Wednesday, October 13, 2010

Generex: Readers Debate

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Dave has another take on the GMD acquisition:

Not so fast:

The tentative deal and acquisition for Global Medical Direct is a business blunder. Global Medical Direct does not have any boots on the ground-aka Drug Reps. It is strictly a mail-order house for diabetic medications and devices. Mail-order houses can not and do not directly generate sales. The previous posts from Adrianna and Barry might want to rethink their comments.

I suspect that the notice of acquiring GMD is a round about way to get an approval for the reverse split on Friday. Generex needs a CEO with a business background and a proven successful track record in developing a company and its products to commercialization- not an Attorney CEO as they have at the present time.

If management has true fiduciary responsibility toward their shareholders, they would reverse split their present corporate authorized shares as they are asking us shareholders would have to do with our common shares.

Until this happens, I am voting NO to the reverse split on Friday.


VFC's Take:   I cannot disagree with the point about the authorized shares, that is a point that is worthy of noting.  I do believe that the number one goal of the company is not to satsify common shareholders, however, it's to bring the pipeline products to market.  Mission first, shareholders next. If I don't like game, then I take the ball (sell the stock) and go home.  Asking these guys to abide by the same rules as the common shareholders is like expecting Congress to start paying taxes - not going to happen, although I'd love to see it happen.

That said, Oral-lyn is a powerful enough product that - if approved - will make any investment at the current market cap look like chump change and long time investors who bought in at any price over the past year or so will be smiling all the way to the bank.  The risk/reward here is terrific, in my opinion.

Another reader disagrees with Dave:

Dave comments are not accurate:

"...Global Medical Direct does not have any boots on the ground-aka Drug Reps. It is strictly a mail-order house for diabetic medications and devices. Mail-order houses can not and do not directly generate sales."

A drug rep goes calling on doctors and hospitals, not my grandmother sitting at home taking her medication. Regarding his comment about mail-order houses don't generate sales, he missed the part of the conference call where this was addressed: The purchased company has DIRECT contact with diabetics via their call center. Furthermore, there are restrictions on how many authorized shares can be sold in the market. He should check his facts and reconsider his vote changing it to YES.
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Dave's Reply:
Dear Anonymous:

You seem to be inaccurate:

In order to generate a drug sale, a prescription has to written by a prescribing doctor, not a mail-order house like Global Medical Direct. In order to prescribe a medication, doctors need to be detailed by drug reps.-aka boots on the ground as to why they should prescribe their medication for a diabetic patient. Generex will not have a sales force in Global Medical Direct to generate sales. A call center such as Global Medical Direct is just an order taking service after the doctor has prescribed a medication. Also, I am not referring to sales of corporate authorized shares of stock, I am referring to an EQUAL reverse split of these corporate shares of the internal company as they, Generex are asking of us the shareholders. Prevents further dilution of the common shares that we the shareholders own.

My facts in this post and my previous post are accurate- check with your financial advisor concerning corporate authorized shares that are not reverse split which leads to dilution of value for the common shareholder.

Again- my vote on Friday will be NO.


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VFC's Take:   Appreciate the comments by all, and especially the debate.  Any forum where honest investors can air ideas, thoughts and opinions is a good one, in my opinion, because no one has all the answers - but as a group, we'll leave no stone uncovered or idea unexplored.

Good luck, all.  Here's to Oral-lyn being all that diabetics, the company and investors hope it can be.

Disclosure:  Long GNBT.

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