Just found this RRM
Unilife stays afloat with $15M infusion of capital
Amgen reaches deal with struggling Conewago Twp. biotech company
By Michael Sadowski, January 15, 2016 at 3:00 AM
(Photo / File)
A California-based biotech company has thrown Unilife Corp. the life raft it desperately needed: a $15 million infusion of capital that is part of a larger deal being negotiated between the two companies.
Now the question is how long that life raft can hold the weight of the financially troubled York County company — one of the biggest players in the fledgling biotech industry of Central Pennsylvania — or whether it will continue to sink.
“In a lot of other biotech-heavy markets — San Diego, Boston — I think you might look at (Unilife) and it would be just another company going up or down,” said Mel Billingsley, president and CEO of Life Sciences Greenhouse of Central Pennsylvania. “But in this market, where biotech is still relatively new, it gets magnified.”
Amgen Inc. of Thousand Oaks, Calif., paid Unilife, of Conewago Township, $15 million for exclusive rights to negotiate a license for some of Unilife's products, which include wearable injection-drug-delivery systems. If the deal goes through by a deadline of Jan. 31, Unilife would develop and manufacture wearable injectors for Amgen, and would share a percentage of revenue from future sales of the product.
Amgen also would be able to buy 19.9 percent of Unilife's stock, which would make it Unilife's largest shareholder.
Unilife officials declined comment on the deal beyond what was announced in a news release. Amgen officials did not respond to requests for comment.
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While the deal gives Unilife some breathing room and could be the elixir it has been seeking, the deal could be bad news for the midstate. Christopher Rhoads, president and CEO of California-based Drug Delivery Systems, said he could see a scenario where Amgen would buy out Unilife at some point and leave the company's future in the region in doubt.
“If Amgen takes them out and buys all of their programs, it might not be bad for investors,” Rhoads said. “It might not be great for Pennsylvania, but it's a way forward for the company.”
Big Pharma
The deal is an example of how the biotech field has shifted over the last few years, according to Lou Kassa, COO of the Pennsylvania Biotechnology Center of Bucks County in Doylestown.
“Big Pharma” — the umbrella term for multibillion-dollar pharmaceutical companies like GlaxoSmithKline, Bayer and Johnson & Johnson — cornered the market in research and development, launching some of the world's most important and influential pharmaceutical products.
Today, small startup companies have become players in research and drug development. Pharmaceutical companies swoop in and buy products at price points that enrich the entrepreneurs who undertake the research, but cheaper than what large companies would have spent developing the same drugs.
That dynamic played out locally in the fall when Japanese pharmaceutical company Astellas Pharma Inc. spent $300 million to buy an early-stage drug from Derry Township-based Immunomic Therapeutics Inc.
“Biotech centers are the new (research and development) for Big Pharma,” Kassa said. “(Companies) can come in and cherry pick the kinds of products they're looking for from the small companies that are developing them.”
As a publicly traded company, Unilife isn't a startup, but it entered a new, largely unknown biotech niche — the development, manufacture and distribution of wearable injectable-drug-delivery devices.
That niche is expected to soar in the next few years, possibly reaching $600 billion in sales by 2020 after generating about $326 million in 2015, according to a Markets and Markets report.
Tough business
For Unilife, 2015 was nearly devastating. It was highlighted by layoffs, the loss of $91 million in its fiscal-year 2015 and cost-cutting moves that included a suspension in pay for CEO Alan Shortall and other executives.
The company admitted it didn't think it had enough capital to continue functioning past the end of the year, and that it would need a deal like the one it signed with Amgen to survive.
But the latest deal doesn't mean the company is safe.
Investment adviser Henrik Alex, who follows the company for investing website Seeking Alpha, said he doesn't expect the deal to be worth much more than an immediate infusion of $30 million for Unilife after the sale of stock is taken into account.
That won't be enough to keep the company afloat for more than another two quarters, he said.
“Amgen is holding all the aces while Unilife will face bankruptcy sooner or later if negotiations break down,” he said.
And as this region learns more about the biotech field, it may soon come to realize Unilife's up-and-down story isn't different from many others in the space.
It's up to each company to decide when to stop pumping money into its endeavor.
“Things fail, they just simply fail, both in the clinic and in the market,” Billingsley said. “I wish there was some kind of pattern or paradigm you can apply to every company for its success, but there isn't. A lot of it is luck, and being in the right space at the right time. There is high reward, but there is extremely high risk. This business is not for the faint of heart. When you win, you win big. But you can lose very big too.”
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