TheStreet stands up to Generex’s bullying

By Felix Salmon
April 6, 2010
filed a ridiculous $250 million lawsuit against them for libel. (To put that number in context, it's roughly twice Generex's market cap.)

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Well done to Adam Feuerstein and TheStreet.com for standing up to egregious bullying from Generex, a small and smelly Canadian biotechnology company which has just filed a ridiculous $250 million lawsuit against them for libel. (To put that number in context, it’s roughly twice Generex’s market cap.)

The story begins on March 19, when Feuerstein wrote a “Biotech Stock Mailbag” column in which he explains why Generex “is a total bust”. Generex wasn’t happy about that, and they were even less happy about his March 26 follow-up, where he goes into a lot more detail about why he thinks Generex’s product is never going to get approval in the US. But there’s no libel here, Generex’s desperate attempts to find some notwithstanding:

The March 26 Article actually states a false legal conclusion that Generex has committed securities fraud under the Federal Securities Laws, when Feuerstein states “Yet even here, Generex plays stupid games aimed at misleading investors, something that totally undermines the legitimacy of the study.” Using the word “misleading” is not an opinion in this context but a conclusion that an SEC standard of fraud has been violated.

I love the word “actually” there — it’s as if Generex can invent a libel out of whole cloth just by asserting it to “actually” exist. Stating in an opinion column that a company is playing stupid games aimed at misleading investors is something that columnists do all the time. It’s not stating “a false legal conclusion”.

In any case, Feuerstein and TheStreet.com responded to the lawsuit in the best possible way — not by writing about it at all, but by publishing yet another column on Generex, this time detailing the way in which India revoked its approval of Generex’s product, without the revocation showing up anywhere in Generex’s SEC filings. It’s good, smart, hard-hitting reporting, and they should be applauded for not being cowed by this silly suit. Meanwhile, any investors still left in Generex might wonder why it’s pursuing expensive libel suits instead of engaging in a public and open way with its critics. It certainly doesn’t make the company look very good at all.

More From Felix Salmon
Post Felix
The Piketty pessimist
The most expensive lottery ticket in the world
The problems of HFT, Joe Stiglitz edition
Private equity math, Nuveen edition
Five explanations for Greece’s bond yield
Comments
7 comments so far

This report is also false. TheStreet’s latest misinformative article was published a few hours before Generex announced the lawsuit. Generex is standing up to TheStreet’s bullying and childlike reports. Get the facts here:

http://seekingalpha.com/article/195914-s orting-out-the-street-s-misinformation-o n-generex

http://pipelinereview.blogspot.com/

Posted by rjs9787 | Report as abusive

Nice post.

I have to admit that I have been with Generex for a long time. I got out last week and I was somewhat sceptical about Adam’s original post – especially how it made my PPS drop by 10% (thanks Adam). But, he did actually do me a favour in the end as it raised my awareness about the conduct of the company.

So, I guess I kind of thank Adam for making me see the light and congratulate you for sticking by him. I honestly thought Generex was a legitimate company – I was wrong… I think?

Posted by okelliot | Report as abusive

An article was just published about this odd essay by Salmon (which by the way is based on fiction and not fact). Here is a portion:

“A settlement is likely in the works (theStreet’s recent phenomenal results, Adjusted EBITDA and all, should afford it the cash to pay out related legal fees). Yet it is the fringe noise around this development that is most interesting. Seeking Alpha has written an extensive article defending Generex (to be sure, by an author who is most likely conflicted as disclosed by his long GNBT position). Yet we were surprised to see Felix Salmon’s involvement in this most recent media fiasco. As a reminder Felix was most recently seen having an extensive and very much thoroughly useless debate with Henry Blodget telling the former stock analyst how to best run his business. Last time we checked Blodget was getting multi-million Series X valuation rounds for his creation, so for the time being we are confident that Henry does not need the advice of bloggers who need the scaffolds of mega mainstream media in order to receive compensation for their musings.

Therefore, we are a little confused by just what the whole point of Salmon’s essay is. On the other hand, if Felix were to surprise us and come out with a 50 page analysis of just how Generex is indeed a fraud, thereby validating Adam’s claims, then we would concede that this development does indeed merit something more than an observation that so far theStreet has not even acknowledged the lawsuit (just as it took theStreet about 3 hours after Zero Hedge first disclosed the site’s recent entanglement with the SEC). Furthermore, instead of taking the indignant moral high ground, perhaps Salmon can also dissect the critique of R.J Steffens (who at least notes his bias… and by the way, nobody within a mile of Zero Hedge HQ has ever smelled one share of Generex): who knows – maybe Salmon will come to the conclusion that this is yet more “good, smart, hard-hitting reporting” and will blog about it as well. At the end of the day, quotas are quotas, and eyeballs (however many) must be satisfied.

We, on the other hand, will be curious to see what objective developments arise out of this legal case (we have had our share of being critial of companies… in this case $10 billion EV ones, and somehow never got sued for it – the reason being all our claims were based on pure facts), but also what information the SEC uncovers, once it is done going thru theStreet’s books.”

http://www.reallibertymedia.com/content/ biotech-company-sues-thestreet-slander-f elix-salmon-has-opinion

Check it out Mr Salmon.

Posted by rjs9787 | Report as abusive

Felix: Your post is lazy. Have you done the slightest bit of research on this company.

Generex was granted FDA IND special access approval for Oral-lyn. Below I have posted an excerpt* from the FDA’s website explaining what a company has to demonstrate to get this approval.

I ask one simple question: is the FDA criminally negligent or is there “sufficient clinical evidence of safety and effectiveness to support the treatment use” for Oral-lyn as per FDA guidelines? It’s one or the other I’m afraid…

*TO SAVE YOU TIME, THIS IS AN EXTRACT FROM THE FDA WEBSITE:

FDA regulations provide for treatment INDs or other access protocols for patients with serious or immediately life-threatening illnesses who have unmet medical need. See the Expanded Access to Investigational Drugs for Treatment Use Final Rule (Expanded Access Rule) (74 FR 40900, August 13, 2009).
Under these regulations, a treatment IND, which permits patients access to unapproved drug products under certain circumstances prior to final agency approval, is possible when the following criteria have been met:
(1) The drug is being investigated in a controlled clinical trial under an IND designed to support a marketing application for the expanded access use, or all clinical trials of the drug have been completed;
(2) The sponsor is actively pursuing marketing approval of the drug for the expanded access use with due diligence; and
(3) There is sufficient clinical evidence of safety and effectiveness to support the treatment use (21 CFR 312.320(a)).

Posted by rtmining | Report as abusive

Now, the key word here is “sufficient”. There is sufficient evidence to support safety/effectiveness, but not “necessary” evidence, i.e. Phase III approval is not a done deal.

However, you have to take IND special access as a pretty strong marker, no?

Another point, the lawsuit announcement came out AFTER Feuerstein’s third article on Generex. Not before. It is not therefore a ‘response’. Jesus, DO SOME HOMEWORK.

Furthermore, there are genuine concerns about this company, especially over the lack of announcement over the shenanigans that the Indian authorities are playing (namely, approving, then pulling Oral-lyn). But please please do some proper research on a company first before posting about it.

I am genuinely interested in serious analysis and fact based argument about this company, not rumour-mongering 5th hand school-yard chatter of the kind you have engaged in here.

Being a “Blogger” clearly does not equate with having much journalistic “integrity”.

Posted by rtmining | Report as abusive

No one can be that irresponsible or stupid. It is very obvious that Adam Feuerstein and others are involved in some shady business themselves. Why attack GNBT? This isn’t even news. Jim sends out a bunch of email blasts with the intention of pumping stocks so that investors in the know can make some quick cash and then dump them. Read the disclosures on their website, they get paid to do this kind of thing.

The way I see it there are two and only two reasons for their obvious misinformation.

1. they are hoping investors panic and sell so that those who they work for and with, with short interest, get paid.

2. they are hoping investors panic and sell so that those they work for and with can buy in at lower pricing.

THAT’S IT… They are not interested in helping the general public or investors as a whole. The ONLY reason they do what they do is to make money. The ONLY reason their website exists is to make money.

SO ENOUGH NONSENSE, GNBT sue and sue again if you have to anyone with common sense can see right through all of this, and believe me, so will the Judge in the lawsuit.

ALSO BTW, Oral-Lyn will be available in India, the US and many other parts of the world as well.

Also don’t forget about the rest of their products. They will be turning profits.

One last comment. It is very common for “news” sources to take advantage of their position and use it for financial gain, it is also very common for companies to bribe, or offer incentives for hurting their competitors, as thestreet is pretty shady and stinky themselves I can’t help but wonder who is behind this and what type of rewards are being handed out… Perhaps an investigation should be made into the person finances and gains of parties involved in this case, then perhaps some real perspective may be gained.

Posted by mosaicflight | Report as abusive

rjs9787 is Generex’s biggest cheerleader and bagholder. So much in fact he is probably on the generex payroll.
He post seeking alpha articles like he works for them, hence his negitive post about this imformative and truthful article.

Posted by ggekko9787 | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/