unilife's products shows a weak business case , page-18

Mike,

I did read Writer’s post and would love for him to weigh in on some of the things I mentioned beyond the character attacks, which I included in my post as well. ;-)

You see, I’m okay with pointing out that the guy seems to have little experience, is doing all he can to drive down the stock (like others are doing all they can to ramp the stock), etc. but I’m also interested in ongoing review of the company and constantly evaluating my investment theory. The reason for this is because I’m a tad overweight the stock. I am up nicely since I averaged down many, many times and I intend to hold for a long time because I believe this can be a nice multibagger. With that said, Alan’s past hyper-ramping propensity reminds me that I should double and triple check everything.

You cited the first part of my post about Hikema, which was only the preface to provide context for Adam’s frame of mind, which I tagged as simply disparaging remarks. Perhaps I should have labeled them question-begging epithets. But what I’m more interested in hearing other discuss is this:

Adam contends that the company will need to test Unifill with its product for 3 years before distribution can commence. He does leave himself an “out” by noting, “In my discussion with Unilife, they claim that the process will take a shorter amount of time than this because Hikma's drugs have very targeted indications in healthcare facilities so the stability requirements are shorter. And they say the Unilife syringe isn't introducing new materials into the fluid path. However, this is just what Unilife says it expects, so it is not guaranteed what will happen.”

However, the Unilife press release announcing the deal states, “Unilife will commence product sales to Hikma in early 2014. Under the terms of the contract, Unilife will supply Hikma a minimum volume of 175MM units per year following a rapid high-volume ramp up period.” That doesn’t sound like there is even 1 year of stability testing to me. We obviously don’t know what “rapid high-volume ramp up period” means in Alan’s vocabulary so there could be some risk there. But I suppose there is some sort of tell in knowing the final $20 million in milestone payments will be made in 2015. Any thoughts on what “rapid high-volume ramp up” will look like? Maybe not as robust as I’m hoping? We still haven’t heard anything about the new high-speed production line, which I understand will take 12 months to get up and running.

I posted numerous other questions as well but no one seems to see merit in discussing those, either. The out-of-hand dismissal reminds me of the logical fallacy that everything a hypocrite says must be wrong because he isn’t following his own advice. I found most of Adam’s article laughable but there were a few things, along with other contextual information I provided in my post, that I personally thought would help me and maybe one or two others better appreciate our long positions.