It?s hard to believe that it was only one short year ago that...

It?s hard to believe that it was only one short year ago that Unilife Corp (NASDAQ: UNIS) broke ground for the construction of its new global headquarters and commercial production facility in York, Pennsylvania. The undertaking was substantial and the timeline set to complete the project was ambitious. However, with little deviation from the original plan, the construction project is now complete. The York facility was developed on a 38 acre parcel of industrial land and carried a total cost of approximately $31 million. The funding for the Unilife facility came from different sources. $10 million came from Unilife?s balance sheet, while balance of $21 million came from low interest loans that are largely US Government-backed, and a combination of Commonwealth of Pennsylvania grants , tax credits and state-assisted loans.

Unilife is a company that produces safety syringe products and addresses a massive world-wide market and problem. Globally, there are approximately 1.3 million deaths per year caused byneedlestick injury. Needlestick injury, the reuse, sharing and unsafe disposal of non-sterile syringes, continues to be the prime drivers of HIV and Hepatitis C epidemics worldwide. The Global market for Unilife?s products is enormous and includes healthcare facilities,pharmaceutical companies and patients who self-administer prescription medication.

This new building marks the second major undertaking by Unilife. In the last 12 months, Unilife fully executed the highly complicated and arduous transition to being a US corporation from being an Australian domiciled concern. And the Company now maintains a dual listing, (NASDAQ ? UNIS) and (ASX-UNS).

Unilife?s mission was to construct a 165,000 square foot development and commercial production facility that would serve as Unilife?s new corporate headquarters. Unilife?s previous headquarters was based in Lewisberry, PA, however, the company knew that its Lewisberry facility did not have the size, design or infrastructure capabilities to meet projected market demand for its safety syringes. The new facility was designed to have the annual production capacity of 400 million syringes. This was a tall order as it needed to meet the most stringent international pharmaceutical standards for primary drug containers. The facility was also designed to accommodate an additional 100,000 square feet of contiguous production space to be readily built at a later date. Zoning approval for this has already been secured. This future add-on will give Unilife the means to expand production capacity up to1 billion syringes per year.

The new facility will house manufacturing for all of Unilife?s syringes as well as their main product, the Unifill Ready-to-Fill (Prefilled) Syringe. Unifill syringes are designed to be prefilled with a drug or vaccine while having the patent-protected safety features of the company?s legacy product. The Unifill syringe offers pharmaceutical companies a highly compelling value proposition. In many cases, it offers these companies the potential to improve the lifecycle oftheir drugs beyond patent expiration and increase levels of product differentiation in therapeutic areas. Furthermore, it will provide pharmaceutical companies enhanced marketability of somedrugs that are self-administered by patients outside the healthcare setting.

The new facility has been custom-designed to meet Unilife?s requirements by L2 Architecture, a Philadelphia-based architectural and design firm that specializes in the pharmaceutical andmedical device sector. L2 enjoys some of the world?s leading pharmaceutical and medical device companies as its clients. The design created by L2 incorporates the latest innovations inpersonnel and material flow dynamics. This design maximizes the industrial productivity capacity of the site while adhering to the highest standards in good manufacturing practices.

Some of the amenities at the new Unilife facility in York, PA include:




Eight Class 8 (100,000) and three Class 7 (10,000) clean rooms where environmental factors such as temperature, humidity, microbial and particulate matter are tightly controlled;


An advanced Water-for-Injection (WFI) system that will meet established pharmaceutical standards of water purity required for the production of the Unifill ready-to-fill syringe;


A microbiology lab;


Unifill automated assembly lines;


Unitract 1ml syringe automated assembly line;


A product development center;


Quality physical and analytical inspection labs;


A 20,000 square foot temperature controlled warehouse for efficient inventory management;


54,000 square foot office section that will serve as Unilife?s global office headquarters with corporate management, administrative support, marketing, new product development, quality control laboratories and various other operational functions.



The completion of the York facility is a major milestone for Unilife as it is critical to the company?s future and its growth. The new facility?s manufacturing capability allows Unilife to meet its production obligation according to the rigid specifications of its first pharmaceutical relationship, Sanofi-Aventis. Unilife enjoys a strong partnership with Sanofi-Avenitis that was initially forged in 2003. After 5 years of joint collaboration, Unilife signed an exclusive licensing agreement with Sanofi-Aventis.

Sanofi-Aventis is the world?s largest buyer of pre-filled syringes for injectable products such as blood thinner Lovenox and influenza flu vaccines. The current agreement between the two companies calls for over $40 million in payments to be paid by Sanofi to Unilife for the granting of limited exclusivity for the Unifill and certain industrialization prerequisites. To date, Sanofi has made milestone payments to Unilife totaling $22.5 million.

Unilife is in advanced stage discussions with other pharmaceutical companies for use of their Unifill product in therapeutic areas outside of those retained exclusively by Sanofi-Aventis. Thenew facility and its production capability will allow the company to further these discussions and fully capitalize on these additional sales opportunities.

I recently had the opportunity to meet with Alan and ask him some questions regarding the new facility and its completion. Below are some snippets of our conversation.
Question - ?Can you give you comment on what the building?s completion means to you personally and its significance to Unilife as a company ??

Alan ? ?The building?s completion marks a major milestone for Unilife, its employees and the healthcare industry. The new facility is state-of-the-art and meets the most stringent of pharmaceutical standards for both production and supply of injectable drug containers. Furthermore, it will optimize operational efficiencies while allowing for cost effective production. Pharmaceutical companies who visit the site will recognize that Unilife has theoperational capabilities to be a genuine and trusted long-term supplier. This facility not only meets but in many areas will also exceed the traditional expectations of our pharmaceuticalcustomers.

Question ? ?It?s conventional wisdom that the commercial lending environment is still very challenging. Unilife?s commercial mortgage was underwritten by Metro Bank of Harrisburg. Clearly, there are strong supporters of the Unilife business model. Your comments ???

Alan ? ?Yes indeed. The mortgage on the building is $18 million. We enjoy an excellent relationship Metro Bank of Harrisburg. They were elated that they were able to effectively contribute to Pennsylvania job growth and creation. Furthermore, we were fortunate in that the U.S. Department of Agriculture (USDA) agreed to guarantee $10 million of the$18 million. It should also be noted that we accepted $5.45 million in assistance from the Commonwealth of Pennsylvania. Those funds were in the form of grants, tax credits and low-interest loans. In addition, Unilife contributed $10 million of equity from its own balance sheet.

Question ? ?How many people will be employed in the new building and can you comment on the what was done to create these production efficiencies you made mention of ?

Alan ? ?We currently employ 170 people at Unilife, the majority of whom will work out of the new facility. We have capacity for well over 200 people. The office section alone was designedto accommodate 200 people. It is important to understand, however, that our facility is designed to maximize efficiencies and maximize output. Our facility will be equipped with the finestequipment that will allow to operate at the highest possible level. That is the advantage of using automated assembly systems and a key reason we moved our production from China to the USA.Most of our employees are highly skilled and relative to our projected production, we employee a relatively small number of employees.

Our automated assembly lines were custom-built by Mikron Group. They are a Swiss-based global leader of pharmaceutical and device automated assembly systems. We are on target to install the Mikron line for Unifill production in Q1 of 2011 and commence commercial sales in the Q2. Production of the Unitract 1ml syringes will recommence in February 2011. And, due to their new production location the regulatory agencies require the Unitract automatedassembly line be recertified.

Question ? ?We are inundated on a daily basis with negative news about our country?s ?jobless economic recovery.? It must be so gratifying to you as a corporate leader to actually be in hiringmode ??

Alan ??Pennsylvania?s unemployment rate stands at 8.6% which is below the national unemployment rate of 9.8%. We consider ourselves fortunate in that we are able to do our part in helping lower those numbers with a business that will lessen injury and save lives Whereas many companies are going to China to have their products manufactured, we are doing just the opposite. Our rapid expansion is affording us the luxury of being able to draw the very best industry talent to the Unilife team. Of the top 25 people who comprise management, 22 have relocated to Central Pennsylvania from other parts of the US or other countries. We all share a common vision and are working towards a common goal.In summation, Unilife with its new facility is well positioned for strong growth.



They are producing a products for markets that a driven by both legislation and pharmaceutical companies need for product differentiation.


They enjoy a $40 million validating partnership with Sanofi-Aventis.


They are in advanced stage discussion with many other pharmaceutical leaders.


They have a highly experienced team with deep industry expertise


They are ideally poised to take advantage of an industry dynamic that involves the convergence of drugs and and devices.



To date, this company has consistently delivered everything it has promised. It?s quite remarkable that this company began its operation a mere 8 years ago with 3 employees in Australia. With the company expecting production and sales on the Unifill syringes to take place in the first half of 2011, Unilife is a company that deserves a watchful eye.

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