Generex Biotechnology Corp. is gaining $30 million for licensing overseas rights to its flagship product, Oralin (oral insulin spray), and its accompanying delivery device.

The Toronto-based company entered a letter of intent to establish a joint venture with Sejong Capital plc, which, in the process, is acquiring exclusive rights to commercialize the products in India, China and Australia. The 51/49 joint venture, in which Generex will maintain a controlling interest, will register, market, distribute and sell the products in those territories.

"We are a small biotech company trying to bring forward technology for large-molecule drugs that are only available by injection and transform them into an oral spray," Generex President and CEO Anna Gluskin told BioWorld Today. "And that kind of technology, which we think is a Holy Grail, requires a major partner to take it forward."

Oralin, which had been partnered with Eli Lilly and Co., is delivered by the RapidMist Diabetes Management System, a device that administers medications orally as a metered-dose spray for rapid absorption by the buccal mucosa. Indianapolis-based Lilly still supplies the drug to Generex, though the companies' three-year-old licensing deal ended May 2003. All intellectual property and commercialization rights for the buccal spray drug delivery technology reverted to Generex in the process.

On its own, the company is testing Oralin in Phase IIb trials in North America and Europe, territories in which eventually it plans to license the product.

"We would like to still take it a little further before big pharma gets involved, such as Phase III, in major jurisdictions," Gluskin said. "So we've decided to use the only currency we have available, which is our licensing, in order to attract more investors to the company and also achieve potential earlier registrations in other jurisdictions."

In the latest deal, Seoul, South Korea-based Sejong will invest $25 million in the joint venture, an amount to be paid to Generex as a nonrefundable license fee. The letter of intent also calls for Sejong to purchase 2 million shares of Generex's restricted common stock at $2.50 apiece, resulting in $5 million in proceeds to Generex.

Gluskin called the deal's structure similar to a joint venture arrangement it struck in March with PharmaBrand SA. That deal calls for the commercialization of Oralin in Ecuador, Bolivia, Peru, Columbia and Venezuela. PharmaBrand, of Quito, Ecuador, expects to file for approval in its country in the next month.

"Then the approval, we're hoping, should come at the end of the year," Gluskin said. "That would be a landmark because it would be the first approval of a non-injectable insulin in the world."

Generex noted that it is receiving interest from other prospective international partners. Its ongoing Phase II program, which began last year, includes studies in the U.S., Canada, the UK, Italy and Israel, and will continue in parallel with other international licenses.

Generex also is developing oral formulations of four other compounds - morphine and fentanyl for pain, heparin for blood thinning and a flu vaccine. All remain in developmental stages of research and are expected to be partnered, Gluskin said.

On Thursday, Generex's (NASDAQ:GNBT) closed unchanged at $1.53.