The DOW may be sliding to the sub 12,000 mark again, and the economy may be taking a turn for the worse again, but none of that will put a damper on the mood at Generex Headquarters, where news that shareholders have finally agreed to a reverse split is undoubtedly causing some long-suppressed elation.
In a Friday morning press release, Generex CEO Mark Fletcher announced that more than 80% of the shares voted were in favor of the reverse split, a testament to the ambitious plans of new management, according to statement made by Fletcher in the said press release, which were unveiled at a Nasdaq presentation earlier this year.
Shares were unmoved, or unimpressed, with the news on Friday, as they remained trading for below twenty cents without so much as a blip at any point during the trading day.
The 'yes' result of this vote was overwhelming, far from the general lack of confidence expressed by shareholders the last time around. Shareholders themselves had a lot riding on the vote, however, and had much incentive to go along with the Generex plan.
During the announcement at the Nasdaq in March, the company promised to 'dividend' shares of the soon-to-be-created spin-off Antigen Express to shareholders if the vote went through, and then to add even more incentive, the company announced a special dividend from money brought in as a result of the Amarantus deal.
So the dividends and the payments are in; that should keep shareholders happy for the time being, but the company's new plan is also on the clock starting now.
Oral-lyn, although discussed during conference calls and moonlight chats, has yet to have its status fully described to shareholders in an informative press release. Additional trials are going to be needed, according to recent statements made by company officials, but little has been released from the company regarding the way-ahead.
Oral-lyn is the flagship product, but no longer the center piece of the company, a title that no belongs to AE37. Once the Antigen Express spin-off goes through, AE37 will be developed by the new independent entity. Generex will retain a majority stake in the company, however, meaning that shareholders who were invested in GNBT for the prospects of Oral-lyn will still have the opportunity to ride that play until the pivotal news hits.
Generex insisted that this RS was key in attracting the institutional interest required to maintain a steady - and higher trading - share price, and now it'll be time for Mr. Fletcher and gang to demonstrate that the successful plan can be turned into a successful operation.
There will be no fallbacks now, as management leveraged its integrity on this reverse split.
A failure to attract the institutional interest required to carry out the battle plan will not bode well in the eyes of the shareholders who voted 'yes' during the shareholders meeting.
So, with the yes-vote in, is it time to buy again, now that shareholders know the plan is ready to be exercised?
Not yet, in my opinion.
As I stated when I decided to sit this one out, the best time to buy might be on the back end of the RS, whenever it goes through. Just about every company that experiences a reverse split sees the share price fall after it's enacted, aside from maybe an initial speculative spike to the upside to give shorts more leverage before the drop.
Unless Generex announces significant news in conjunction with the RS, then I would expect it to be a near-certainty that there will be some type of drop, but nothing too significant since it looks like the RS might already be priced-in.
Regardless, I'll wait until the split is enacted before taking another look.
In other news, Generex announced additional collaboration with Amarantus, given that its previous agreement to acquire a majority stake in GMD was cancelled.
With this new collaboration, the two companies "have selected the development of a MANF-based biomarker test to diagnose diabetic patients likely to respond to Oral-lyn treatment as the lead program for their joint research collaboration."
This could be a solid undertaken should a biomarker test be created, but in reality it's just a side show with Oral-lyn being the main play.
Still keep GNBT on the radar. Even though the products look to be a ways away, there's definitely never a dull moment with this company.
Although the share price has been pretty dull for the time being, but sometimes that's a good thing for the patient investor.
Disclosure: No position.
