabetes treatment market (Source: RNCOS’ Insulin Delivery Systems Market Analysis [2008-2012], August 2009). RNCOS also expects the delivery device market for insulin to expand at the same rate. GENEREX’S TECHNOLOGY PLATFORM Generex’s technology platform includes delivery systems and technologies to treat autoimmune disorders, cancers, and infectious diseases. Presently, the Company’s primary focus is on the application of its RapidMist™ drug delivery technology, capable of delivering large molecule drugs through the buccal mucosa of the mouth (depicted in Figure 3). There are several advantages to delivering therapeutic agents through the buccal mucosa. The buccal mucosa is a large, semi-permeable surface of the inner cheeks and lips. When combined with absorption enhancers, buccal delivery provides a noninvasive method to deliver macromolecule drugs (e.g., proteins, peptides, and nucleic acids). The most important objective of buccal delivery is for the therapeutic agent to gain rapid access into the circulatory system. Once the agent is absorbed into the buccal mucosa, a network of blood vessels provides entrance into the circulatory system. The network also permits the agent’s rapid absorption into the bloodstream.

Using large molecule agents to treat a variety of diseases and conditions is a growing trend within the pharmaceutical industry. However, there are three challenging properties associated with large molecule medications: (1) they are difficult for membranous cells to absorb; (2) they are vulnerable to acids and enzymes in the gastrointestinal (GI) tract; and (3) they are relatively insoluble and may need assistance to dissolve. To address these challenges, Generex’s scientists formulated a novel blend of surfactants to help the agent rapidly permeate the buccal mucosa and to avoid the hazardous environment of the GI tract. Generex believes that its buccal delivery technology offers a more convenient and painless solution that may increase patient compliance.

Figure 3

BUCCAL MUCOSA

Sources: Cancer Research UK and Crystal Research Associates, LLC.

Inner Cheeks

Inner Lips

Buccal Mucosa

Uvula

Tongue


RapidMist™ RapidMist™, Generex’s proprietary buccal drug delivery device, is a small, lightweight, hand-held, easy-to-use aerosol applicator that allows patients to self-administer select medications orally. RapidMist™ is a noninvasive means to penetrate even large molecule agents—traditionally administered via an injection—through the buccal mucosa of the mouth and into the bloodstream. This technology offers several benefits (summarized in Table 8) and has demonstrated safety and efficacy in clinical testing. The agents dispensed from the device exhibit a rapid onset of action without entering the lungs. Lung deposition of some pharmaceutical agents (e.g., insulin) may decrease lung function and increase the risk for lung cancer, such as was demonstrated with Pfizer’s Exubera® and Eli Lilly and Novo Nordisk’s inhaled insulin pipeline candidates (addressed under “Pulmonary or Inhaled Insulin” on page 19). Generex’s device has two important components: (1) an exclusive formulation; and (2) a patented device design.

Formulation Generex has developed a proprietary procedure for the RapidMist™ formulation. Many medicines are composed of an active pharmaceutical ingredient (API), which is the substance of a drug that is pharmaceutically active, and the substance of the tablet or liquid that the API is encased within, called the excipient. To create the RapidMist™ formulation, Generex deposits the medication into a solution with a combination of absorption enhancers and excipients that are generally recognized as safe (GRAS) by the FDA. Absorption enhancers, or surfactants, are important in the permeation of the buccal mucosa. Without surfactants, the API used in the formulation may have to travel through cell membranes and cell walls without protection, reducing the agent’s efficacy. Scientists at Generex have developed a surfactant combination that enables the delivery of macromolecule drugs, including insulin, via the buccal mucosa, with the added benefit of rapid absorption into the circulatory system due to increased solubility and stability. The resulting formulations are aerosolized with a pharmaceutical-grade chemical propellant and are administered to patients using the Company’s proprietary RapidMist™ metered dose inhaler. Device

Generex combines a container for the formulation, a metered dose valve, an actuator, and a dust cap to create the RapidMist™ device (shown in Figure 4), which enables patients to self-administer Generex’s proprietary formulations. The Company specifically engineered the device to deliver precise, consistent doses of any size molecular therapeutic agent to the patient. The actuator’s design delivers a fast-moving, fine-droplet spray that enables maximum contact with the buccal mucosa. The actuator also controls the size of the droplets in the spray for desired buccal absorption. While the appearance of RapidMist™ is similar to a typical pulmonary inhaler, the technology differs greatly. Inhalers deliver medication into the lungs, whereas RapidMist™ targets the buccal mucosa. In contrast, the controlled, larger size of the molecules delivered by Generex’s technology prevents the pharmaceutical agent from depositing into the lungs.

Figure 4


RAPIDMIST™

Source: Generex Biotechnology Corp.


▪ Rapid onset of action▪ Needle-free, pain-free technology▪ No lung deposition

▪ Easy self-administration ▪ Expected improvement in compliance▪ Precise dose control

BENEFITS OF RAPIDMIST™


Table 8

▪ Established safety profile ▪ Convenient to carry and handle


GENEREX’S PRODUCT PORTFOLIO Generex believes that its future success is largely dependent on RapidMist™, its proprietary buccal delivery technology, which is employed in its four marketed products: Generex Oral-lyn®, the Company’s oral insulin formulation approved for sale in Ecuador, India, Lebanon, and Algeria; and three over-the-counter (OTC) products—Glucose RapidSpray™, BaBOOM!™ Energy Spray, and Crave-NX™ 7-Day Diet Aid Spray. Generex Oral-lyn® Generex Oral-lyn®, shown in Figure 5, is a noninvasive, pain-free method to provide preprandial (before a meal) insulin therapy to Type 1 and Type 2 diabetes patients. Generex Oral-lyn® is composed of a liquid formulation of human regular insulin and absorption enhancers to improve penetration through the buccal mucosa when sprayed through the Company’s RapidMist™ device. To use Generex Oral-lyn®, patients seal their lips around the opening of the device and spray, refraining from inhaling or swallowing for several seconds. The design of the canister maximizes the spray’s contact with the oral cavity, enabling the rapid absorption of insulin into the bloodstream through the buccal membrane. The particles of spray emitted by the device are larger than the particles emitted by typical pulmonary inhalers, preventing lung deposition. Generex believes that Generex Oral-lyn® offers patients the ability to fine-tune their blood glucose levels in a convenient, safe, and painless manner while ultimately improving compliance and quality of life. In December 2009, Generex signed a long-term agreement with Sanofi-Aventis Deutschland GmbH for the manufacture and supply of recombinant human insulin crystals for commercial and clinical trial use in Generex Oral-lyn®. The contract provides Generex with an insulin source for regulatory markets where the Company is pursuing regulatory approvals for Generex Oral-lyn®, including the U.S., Canada, and a number of other regions. Scientific Support To date, Generex has evaluated the safety and efficacy of Generex Oral-lyn® in roughly 40 studies worldwide. While the majority of trials have included Type 1 and Type 2 diabetics, as overviewed below and on pages 24-25, the Company has also tested its buccal insulin therapy in patients with IGT, as summarized on page 25. Using Generex Oral-lyn® to Treat Diabetes Patients To evaluate the effectiveness of Generex Oral-lyn® in humans as well as to evaluate its safety and efficacy versus injected insulin and placebos, Generex conducted 13 studies in Ecuador and an additional 26 trials in other countries, including the U.S., Canada, Italy, and Israel, from 1998 to 2007. Clinical studies suggest that Generex Oral-lyn® is non-inferior to injected insulin and is shown to improve the hemoglobin A1c (HbA1c) level, the average amount of glucose in the bloodstream over the previous two to three months. Generex Oral-lyn® has demonstrated safety in a 24-month trial of 40 dogs in addition to the roughly 1,000 patients who have used the product (not including patients in the ongoing Phase III trial). In both instances, researchers found no abnormalities in the oral cavity, suggesting that buccal delivery of Generex Oral-lyn® provides a safe method of administration. In general, the glucose clamp technique (a recognized method for quantifying insulin resistance or response) demonstrated that insulin levels and glucose usage increased in a linear fashion with increases in Generex Oral-lyn® dosage.

Figure 5


GENEREX ORAL-LYN®



The latest study completed in August 2007 compared the effects of Generex Oral-lyn® with conventional preprandial insulin. The study’s results, published in Diabetes Technology & Therapeutics, concluded that Generex Oral-lyn® and regular injected insulin have similar glucodynamic effects in Type 1 patients. The patients were administered insulin analog twice daily with rigorous monitoring to record changes in blood glucose levels caused by additional food, insulin, or Generex Oral-lyn® puffs. In another study of Type 1 diabetics who were given either Generex Oral-lyn® or an equivalent amount of injected insulin, researchers found that Generex’s product demonstrated reproducibility (versus injected insulin) at levels of 85% to 90%. This data was collected based on measuring insulin and glucose levels for four hours after administration, on three separate occasions (as shown in Figure 6). Figure 6 illustrates the similarity of results achieved with Generex Oral-lyn® buccal insulin each time.

The Company also tested Generex Oral-lyn® in a 90-day study of Type 2 patients who were considered to be “failing” the diet and exercise component of their treatment plan. One group of participating patients continued with their existing treatment plan (unchanged) and another group began Generex Oral-lyn® administration in addition to their original treatment plan. The study showed HbA1c levels lowered by nearly 1% in the patients treated with Generex Oral-lyn®. Another study included two groups of patients, both of which had been taking pioglitazone without desired results. Pioglitazone is a medicine typically prescribed to Type 2 patients intended to increase the body’s insulin sensitivity with the execution of a treatment plan. In this study as well, the group of patients who supplemented their treatment with Generex Oral-lyn® experienced a 1% decrease in HbA1c levels versus the control group, which was not given the Company’s product. Generex completed a similar study with patients using metformin and sulphonylureas (glucose-lowering agents for Type 2 patients) instead of pioglitazone. Patients supplementing their treatment plan with Generex Oral-lyn® experienced lower HbA1c levels than the control group. Generex further tested the Generex Oral-lyn® insulin formulation by way of insulin pump delivery. Comparable research studies using Type 1 and Type 2 diabetes patients have provided similar efficacy results: the onset of Generex Oral-lyn® insulin occurred in five minutes while the peak occurred at 30 minutes. When compared to placebo and lispro (an insulin analog) dosages, the rise in blood glucose levels of patients receiving Generex Oral-lyn® was slower, confirming the product’s more rapid onset of action.

Source: ONdrugDelivery Ltd., a provider of specialized drug delivery information, 2006.

Figure 6


REPRODUCIBILITY OF GENEREX ORAL-LYN® ABSORPTION IN TYPE 1 DIABETICS ON THREE OCCASIONS

300.00

250.00

200.00

150.00

100.00

50.00

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Glu

cose

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0 10 20 30 40 50 60 75 90 120 150 180 210 240

Injection Oral-lyn Day 1 Oral-lyn Day 2 Oral-lyn Day 3

Time (mins)


The final series of research studies includes a study of 26 patients currently using metformin and glargine, a long-acting basal insulin analog. Half of these patients received a preprandial placebo spray for 12 weeks, while the other half received Generex Oral-lyn®. Those who received Generex Oral-lyn® experienced lower blood glucose levels than the control group after each meal, as shown in Figure 7. A similar study involved nine Type 1 patients who were first administered glargine and standard human insulin injections at least twice daily. Once stabilized, patients recorded their blood sugar levels 10 times per day for three days, which represented the control. Patients then replaced the human insulin with pre- and postprandial Generex Oral-lyn® (split doses), and continued glargine administration. The results of the study demonstrated non-inferiority of Generex Oral-lyn® to standard human insulin injections.

In December 2009, an independent review of clinical trials with Generex Oral-lyn® published in Diabetes, Obesity, and Metabolism showed that the oral insulin spray has a faster onset of action and shorter duration of action than insulin delivered subcutaneously. Short-acting insulin, such as Generex Oral-lyn®, is designed to imitate the insulin normally produced with a meal and can be taken shortly before, during, or immediately after a meal. As well, the authors of the study reported that the ease of use of Generex Oral-lyn® could increase patient compliance, potentially reducing complications and improving quality of life for diabetic patients. Using Generex Oral-lyn® to Treat Patients with IGT Data from a 15-patient Phase II proof-of-concept study supports the conclusion that Generex Oral-lyn® can reduce postprandial hyperglycemia in obese patients with IGT. Postprandial hyperglycemia occurs due to a reduced early insulin response after a meal and is associated with an increased risk of cardiovascular events and mortality. The results of the Phase II study indicate that the treatment is safe and none of the study participants experienced hypoglycemia. As such, the use of insulin through an alternative route such as the buccal mucosa (versus an insulin injection) may provide a novel approach to treating postprandial hyperglycemia. Generex has presented clinical data supporting the treatment of IGT patients using Generex Oral-lyn® at multiple meetings and events, including the IDF’s 20th World Diabetes Congress held October 18-22, 2009, in Montreal, Canada; the 45th Annual Meeting of the European Association for the Study of Diabetes (EASD) held September 29 to October 2, 2009, in Vienna, Austria; the Endocrine Society’s Annual Meeting held June 10-13, 2009, in Washington, D.C.; and the ADA’s 69th Annual Scientific Sessions held on June 5-9, 2009, in New Orleans, Louisiana.

Figure 7

Generex Oral-lyn®Placebo

Dinner

45

40

35

30

25

20

Sources: ONdrugDelivery Ltd. and Crystal Research Associates, LLC.

WEEKS 8-12 DIFFERENCES IN PRE- TO POSTPRANDIAL SERUM GLUCOSE BY TREATMENT ASSIGNMENT


15

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0Breakfast Lunch

Ser

um g

luco

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Type 2 Diabetes Treatment Algorithm In October 2008, the ADA and the EASD published a consensus algorithm for the medical management of hyperglycemia in Type 2 patients (Source: Diabetes Care 31[12]:1-11, December 2008). The algorithm describes a stepped-care approach to treat the elevated blood glucose levels that characterize diabetes. Based on this new approach, treatment begins with lifestyle modifications and metformin. If glucose/glycemic parameters are not met or maintained, the patient advances to a second step, which includes one of two therapies: (1) the addition of basal insulin or sulfonylurea; or (2) the addition of pioglitazone or a GLP-1 agonist. If the second step is insufficient, the patient may require implementation of a third step, which entails intensive insulin therapy. The consensus algorithm notes that early and aggressive use of insulin therapy as the second step of treatment is preferred. Early insulin treatment can more rapidly restore normal blood glucose levels and can assist in preserving insulin-producing beta cells. Insulin is also less likely to cause side effects. However, regimen adherence problems are common in individuals with diabetes, making glycemic control difficult to attain (Source: Clinical Diabetes 24[2]:71-77, April 2006). Generex believes that Generex Oral-lyn® may have a valuable role in the ADA/EASD consensus algorithm and may improve patient compliance as a convenient, familiar, and pain-free alternative to prandial insulin injections. As such, the buccal insulin product may augment the early intervention insulin therapy for Type 2 diabetes (step two of the treatment algorithm), potentially delaying the progression of the disease and associated complications. Regulatory Efforts and Approvals In September 2009, the FDA granted Generex approval to administer Generex Oral-lyn® to patients with serious or life-threatening Type 1 or Type 2 diabetes under the Treatment Investigational New Drug (IND) program. Drugs approved for the Treatment IND program must demonstrate the prospect of efficacy through clinical testing. The program enables companies to provide early access to investigational drugs for patients with serious or life-threatening conditions for which no satisfactory alternative treatment exists. Greater details concerning the availability of Generex Oral-lyn® under the Treatment IND program are listed on the www.clinicaltrials.gov website under “Treatment Study of Generex Oral-lyn® in Patients With Diabetes.” The Company has also obtained Special Access Programme (SAP) authorization from the Therapeutic Products Directorate of Health Canada to administer Generex Oral-lyn® to a Type 1 diabetes patient under medical supervision. The SAP allows practitioners who treat patients with serious or life-threatening conditions to access non-marketed drugs, such as Generex Oral-lyn®, in cases where conventional therapies have failed or are inaccessible. Investigational products considered for release include pharmaceutical, biologic, and radio-pharmaceutical products not yet approved for sale in Canada. Generex also received approval in August 2008 from the Ethics Committee at University Campus Bio-Medico (Rome, Italy) to conduct a Generex Oral-lyn® trial in people diagnosed with or susceptible to IGT. The Company expects to test for safety and efficacy as well as the participants’ satisfaction with a noninvasive human insulin product. In May 2005, the Company received the first regulatory approval to sell and market Generex Oral-lyn® from the Ecuadorian Ministry of Public Health to treat patients with Type 1 and Type 2 diabetes. Generex believes that this was one of the first approvals for noninjectable insulin in the world. To date, the Company has obtained the necessary approvals to market and sell Generex Oral-lyn® commercially in Ecuador, India, Lebanon, and Algeria. In December 2007, Generex also received approval to import Generex Oral-lyn® into Abu Dhabi under specified circumstances. To import Generex Oral-lyn®, the Imperial College London Diabetes Centre (ICLDC) must issue a purchase order and the purchase can only go to a drugstore or pharmacy licensed by the Ministry of Health of the United Arab Emirates (UAE).


Offices and Subsidiaries to Assist in Obtaining Regulatory Approval In early 2008, Generex established a branch office—called Generex Biotechnology MENA (Middle East and North Africa)—located at the Dubai Healthcare City complex in Dubai, UAE. Although Generex originally established the MENA branch solely to file regulatory dossiers in the Middle Eastern and North African regions, the office’s territory has recently expanded to include over 25 countries throughout Africa, Australia, New Zealand, Eastern Europe, and the EU. To support its registration efforts in the Baltic region and in Europe, Generex established SIA Generex Biotechnology BALTIC, a limited liability company, in September 2009. The purpose of the wholly owned subsidiary is to develop the local and surrounding markets in the Baltic region for Generex Oral-lyn®, its complementary metabolic disease pipeline products (e.g., MetControl™, Glucose RapidSpray™), other OTC products, and the Company’s immunotherapeutic vaccine platform (detailed on pages 35-36), particularly in the influenza application. Generex BALTIC will likely work closely with the established Generex MENA branch office in Dubai to establish marketing and logistical support for products already available for distribution. Phase III Trial with Generex Oral-lyn® In March 2008, Generex initiated Phase III clinical trials in North America for Generex Oral-lyn®. The Phase III clinical trial may include up to 750 Type 1 patients. Worldwide, 70 clinical sites are screening and enrolling patients, including locations in the U.S. (Texas, Maryland, Minnesota, and California), Canada (Alberta), Russia, Ukraine, Romania, Bulgaria, and Poland. At present, 387 Type 1 patients have enrolled in the program. The trial’s protocol entails two stages: (1) a six-month active treatment period; and (2) a six-month follow-up period. The purpose of the study is to compare Generex Oral-lyn® and the RapidMist™ Diabetes Management System (which includes Glucose RapidSpray™) against insulin injections. The Company intends to measure the blood glucose levels of each method by recording HbA1c levels. To support the Phase III program, Generex has hired a global clinical research organization (CRO) to provide numerous study-related site services. Generex contracted third-party manufacturers for sufficient quantities of the RapidMist™ metered dose inhaler components, the insulin, and the formulary excipients required to produce clinical trial batches of Generex Oral-lyn®. Catalent Pharma Solutions (formerly Cardinal Health PTS, LLC) is responsible for producing clinical trial batches for the Company’s Phase III program. Generex’s regulatory affairs, quality control, and research and development (R&D) personnel are working with Catalent to prepare and validate Catalent’s production processes. Generex and Catalent are negotiating terms for the production of commercial quantities of Generex Oral-lyn®. The Company plans to use the data collected from its Phase III program in pursuing regulatory approvals from Health Canada, the European Medicines Agency (EMEA), and the FDA. Generex is preparing its regulatory applications concurrently with the progression of the late-stage trials. On March 10, 2009, Generex announced positive results following the review of the Phase III data for Generex Oral-lyn®. Data showed that the product was non-inferior to injectable mealtime (prandial) insulin. As of March 2009, more than 300 participants had enrolled in the study, 60 of whom had achieved the requisite six-month treatment milestone. As well, the interim data showed that there were no significant adverse events associated with Generex Oral-lyn®. If the data collected from the study continues to be positive, the Company may be able to reduce the trial’s enrollment and still obtain formal verification of the non-inferiority hypothesis. Generex and its independent third-party statistical and data monitoring consultants are monitoring the study according to protocol and International Conference on Harmonization-Good Clinical Practice (ICH-GCP) guidelines. Veterinary Application In response to increased demand, Generex is pursuing a regulatory submission for Generex Oral-lyn® with the veterinary arms of global health agencies to treat diabetic cats and dogs. In July 2009, the Company held a pre-NDS meeting with the Veterinary Drugs Directorate (VDD) of Health Canada to outline the proposed development plan for the veterinary application of Generex Oral-lyn® with the


ultimate goal of filing an NDS. The Company plans to prepare an IND package for submission to Health Canada and the FDA before the end of 2010. To date, Generex has conducted a two-year safety study on dogs and drafted a preliminary clinical design in order to meet some of the regulatory requirements for the IND application. Generex estimates that roughly 1 in 500 pets develops diabetes and may require additional glucose in their diets. During the process of developing a product for humans, Generex invented a glucose spray for the first signs of low blood sugar in pets. Equivalent to its purpose in humans, glucose is the fuel that animals burn for energy, which is necessary for optimal functioning of brain and muscle tissues. Animals can become weak and lethargic if sufficient amounts of glucose are unavailable. In 2008, the global animal health market was valued at approximately $19.2 million, up roughly 7.2% from an estimated $17.9 million in 2007 (Source: Vetnosis Ltd., a research and consulting firm specializing in global animal health and veterinary medicine). There are approximately 77.5 million pet dogs and 93.6 million pet cats in the U.S. (Source: the American Pet Products Association’s [APPA] 2009-2010 National Pet Owners Survey). Based on a collection of various market research sources, the APPA estimated 2009 U.S. pet industry expenditures to be roughly $45.4 billion, up from $43.2 billion in 2008. Of the $45.4 billion, the APPA attributed $10.2 billion to purchases of OTC medicines and other pet supplies. In Canada, there are nearly 6.1 million pet dogs and over 8.5 million pet cats (Source: the Canadian Veterinary Journal 50[1]:48-52, January 2009). Generex estimates that the Canadian pet market is approximately $4 billion annually. Buccal Glucose and Energy Products Using the RapidMist™ platform, Generex has developed several OTC glucose and energy sprays—Glucose RapidSpray™, Crave-NX™ 7-Day Diet Aid Spray, and BaBOOM!™ Energy Spray—which are available at select retailers and wholesalers in the U.S. and Canada and also sold through Generex MENA, the Company’s branch office in Dubai Healthcare City, Dubai, UAE. In December 2009, Generex announced that it had recently initiated shipments and generated sales of its confectionary product line, including Glucose RapidSpray™, Crave-NX™, and BaBOOM!™ Energy Spray, to the Netherlands, Australia, and New Zealand. Currently, BaBOOM!™ and Crave-NX™ are under consideration for commercial sale by several of the largest national and regional retailers and drugstore chains in the U.S. and Canada. Generex is also pursuing European registrations for these products, with plans to expand to South African, Baltic, and Nordic markets, among others, in 2010. The Company’s OTC products are manufactured by Team Tech Inc. in the U.S. and Pax-All Manufacturing, Inc. in Canada. Glucose RapidSpray™

Shown in Figure 8, Glucose RapidSpray™ serves as an OTC aid to diabetic individuals who require or need additional glucose—which is one of the main sugars used by the body to produce energy. Glucose RapidSpray™ delivers glucose to diabetics in a rapid and efficient manner via an easy-to-use, portable spray bottle. The product is available in orange or raspberry flavors. The minimum serving size is five sprays and each canister provides roughly 43 servings, varying per individual. The spray is primarily composed of dextrose, a simple sugar used as a source of energy in animals and plants. Flavoring, binding agents, and preservatives are also included in the formulation to deliver a fat-free, low-calorie glucose product. Patients use Glucose RapidSpray™ at the earliest sign of a low blood sugar onset (hypoglycemia). To administer, patients aim the device toward the inner cheek and spray. The particles of spray are then absorbed through the buccal mucosa. Studies conducted by Generex and scientists at the University Campus Bio-Medico, Rome, indicated that the spray can prevent a further decline in glucose levels as well as the symptoms that generally accompany such episodes when used early in the onset of hypoglycemia.


GLUCOSE RAPIDSPRAY™

Figure 8



The Company has also conducted a clinical trial at the Children City Hospital’s Department of Endocrinology, in Moscow, Russia. Participants included children up to five years of age with Type 1 diabetes. According to the study, the ability of Glucose RapidSpray™ to provide small, controlled doses of glucose to young patients to control blood sugar levels makes it an improved tool versus existing glucose products. The Company’s proprietary oral glucose spray product not only reduces the risk of hypoglycemia but also improves overall metabolic control, as demonstrated by a reduction of HbA1c. Other research studies have suggested that Glucose RapidSpray™ may help obese patients lose weight in a short period. Marketing, Licensing, and Distribution of Glucose RapidSpray™ The Company aims to market Glucose RapidSpray™ as a complementary product to Generex Oral-lyn®. Generex believes that the combination of Generex Oral-lyn®, Glucose RapidSpray™, and other oral agents (e.g., MetControl™ [detailed on pages 31-32]) provides patients with a full range of products for the treatment of Type 2 diabetes and IGT. Glucose RapidSpray™ is available in the U.S. and Canada through a variety of retail chains, wholesalers, and online venues. Figure 9 illustrates some of the retail chains presently carrying Glucose RapidSpray™. It is also available wholesale in the Middle East through the Generex MENA office in Dubai. The Company markets the glucose spray in South Africa and six neighboring countries through an agreement with Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd. Generex plans to expand into other markets in 2010.

Glucose RapidSpray™ as a Diabetes Solution for Pets Glucose RapidSpray™ also has potential to treat hypoglycemia in pets. Once administered, the product reaches the pet’s bloodstream within three minutes, raising the animal’s blood sugar. As such, the Company believes that Glucose RapidSpray™ is a convenient, user-friendly option to maintain the blood glucose levels of pets throughout the day versus other therapies, which may require the administration of large pills. Other potential uses for Glucose RapidSpray™ for pets include newborn dogs and cats, toy breeds, hunting dogs, show dogs, pre- and post-operative care, aging pets, and pets with low appetites. Glucose RapidSpray™ is available in the U.S. and Canada through local veterinarians, retailers, and online at www.glucoserapidspraypets.com. In early 2009, Generex entered into an agreement with Butler Schein™ Animal Health (formerly Butler Animal Health Supply LLC), a U.S. companion animal health distribution company, for the distribution of Glucose RapidSpray™ in the U.S. Per the terms of the five-year contract, Butler agreed to increasing minimum purchase volumes from 20,000 units in the first year to 100,000 units in the fifth year. For Canadian distribution, Generex has entered into an agreement with McCarthy and Sons Service, a sales firm for the Canadian veterinary market. McCarthy and Sons Service is responsible for promoting sales of Glucose RapidSpray™ on an exclusive representation basis to Canadian veterinarian clinics and hospitals.


Figure 9


RETAILERS OF GLUCOSE RAPIDSPRAY™ IN THE U.S. AND CANADA


BaBOOM!™ Energy Spray Depicted on the left side of Figure 10, BaBOOM!™ Energy Spray is a novel blend of glucose, caffeine, ginseng, and vitamins B and C that can be sprayed orally to sustain energy levels. The spray is watermelon flavored and provides approximately 40 fat-free servings per bottle at less than five calories per serving. It may enhance the energy of individuals who are experiencing general fatigue.

Crave-NX™ 7-Day Diet Aid Spray In February 2009, Generex launched its proprietary Crave-NX™ 7-Day Diet Aid Spray (www.crave-nx.com), the Company’s first weight loss product. Shown on the right side of Figure 10, Crave-NX™ is a glucose spray that is scientifically formulated to curb cravings quickly throughout the day—potentially reducing an individual’s daily caloric intake. As such, Generex markets Crave-NX™ as an aid for dieters. To administer Crave-NX™, users spray the product into their mouth as needed. In a study conducted at the University Campus Bio-Medico, Rome, the use of Crave-NX™ appeared to reduce participants’ body mass index (BMI) versus a control group. As such, Generex believes that its product could benefit individuals with obesity and diabetes. Crave-NX™ has zero fat and only two calories per serving, with 20 servings per bottle. Consumers can use the orange-flavored spray anytime, including between meals, during exercise, or before bedtime. Generex has positioned Crave-NX™ to complement other diet products and programs, which the Company believes could aid consumers who are trying to lose weight as well as lead to incremental sales for retailers. Crave-NX™ can also be sold as a stand-alone weight-loss product. Marketing and Distribution In December 2009, Generex entered into an agreement with drugstore chain Duane Reade Holdings, Inc. to carry Crave-NX™ in 256 stores throughout New York City. As well, in January 2010, Generex reached an agreement with a major nationwide pharmacy chain to market Crave-NX™ in over 7,000 stores. In addition to making the product more readily available to consumers across the U.S., the Company believes that this agreement adds credibility to its product as Generex launches the brand nationwide. Both companies intend to position Crave-NX™ as a product to complement other diet products and programs that help provide incremental sales for the pharmacy retailer and a new diet add-on solution for the consumer. As of January 13, 2010, the Company had received over $800,000 in initial purchase orders for Crave-NX™ through this agreement.

BABOOM!™ ENERGY SPRAY AND CRAVE-NX™ 7-DAY DIET AID SPRAY


Figure 10


BaBOOM!™ Energy Spray Crave-NX™ 7-Day Diet Aid Spray


To support the launch of the Crave-NX™ brand, Generex has commenced an aggressive marketing campaign consisting of television, radio, and print advertisements that are designed to stimulate customer demand, awareness, and repeat purchases. Generex airs radio advertisements in New York, New Jersey, and Texas and plans to expand into television in these same markets. Market Opportunity Worldwide, the weight management market is likely to continue to expand, despite the present economic downturn. Markets and Markets, a global research and consulting company, forecast this market to increase to $586 billion in 2014, up from $363 billion in 2009. In the U.S., which is home to approximately 72 million dieters, the weight loss market was valued at roughly $58.6 billion in 2008 (Source: MarketData Enterprises, Inc.’s U.S. Weight Loss & Diet Control Market, February 2009). MetControl™ MetControl™ (depicted in Figure 11) is Generex’s metformin medicinal chewing gum developed to treat Type 2 diabetes and obesity. Metformin is a generic medicine traditionally prescribed in pill form and is part of the standard of care for Type 2 diabetes. Although metformin has a broad range of beneficial effects for this complex disease, nearly 10% of patients who take metformin cannot tolerate the drug due to treatment-limiting adverse reactions, such as nausea, vomiting, abdominal pain, and diarrhea. Generex anticipates that MetControl™ may avoid some of the pill’s side effects. In 2006, the Company entered into a joint development relationship with Fertin Pharma A/S, a Danish manufacturer of medicinal chewing gum, to combine Generex’s proprietary buccal drug delivery platform technologies with Fertin’s expertise in gum base formulations, solubilization systems, and taste masking and modification. Due to the rising obesity epidemic, Type 2 diabetes is developing in an increasing number of children globally (Source: the Mayo Foundation for Medical Education and Research [Mayo Clinic]). Generex believes that, due to the large size of metformin pills and the bitter taste of both pill and liquid formulations, children may not be compliant to a treatment program that includes current metformin products. MetControl™ chewing gum provides an easier way to administer the medication because patients no longer have to swallow a large pill. Generex can also flavor MetControl™, which the Company believes may improve compliance among younger patients. Generic Metformin Generic metformin is an important part of the standard of care for Type 2 diabetes patients. In the U.S., patients filled nearly 35 million prescriptions for metformin in 2006 (Source: Verispan LLC’s Vector One®: National [VONA], a U.S. prescription and patient tracking service). Metformin reduces the amount of glucose in the blood using three different techniques: (1) reduction of glucose production in the liver; (2) reduction of the absorption rate of food in the stomach; and (3) improvement in efficiency of existing insulin in the body. Metformin is accepted nationally and globally as a standard of care and, in 2006, the ADA recommended it as the “first drug of choice” for Type 2 diabetes patients. Because metformin is not a new active compound, the anticipated R&D path to commercialization for a novel delivery technique of metformin may be shorter than that for a new chemical entity. Phase I/II Clinical Study Results In mid-2009, Generex announced positive data from its bioequivalent study with MetControl™, which the Company conducted in late 2008 according to ICH-GCP standards using clinical materials produced by Fertin Pharma. The open-label, randomized, crossover study compared MetControl™ to immediate-release metformin tablets in healthy volunteers. In crossover studies, participants test two or more medications one after the other in a specified or random order. The results of the study indicated that

METCONTROL™


Figure 11



MetControl™ chewing gum and traditional metformin tablets were bioequivalent in both the rate and the degree of systemic absorption. Generex believes that these results provide evidence that MetControl™ is therapeutically equivalent to metformin tablets and is therefore interchangeable. Regulatory Submissions and Potential Marketing Strategy In the first half of 2010, Generex intends to prepare and submit a formal Abbreviated New Drug Application (ANDA) with full support data to regulatory authorities in North America, Europe, and other global regions where the Company may seek approval for the sale of MetControl™. Generex seeks to follow one of two paths to develop and commercialize its metformin chewing gum: (1) contract with a partner to market and distribute the product in major markets worldwide; or (2) license the product to a third party to sell. Generex plans to market MetControl™ as a companion product to Generex Oral-lyn®, creating an oral combination therapy that may optimize treatment in Type 2 diabetes patients. In particular, the Company believes that this combination of medicines could delay the onset of several complications that are commonly associated with diabetes (e.g., heart disease and stroke). Potential Buccal Morphine and Fentanyl Products Using RapidMist™ technology, Generex has developed fentanyl and morphine sprays. Fentanyl and morphine are narcotics commonly prescribed to alleviate pain. The delivery of morphine and fentanyl orally (by pill) or via injection to treat moderate to severe breakthrough and postoperative pain often fails to provide patients with adequate relief and control. These types of pain have a rapid onset of action and a short to medium duration and, thus, delivery by pills (which have a slow onset of action) is often ineffective. As well, delivery via pill makes it difficult to adjust doses, which can cause patients to take too much or too little medication. Delivery via injection is invasive, can increase anxiety, and requires someone to administer the medication, which reduces the patient’s control over the pain. Generex believes that a buccal delivery formulation for morphine and fentanyl could provide numerous advantages for patients with breakthrough and postoperative pain, including being cost-effective and providing fast access to the circulatory system, precise dosing control, and a simple, self-administration procedure. The buccal morphine and fentanyl sprays have completed Phase I clinical trials. In addition to these products, the Company is evaluating the use of its large molecule drug delivery technology with other compounds, including monoclonal antibodies, human growth hormone, fertility hormone, estrogen, and heparin, as well as with a number of vaccines. Generex is likely to continue the development of these buccal spray products after the completion of the Phase III program for Generex Oral-lyn®. GENEREX’S DISTRIBUTION CHANNELS Generex markets its products through collaborative arrangements with companies that have established pharmaceutical marketing and distribution capabilities, including expertise in the regulatory approval processes of their respective jurisdictions. The Company has established numerous licensing and distribution agreements with regional distributors, many of which are summarized below and on pages 33-34. In addition, the Company’s branch office in Dubai Healthcare City, Generex MENA, enables Generex to work closely with its regional licensee, Leosons General Trading Company. In September 2009, Generex announced that it had increased its presence in the global marketplace through Generex MENA to cover all of Africa, Australia, New Zealand, Eastern Europe, and the EU. Generex Oral-lyn® To facilitate the process of gaining regulatory approval for the registration, marketing, distribution, and sale of Generex Oral-lyn® worldwide, Generex enters into licensing and distribution agreements with multinational distributors. To date, Generex has received regulatory approval for the commercial marketing and sale of Generex Oral-lyn® in Ecuador, India, Lebanon, and Algeria. In October 2009, Generex received its first Algerian purchase order from Continental Pharma Laboratories, a pharmaceutical products distributor, for 10,000 canisters of Generex Oral-lyn®.


Generex and PharmaBrand S.A., a distributor of pharmaceutical products in Central and Latin America, market Generex Oral-lyn® in Ecuador. PharmaBrand has made sales of Generex Oral-lyn® in Ecuador; however, as the relationship currently operates under a Letter of Intent, Generex’s financial statements may not reflect these product revenues until the companies establish a definitive agreement. In March 2006, Generex completed the delivery and installation of a turnkey Generex Oral-lyn® filling operation at PharmaBrand’s facilities in Quito, Ecuador, which the Company believes is sufficient to support commercial sales in Ecuador and other countries in Latin America. Presently, Generex is in the process of transitioning PharmaBrand’s primary role to that of a manufacturer for the commercial orders placed worldwide, with distribution rights in Ecuador. Table 9 provides a snapshot of Generex’s contracted distributors to date as well as the countries covered under each agreement. Under each contract, excluding that with Dong Sung Pharmaceutical Company Ltd., the Company does not receive an upfront license fee, but rather the distributor bears all costs associated with obtaining governmental approvals for Generex Oral-lyn®, including any clinical and regulatory costs. Generex holds the worldwide rights to market its oral insulin product.

The Company’s Generex MENA branch office primarily pursues regulatory approvals for Generex Oral-lyn® but is also responsible for expanding the market for the OTC product line. Generex MENA has established relationships with over 30 distributors in more than 20 countries in the region. Of these distributors, eight are actively pursuing regulatory approval for Generex Oral-lyn®. In August 2008, Generex entered into a seven-year product licensing and distribution agreement with Dong Sung Pharmaceutical Company Ltd., a Korean pharmaceutical company with over 500 employees and one of the largest production facilities in the country. The contract grants Dong Sung the exclusive right to import, market, distribute, and sell Generex Oral-lyn® in South Korea. Per the agreement, Dong Sung owes the Company two $500,000 non-refundable license fees: (1) upon execution of the agreement (which has been paid); and (2) upon receipt of governmental approval from the Korea Food and Drug Administration. Generex holds the responsibility for procuring such approval but receives assistance from Dong Sung and SciGen, Ltd., the Company’s master licensee for the region. Generex and its marketing partner Shreya Life Sciences Pvt. Ltd. launched Generex Oral-lyn® in India as “Oral Recosulin™” in late 2008. Shreya Life Sciences and Generex are working to implement an intensive marketing campaign to promote the sale of Generex Oral-lyn® in India once the studies to be conducted per the condition of the regulatory approval are complete. Generex committed to distributors to offer a minimum of four complementary education-focused seminars on an annual basis for endocrinologists, physicians, chair practitioners, opinion leaders, nurses, and pharmacists. In December 2008, Generex and its marketing partner Benta S.A.L. obtained approval to market Generex Oral-lyn® in Lebanon followed by a product launch in May 2009. In Armenia, Generex has submitted a registration application for Generex Oral-lyn® to public health authorities.

Leosons General Trading Company 20 Middle Eastern and North African countries

Shreya Life Sciences Pvt. Ltd. India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, and Myanmar

E&V Alca Distribution Corp. Albania, Montenegro, and Kosovo

Lebanon

SciGen, Ltd.

Dong Sung Pharm. Co. Ltd. South Korea


South Africa, Lesotho, Swaziland, Botswana, Namibia, Mozambique,

and Zimbabwe

China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore,

Thailand, and Vietnam

Adcock Ingram Limited and Adcock

Ingram Healthcare (Pty) Ltd.

Medrey S.A.L. (formerly MedGen Corp.)

and Benta S.A.L.

GENEREX'S DISTRIBUTORS


Table 9

CountriesCompany


Over-the-Counter Products To market its OTC products, Generex relies primarily on establishing partnerships with companies possessing extensive pharmaceutical marketing and distribution resources. Currently, a number of wholesalers, retailers, and websites offer the Company’s OTC products, including those listed in Table 10. Glucose RapidSpray™ is available at a number of independent North American drugstores. In addition, Glucose RapidSpray™, BaBOOM!™ Energy Spray, and Crave-NX™ each have an individual product website, where consumers can purchase the products directly. Butler Schein™ Animal Health (formerly Butler Animal Health Supply LLC), a distributor of companion animal health supplies, is responsible for distributing Glucose RapidSpray™ to veterinarians in the U.S.

Generex presents its products to retail outlets through brokers, a strategy that the Company believes increases the likelihood of getting its products listed and on the shelves of major chains throughout the U.S. and Canada. To this extent, BaBOOM!™ Energy Spray and Crave-NX™ are under review for commercial sale by several large national and regional retailers and drugstore chains in North America. In addition, distributors (enlisted through Generex MENA) market the Company’s OTC products in over 20 Middle Eastern and North African countries. Generex MENA also targets countries outside its immediate jurisdiction, pursuing and penetrating markets in Africa, Eastern Europe, and Australia.

▪ Cardinal Health ▪ AmerisourceBergen Corp. ▪ Smith Drug Company ▪ UniPharm Wholesale Drugs Ltd

▪ McKesson USA ▪ H.D. Smith Wholesale Drug ▪ Value Drug Company ▪ McKesson Canada

▪ DIK Drug Co. ▪ Rochester Drug Company ▪ Kohl & Frisch Limited

▪ Rite Aid ▪ Kinney Drug, Inc. ▪ Shoppers Drugmart ▪ Loblaw Companies Ltd.

▪ Meijer ▪ Kerr Drug, Inc. ▪ Rexall PharmaPlus ▪ 7-11 Canada Inc.

▪ Medicine Shoppe ▪ Wal-Mart Canada

▪ Amazon.com ▪ Walgreens.com ▪ DiabeticExpress.com ▪ AmericanDiabetesWholesale.com


Pharmaceutical Wholesalers

Retail Chains and Outlets (U.S. and Canada)

Table 10


SNAPSHOT OF GENEREX'S OTC DISTRIBUTION CHANNELS

Online Venues


Antigen Express, Inc. In 2003, Generex acquired Antigen Express, which presently employs seven individuals. The subsidiary’s offices and two laboratories are located at the Massachusetts Biotechnology Research Park in Worcester, Massachusetts.

ANTIGEN EXPRESS’ TECHNOLOGY PLATFORM Antigen Express is developing proprietary immunotherapeutic and prophylactic vaccines that stimulate the immune system either to attack offending agents (e.g., cancer cells, bacteria, and viruses) or to stop attacking benign elements (e.g., self proteins and allergens). The immunomedicine products are based on two platform technologies that are in the early stages of development: (1) Ii-Key hybrid peptides; and (2) Ii Suppression. Both techniques work to elicit a specific and robust immune response by modulating the activity of the invariant chain (Ii) protein—a component that Antigen Express’ scientists have identified as having a critical role in controlling antigen recognition. Using these Ii-Key technologies, the Company has developed synthetic peptide vaccines designed to stimulate a potent and specific immune response. Currently, Antigen Express is testing its vaccines in a Phase II clinical trial in breast cancer patients, a Phase I trial in prostate cancer, a Phase I trial in individuals in either breast or ovarian cancer, and a Phase I trial in avian influenza. Development efforts are also underway for human immunodeficiency virus (HIV), human papillomavirus (HPV), melanoma, allergies, and Type 1 diabetes. To advance these technologies, Antigen Express collaborates with top clinical and academic investigators at various institutions. Ii-Key Hybrid Ii-Key hybrid technology forces the presentation of specific antigens on major histocompatibility complex (MHC) class II molecules. MHC class II molecules are located at the surface of antigen-presenting cells (APCs) and control the antigen-specific stimulation of T helper (Th or CD4+) cells, which are crucial in directing and coordinating the immune response. A portion of the Ii protein interacts with an allosteric site on MHC class II molecules. Antigen Express’ scientists termed this region of the Ii protein “Ii-Key.” Antigen Express then developed the Ii-Key hybrid technology, whereby a specific antigenic peptide intended for MHC class II presentation could be combined with Ii-Key. Figure 12 illustrates the Ii-Key hybrid process and depicts the corresponding sequence of events.

Sources: Generex Biotechnology Corporation and Crystal Research Associates, LLC.

Ii-KEY HYBRID TECHNOLOGY


Figure 12

(1) The Ii-Key portion of the hybrid interacts with the MHC class II molecule, reducing the groove’s binding affinity and causing the discharge of any resident epitope.

(2) The antigenic epitope portion of the hybrid then binds to the newly vacated epitope-binding groove of the MHC class II molecule.

(3) The Ii-Key portion of the hybrid is then pulled away from the allosteric site, which caused the groove to open initially, and thereby locks the new antigen in place on the molecule.

(4) The Ii-Key hybrid/MHC class II complex, now located on the cell’s surface, presents the hybrid’s therapeutic epitope to Th cells, avoiding the need for antigen processing altogether.

Antigen-specif ic Th Stimulation

T Helper (Th) Stimulatory Molecule

(MHC class II)

Antigenic Epitope

Ii-Key Hybrid

Therapeutic Epitope Ii-Key

Regulatory Site

STEP 1

STEP 2

STEPS 3 & 4


Antigen Express can modify dosing of Ii-Key hybrids to elicit either a Th1 or Th2 immune response. Th1 is a primary cellular response, whereas Th2 mediates an antibody response. When the Ii-Key hybrid stimulates a Th1 response, the intensity and duration of the immune response increases due to the subsequent activation of additional T-cells. Typical peptide vaccines are unable to achieve an equivalent effect, often resulting in a weaker, temporary response. Antigen Express’ hybrid technology results in a more robust response and can target various types of cancers and infectious diseases. Ii Suppression When the Ii protein is present in a cell, it blocks the antigen-binding groove of MHC class II molecules until the MHC class II molecule/Ii complex fuses with a phagocytic vesicle containing antigens obtained from outside the cell. In this manner, the Ii protein ensures that MHC class II molecules only present extracellular antigens (e.g., viruses, bacteria, and dead cells). Antigen Express’ Ii suppression technology relies on RNA interference (RNAi) to prevent the synthesis of the Ii protein in the cell. The suppression of the Ii protein allows MHC class II molecules to obtain and present internally produced antigens rather than only extracellular ones. This gives antigens produced within the cell (e.g., tumor-associated antigens) the opportunity to be presented on the cell surface for immune stimulation. MHC class II molecules are unable to present intracellular antigens when the Ii protein is active. Suppression of the Ii protein in tumor cells forces the presentation of internally derived tumor antigens. Multiple studies have shown immunization with Ii-suppressed cells can prevent tumor growth in cure models and protect against growth in prevention models. Antigen Express has also performed studies showing that Ii suppression may enhance the activity of DNA vaccines. ANTIGEN EXPRESS’ PRODUCT PIPELINE Antigen Express focuses on the development of novel immunotherapies for cancers, allergies, and infectious and autoimmune diseases. The Company uses its most advanced peptide vaccine, AE37, in vaccines for breast and prostate cancer as well as in a combination vaccine for patients with breast or ovarian cancer. AE37, which is based on the Ii-Key hybrid technology, was shown to be safe and well tolerated in clinical studies. Antigen Express is also developing vaccines based on its Ii suppression technology, including a vaccine for acute myelogenous leukemia and a DNA vaccine for HIV. Figure 13 summarizes Antigen Express’ product pipeline.

Ii-Key Hybrid Technology Research Preclinical Phase I Phase II Phase III

Cancer

HER-2/neu+ Breast Cancer

HER-2/neu+ Prostate Cancer

HER-2/neu+ Combination Vaccine

Melanoma

HPV

Infectious Disease

Avian Influenza (H5N1)

Swine Flu (H1N1)

HIV

Diagnostic/Therapeutic

Diabetes

Allergies

Ii Suppression Technology Research Preclinical Phase I Phase II Phase III

Acute Myelogenous Leukemia

HIV (DNA Vaccine)

Figure 13


ANTIGEN EXPRESS PIPELINE



Ii-Key Hybrid-based Product Candidates AE37 is Antigen Express’ most advanced peptide vaccine using the Ii-Key hybrid technology. The antigenic peptide portion of the hybrid was derived from the human epidermal growth factor receptor 2 (HER-2/neu) gene, which is commonly associated with abnormal cell growth. The design of the AE37 vaccine stimulates Th cells and increases the specific immune response needed in order to achieve tumor immunity. Additionally, physicians may be able to use the vaccine after other cancer treatments to improve efficacy by destroying residual cancerous cells. The AE37 vaccine is presently in randomized Phase II clinical trials to investigate efficacy in breast cancer patients. In January 2009, a report published in Expert Opinion on Biological Therapy (Vol. 9, No. 1, pgs. 71-78) reviewed AE37’s preclinical and clinical data and compared it to other clinically tested vaccines. The report concluded that—in addition to being safe and well tolerated in clinical studies—AE37 demonstrated improved immunogenicity versus other peptide vaccines investigated. In addition, the authors of the study believe that previous research underscores the value of specific CD4+ T-cell stimulation. Dr. Eric von Hofe, president of Antigen Express, co-authored the publication. In addition, the subsidiary’s product pipeline encompasses diagnostic and therapeutic products for allergy and autoimmune diseases that are also based on the Ii-Key hybrid technology. Since 2005, the Company has worked with Stallergenes S.A. (GENP-NYSE Euronext) to investigate a therapeutic approach to asthma and allergies. Stallergenes is a biopharmaceutical company focused on treatment by desensitizing allergy-related respiratory conditions. Antigen Express is also developing a diagnostic test to identify and differentiate between Type 1 and Type 2 diabetes more accurately. Due to the prevalence of Type 2 diabetes, patients with Type 1 are often misdiagnosed and, as a result, do not receive proper treatment. Breast Cancer (AE37 Vaccine) Antigen Express’ breast cancer vaccine (AE37) uses the proprietary Ii-Key vaccine technology. The HER-2/neu oncogene is typically over-expressed in a variety of cancerous tumors, including those in the breast, ovaries, prostate, colon, and lungs. Antigen Express modified the vaccine from a fragment of the HER-2/neu protein in order to assist in the stimulation of Th cells. The benefits of using this technology include the creation of a more robust, specific antigen response and immunological memory. IND applications have been filed for Phase I and Phase II trials in patients with stage II HER-2/neu positive (HER-2/neu+) breast cancer, a Phase I trial for patients with prostate cancer, as well as for use in combination with another peptide in patients with breast or ovarian cancer. Globally, breast cancer is the most frequently diagnosed cancer in women. Worldwide, more than one million new cases of breast cancer present every year. This disease is also the second-leading cause of cancer-related death for women (Source: the American Cancer Society’s [ACS] Cancer Facts and Figures 2009). Phase I Trials Antigen Express’ Phase I trials for the breast cancer vaccine included a dose-escalation study designed to establish both safety and immunologic activity of AE37. The trial, led by Dr. George Peoples at the Walter Reed Army Medical Center (WRAMC), included 15 node-negative breast cancer patients. Participants received six immunizations, one per month, at varying dosages (100 micrograms [µg], 500 µg, or 1,000 µg) of the AE37 peptide with 0 µg to 250 µg of granulocyte-macrophage colony-stimulating factor (GM-CSF) as an adjuvant to stimulate the immune system. In 47% of participants, dose reductions were required due to significant local reactions. However, no participants experienced higher than Grade 3 toxicities. In July 2008, the Journal of Clinical Oncology published the study’s results, which demonstrated that the AE37 vaccine appeared to be safe and well tolerated in all subjects. Moreover, the study’s results demonstrated that AE37 could be the first peptide vaccine to show potency independent of an immunoadjuvant (Source: the Journal of Clinical Oncology 26[20]:3426-3433, 2008).


Ongoing Phase II Efficacy Study A fully randomized and controlled Phase II study of its breast cancer vaccine was designed to determine efficacy by preventing recurrence in two types of breast cancer patients: node-positive and high-risk node-negative. The Company intends to evaluate the rate of relapse in the study participants after a follow-up period of two years, with the goal of demonstrating that the relapse rate in the AE37 group of the study is less than half the relapse rate in the control group. Patient dosing in this trial began in May 2007. Generex is conducting the study under the direction of Dr. Peoples in collaboration with the U.S. Military Cancer Institute’s Clinical Trials Group. Antigen Express reported interim results in December 2009. At a median follow-up of 13 months, there were no relapses in patients receiving the AE37 breast cancer vaccine (0 of 49 patients), while relapses occurred in 5 out of 71 patients in the control group. After receiving positive Phase II results for its breast cancer vaccine in 2009, Antigen Express is preparing for a Phase III study, which could commence this year. Prostate Cancer (AE37 Vaccine) The Company’s prostate cancer vaccine trial was conducted using AE37, which demonstrated safety and tolerability in achieving a specific immune response in Phase I breast cancer trials. Antigen Express and the Saint Savas Cancer Hospital have collaborated on AE37 for more than five years. Findings from these efforts have demonstrated AE37’s ability to stimulate Th cells in both animal tumor models and human cancer patients. Antigen Express announced results from a 29-patient Phase I trial with AE37 in prostate cancer patients in June 2009 at the 45th Annual Meeting of the American Society of Clinical Oncology (ASCO) in Orlando, Florida. Antigen Express and Saint Savas designed the study to test for safety, to determine specific immunological responses to the vaccine, and to collect imaging and prostate-specific antigen (PSA) levels to monitor tumors. Patient dosing for the Phase I clinical trial began in November 2007 at both Saint Savas and the Laikon Hospital at the University of Athens (Greece) under the direction of Dr. Constantin Baxevanis. Data from the study shows that the vaccine is safe, well tolerated, and produces the desired immunological response in patients. These results are consistent with those of prior clinical trials of AE37 in breast cancer patients. Agreements are in place to initiate a Phase II clinical trial in 2010. Prostate cancer is the second leading cause of cancer-related death in men in the U.S. and is the most commonly diagnosed cancer in the world. The ACS attributes nearly 27,360 deaths annually to prostate cancer in the U.S., with an estimated 254,000 deaths from the disease globally. GlobalData, a provider of market research on the energy, utility, and medical sectors, valued the global prostate cancer market at $5.4 billion in 2009, with expectations to expand at a CAGR of 6% through 2015, when the market could reach $7.8 billion (Source: GlobalData’s Prostate Cancer: Drug Pipeline Analysis and Market Forecasts to 2015, January 2010). Breast and Ovarian Cancer (AE37 Combination Vaccine) AE37 is also the subject of a Phase I clinical trial in patients with breast or ovarian cancer in which it is being combined with a second HER-2/neu-derived peptide that is designed to stimulate a different portion of the immune system. An IND application was submitted in July 2008 to combine AE37 with a vaccine peptide designed to stimulate cytotoxic T-lymphocytes (CTLs). In August 2008, patient enrollment was initiated for a Phase I clinical trial of this peptide combination for both breast and ovarian cancer indications, which is underway at the Mary Crowley Medical Research Centers in Dallas and the Brooke Army Medical Center (BAMC) in San Antonio. The Company designed the Phase I trial to assess the vaccine’s safety and immunological response in patients with breast or ovarian cancers. The first patient was treated with the vaccine in March 2009. In previous trials, the effects of peptide vaccines designed to stimulate CTLs had been temporary, thus Antigen Express modified the original formulation into a second-generation peptide vaccine combination. The Company believes that combining the CTL peptide with a T-cell specific Ii-Key hybrid vaccine may improve efficacy.


Melanoma Vaccine For melanoma patients, Antigen Express has identified another Ii-Key hybrid peptide derived from the melanoma-associated protein gp100. The vaccine uses the same technology employed in the Company’s AE37 vaccine. In 2005, preclinical findings for the hybrid peptide vaccine were published in the Journal of Immunotherapy. The research demonstrated a post-vaccination increase in enzyme-linked immunosorbent spot (ELISPOT) responses—which are used to monitor immune responses in humans and animals—by three to five times basal levels in treated animals. These findings suggested a potent vaccine effect with a potential for therapeutic application. In addition, Antigen Express signed a confidentiality and materials transfer agreement with the Mayo Clinic in June 2008 to work toward a Phase I clinical trial for the melanoma vaccine. Dr. Svetomir Markovic of the Mayo Clinic, who is experienced in melanoma trials, is leading the project. His expertise includes the development and clinical testing of cancer vaccines, immune-boosting agents, agents that reconstitute immunity in patients with cancer, and combination therapies to enhance anti-tumor immune responses. He has focused on malignant melanoma and non-Hodgkin’s lymphoma. Generex intends to work with the Mayo Clinic to perform several additional studies prior to initiating a trial. The ACS estimated that roughly 68,720 new cases of melanoma of the skin were likely to develop in 2009, with approximately 8,650 melanoma patients dying of the disease in 2009. Human Papillomavirus (HPV)-Induced Cervical Cancer Vaccine Antigen Express’ immunotherapeutic vaccine for HPV-induced cancers makes use of its proprietary Ii-Key platform technology. The Company modified a fragment of the HPV16 E7 protein, which is involved in the tumorigenic activity of the virus, to enhance stimulation of CD4+ Th cells. In a preclinical mouse model, the modified vaccine peptide was roughly five times more potent than the unmodified peptide in generating antigen-specific Th cells. In July 2009, the Company published studies authored by Dr. Minzhen Xu, Antigen Express’ vice president of biology, in Vaccine (Vol. 27, Issue 34) demonstrating the anticancer activity of a novel Ii-Key/HPV hybrid vaccine. The studies show that mice immunized with the hybrid vaccine showed increased killing of cells expressing an HPV-specific antigen without harming cells that do not express the antigen. Further, researchers observed HPV-specific activation of CD4+ Th cells in immunized mice—an effect that was consistent with the vaccine’s predicted mechanism of action. There are roughly 470,606 new cases of cervical cancer each year worldwide, with approximately 233,372 patients dying of the disease annually (Source: the Pan American Health Organization). While prophylactic vaccines against HPV-induced cervical cancer are available, including Merck’s Gardasil®, these vaccines do not benefit patients once cancer presents. Antigen Express believes that its Ii-Key/HPV hybrid vaccines differ by helping to induce a cellular immune response, which is necessary for killing cancer cells. Avian Influenza (H5N1) Vaccine Antigen Express aims to manufacture a synthetic avian influenza vaccine (based on Ii-Key technology) quickly, easily, in larger amounts, and at a reduced cost versus traditional egg- or cell-based vaccines in the case of an avian flu pandemic. Modified peptide vaccines can be manufactured by an entirely synthetic process, which reduces cost and increases both the speed and quantity of vaccine relative to traditional vaccine technologies. Its virus-derived peptides are similar in all strains of the H5N1 avian flu, suggesting that the vaccine may continue to be effective as the virus mutates, such as has occurred in previous avian flu outbreaks. It is anticipated that use of the synthetic vaccine alone could reduce mortality. As well, it may have utility in combination with traditional egg-based vaccines to immunize more at-risk individuals. Antigen Express’ avian flu vaccine is presently undergoing Phase I clinical trials, as addressed on page 40. The World Health Organization (WHO) has kept a record of all laboratory-confirmed cases of this particular strain of avian flu since 2003. As of March 2010, laboratories confirmed 486 cases of H5N1 globally with 287 cases (~60%) resulting in death. The number of actual cases in this timeframe may be higher if cases were unreported or unconfirmed.


Collaborations In August 2007, Antigen Express and the University of Rochester (New York) established an agreement to develop the avian flu vaccine. The collaboration combines the expertise of Dr. John Treanor, a global leader in clinical development of pandemic flu vaccines, with Antigen Express’ vaccine technology. Dr. Treanor is a professor of medicine, microbiology, and immunology at the University of Rochester Medical Center. In mid-2009, the Company published preclinical studies conducted as part of the collaboration between Antigen Express and Dr. Treanor in Vaccine. The Company uses the results of the studies as a guide to optimize synthetic peptide vaccines for pandemic or potentially pandemic influenza viruses. Ongoing Phase I Trials for the Avian Influenza Vaccine Phase I trials of the avian flu vaccine in healthy volunteers were initiated in 2007 at the Lebanese-Canadian Hospital in Beirut, Lebanon. Antigen Express has completed the first portion of the Phase I trial. As of August 2009, over 120 participants received the peptide vaccine, which appears to be safe and well tolerated. Collaborative efforts established with the University of Rochester are intended for potential future Phase I trials in the U.S. In early 2008, Antigen Express and the Lebanese-Canadian Hospital in Beirut extended an existing clinical trial agreement. The parties intended to perform follow-on testing of specific peptides identified during the initial collaboration—all of which were safe and well tolerated. Currently, the Company is conducting preclinical work on a multi-peptide H1N1 vaccine. Swine Flu (H1N1) Vaccine Antigen Express is progressing toward the development of a synthetic peptide vaccine for the H1N1 virus (swine flu) using its novel peptide modification technology. Because the manufacturing process for its vaccine technology is synthetic, Antigen Express could produce a swine flu vaccine more rapidly, in greater quantities, and at a reduced cost versus traditional egg-based vaccines. As well, the Company’s peptide modification technology makes it less likely that a given virus strain could render Antigen Express’ vaccine inactive, as is the case with traditional vaccines. The Company presented its H1N1 swine flu program at the Influenza Congress USA 2009 in Washington, D.C. in November 2009. The Company’s synthetic vaccine platform technology was featured at the first International Swine Flu Conference in D.C. in August 2009, on Canada’s Business News Network (BNN) in August 2009, in Massachusetts’ Telegram & Gazette in June 2009, and on Boston’s CBS affiliate, WBZ-TV News, in April 2009, among others. Additional Infectious Disease Vaccines Antigen Express is further investigating other potential venues for its Ii-Key hybrid technology. Additional developments include an HIV vaccine, which is presently in the preclinical stage. It is important to note that Antigen Express is developing two HIV vaccines. The second HIV vaccine (described on page 42) uses Ii suppression technology and is DNA based. Diagnostic Test for Type 1 Diabetes Moreover, Antigen Express is working to develop a blood test to detect Type 1 diabetes before the disease progresses into the late stages of development. Current technology is only able to detect Type 1 diabetes in later stages, when antibodies of the disease are present. Yet, Antigen Express’ novel test technology may identify patients experiencing the early, less detectable stages of Type 1 diabetes as well as people who are at a high risk for developing the disease later in life. If early detection is possible, patients may be able to take precautionary and preventive measures to improve their quality of life.


In April 2009, Antigen Express and the Immune Tolerance Network—a nonprofit, government-funded consortium led by world authorities in the field of immune tolerance—signed an agreement to implement an improved diagnostic test for Type 1 diabetes. The diagnostic tool, which is based on technology being developed by Antigen Express, allows for more potent and specific activation of immune cells (CD4+ or Th cells), both after immunization and when using blood cells ex vivo. In Type 1 diabetes, CD4+ cells activate and recognize proteins associated with cells involved in insulin secretion, which ultimately leads to the destruction of these cells. Antigen Express’ technology allows for the more sensitive detection of these inappropriately activated cells in the blood. Antigen Express’ blood test leverages the Company’s Ii-Key hybrids, which can directly bind to MHC class II molecules on the cell surface without the need for antigen processing. Antigen Express performed earlier studies demonstrating that this ability could improve detection of antigen-specific Th cells, leading to a more accurate patient evaluation. A study performed by researchers at Antigen Express in collaboration with investigators at the Institute of Cell and Molecular Science in London, UK, and at the University Campus Bio-Medico in Rome Italy, used GAD65—a protein that frequently triggers the autoimmune response in some diabetics. In the study, antigenic peptides were either taken from a GAD65 protein and linked to the Ii-Key hybrid peptide or were administered alone. Both methods induced a higher interferon response in blood cells from diabetic patients versus the control group. Another benefit of this technology is that the T-cell reaction may have the ability to differentiate between patients with Type 1 and Type 2 diabetes. Physicians occasionally mistake Type 1 diabetes for Type 2, which is much more prevalent globally. Treatment for Type 1 and Type 2 diabetes can vary significantly. If Antigen Express’ diagnostic test could distinguish between the two varieties, proper treatment for the patient can begin sooner and provide more benefit than if the patient was misdiagnosed. Allergies In 2005, Antigen Express collaborated with Stallergenes to develop a new approach to asthma and allergy immunotherapy. Under the partnership, the companies completed a study using a technique similar to the technique employed in Antigen Express’ diagnostic test for diabetes. To measure the accuracy of diagnostic tests, scientists evaluated the test’s ability to correctly identify the proportion of persons truly having the disease (called a measure of sensitivity), among other criteria. In January 2008, Antigen Express published the results of the study in the peer-reviewed International Archives of Allergy and Immunology journal, which suggested that Ii-Key hybrids are able to identify activated Th cells that respond to specific allergens with high sensitivity when used ex vivo. Ii Suppression-based Vaccines Antigen Express also develops product candidates based on its Ii suppression technology. These include an RNAi-based tumor vaccine scheduled for Phase I clinical trials in China and a DNA vaccine for HIV that is progressing under a collaboration with Massachusetts General Hospital (MGH). The RNAi technology may provide an improvement over current therapies, such as chemotherapy, which destroys cancer cells but also damages healthy cells in the process. To date, preclinical models have proven the potential of using Ii suppression technology to enhance the presentation of intracellular tumor antigens to CD4+ T-helper cells and improve the immune response. Several preclinical studies, both independent and Company sponsored, have demonstrated that this technology is capable of producing a potent anti-cancer vaccine with significant clinical potential. Acute Myelogenous Leukemia Antigen Express is developing an RNAi-based tumor vaccine that forces tumor cells to present antigens of the cancer cell for improved recognition by the body’s immune system. The Company’s strategy entails modifying the patient’s cancer cells to increase their immunogenicity, thereby enabling the immune system to fight off the cancer anywhere in the patient’s body. The vaccine’s first application is for acute myelogenous leukemia. The scheduled Phase I clinical trials are a collaborative effort between the Company, Dr. Daopei Lu (a skilled hematologist-oncologist), and the Beijing Daopei Hospital (China). Preliminary work under the agreement is underway. Due to regulatory changes in China’s approval process relating to these types of studies, it is unclear when the trial might commence.


Adult acute myelogenous leukemia is a blood and bone marrow cancer that rapidly progresses if left untreated. It is also the most common type of acute leukemia in adults (Source: National Cancer Institute [NCI]). The Leukemia and Lymphoma Society estimated that nearly 13,000 new cases of acute myelogenous leukemia were likely to develop in 2009, with roughly 9,000 deaths caused by the disease. HIV (DNA Vaccine) Since 2004, Antigen Express has collaborated with MGH to use modified peptide antigens to stimulate immunity to HIV. The Company intends to apply this science to both the prevention and treatment of the disease. The collaboration combines Antigen Express’ Ii suppression technologies with Partners AIDS Research Center (PARC), MGH’s HIV research and care program. To the Company’s knowledge, HIV vaccines tested in the past have been unsuccessful due to a lack of efficacy. PARC focuses on HIV patients who do not experience progression of the disease, called “controllers of HIV infection.” These individuals represent a small percentage of the HIV population. The primary difference between controllers and the rest of the HIV population is that controllers have a more robust Th response. When patients first develop the disease, this response is detectable. However, as the disease progresses, it is rare to detect a robust Th response. The Company believes that specific Ii-Key-modified peptides researched by PARC may be able to stimulate a response similar to that in controllers.


Competition Generex’s buccal delivery technology and its other products in development compete directly with technologies at other pharmaceutical and biotechnology companies, universities, government agencies, and public and private research organizations. The Company may face increasing competition from providers of alternative methods of insulin delivery, as the medical community explores viable alternatives to insulin injections—such as nasal delivery, transdermal patches, needle-free (high-pressure) injection, and pulmonary techniques—which may improve the convenience, reliability, and efficacy of insulin administration. In addition, competition may arise from entities that supply and develop drug delivery platforms. Several of the Company’s competitors—Pfizer, Eli Lilly, and Novo Nordisk—discontinued the development of inhaled insulin programs and products due the potential risk of lung damage and cancer. Generex believes that its proprietary buccal delivery technology offers multiple advantages over inhaled insulin without the potential complications. Beyond other insulin delivery systems, Generex may also compete with products that are approved to treat diabetics in substitution of, or in addition to, insulin therapy. The following pages are not intended to represent an exhaustive summation of competitors, but rather are an indication of the type of competition that Generex may face as it seeks to develop and commercialize its products on a global scale. Table 11 presents some of the Company’s key competitors, which are overviewed thereafter.

MannKind Corporation MNKD (NASDAQ) $10.39 $2.19 - $12.30 2,350,220 $1.18B

Nektar Therapeutics NKTR (NASDAQ) 15.29 4.02 - 15.30 869,756 1.43B

Novo Nordisk A/S NVO (NYSE) 74.52 41.35 - 74.86 300,589 43.82B

Alkermes, Inc. ALKS (NASDAQ) 12.92 7.41 - 13.42 1,136,350 1.23B

CPEX Pharmaceuticals, Inc. CPEX (NASDAQ) 16.09 6.50 - 16.99 11,521 40.80M

Novavax, Inc. NVAX (NASDAQ) $2.36 $0.52 - $7.79 1,593,190 $220.63M

Advaxis, Inc. ADXS (OTC.BB) 0.17 0.02 - 0.21 1,027,700 21.62M

Micromet, Inc. MITI (NASDAQ) 8.09 2.45 - 8.48 377,366 559.65M

Sanofi Pasteur Inc.

(part of sanofi-aventis SA) SNY (NYSE) 38.18 24.85 - 41.59 1,489,290 99.80B

Dendreon Corporation DNDN (NASDAQ) 36.41 2.55 - 36.86 3,237,290 4.88B

BioSante Pharmaceuticals, Inc. BPAX (NASDAQ) 1.75 1.13 - 2.70 363,400 93.89M

VaxOnco Inc. Closely held — — — —

CEL-SCI Corporation CVM (NYSE Amex) 0.74 0.18 - 2.10 2,805,690 151.01M

Table 11

Avg. Vol. (3 month)

Last Trade (03/09/2010)

Symbol (Exchange)Company 52-week Range

Market Cap.

Antigen Express' Competition

Generex's Competition

Sources: Yahoo! Finance (www.finance.yahoo.com) and Crystal Research Associates, LLC.

COMPETITION



GENEREX’S COMPETITION Buccal Insulin Product MannKind Corporation Headquartered in Valencia, California, MannKind is a biopharmaceutical company focused on the discovery, development, and commercialization of therapeutic products for diseases such as diabetes and cancer. MannKind is developing Afrezza™ (insulin human [rDNA origin] Inhalation Powder), a drug-device combination product that administers insulin via inhalation to the lungs. The rapid-acting mealtime insulin therapy has completed Phase III clinical trials in the U.S., Canada, Europe, and Latin America. MannKind is developing Afrezza™ to treat hyperglycemia in adult patients with Type 1 or Type 2 diabetes. It is a drug-device combination product, consisting of Inhalation Powder pre-metered into single-use dose cartridges and the Afrezza™ Inhaler. MannKind submitted an NDA to the FDA in May 2009. In January 2010, the FDA delayed its decision on the NDA because it had not yet inspected the insulin manufacturing facilities for the product. MannKind is also developing MKC-1106-PP, an immunotherapy injected directly into the lymph nodes to treat solid tumors caused by ovarian, colorectal, pancreatic, renal, breast, and prostate cancer. Nektar Therapeutics Nektar is a biopharmaceutical company headquartered in San Carlos, California, that develops drug delivery technologies. Nektar’s proprietary technology includes a pulmonary platform for both dry powder and liquid formulations. In addition, the company offers a pulmonary drug delivery system (PDDS) designed to administer liquid formulations through micro pump technology, which can customize the particle size for each individual application and the selected agent. In 2007, Nektar and Pfizer terminated their collaborative development and licensing agreement for Exubera®, an FDA-approved inhaled insulin formulation, and Nektar’s next-generation inhaled insulin product. In 2008, Nektar ceased all negotiations with potential partners for Exubera® and the inhaled insulin product after data indicated that the inhaled insulin product carried an increased risk of lung cancer in some patients. Presently, Generex is not aware of any product candidates under development by Nektar or Pfizer that compete directly with Generex Oral-lyn®. Novo Nordisk A/S Headquartered in Bagsværd, Denmark, Novo Nordisk is a global healthcare company in diabetes care, hemostasis management, and growth hormone and hormone replacement therapy. Novo Nordisk is also a leading global manufacturer of insulin. In 2008, Novo Nordisk terminated Phase III clinical testing of its pulmonary delivery system for inhaled insulin, the AERx® insulin Diabetes Management System (AERx® iDMS), initially developed by Aradigm Corporation. The company cited low satisfaction levels with trial participants and reimbursement issues with healthcare providers in addition to the inhaled insulin setbacks experienced by Pfizer. Novo Nordisk has restructured its inhaled insulin program to focus on insulin analogs, protein delivery systems, and new anti-diabetics. In January 2010, the company received FDA approval for Victoza® (liraglutide) as an adjunct to diet and exercise to improve glycemic control in adult Type 2 diabetes patients. Victoza® is a human GLP-1 analog. GLP-1 is a human hormone produced in the intestine that stimulates the pancreas to secrete insulin and tells the brain to reduce appetite. In June 2008, Novo Nordisk entered into a development and license agreement with Emisphere Technologies, Inc. to develop and commercialize oral formulations of Novo Nordisk’s proprietary Glucagon-Like Peptide-1 (GLP-1) analogs using Emisphere’s Eligen® technology, a broadly based oral drug delivery platform for the improved administration of both therapeutic molecules and pharmaceutical compounds. In January 2010, Novo Nordisk initiated its first Phase I clinical trial with a long-acting oral GLP-1 analog (NN9924) that uses Eligen® technology. Results from the trial are expected in 2011.


Alkermes, Inc. Alkermes is a biotechnology company headquartered in Waltham, Massachusetts, that specializes in proprietary extended-release and pulmonary drug delivery technologies. The company developed the AIR® pulmonary drug delivery system to improve the efficacy of drug administration to the lungs. The system’s design delivers large molecule drugs into the lungs by way of a dry powder formulation. In May 2009, Alkermes, Amylin Pharmaceuticals, Inc., and Eli Lilly submitted an NDA for exenatide once weekly, an extended-release injectable formulation that contains the same active ingredient as Byetta® injection. Byetta® is an injectable medication to treat Type 2 diabetes that is administered twice daily. In clinical studies, exenatide once weekly demonstrated superior blood sugar control versus several common diabetes medications, including sitagliptin, pioglitazone, and insulin glargine. In 2001, Alkermes entered into a licensing agreement with Eli Lilly for the development of an AIR® inhaled insulin system. Through the collaboration, the AIR® insulin system reached, but did not complete, Phase III clinical trials. In March 2008, Eli Lilly decided to end its inhaled insulin program, five months after Pfizer’s decision to remove Exubera® from the market. CPEX Pharmaceuticals, Inc. Headquartered in Exeter, New Hampshire, CPEX is a specialty pharmaceutical company focused on advancing drug delivery platforms. The company’s proprietary permeation enhancer, CPE-215®, improves skin, mouth, nose, and eye membrane absorption of various pharmaceuticals. CPE-215® is approved in the U.S. and parts of Europe. CPEX applied its permeation-enhancing technology to Nasulin™, which administers insulin by means of absorption through the nasal mucosa. In December 2009, CPEX completed enrollment of 94 patients for its ongoing Phase IIa clinical trial with Nasulin™. The double-blind, placebo-controlled study is designed to evaluate the efficacy and safety of Nasulin™ versus placebo over a six-week treatment period. Previous clinical studies with Nasulin™ demonstrated rapid absorption and achieved the anticipated glucose response. As of December 2009, Nasulin™ had shown to be well tolerated in roughly 300 participants with no drug-related serious adverse events reported. Results from the trial are expected in the first half of 2010. GLP Analogs In addition to the insulin delivery platforms listed above, there are several companies that are developing products to deliver analogs of insulin orally. For example, Oramed Pharmaceuticals has an ingestible insulin capsule in Phase II clinical trials. Emisphere Technologies, Inc. is focusing its diabetes research on developing GLP-1 analogs after completing Phase II clinical trials with oral insulin in 2006. As well, Biocon Limited has developed IN-105, a conjugated insulin molecule that is delivered orally (via tablet) that is in Phase III clinical testing. Buccal Morphine and Fentanyl Products Generex may compete with several morphine and fentanyl products. For example, Cephalon, Inc.’s (CEPH -NASDAQ) Fentora® is a fentanyl buccal tablet that is placed between a patient’s upper cheek and gum, which is approved in the U.S. for breakthrough pain in opioid-tolerant cancer patients. Cephalon is also seeking approval for the tablet as a treatment for opioid-tolerant patients with non-cancer breakthrough pain. Generex also faces competition from other products commonly prescribed to treat persistent pain, including Ortho-McNeil-Janssen Pharmaceuticals, Inc.’s Duragesic® (fentanyl transdermal system) CII patch and Purdue Pharma L.P.’s Oxycontin® C-II (oxycodone HCl controlled-release) Tablets and MS Contin® C-II (morphine sulfate controlled-release) Tablets.


ANTIGEN EXPRESS’ COMPETITION Antigen Express is likely to experience competition in the areas of immunotherapeutic technologies and products for cancers, autoimmune disorders, and infectious diseases. In addition, large pharmaceutical companies, such as Merck & Co., Inc., GlaxoSmithKline plc, Novartis, Inc., Sanofi Pasteur, Inc., and MedImmune Inc. (a subsidiary of AstraZeneca plc [AZN-NYSE]), among others, compete in the vaccine market and may have greater experience securing government contracts and grants, conducting clinical trials, obtaining regulatory approvals, and manufacturing and marketing approved products. In addition to the companies listed on pages 46-47, there are numerous smaller companies that are pursuing similar technologies. Immunomedicine Technology and Products Novavax, Inc. Headquartered in Rockville, Maryland, Novavax is a clinical-stage biotechnology company developing vaccines to address infectious diseases such as H1N1, seasonal influenza, and respiratory syncytial virus (RSV). Novavax creates potent recombinant vaccines using its proprietary virus-like-particle (VLP) technology, which entails building a structure similar to a virus (except for the genetic material required for viral replication) without using an adjuvant. Once a VLP vaccine is injected into the body, it triggers an immune response sufficient enough to protect an individual in the case of virus exposure. In December 2009, Novavax reported favorable initial results from the first stage of a two-stage pivotal Phase II study evaluating the safety and immunogenicity of its VLP vaccine for 2009 H1N1 pandemic influenza strains. In March 2010, the Company announced that it had completed enrollment for both stages of the trial, with over 4,500 participants enrolled in total. As well, in November 2009, the company completed enrollment for the Phase II clinical study of its trivalent seasonal influenza (2008/2009 recommended strains) VLP vaccine candidate in healthy adults. The trial compares the safety, tolerability, and immunogenicity of two different doses of Novavax’s vaccine to a commercially available trivalent inactivated vaccine, Fluzone®. Advaxis, Inc. Advaxis is a biotechnology company headquartered in North Brunswick, New Jersey, that uses live, genetically modified Listeria monocytogenes to create therapeutic vaccines that stimulate multiple immune responses against cancer, infectious diseases, and immune disorders. The company bioengineers Listeria bacteria using a proprietary technique to create a specific antigen that can stimulate an immune response after recognition by the recipient’s immune system. Advaxis’ lead drug candidate is ADXS11-001, which is used to treat head and neck cancer as well as HPV-derived cervical cancer. In December 2009, the company announced plans to collaborate with the Gynecologic Oncology Group, a collaborative research group of the NCI, in a multicenter, Phase II clinical trial of ADXS11-001 in advanced cervical cancer in women who have failed prior cytotoxic therapy. As well, the company reported that, as of December 2009, 15% of participants in its Phase I trial of ADXS11-001 (2 of 13 patients) were still alive three years after initial dosing. The company also has prostate and breast cancer vaccines in preclinical phases and is researching its potential in other cancers, including ovarian, glioma, lymphomas, and leukemias. Micromet, Inc. Headquartered in Bethesda, Maryland, Micromet focuses on the development of proprietary antibodies to treat a variety of cancers, autoimmune diseases, and inflammation. The company employs two platform technologies: (1) the creation of Single-Chain Antibodies (SCAs) through the use of the antigen-binding region of a full-sized antibody, held together by a linker; and (2) BiTE® technology, which uses the body’s cytotoxic T-cells to attack tumor cells. Two SCAs create one BiTE® molecule. Employing these methods, Micromet has developed three clinical-stage compounds and five preclinical agents. Two of Micromet’s BiTE® antibodies and three of its conventional antibodies are currently in clinical trials. The company’s most advanced candidates include the BiTE® antibody blinatumomab (MT103), which is in a Phase II clinical trial to treat patients with acute lymphoblastic leukemia (ALL) and in a Phase I clinical trial for patients with non-Hodgkin’s lymphoma (NHL), as well as the human monoclonal antibody adecatumumab (MT201), which is in a Phase II trial in colorectal carcinoma and a Phase Ib trial in combination with docetaxel in metastatic breast cancer.


Sanofi Pasteur Inc. With headquarters in Lyon, France, Sanofi Pasteur (the vaccine division of sanofi-aventis) is one of the largest companies in the world wholly dedicated to vaccines. Sanofi Pasteur received FDA approval for an H5N1 avian influenza vaccine in April 2007 and for an H1N1 vaccine in September 2009. The company has nearly 30 preventive and therapeutic vaccines in development or submitted for regulatory approval for diseases and illnesses such as Dengue fever, Japanese encephalitis, HIV, cancer, and influenza. Sanofi Pasteur is also exploring new technologies and routes of administration and seeks to improve the effectiveness and tolerability of existing vaccines. Dendreon Corporation Dendreon, a Seattle, Washington-based biotechnology company, is developing a range of product candidates that provide a targeted approach to various cancers. Dendreon’s pipeline includes active cellular immunotherapy (ACI), monoclonal antibody, and small molecule product candidates. ACI uses live human cells to re-engage a patient’s immune system in order to elicit a specific and long-lasting response against cancer. Its most advanced product candidate is Provenge® (sipuleucel-T), an autologous (patient-specific) ACI for the treatment of prostate cancer. In late 2009, Dendreon submitted an amended Biologics License Application (BLA) to the FDA seeking licensure for Provenge® to treat men with metastatic castrate-resistant prostate cancer (CRPC). The FDA assigned a Prescription Drug User Fee Act (PDUFA) date of May 1, 2010, by which time it will respond to Dendreon’s amended BLA. Lapuleucel-T, which has completed two Phase I trials in patients with breast, ovarian, and colorectal tumors, was also developed from Dendreon’s ACI platform. Lapuleucel-T targets HER/2+ cancers. BioSante Pharmaceuticals, Inc. Headquartered in Lincolnshire, Illinois, BioSante is a specialty pharmaceutical company developing products for female sexual health, menopause, contraception, and male hypogonadism. In October 2009, BioSante merged with Cell Genesys, Inc., a developer of biological cancer therapies. As a result of the merger, BioSante obtained a portfolio of cancer immunotherapies (known as GVAX™ Immunotherapies) and other technologies. Designed to stimulate the immune system to fight cancer, GVAX™ cancer treatments consist of tumor cells that are genetically modified to secrete an immune-stimulating cytokine and are irradiated for safety. BioSante is evaluating future development opportunities for GVAX™ Immunotherapies, including potential combination with BioVant™, BioSante’s vaccine adjuvant, as well as possible external collaborations. Several GVAX™ Immunotherapies are in human clinical trials at the Johns Hopkins Sidney Kimmel Comprehensive Cancer Center. VaxOnco Inc. With headquarters in Seoul, South Korea, VaxOnco specializes in developing new cancer therapies and vaccines that use the selective power of the immune system to seek out and destroy tumor cells. In April 2009, VaxOnco acquired Pharmexa-Epimmune Inc. from Pharmexa A/S (PHARMX-CPH) for €440,000. Pharmexa-Epimmune’s portfolio included T-cell epitope-based vaccines using microstructures in bacteria that stimulate an immune reaction, including GV1001, a peptide vaccine in both Phase III testing for pancreatic cancer and Phase II testing for liver and non-small cell lung cancer. Pharmexa-Epimmune also had two vaccines against HER/2+ breast cancer in Phase I and Phase II clinical trials. CEL-SCI Corporation Headquartered in Vienna, Virginia, CEL-SCI develops cancer and infectious disease products that empower immune system defenses. The company’s main product is Multikine®, an immunotherapeutic agent with Orphan Drug status being developed as a first-line standard of care cancer treatment. CEL-SCI is currently preparing to initiate a global, open-label Phase III clinical trial of Multikine® for advanced primary head and neck cancer in the summer of 2010. Multikine®, which activates multiple cellular components of the immune system to fight cancer, is administered to patients when the immune system is strongest, before any other treatment (e.g., surgery, chemotherapy, or radiotherapy). The company also initiated a Phase I clinical study with an investigational L.E.A.P.S.™ (Ligand Epitope Antigen Presentation System) H1N1 vaccine in November 2009. CEL-SCI’s L.E.A.P.S.™ technology allows the Company to direct an immune response against specific disease epitopes.


Recent Milestones Generex and its subsidiaries have achieved numerous milestones in the past 12 months, as listed below. Enrolled over 350 subjects in its global Phase III clinical trial with Generex Oral-lyn® Reached an agreement with a major U.S. pharmacy chain to market Crave-NX™ in over 7,000 stores

and received over $800,000 in initial purchase orders after launching the product in February 2009 Initiated shipments and generated sales of Glucose RapidSpray™, Crave-NX™, and BaBOOM!™

Energy Spray in Australia, the Netherlands, and New Zealand Reported interim results from a Phase II efficacy study in breast cancer patients with the AE37

immunotherapeutic vaccine showing that, at a median follow-up of 13 months, 0 of 49 patients receiving the AE37 vaccine relapsed, while relapses were observed in 5 of 71 control group patients

Signed a long-term agreement with sanofi-aventis for the manufacture and supply of recombinant

human insulin crystals for commercial and clinical trial use in Generex Oral-lyn® Reached an agreement with Duane Reade to market Crave-NX™ in 256 drugstores in New York City Launched Generex Oral-lyn® in Algeria after obtaining regulatory approval and received its first

Algerian purchase order from Continental Pharma Laboratories for 10,000 canisters Increased its global presence through Generex MENA, expanding its scope beyond the Middle East

and North Africa to include all of Africa, Australia, New Zealand, Eastern Europe, and the EU Received approval for Generex Oral-lyn® under the FDA’s Treatment IND program as well as

permission to charge for the product in order to recover costs Incorporated Generex BALTIC in the EU as a wholly owned subsidiary to develop the local

marketplace in the Baltic region and surrounding areas for Generex Oral-lyn®, the Company’s OTC products, as well as its immunotherapeutic vaccine platform

Entered into a sales agreement with McCarthy and Sons Service to promote sales of Glucose

RapidSpray™ to veterinarian clinics and hospitals in Canada Held a pre-NDS meeting with the Veterinary Drugs Directorate of Health Canada to outline Generex’s

proposed development plan for the veterinary application of Generex Oral-lyn® Received new patents in Canada, Australia, New Zealand, Brazil, Lebanon, and Morocco Launched commercial retail sales of Generex Oral-lyn® in Lebanon Signed an agreement with the Immune Tolerance Network aimed at implementing a better diagnostic

test for Type 1 diabetes using technology being developed by Antigen Express Reported positive results in March 2009 from an interim review of Phase III data for Generex Oral-

lyn®, noting that data to date demonstrated that the product was non-inferior to injectable mealtime insulin, with no significant adverse events reported

Administered the first patient with the AE37 combination vaccine for breast and ovarian cancer Received a $500,000 purchase order from a pharmaceutical products distributor in the Kingdom of

Saudi Arabia for Glucose RapidSpray™ and BaBOOM!™ Energy Spray, among other products


Key Points to Consider Generex’s RapidMist™ technology is a proprietary device and formulation combination. The hand-

held aerosol spray applicator delivers precise, consistent doses of therapeutics (in liquid form) to a patient’s buccal mucosa—the lining of the inner mouth. Generex’s formulations contain surfactants that enable macromolecule drugs typically administered by injection to be absorbed rapidly via the mouth into the bloodstream.

The Company’s lead product candidate, Generex Oral-lyn®, is an oral insulin spray for Type 1 and

Type 2 diabetes patients that is approved for sale in India, Lebanon, Algeria, and Ecuador. The Company believes that Generex Oral-lyn® can manage blood glucose levels in a convenient, safe, and pain-free manner while improving patient compliance and quality of life.

o A global Phase III trial with Generex Oral-lyn® is ongoing, with 387 Type 1 patients enrolled to

date. Interim results evaluating 300 participants reported no adverse events and showed that the product appeared to maintain non-inferiority to injectable mealtime (prandial) insulin.

o Generex Oral-lyn® is authorized under the Special Access Programme (SAP) in Canada and

under the Treatment Investigational New Drug (IND) program in the U.S. Each program provides experimental drugs to patients with serious or life-threatening diseases in cases where conventional therapies have failed or are inaccessible.

After reporting positive data from a bioequivalent study, Generex plans to submit an Abbreviated New

Drug Application (ANDA) for its metformin chewing gum, MetControl™, in North America, Europe, and other global regions in the first half of 2010.

With roughly 285 million diabetics worldwide, the global market for medicines to treat this illness

totaled $27.3 billion in 2008. The market continues to expand as a result of the aging global population and the escalating obesity epidemic, and may include 430 million individuals by 2030.

Generex’s over-the-counter (OTC) sprays are available at select wholesalers and retailers in Canada and the U.S., with several national and regional retailers and drugstore chains considering the Company’s OTC line for commercial sale. Most recently, Generex contracted with a major U.S. pharmacy chain to market Crave-NX™ 7-Day Diet Aid Spray in over 7,000 stores, receiving over $800,000 in initial purchase orders.

In response to increased demand, Generex is positioning its diabetes products to enter the global

animal health market, which was valued at $19.2 million in 2008. Currently, Glucose RapidSpray™ is available online and in veterinary clinics and hospitals across North America. Generex is also preparing an IND package for Generex Oral-lyn® in the U.S. and Canada.

Generex’s wholly owned subsidiary, Antigen Express, is developing immunotherapeutic vaccines for

breast cancer (Phase II) and prostate cancer (Phase I), a prophylactic avian flu vaccine (Phase I), and a preclinical diagnostic diabetes kit. After receiving positive Phase II results for its breast cancer vaccine in 2009, Antigen Express is preparing for a Phase III study in 2010. As well, a Phase I clinical trial in breast and ovarian cancer patients is ongoing for a second-generation combination vaccine.

The Company’s management has experience in an array of fields, such as technology development;

corporate, commercial, and securities law; and the design and launch of pharmaceutical and device products. Most recently, Generex added Dr. Joseph Rubinfeld to its team as chief scientific advisor to assist in developing and implementing product commercialization roadmaps.

Generex holds 146 issued and 116 pending U.S. and foreign patents. In 2009, the Company received

new patent approvals in Canada, Australia, New Zealand, Brazil, Lebanon, and Morocco. On October 31, 2009, Generex’s cash and cash equivalent position was nearly $26.3 million after

raising over $31 million from May 2009 to September 2009, net of issuance costs and expenses.


Historical Financial Results

All amounts are in U.S. dollars. Tables 12, 13, and 14 (pages 50-54) provide a summary of Generex’s key historical financial statements: its Consolidated Statements of Operations, Balance Sheets, and Statements of Cash Flows.

Cumulative From

November 2, 1995

(Date of Inception)

to October 31,

2009 2008 2009

(Unaudited) (Unaudited) (Unaudited)

Revenues, net 97,542$ 538,346$ 3,715,436$

Cost of Goods Sold 79,237 22,192 720,618

Gross profit 18,305 516,154 2,994,818

Operating Expenses:

Research and development 3,075,769 4,355,689 106,452,944

Research and development - related party — — 220,218

Selling and marketing 1,298,704 837,198 5,731,202

General and administrative 3,825,265 2,847,913 120,626,083

General and administrative - related party — — 314,328

Total Operating Expenses 8,199,738 8,040,800 233,344,775

Operating Loss (8,181,433) (7,524,646) (230,349,957)

Other Income (Expense):

Miscellaneous income (expense) 500 5 196,761

Income from rental operations, net 84,593 88,380 1,656,601

Interest income 10,085 168,465 7,756,959

Interest expense (52,401) (4,429,388) (68,049,569)

Loss on extinguishment of debt — — (14,134,068)

Net Loss Before Undernoted (8,138,656) (11,697,184) (302,923,273)

Minority Interest Share of Loss — — 3,038,185

Net Loss (8,138,656) (11,697,184) (299,885,088)

Preferred Stock Dividend — — 2,295,057

Net Loss Available to Common Stockholders (8,138,656)$ (11,697,184)$ (302,180,145)$

Basic and Diluted Net Loss per Common Share (0.03)$ (0.10)$

Weighted Average Number of Shares of Common

Stock Outstanding 233,991,319 118,109,023


(A Development Stage Company)

Ended October 31,

For the Three Months

CONSOLIDATED STATEMENTS OF OPERATIONS

Generex Biotechnology Corporation and Subsidiaries

Table 12


October 31, July 31,

2009 2009

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents 26,262,140$ 14,197,048$

Accounts receivable 76,367 57,792

Inventory 1,424,782 1,271,456

Other current assets 1,015,191 766,741

Total Current Assets 28,778,480 16,293,037

Property and Equipment, Net 1,439,598 1,444,770

Assets Held for Investment, Net 3,470,728 3,373,564

Patents, Net 3,646,160 3,702,386

TOTAL ASSETS 37,334,966$ 24,813,757$

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable and accrued expenses 7,609,207$ 7,486,155$

Deferred revenue and rebate liability 108,197 140,883

Current maturities of long-term debt 1,247,772 1,060,788

Current maturities of obligations under capital lease 37,365 43,836

Total Current Liabilities 9,002,541 8,731,662

Obligations Under Capital Lease, Net — 3,932

Long-term Debt, Net 1,681,576 1,854,421

Total Liabilities 10,684,117 10,590,015

Commitments and Contingencies

Stockholders’ Equity

Special Voting Rights Preferred Stock, $.001 par value;

authorized 1,000 shares at October 31, 2009, and

July 31, 2009; -0- shares issued and outstanding at

October 31, 2009, and July 31, 2009 — —Common Stock, $.001 par value; authorized 500,000,000

shares at October 31, 2009 and July 31, 2009; 248,145,032

and 212,628,818 shares issued and outstanding

at October 31, 2009, and July 31, 2009, respectively 248,144 212,628

Additional paid-in capital 327,892,433 307,401,016

Deficit accumulated during the development stage (302,180,146) (294,041,489)

Accumulated other comprehensive income 690,418 651,587

Total Stockholders’ Equity 26,650,849 14,223,742

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 37,334,966$ 24,813,757$


CONSOLIDATED BALANCE SHEETS

Generex Biotechnology Corporation and Subsidiaries

Table 13

(A Development Stage Company)


Cumulative From

November 2, 1995

(Date of Inception)

to October 31,

2009 2008 2009


Cash Flows From Operating Activities:

Net loss (8,138,656)$ (11,697,184)$ (299,885,088)$

Adjustments to reconcile net loss to net cash used in

operating activities:

Depreciation and amortization 199,702 216,172 7,972,373

Minority interest share of loss — — (3,038,185)

Reduction of Notes receivable - Common Stock in exchange

for services rendered — — 423,882

Write-off of uncollectible Notes receivable - Common Stock — — 391,103

Write-off of deferred offering costs — — 3,406,196

Write-off of abandoned patents — — 913,196

Loss on disposal of property and equipment — — 911

Loss on extinguishment of debt — — 14,134,069

Common Stock issued as employee compensation 28,986 55,136 3,708,379

Issuance of Options and Option modifications as employee

compensation 879,000 9,680 985,996

Common Stock issued for services rendered 639,224 46,649 10,701,853

Amortization of prepaid services in conjunction with

Common Stock issuance — — 138,375

Non-cash compensation expense — — 45,390

Stock Options and Warrants issued for services rendered 5,653 — 7,371,376

Issuance of Warrants as additional exercise right

inducement — — 21,437,909

Preferred Stock issued for services rendered — — 100

Treasury Stock redeemed for non-performance of services — — (138,000)

Amortization of deferred debt issuance costs and loan

origination fees — 153,791 2,405,629

Amortization of discount on Convertible Debentures — 4,009,835 38,345,592

Common Stock issued as interest payment on Convertible

Debentures — 252,083 757,514

Interest on short-term advance — — 22,190

Founders’ shares transferred for services rendered — — 353,506

Fees in connection with refinancing of debt — — 113,274

Warrant repricing costs — — 3,198,604

Changes in operating assets and liabilities (excluding

the effects of acquisition):

Accounts receivable (26,542) (30,674) (99,777)

Miscellaneous receivables — — 43,812

Inventory (145,862) (60,179) (1,461,712)

Other current assets (238,187) (40,087) (692,700)

Accounts payable and accrued expenses 1,168,647 (574,680) 13,721,787

Deferred revenue (33,702) 37,018 105,135

Other, net — — 110,317

Net Cash Used in Operating Activities (5,661,737) (7,622,440) (174,506,994)

Generex Biotechnology Corporation and Subsidiaries (A Development Stage Company)

Table 14


Ended October 31,


CONSOLIDATED STATEMENTS OF CASH FLOWS


Cumulative From

November 2, 1995

(Date of Inception)

to October 31,

2009 2008 2009


Cash Flows From Investing Activities:

Purchase of property and equipment (132,646) (1,385) (4,727,578)

Costs incurred for patents (42,237) (30,537) (2,244,747)

Change in restricted cash — — 45,872

Proceeds from maturity of short-term investments — 2,214 195,242,918

Purchases of short-term investments — — (195,242,918)

Cash received in conjunction with merger — — 82,232

Advances to Antigen Express, Inc. — — (32,000)

Increase in officers’ loans receivable — — (1,126,157)

Change in deposits — (608,279) (652,071)

Change in Notes receivable - Common Stock — — (91,103)

Change in due from related parties — — (2,222,390)

Other, net — — 89,683

Net Cash Used in Investing Activities (174,883) (637,987) (10,878,259)

Cash Flows From Financing Activities:

Proceeds from short-term advance — — 325,179

Repayment of short-term advance — — (347,369)

Proceeds from issuance of long-term debt — — 2,005,609

Repayment of long-term debt (23,492) (21,567) (2,048,018)

Repayment of obligations under capital lease (10,403) (3,024) (45,637)

Change in due to related parties — — 154,541

Proceeds from exercise of Warrants 1,517,940 — 45,642,159

Proceeds from exercise of Stock Options — 56,000 5,001,916

Proceeds from minority interest investment — — 3,038,185

Proceeds from issuance of Preferred Stock — — 12,015,000

Redemption of SVR Preferred Stock — — (100)

Proceeds from issuance of Convertible Sebentures, net — — 40,704,930

Payment of costs associated with Convertible Debentures — — (722,750)

Repayments of Convertible Debentures — (376,667) (5,142,424)

Purchase of Treasury Stock — — (483,869)

Proceeds from issuance of Common Stock, net 16,400,671 — 112,137,624

Purchase and retirement of Common Stock — — (497,522)

Net Cash Provided by Financing Activities 17,884,716 (345,258) 211,737,454

Effect of Exchange Rates on Cash 16,996 (14,970) (90,061)

Net Increase (Decrease) in Cash and Cash Equivalents 12,065,092 (8,620,655) 26,262,140

Cash and Cash Equivalents, Beginning of Period 14,197,048 17,237,510 —

Cash and Cash Equivalents, End of Period 26,262,140$ 8,616,855$ 26,262,140$

Table 14 (cont.)




Ended October 31,



Cumulative From

November 2, 1995

(Date of Inception)

to October 31,

2009 2008 2009


Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Interest 52,401$ 618,099$

Income taxes $ — $ —

Disclosure of non-cash investing and financing activities:

Issuance of Common Stock as satisfaction of accounts

payable and accrued expenses 1,055,459$ $ —

Par value of Common Stock issued in conjunction with

cashless exercise of Warrants 4,466$ $ —

Issuance of Common Stock as repayment of Convertible

Debentures and advance payments $ — 3,753,334$

Issuance of Common Stock as Convertible Debentures

advance payments $ — 759,450$

Purchase of property and equipment through the issuance

of obligations under capital lease $ — 83,002$





Ended October 31,

Table 14 (cont.)


Risks Some of the information in this Executive Informational Overview® (EIO®) relates to future events or future business and financial performance. Such statements can only be predictions and the actual events or results may differ from those discussed due to the risks described in Generex’s statements on Forms 10-K, 10-Q, 8-K, and other forms filed from time to time. The content of this report with respect to Generex has been compiled primarily from information available to the public released by the Company through news releases, Annual Reports, and U.S. Securities and Exchange Commission (SEC) filings. Generex is solely responsible for the accuracy of this information. Information as to other companies has been prepared from publicly available information and has not been independently verified by Generex. Certain summaries of activities have been condensed to aid the reader in gaining a general understanding. For more information about Generex, please refer to the Company’s website at www.generex.com. Investors should carefully consider the risks and information about Generex’s business described below. Investors should not interpret the order in which these considerations are presented as an indication of their relative importance. The risks and uncertainties described below are not the only risks that the Company faces. Additional risks and uncertainties not presently known to Generex or that the Company currently believes to be immaterial may also adversely affect its business. If any of the following risks and uncertainties develops into actual events, the business, financial condition, and results of operations could be materially and adversely affected, and the trading price of the Company’s shares could decline. RISKS RELATED TO GENEREX’S FINANCIAL CONDITION The Company has a history of losses and will incur additional losses. Generex is a development-stage company with a limited history of operations, and does not expect sufficient revenues to support its operations in the immediate future. In the three months ended October 31, 2009, the Company received revenues of $97,542 from sales of its OTC products. In the fiscal year ended July 31, 2009, Generex received roughly $618,509 from sales of these products. The Company did not recognize any revenue from the sale of its oral insulin product in Ecuador or India in fiscal 2009, although it did recognize $500,000 in licensing fee revenue relating to the signing of a licensing and distribution agreement for the sale of Generex Oral-lyn® in Korea. The Company does not expect to receive any revenues in Ecuador until it enters into a definitive manufacturing and distribution agreement with its business partner there. While Generex has entered into a licensing and distribution agreement with an Indian-based pharmaceutical company and insulin distributor, the Company does not anticipate significant revenue from the commercial launch of Generex Oral-lyn® in India in 2008. Generex has also entered in sub-distribution agreements in Lebanon and Algeria but does not expect any significant revenue from the product’s launch in those countries in calendar year 2010. To date, Generex has not been profitable and its accumulated net loss available to shareholders was $302,180,145 at October 31, 2009. The Company’s losses have resulted principally from costs incurred in research and development (R&D), including clinical trials, and from general and administrative costs associated with its operations. While Generex seeks to attain profitability, the Company cannot be sure that it will ever achieve product and other revenue sufficient for it to attain this objective. With the exception of Generex Oral-lyn®, Glucose RapidSpray™, BaBOOM!™ Energy Spray, and Crave-NX™, Generex’s product candidates are in research or early stages of preclinical and clinical development. The Company will need to conduct substantial additional R&D and clinical trials. Generex will also need to receive necessary regulatory clearances, both in the U.S. and in foreign countries, and obtain meaningful patent protection for and establish freedom to commercialize each of its product candidates. The Company must also complete further clinical trials and seek regulatory approvals for Generex Oral-lyn® in countries outside of Ecuador, India, Lebanon, and Algeria. Generex cannot be sure that it will obtain required regulatory approvals or that it will successfully research, develop, commercialize, manufacture, and market any other product candidates. The Company expects that these activities, together with future general and administrative activities, will result in significant expenses for the foreseeable future.


Generex will need additional capital. To progress in product development or marketing, Generex will need additional capital, which may not be available to the Company. This may delay Generex’s progress in product development or marketing. The Company will require funds in excess of its existing cash resources to complete the following tasks: to proceed with the development of Generex Oral-lyn®; to finance the R&D of new products based on the Company’s buccal delivery and immunomedicine

technologies, including clinical testing relating to new products; to finance the R&D activities of Antigen Express with respect to other potential technologies; to commercially launch and market developed products; to develop or acquire other technologies or other lines of business; to establish and expand Generex’s manufacturing capabilities; to finance general and administrative activities that are not related to specific products under

development; and to otherwise carry on business. In the past, Generex has funded most of its development and other costs through equity financing. The Company anticipates that its existing capital resources will enable it to maintain currently planned operations through December 2010. However, this expectation is based on Generex’s current operating plan, which could change due to many factors, and the Company may need additional funding sooner than anticipated. Because Generex’s operating and capital resources are insufficient to meet future requirements, the Company will have to raise additional funds in the near future to continue with the development and commercialization of its products. Unforeseen problems, including materially negative developments in the Company’s clinical trials or in general economic conditions, could interfere with Generex’s ability to raise additional equity capital or materially adversely affect the terms upon which such funding is available. It is possible that the Company will be unable to obtain additional funding as and when needed. If Generex was unable to obtain additional funding as and when needed, the Company could be forced to delay the progress of certain development efforts. Such a scenario poses risks. For example, Generex’s ability to bring a product to market and obtain revenues could be delayed, its competitors could develop products more quickly, and/or the Company could be forced to relinquish rights to technologies, products, or potential products. Generex’s R&D and marketing efforts can be highly dependent on corporate collaborators and other third parties that may not devote sufficient time, resources, and attention to the Company’s programs. This could limit Generex’s efforts to successfully develop and market potential products. Because the Company has limited resources, Generex has sought to enter into collaboration agreements with other pharmaceutical companies that will assist it in developing, testing, obtaining governmental approval for, and commercializing products using its buccal delivery and immunomedicine technologies. Any collaborator with which the Company may enter into such collaboration agreements may not fully support Generex’s research and commercial interests since the Company’s program may compete for time, attention, and resources with such collaborator’s internal programs. Therefore, these collaborators may not commit sufficient resources to Generex’s program to move it forward effectively, or the program may not advance as rapidly as it might if the Company had retained complete control of all R&D, regulatory, and commercialization decisions.


RISKS RELATED TO GENEREX’S TECHNOLOGIES With the exception of Generex Oral-lyn®, Glucose RapidSpray™, BaBOOM!™ Energy Spray, and Crave-NX™, the Company’s technologies and products are at an early stage of development and Generex cannot expect significant revenues in respect thereof in the foreseeable future. The Company has no products approved for commercial sale at the present time with the exception of Generex Oral-lyn® in Ecuador, India, Lebanon, and Algeria, and its glucose sprays, which are available in certain retail outlets in the U.S., Canada, and the Middle East. To be profitable, the Company must not only successfully research, develop, and obtain regulatory approval for its products, but also manufacture, introduce, market, and distribute them once development is completed. Generex has yet to manufacture, market, and distribute these products on a large-scale commercial basis, and the Company expects to receive only modest revenues from product sales in fiscal year 2010. Generex may not be successful in one or more of these stages of the development or commercialization of its products, and/or any of the products the Company develops may not be commercially viable. Until Generex can establish that its products are commercially viable, the Company will not receive significant revenues from ongoing operations. Until Generex receives regulatory approval to sell its pharmaceutical products in additional countries, the Company’s ability to generate revenues from operations may be limited and those revenues may be insufficient to sustain operations. Many factors impact Generex’s ability to obtain approvals for commercially viable products. The Company’s only pharmaceutical product that is approved for commercial sale is its oral insulin spray formulation, and that approval was obtained in Ecuador, India, Lebanon, and Algeria. Generex has begun the regulatory approval process for its oral insulin, buccal morphine, and fentanyl products in other countries, and the Company has initiated late-stage clinical trials of Generex Oral-lyn® at some of its clinical trial sites in North America according to the Phase III clinical plan. Generex’s immunomedicine products are in the preclinical stage of development, with the exception of a Phase II trial in human patients with stage II HER-2/neu positive breast cancer (U.S.), a Phase I trial in human patients with prostate cancer (Athens, Greece), a Phase I trial in human patients with breast or ovarian cancer (U.S.), and a Phase I trial in human volunteers of a peptide vaccine for use against the H5N1 avian influenza virus (Beirut, Lebanon). Preclinical and clinical trials of Generex’s products, and the manufacturing and marketing of its technologies, are subject to extensive, costly, and rigorous regulation by governmental authorities in the U.S., Canada, and other countries. The process of obtaining required regulatory approvals from the FDA and other regulatory authorities often takes many years, is costly, and can vary significantly based on the type, complexity, and novelty of the product candidates. For these reasons, it is possible that Generex will not receive regulatory approval for any prescription pharmaceutical product candidate in any countries other than Ecuador, India, Lebanon, and Algeria. In addition, 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 testing. Because of this, statements in this report regarding the expected timing of clinical trials cannot be regarded as actual predictions of when the Company will obtain regulatory approval for any clinical phase. Delays in obtaining U.S. or other foreign approvals for Generex’s pharmaceutical products could result in substantial additional costs to the Company and could adversely affect its ability to compete with other companies. If regulatory approval is ultimately granted, the approval may place limitations on the intended use of the product Generex seeks to commercialize and may restrict the way in which the Company is permitted to market the product.


Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, Generex may not have meaningful protection from competition. The Company’s long-term success will substantially depend upon its ability to protect its proprietary technologies from infringement, misappropriation, discovery, and duplication and to avoid infringing the proprietary rights of others. Generex’s patent rights and the patent rights of biotechnology and pharmaceutical companies in general are highly uncertain and include complex legal and factual issues. Because of this, the Company’s pending patent applications may not be granted. These uncertainties also mean that any patents that Generex owns or will obtain in the future could be subject to challenge and, even if not challenged, may not provide the Company with meaningful protection from competition. Due to Generex’s financial uncertainties, the Company may not possess the financial resources necessary to enforce its patents. Patents already issued to Generex or its pending applications may become subject to dispute and any dispute could be resolved against the Company. Because a substantial number of patents have been issued in the field of alternative drug delivery and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of Generex’s patents cannot be predicted. Consequently, the Company does not know whether any of its pending or future patent applications will result in the issuance of patents or, to the extent patents have been issued or will be issued, whether these patents will be subject to further proceedings limiting their scope, will provide significant proprietary protection or competitive advantage, or will be circumvented or invalidated. Also, because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the U.S. and other countries, even after reasonable investigation Generex may not know with certainty whether any products that it (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. For example, Generex is aware of certain patents owned by third parties that such parties could attempt to use in the future in efforts to affect the Company’s freedom to practice some of the patents that it owns or has applied for. Based upon the science and scope of these third-party patents, Generex believes that the patents that it owns or has applied for do not infringe any such third-party patents; however, the Company cannot know for certain whether it could successfully defend its position, if challenged. Generex may incur substantial costs if it is required to defend its intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing, and marketing of the accused product or process. In addition to potential liability for significant damages, Generex could be required to obtain a license to continue to manufacture or market the accused product or process. RISKS RELATED TO THE MARKETING OF GENEREX’S POTENTIAL PRODUCTS The Company may not become or stay profitable even if its pharmaceutical products are approved for sale. Even if Generex obtains regulatory approval to market its oral insulin product outside of Ecuador, India, Lebanon, and Algeria, or to market any other prescription pharmaceutical product candidate, many factors may prevent the product from ever being sold in commercial quantities. Some factors, including those listed below, are beyond Generex’s control: acceptance of the formulation or treatment by healthcare professionals and diabetic patients; the availability, effectiveness, and relative cost of alternative diabetes or immunomedicine treatments

that may be developed by competitors; and the availability of third-party (e.g., insurer and governmental agency) reimbursements. The Company will not receive significant revenues from Generex Oral-lyn® or any of its other pharmaceutical products that may receive regulatory approval until it can successfully manufacture, market, and distribute them in the relevant markets. Similarly, the successful commercialization of the Company’s OTC glucose spray products may be hindered by manufacturing, marketing, and distribution limitations.


Generex has to depend upon others for marketing and distribution of its products and may be forced to enter into contracts limiting the benefits it may receive and the control the Company has over its products. Generex intends to rely on collaborative arrangements with one or more other companies that possess the marketing and distribution resources to perform these functions for the Company. Generex may not be able to enter into beneficial contracts and may be forced to enter into contracts for the marketing and distribution of its products that substantially limit the potential benefits to the Company from commercializing these products. In addition, Generex will not have the same control over marketing and distribution that it would have if the Company conducted these functions itself. Generex may not be able to compete with treatments now being marketed and developed or that may be developed and marketed in the future by other companies. The Company’s products will compete with existing and new therapies and treatments. Generex is aware of a number of companies currently seeking to develop alternative means of delivering insulin, as well as new drugs intended to replace insulin therapy at least in part. The Company is also aware of a number of companies seeking to develop alternative means of enhancing and suppressing peptides. In the longer term, Generex also faces competition from companies that seek to develop cures for diabetes and other malignant, infectious, autoimmune, and allergic diseases through techniques for correcting the genetic deficiencies that underlie such diseases. Numerous pharmaceutical, biotechnology, and drug delivery companies, hospitals, research organizations, individual scientists, and nonprofit organizations are engaged in the development of alternatives to Generex’s technologies. Some of these companies have greater R&D capabilities, experience, manufacturing, marketing, financial, and managerial resources than Generex does. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing drug delivery technologies could enhance competitors’ financial, marketing, and other resources. Developments by other drug delivery companies could make Generex’s products or technologies uncompetitive or obsolete. Accordingly, the Company’s competitors may succeed in developing competing technologies, obtaining FDA approval for products, or gaining market acceptance more rapidly than Generex. Some of the Company’s most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, have announced the discontinuation of development and sale of their inhalable forms of insulin. Unlike inhaled insulin formulations, Generex Oral-lyn® is a buccally absorbed formulation with no residual pulmonary deposition. Generex believes that its buccal delivery technology offers several advantages over inhaled insulin, including ease of use, portability, and the avoidance of pulmonary inhalation, which requires frequent physician monitoring. If government programs and insurance companies do not agree to pay for or reimburse patients for Generex’s pharmaceutical products, the Company’s success will be impacted. Sales of Generex’s oral insulin formulation in Ecuador, India, Lebanon, and Algeria and its other potential pharmaceutical products in other markets will depend in part on the availability of reimbursement by third-party payers, such as government health administration authorities, private health insurers, and other organizations. Third-party payers often challenge the price and cost-effectiveness of medical products and services. Government approval of healthcare products does not guarantee that these third-party payers will pay for the products. Even if third-party payers do accept Generex’s product, the amounts they pay may not be adequate to enable the Company to realize a profit. Legislation and regulations affecting the pricing of pharmaceuticals may change before Generex’s products are approved for marketing and any such changes could further limit reimbursement.


RISKS RELATED TO POTENTIAL LIABILITIES Generex faces significant product liability risks, which may have a negative effect on its financial condition. The administration of drugs or treatments to humans, whether in clinical trials or commercially, can result in product liability claims whether or not the drugs or treatments are actually at fault for causing an injury. Furthermore, Generex’s pharmaceutical products may cause, or may appear to have caused, serious adverse side effects (including death) or potentially dangerous drug interactions that the Company may not learn about or understand fully until the drug or treatment has been administered to patients for some time. Product liability claims can be costly to defend and may result in large judgments or settlements against Generex, which could have a severe negative effect on its financial condition. The Company maintains product liability insurance in amounts it believes to be commercially reasonable for its current level of activity and exposure, but claims could exceed Generex’s coverage limits. Furthermore, due to factors in the insurance market generally and the Company’s experience, Generex may not always be able to purchase sufficient insurance at an affordable price. Even if a product liability claim is not successful, the adverse publicity and time and expense of defending such a claim may interfere with the Company’s business. RISKS RELATED TO THE MARKET FOR GENEREX’S COMMON STOCK The Company’s Common Stock could be delisted from the NASDAQ Capital Market. On July 23, 2008, Generex received notice from the NASDAQ Stock Market that it was not in compliance with Marketplace Rule 4310(c)(4) (now known as Listing Rule 5550(a)(2)), which requires the Company to have a minimum bid price per share of at least $1.00 for 30 consecutive business days. In accordance with this rule, Generex had 180 calendar days, or until January 20, 2009, subject to extension, to regain compliance. The Company’s initial compliance period of 180 calendar days ended on January 20, 2009, but was extended until November 9, 2009, due to NASDAQ’s temporary suspension of the minimum bid price requirement from October 16, 2008, until August 3, 2009. On November 9, 2009, Generex received a letter from NASDAQ indicating that it had not regained compliance with the $1.00 minimum bid price required for continued listing under Listing Rule 5550(a)(2) within the grace period previously allowed by NASDAQ following the initial notice of noncompliance on July 23, 2008. Pursuant to Listing Rule 5810(c)(3)(A), NASDAQ granted Generex an additional 180 calendar day compliance period because the Company met all other initial inclusion criteria (other than the minimum bid price requirement) as of January 6, 2009. Therefore, Generex has 180 calendar days, or until May 5, 2010, to regain compliance with the rule. To regain compliance with the minimum bid price requirement, the closing bid price of the Company’s Common Stock must close at $1.00 per share or more for a minimum of 10 consecutive business days. If, by May 5, 2010, Generex does not regain compliance with Listing Rule 5550(a)(2), the Company will receive written notification that its stock will be delisted. At that time, Generex may appeal the delisting determination to a NASDAQ Hearings Panel. An appeal to the Hearings Panel would stay the delisting. If the Company is not successful in such an appeal, its stock would be delisted from the NASDAQ Capital Market and likely trade on NASDAQ’s OTC Bulletin Board (OTC.BB), assuming Generex meets the requisite criteria.


If Generex fails to maintain compliance with applicable NASDAQ Rules and its stock is delisted from the NASDAQ Capital Market, the Company may become subject to penny stock regulations and there will be less interest for its stock in the market. This may result in lower prices for Generex’s stock and make it more difficult for the Company to obtain financing. If the Company’s stock is not listed on NASDAQ and fails to maintain a price of $5.00 or more per share, Generex’s stock would become subject to the SEC’s penny stock rules. These rules require a broker to deliver, prior to any transaction involving a penny stock, a disclosure schedule explaining the penny stock market and its risks. Additionally, broker/dealers who recommend penny stocks to persons other than established customers and accredited investors must make a special written suitability determination and receive the purchaser’s written agreement to a transaction prior to the sale. In the event that Generex’s stock becomes subject to these rules, it will become more difficult for broker/dealers to sell the Company’s Common Stock. Therefore, it may be more difficult for Generex to obtain financing. The price of Generex’s Common Stock may be volatile. There may be wide fluctuations in the price of the Company’s Common Stock. These fluctuations may be caused by the following factors: announcements of research activities and technology innovations or new products by Generex or its

competitors; changes in market valuation of companies in the Company’s industry generally; variations in operating results; changes in governmental regulations; developments in patent and other proprietary rights; public concern as to the safety of drugs or treatments developed by Generex or others; results of clinical trials of the Company’s or competitors’ products; and regulatory action or inaction on Generex’s or its competitors’ products. From time to time, Generex may hire companies to assist the Company in pursuing investor relations strategies to generate increased volumes of investment in its Common Stock. Such activities may result, among other things, in causing the price of Generex’s Common Stock to increase on a short-term basis. Furthermore, the stock market generally and the market for stocks of companies with lower market capitalizations and small biopharmaceutical companies, like Generex, have from time to time experienced, and likely will again experience, significant price and volume fluctuations that are unrelated to the operating performance of a particular company. During the third calendar quarter of 2008 and continuing to date, Generex, like many other publicly traded companies, has experienced a sharp decline in the price of its stock attributable to concerns about the current global recession. The widespread decline in stock prices led the NASDAQ Stock Market to further extend its temporary suspension of enforcement of the minimum bid price requirement until July 31, 2009. Provisions of Generex’s Restated Certificate of Incorporation could delay or prevent the acquisition or sale of its business. The Company’s Restated Certificate of Incorporation permits its Board of Directors to designate new series of Preferred Stock and issue those shares without any vote or action by Generex’s stockholders. Such newly authorized and issued shares of Preferred Stock could contain terms that grant special voting rights to the holders of such shares that make it more difficult to obtain stockholder approval for an acquisition of Generex’s business or increase the cost of any such acquisition.


The Company’s recent equity financing will dilute current stockholders and could prevent the acquisition or sale of its business. Generex’s recent equity financing transactions have and will dilute current stockholders. Currently, approximately 42,680,284 shares of Common Stock are issuable upon exercise of the Warrants that the Company issued on March 31, 2008, May 15, 2009, June 15, 2009, August 6, 2009, and September 14, 2009 (without regard to additional shares that may become issuable due to anti-dilution adjustments or in connection with payments of interest), which represents roughly 17% of the shares of Common Stock currently outstanding. Assuming the holders of the Warrants convert and exercise all of the Warrants into shares of Common Stock, the number of shares of issued and outstanding Common Stock will increase significantly, and current stockholders will own a smaller percentage of the outstanding Common Stock of Generex. The issuance of shares of Common Stock pursuant to the Warrants will also have a dilutive effect on earnings per share and may adversely affect the market price of the Common Stock. In addition, the issuance of shares of Common Stock upon exercise of the Warrants sold in the offerings that closed on June 15, 2009, August 6, 2009, and September 14, 2009, and sold in the March 31, 2008, private placement could have an anti-takeover effect because such issuance will make it more difficult for, or discourage an attempt by, a party to obtain control of Generex by tender offer or other means. The issuance of Common Stock upon the exercise of the Warrants will increase the number of shares entitled to vote, increase the number of votes required to approve a change of control of the Company, and dilute the interest of a party attempting to obtain control of Generex. If Generex raises funds through one or more additional equity financings in the future, it will have a further dilutive effect on existing holders of Generex’s shares by reducing their percentage ownership. The shares may be sold at a time when the market price is low because the Company needs the funds. This will dilute existing holders more than if Generex’s stock price was higher. In addition, equity financings normally involve shares sold at a discount to the current market price.


Recent Events 03/04/2010—Generex Biotechnology Corporation announced that it had established several key strategic relationships for the development of a distribution network for Generex Oral-lyn® under the U.S. Food and Drug Administration’s (FDA) Treatment Investigational New Drug (IND) Program. 03/02/2010—Announced that the Company received notice of issuance of a patent for its Ii-Key peptide vaccine technology in China. 01/25/2010—Announced its participation in the 2010 Arab Health Congress on January 25-28, 2010, at the Dubai International Exhibition Centre through its Middle Eastern branch office, Generex MENA. In recent years, the event has attracted approximately 50,000 healthcare professionals from all over the world. 01/20/2010—Announced its participation in the 2010 ECRM® Vitamin, Diet & Sports Nutrition Efficient Program Planning Session held January 19-22, 2010, in Orlando, Florida. Generex showcased several products from its over-the-counter (OTC) line, including BaBOOM!™ Energy Spray and Crave-NX™ 7-Day Diet Aid Spray. 01/19/2010—Announced the presentation of the immunotherapeutics vaccine technology platform and product pipeline of its wholly owned subsidiary, Antigen Express, Inc., at the Cambridge Healthtech Institutes’ 9th annual PepTalk Conference held January 11-15, 2010, in San Diego. 01/13/2010—Announced that it received an aggregate of over $800,000 in initial purchase orders for Crave-NX™. These orders were part of the agreement with a major nationwide pharmacy chain announced on January 11, 2010. 01/11/2010—Announced that it reached an agreement with a major nationwide pharmacy chain to market Crave-NX™ in over 7,000 North American stores beginning January 2010. 01/08/2010—Issued the last segment of an article written by Dr. Joseph Rubinfeld, Generex’s chief scientific advisor, discussing the Company’s accomplishments during 2009 and potential future achievements. The three-part article can be found on Generex’s website under News Releases in entries dated January 6-8, 2010. 12/17/2009—Announced that it initiated shipments and generated sales of its confectionary product line, including Glucose RapidSpray™, Crave-NX™, and BaBOOM!™ Energy Spray in Australia, the Netherlands, and New Zealand. 12/15/2009—Clarified a previous announcement made on December 14, 2009, concerning interim results from a Phase II efficacy study with Antigen Express’ AE37 immunotherapeutic vaccine for breast cancer. The prior press release included two incorrect statements: (1) that only half the number of patients in the treatment arm of the study relapsed compared to those not receiving the vaccine; and (2) that the results presented at the conference were those observed in patients 13.5 months after treatment. As Dr. Peoples reported to the symposium, at a median follow-up of 13 months, there were no relapses in patients receiving the AE37 vaccine for breast cancer (0 of 49 patients), while relapses were observed in the control group (5 of 71 patients). 12/14/2009—Announced the presentation of interim results from a Phase II efficacy study of AE37 at the 32nd Annual San Antonio Breast Cancer Symposium. 12/09/2009—Announced that it signed a long-term agreement with Sanofi-Aventis Deutschland GmbH for the manufacture and supply of recombinant human insulin crystals for commercial and clinical trial use in Generex Oral-lyn®. The financial terms of the arrangement were not disclosed.


12/03/2009—An independent review of clinical trials of Generex Oral-lyn® was published in Diabetes, Obesity and Metabolism, which showed that the oral insulin spray has a faster onset of action and shorter duration of action than insulin delivered subcutaneously. 12/01/2009—Announced that it plans to offer Crave-NX™ at 256 Duane Reade drugstores throughout New York City. 11/23/2009—Announced that the director of immunobiology at Antigen Express, Dr. Douglas Powell, presented Generex’s H1N1 swine flu program, including its progress toward the development of a synthetic peptide vaccine for H1N1, at the Influenza Congress USA held November 18-20, 2009, in Washington, D.C. Representatives from key U.S. and international agencies, policy makers, and major pharmaceutical and biotechnology companies attended the symposium. 11/10/2009—Received confirmation from the NASDAQ Stock Market that the Company was granted an additional 180-day period to regain compliance with the listing maintenance requirements. 11/02/2009—Announced that The Doggie Chronicles, a radio program for pet enthusiasts, featured Mr. William D. Abajian, Generex’s senior executive advisor for global licensing and business development. Mr. Abajian discussed hypoglycemia in dogs and cats and how Generex’s proprietary Glucose RapidSpray™ can help maintain blood glucose levels throughout the day in both humans and their pets. 10/29/2009—Announced that, in light of general market conditions, the Company did not intend to exercise its right to issue and sell shares of its Common Stock under the “At Market Issuance Sales Agreement” established with Wm Smith & Co. on October 14, 2009, until further notice. 10/21/2009—Announced that it received its first purchase order from Continental Pharma Laboratories for 10,000 canisters of Generex Oral-lyn® to be filled by Generex MENA. 10/20/2009—Announced plans to present clinical data at the 20th World Diabetes Congress of the International Diabetes Federation (IDF) in Montréal, Canada, on October 18-22, 2009. 10/16/2009—Reported that it and Continental Pharma Laboratories announced the launch of commercial sales of Generex Oral-lyn® in Algeria at a conference earlier in the week. The launch of Generex Oral-lyn® took place at Royal Hotel in Oran, Algeria. 10/14/2009—Announced that the FDA granted price approval in respect of the use of Generex Oral-lyn® under the Treatment IND program, permitting the Company to charge for the product in order to recover costs. Greater details about the FDA’s Treatment IND program are provided on page 25. 10/14/2009—Announced its plan to host a conference call on October 15, 2009, at 11:00 a.m. EDT to update the investment community on Generex Oral-lyn® and other corporate activities. The call is archived at www.generex.com under Investor Relations. 10/05/2009—Announced that Homeland Security Television (HSTV), an on-demand network dedicated to homeland security and global development, featured Dr. Eric von Hofe, the president of Antigen Express. In the segment, entitled “2009 Influenza Pandemic Preparedness,” Dr. von Hofe discussed the shifting types of flu strains resulting in new vaccines every season, and distinguished vaccines from antiviral agents and methods that could help cut down on the transmission of H1N1. 09/30/2009—Announced its plans to present study results at the 45th Annual Meeting of the European Association for the Study of Diabetes (EASD) held September 29 through October 2, 2009, in Vienna, Austria. The EASD Annual Meeting attracts over 14,000 attendees from the healthcare industry. 09/22/2009—Announced that it increased its presence in the global marketplace through Generex MENA, expanding its scope beyond the Middle East and North Africa to include all of Africa, Australia, New Zealand, Eastern Europe, and the EU. 09/14/2009—Announced that it received commitments from investors to purchase $12,250,000 of securities in a registered direct offering.


09/10/2009—Announced that the FDA granted approval for the use of Generex Oral-lyn® under its Treatment IND program. 09/02/2009—Announced that it incorporated Generex Biotechnology BALTIC in the EU as a wholly owned subsidiary to develop the local marketplace in the Baltic region and surrounding areas for Generex Oral-lyn® and its complementary metabolic disease pipeline products, as well as its immunotherapeutic vaccine platform. 08/27/2009—Announced that its synthetic vaccine platform technology was featured at the first International Swine Flu Conference in Washington, D.C., on August 20, 2009. Antigen Express’ Dr. Powell was a featured panelist in a discussion on flu season preparation and responding to the pandemic H1N1 threat. 08/24/2009—Ms. Anna E. Gluskin, the Company’s chairman, president, chief executive officer, and director, was featured on Market News on Canada’s Business News Network (BNN) to discuss the current H1N1 situation and how Generex’s synthetic vaccine platform can respond to the swine flu’s ever-changing DNA. Ms. Gluskin also discussed the differences between Generex’s synthetic vaccines and traditional egg-based vaccines. The segment is available at www.generex.com. 08/18/2009—Announced that it entered into a sales agreement with McCarthy and Sons Service, a sales firm that has serviced Canadian veterinarians for over 40 years. The agreement deemed McCarthy and Sons responsible for promoting sales of Glucose RapidSpray™ on an exclusive representation basis to veterinarian clinics and hospitals in Canada. 08/06/2009—Announced that it consummated a registered direct offering of 8,558,013 shares of its Common Stock to a select group of accredited investors at $0.6602 per share. In addition, Generex issued to the investors Warrants to acquire up to 2,995,305 shares of its Common Stock at $0.79 per share. The Warrants are exercisable for a period of five years commencing 183 days after the closing date. The offering resulted in gross proceeds of $5,650,000 and, after placement agent’s fees and estimated offering expenses, Generex received net proceeds of roughly $5,336,000. 08/05/2009—Announced the publication of preclinical studies conducted to identify vaccine peptides for the potentially pandemic H5N1 avian influenza virus in the journal Vaccine. 08/04/2009—Announced that Dr. Joseph Rubinfeld, one of the original founders of Amgen, Inc. , agreed to act as Generex’s chief scientific advisor. Dr. Rubinfeld’s full biography is provided on page 14. 08/03/2009—Announced the successful completion of its 2009 annual stockholders’ meeting held on July 30, 2009. An aggregate of 127,891,751 shares voted, representing 67.6% of the outstanding shares. All proposals put forward for the stockholders’ consideration in the June 18, 2009, notice of meeting and proxy statement in respect of the meeting passed. 07/22/2009—Announced that the Company held a meeting with the Veterinary Drugs Directorate (VDD) of Health Canada on July 14, 2009, in Ottawa, Canada. The meeting was a pre-New Drug Submission (NDS) meeting held in order to outline Generex’s proposed development plan for the veterinary application of Generex Oral-lyn®. 07/20/2009—Announced publication of studies demonstrating the anticancer activity of a novel Ii-Key/human papillomavirus (HPV) immunotherapeutic vaccine. Greater details about the Antigen Express studies are provided on page 39. 06/29/2009—Announced that it reviewed the positive data from its bioequivalent study with MetControl™, which was conducted in November 2008. Results indicated that MetControl™ gum and traditional metformin tablets are bioequivalent in respect of both the rate and the extent of systemic absorption. Management believes that the results provide evidence that MetControl™ and metformin tablets are therapeutically equivalent and therefore interchangeable.


06/26/2009—Antigen Express developed new vaccine technology that could lead to the development of safe, effective flu vaccines, according to a June 23, 2009, article in the Worcester Telegram & Gazette. The complete text of the article is available online at www.telegraph.com. 06/22/2009—Announced the appointment of Mr. Stephen Fellows, CA, to the position of vice president of finance as the Company plans for growth in sales for its current retail product portfolio and increased commercialization for Generex Oral-lyn®. Mr. Fellows’ biography is provided on page 12. 06/17/2009—Provided an update on the status of the retail broker network for the Company’s line of OTC confectionary products available in Canada and the U.S. In Canada, Generex had been engaged for over two years with Pinnacle Pharmaceutics Ltd., a manufacturer’s agent in Canada specializing in sales and marketing expertise for OTC products. In the U.S., Generex continued to grow its national broker network with leading regional brokers specializing in the food, drug, mass, and convenience store class of trades. 06/15/2009—Announced that it had consummated the previously announced registered direct offering of 17,200,000 shares of its Common Stock to a select group of accredited investors at $0.6389 per share. Generex also issued Warrants to acquire up to 8,600,000 shares of its Common Stock at $0.76 per share. The Warrants are exercisable for a period of five years commencing 183 days after the closing date. The offering resulted in gross proceeds of roughly $11 million and, after placement agent’s fees and estimated offering expenses, the Company received net proceeds of $10.8 million. 06/12/2009—Announced that it received five new patents in Canada, Australia, New Zealand, Brazil, and Lebanon. The patents provide additional protection for Generex’s proprietary compositions and methods for delivering pharmaceuticals in buccal applications. 06/11/2009—Announced the presentation of clinical data at the Endocrine Society’s Annual Meeting held June 10-13, 2009, in Washington, D.C. The Company’s abstract provided positive safety and efficacy data from a Phase II clinical trial of Generex Oral-lyn® in patients with impaired glucose tolerance (IGT). 06/10/2009—Announced that all of the 8% Senior Secured Convertible Notes issued on March 31, 2008, had been satisfied in full and were no longer outstanding. As a result of the satisfaction of the Notes, the $3 million in cash collateral provided as security for the Notes was to be returned to Generex. 06/09/2009—Presented data at the American Diabetes Association’s (ADA) 69th Annual Scientific Sessions held June 5-9, 2009, in New Orleans, Louisiana. 06/01/2009—Announced that the results of its Phase I trial with AE37 in prostate cancer patients were presented at the 45th Annual Meeting of the American Society of Clinical Oncology (ASCO) held in Orlando, Florida, from May 29 to June 2, 2009. 05/28/2009—Announced that Dr. Powell was scheduled to participate in a panel discussion at the Human Swine Flu (H1N1) and Novel Influenza Pandemics symposium being hosted by the New York Academy of Sciences (NYAS) in New York City. The symposium featured presentations by leaders in the field and explored the latest swine flu outbreak with talks on the new reassortant virus, epidemiology, vaccines, treatment, and public health aspects. 05/26/2009—Announced that a presentation was made at the BIT Life Sciences’ 1st Annual International Congress of Antibodies held May 22-24, 2009, in Beijing, China, regarding the vaccine platform being developed by Antigen Express. 05/20/2009—Commented on its recent stock offering. On May 15, 2009, Generex announced the consummation of a $5,000,000 registered direct offering of shares of its Common Stock to selected accredited investors at $0.33 per share. The amount of the offering was the maximum allowed by paragraph eight of the February 27, 2009, forbearance and amendment agreements signed by Generex with the holders of its 8% Senior Secured Convertible Notes. Pursuant to that paragraph, although the conversion price of the note holders’ Warrants to acquire Generex’s Common Stock was reduced, the number of shares of the Company’s Common Stock issuable pursuant to the exercise of those Warrants was not increased such that the offering did not increase the amount of dilution under those Warrants.


The offering was a discounted offering of the Company’s Common Stock, with no Warrant coverage, and was the first utilization of the Company’s existing shelf registration statement. The stock issued in the offering represented roughly 9.24% of the issued and outstanding shares of the Company’s Common Stock immediately prior to the offering. While 80% of the offering was subscribed for by new investors in Generex, the remaining 20% of the offering was subscribed for by high net worth long-time investors in the Company. 05/15/2009—Announced that it consummated a registered direct offering of 15,151,517 shares of its Common Stock to a select group of accredited investors at $0.33 per share. The offering resulted in net proceeds of approximately $4.8 million, after deducting the placement agent’s fees and estimated offering expenses. 05/14/2009—Announced, together with Benta S.A.L. (the Company’s importation, marketing, distribution, and sales sub-licensee in Lebanon), the launch of commercial retail sales of Generex Oral-lyn® in Lebanon after the product received approval for importation and commercial marketing and sale by the Lebanese Ministry of Public Health for the treatment of patients with Type 1 and Type 2 diabetes. 05/12/2009—Announced that Professor Paolo Pozzilli of the Department of Endocrinology and Diabetes at University Campus Bio-Medico (Rome, Italy) gave a lecture on Generex Oral-lyn® at the Hamad General Hospital in the State of Qatar. Over 30 diabetologists, endocrinologists, and hospital department heads attended the lecture, which was arranged by Generex MENA. 05/05/2009—Announced that Generex Oral-lyn® was approved by the Ministry of Health, Populations, and Hospitals Reform of Algeria for importation and commercial marketing and sale to treat diabetes in the People’s Democratic Republic of Algeria. As of May 2009, Generex Oral-lyn® was the only non-injectable buccal insulin approved in Algeria. 04/30/2009—Dr. von Hofe was featured on April 29, 2009, on Boston’s CBS affiliate, WBZ-TV News, at 11:00 p.m. EDT. During the segment, which discussed the swine flu outbreak with an emphasis on pharmaceutical and biotechnology companies that were developing vaccines, Dr. von Hofe highlighted Antigen Express’ proprietary synthetic vaccine platform technology. The segment can be viewed online at www.generex.com. 04/21/2009—Announced that Antigen Express and the Immune Tolerance Network signed an agreement aimed at implementing an improved diagnostic test for Type 1 diabetes. 04/20/2009—Announced that Antigen Express presented preclinical findings on a novel immunotherapeutic vaccine for HPV-induced cancers at the 100th Annual Meeting of the American Association for Cancer Research in Denver, Colorado, held April 18-22, 2009. 04/14/2009—Announced its plans to exhibit at the Marketplace 2009 convention held on April 15, 2009, at the Arlington Convention Center in Texas. Although the Company intended to display all of its confectionary products, Generex expected to focus on BaBOOM!™ Energy Spray. 04/08/2009—Announced that the Moroccan Industrial and Commercial Property Office granted the Company its first Moroccan patent, entitled “Orally Absorbed Pharmaceutical Formulation and Method of Administration.” The patent contains claims to pharmaceutical formulations effective to deliver a pharmaceutical agent across oral membranes as well as device and method claims. 03/31/2009—Announced that its Generex MENA branch office hosted a seminar at NMC Specialty Hospital, Abu Dhabi, in order to introduce Generex Oral-lyn® to endocrinologists, general physicians, and key hospital staff employed by the NMC Specialty Hospital. 03/26/2009—Announced its plans to pursue submission of Generex Oral-lyn® with the veterinary arms of global health agencies for therapeutic use in cats and dogs with diabetes due to increased demand for the product.


03/25/2009—The “C-Suite” segment of FOX Business Network featured Ms. Gluskin in a segment discussing Generex’s range of products based on the RapidMist™ platform technology. The segment can be viewed online at www.generex.com. 03/13/2009—Announced a conference call for Friday, March 13, 2009, at 11:00 a.m. EST to update the investment community on the positive results following review of Phase III data for Generex Oral-lyn®; activity in the regions where the Company’s products have been approved for sale; progress on distribution of Generex’s OTC products; and other corporate activities. The archived webcast can be accessed online at www.generex.com under Investor Relations. 03/11/2009—Provided an update on Generex Oral-lyn® sales in India, where the product is marketed and sold by Shreya Life Sciences Pvt. Ltd. Generex Oral-lyn® has been marketed under the brand name Oral Recosulin™ since January 27, 2009, in Mumbai and in the cities of Bangalore, Delhi, Kolkata, Chennai, and Cochin since February 3, 2009. Following the initial marketing campaign, Shreya Life Sciences had procured orders from more than 60 physicians for over 100 patients. 03/10/2009—Announced positive results following the review of the Phase III data for Generex Oral-lyn®. As of March 10, 2009, over 300 participants had been enrolled in the study (with 60 having achieved the requisite six-month treatment milestone) and the product’s non-inferiority to injectable mealtime (prandial) insulin appeared to be maintained. No significant adverse events had been reported. 03/03/2009—Announced that the first patient received the AE37 vaccine as part of a new combination therapy approach for breast and ovarian cancer patients. Greater details of this trial are provided on page 38. 03/02/2009—Announced that Professor Pozzilli was scheduled to make a podium presentation about Generex Oral-lyn® at the International Conference on Advances in Diabetes and Insulin Therapy held in Mumbai, India, on March 19-22, 2009. 02/20/2009—Discussed how the Company’s BaBOOM!™ Energy Spray can improve sport performance by raising energy levels. 02/18/2009—Announced the commercial launch of Crave-NX™. 02/17/2009—Announced that it received a $500,000 purchase order from a pharmaceutical products distributor in the Kingdom of Saudi Arabia—the Saudi Import Company-Banaja—which included Glucose RapidSpray™ and BaBOOM!™ Energy Spray, among other consumer health-related products packaged exclusively for Generex MENA. 01/27/2009—Announced its participation, through Generex MENA, in the 2009 Arab Health Congress January 26-29, 2009, at the Dubai International Convention & Exhibition Centre. 01/22/2009—Announced that it entered into a distribution agreement with Butler Schein™ Animal Health (formerly Butler Animal Health Supply LLC), pursuant to which Butler was expected to distribute Glucose RapidSpray™ to the U.S. animal health industry. 01/12/2009—Announced the publication of a report in the January 2009 issue of Expert Opinion on Biological Therapy (Vol. 9, No. 1, pgs. 71-78) reviewing AE37’s clinical and preclinical data to date and comparing the vaccine to other investigational vaccines.


Glossary Abbreviated New Drug Application (ANDA)—A submission to the FDA for the manufacture and marketing of a generic product. Active Pharmaceutical Ingredient (API)—A substance that is used to produce a pharmaceutical product as a therapeutically active compound (ingredient). Actuator—A mechanism for controlling the flow of material or power. Acute Myelogenous Leukemia—Like other types of leukemia, acute myelogenous leukemia is a cancer of the white blood cells. It is a type of leukemia that progresses quickly and is characterized by the growth of too many immature white blood cells in the blood and bone marrow. Adjuvant—A substance that enhances the effectiveness of a primary therapy. AE37—Antigen Express’ most advanced peptide vaccine using the Ii-Key hybrid technology. The peptide was derived from a portion of the HER-2/neu gene, which is commonly associated with abnormal cell growth (cancer). See the human epidermal growth factor receptor 2 (HER-2/neu) entry on page 70. Allosteric Site—The place on an enzyme where a molecule that is not a substrate may bind, thus changing the shape of the enzyme and influencing its ability to be active. Antibody—A specialized immune protein typically produced by B-cells after they are stimulated by an antigen. The antibody reacts in an adaptive immune response specifically against the stimulus antigen. Antigen-presenting Cells (APCs)—Cells that present antigens in a form recognized by T-cells. Antigens—Substances that have the ability to stimulate the production of antibodies. Basal Insulin—A low level of insulin throughout the day and overnight. Also called background insulin. Beta Cells—Cells that make insulin. Beta cells are located in the islets of the pancreas. Bioavailability—The fraction of an administered dose of unaltered drug that reaches the systemic circulation, the system in the body that supplies blood and oxygen to all parts except for the lungs. Buccal Mucosa—The inner lining of the cheeks and lips. Chromatography—A process to separate mixtures into their component parts for analytical purposes. Cytotoxic T-Lymphocytes (CTLs)—A type of white blood cell developed in the bone marrow that directly attacks foreign antigens and acts as an immune system regulator. Also called cytotoxic T-cells. Dipeptidyl Peptidase IV (DPP-IV) Inhibitors—A new drug class taken in pill form to stimulate the secretion of insulin to lower blood glucose levels in Type 2 diabetes patients. Epitope—A specific antibody-generating location on a protein that is able to stimulate an immune response. Excipient—A generally inert (inactive) substance that is used as a diluent or vehicle for a drug. Fentanyl—A narcotic opioid drug that is used in the treatment of pain. GAD65—A biosynthetic enzyme that is the target of autoantibodies in people who later develop Type 1 diabetes.


Generally Recognized As Safe (GRAS)—An FDA designation given to food additives that are generally recognized as safe by the scientific community. Glucodynamic—Relating to the glucose requirements and effects following insulin injection. Glucose—A form of sugar that is the body’s primary fuel. Glucose broken down from food can be converted into energy or stored by the body. Glucose Clamp Technique—A recognized method for quantifying insulin resistance and the pancreatic insulin response to glucose through a hyperglycemic stimulus including two phases of an intravenous glucose infusion. Grade 3—A term used by the National Cancer Institute (NCI) to describe severe adverse effects. The NCI has common terminology criteria to report adverse events on a scale of severity that ranges from 1 (mild) to 5 (may cause death). Granulocyte-Macrophage Colony-Stimulating Factor (GM-CSF)—A protein secreted by T-cells (among others) that functions as a white blood cell growth factor. H5N1—A subtype of the influenza A virus that causes illness in humans and many other animal species. Hemoglobin A1c (HbA1c)—A form of oxygen-carrying protein in red blood cells to which glucose is bound. HbA1c levels are able to determine the average blood sugar concentration to monitor a patient’s control of diabetes over a prolonged period. Also known as glycosylated hemoglobin. Heparin—A drug that helps prevent blood clots from forming. Human Epidermal Growth Factor Receptor 2 (HER-2/neu)—A protein involved in normal cell growth that is found in high levels and is more aggressive on cells in a variety of cancers. Hyperglycemia—Abnormally high blood sugar usually associated with diabetes. Hypoglycemia—Low blood sugar. International Conference on Harmonization-Good Clinical Practice (ICH-GCP) Guidelines—A standard for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials, which provides assurance that the data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial subjects are protected. The guideline was created considering the current good clinical practices of the EU, Japan, and the U.S., among other countries, as well as those of the World Health Organization (WHO). ICH-GCP provides a unified standard to facilitate the mutual acceptance of clinical data by the regulatory authorities in the EU, Japan, and the U.S. Ii-Key—A fragment of the invariant chain that is necessary for binding an exogenous peptide on MHC class II cells. Immunoadjuvant—A nonspecific substance that enhances the immune response to an antigen with which it is administered. Immunotherapy—A treatment used to stimulate or restore the immune system’s ability to combat disease and infection. Impaired Glucose Tolerance (IGT)—A condition where blood sugar levels are elevated, though not quite at diabetic levels. IGT is a risk factor for developing Type 2 diabetes. Incretin Mimetics—A new class of drugs to treat Type 2 diabetes by replicating the enhancement of glucose-dependent insulin secretion and other glucose-lowering actions of incretin hormones. Insulin Analog—Natural insulin modified through changes made in the amino acid sequence of the molecule that affect its duration of action.


Interferon—A family of glycoproteins (molecules consisting of a carbohydrate and a protein that have important roles in the body) that normally prevent virus multiplication in cells to combat viral infections. Invariant Chain (Ii) Protein—When present in a cell, the Ii protein blocks MHC class II molecules and only permits extracellular antigens to be presented. See the Major Histocompatibility Complex (MHC) Class II Molecules entry below. Investigational New Drug (IND)—The status of an experimental drug after the FDA agrees that it can be tested in people. Listeria Monocytogenes—The species of the genus Listeria that is pathogenic to humans. Macromolecule—A large, complex molecule found only in plants and animals. Macromolecules include proteins, nucleic acids, and carbohydrates. Major Histocompatibility Complex (MHC) Class II Molecule—An antigen-presenting cell that primarily presents peptides that have been digested from external sources. Metabolic—Relating to metabolism, the whole range of biochemical processes that occur within us (or any living organism). Metabolism consists of anabolism (the buildup of substances) and catabolism (the breakdown of substances). Metformin—An oral medication that helps to control blood glucose levels in Type 2 diabetes patients. Micrograms (µg)—A measurement of weight equivalent to one millionth (1/1,000,000) of a gram. Morphine—A narcotic drug that is used in the treatment of pain. Node-Negative—When cancer has not spread into the lymph nodes. Node-Positive—When cancer has spread into the lymph nodes. Nucleic Acids—A family of large molecules that includes DNA and RNA. Nucleic acids were first found in the nucleus of cells but have since been discovered outside the nucleus as well. Oncogene—A once inactive gene that mutates to promote or contribute to the uncontrolled growth of cancer. Opinion Leaders—Individuals who influence the opinions of others. Their behavior is important in determining the rate of adoption of an innovation in a system. Patent Cooperation Treaty (PCT)—A unified procedure for filing patent applications to protect inventions in roughly 140 countries. A single filing results in a single search accompanied by a written opinion, after which the examination and grant procedures are handled by the relevant national or regional authorities. Pathogenic—Causing or capable of causing a disease. Peptide—A molecule that consists of two or more amino acids. Amino acids are one of the 20 building blocks of proteins. Phagocytic—Relating to a phagocyte, which is any cell that ingests and destroys foreign particles, bacteria, and cell debris. Postprandial—Following a meal. Preprandial—Preceding a meal. Prophylactic—A medication or treatment used to prevent a disease.


Prostate-specific Antigen (PSA)—A protein produced by normal prostate cells. Renal—Of or relating to the kidneys. Reproducibility—A measure of how closely similar the results of a test are each time it is conducted. RNA Interference (RNAi)—Introducing double-stranded RNA to a cell to inhibit the expression of a gene. Sensitivity—The proportion of persons with the disease who are correctly identified by a screening test. Special Access Programme (SAP)—Health Canada’s SAP provides access to non-marketed drugs to practitioners who are treating patients with serious or life-threatening conditions. The SAP permits a manufacturer to sell a drug that cannot otherwise be sold or distributed in Canada. The program allows pharmaceutical, biologic, and radio-pharmaceutical products that are not yet approved for sale in Canada to be distributed to practitioners when conventional therapies are inaccessible, inappropriate, or unsuccessful. Standard of Care—The diagnostic and treatment process that experts deem to be appropriate, accepted, and widely used. Healthcare providers are obligated to provide the standard of care to patients. The general standard of care guidelines for diabetes dictate proper diagnosis and classification, establishment of a diabetes management team, and glycemic control. Surfactants—Chemicals that act as wetting agents to lower the surface tension of a liquid and allow for increased dispersion. Synthesis—The formation of a compound from simpler compounds or elements. Also, the production of a substance (as in protein synthesis) by the union of chemical elements, groups, or simpler compounds, or by the degradation (breakdown) of a complex compound. T Helper (Th) Cells—A type of white blood cell that attacks virus-infected cells, foreign cells, and cancer cells and produces substances that control the immune response. T-Cells—White blood cells that are important to the immune system and are at the core of adaptive immunity, which is the system that tailors the body’s immune response to specific pathogens.


Intentionally Blank.





Executive Informational Overview Page 76

Jeffrey J. Kraws and Karen B. Goldfarb

Phone: (609) 306-2274 Fax: (609) 395-9339

Email: [email protected] Web: www.crystalra.com

Legal Notes and Disclosures: This report has been prepared by Generex Biotechnology Corporation (“Generex” or “the Company”) with the assistance of Crystal Research Associates, LLC (“CRA”) based upon information provided by the Company. CRA has not independently verified such information. In addition, CRA has been compensated by Generex in cash of sixty thousand U.S. dollars and one hundred fifty thousand four-year Warrants for its services in creating and updating the base report, for updates, and for printing costs. Some of the information in this report relates to future events or future business and financial performance. Such statements constitute forward-looking information within the meaning of the Private Securities Litigation Act of 1995. Such statements can be only predictions and the actual events or results may differ from those discussed due to, among other things, the risks described in Generex’s reports on its 10-K, 10-Q, press releases, and other forms filed from time to time. The content of this report with respect to Generex has been compiled primarily from information available to the public released by Generex. The Company is solely responsible for the accuracy of that information. Information as to other companies has been prepared from publicly available information and has not been independently verified by Generex or CRA. Certain summaries of scientific activities and outcomes have been condensed to aid the reader in gaining a general understanding. For more complete information about Generex, the reader is directed to the Company’s website at www.generex.com. This report is published solely for information purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any state. Past performance does not guarantee future performance. Free additional information about Generex and its public filings, as well as free copies of this report, can be obtained in either a paper or electronic format by calling (416) 364-2551.

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