Been mulling over recent announcements figuring out where we are, and how close we are to achieving not just meaningful production quota across various platforms, but also regulatory approvals that will be THE catalyst for a significant and permanent re-rating by the broader market.
The three key pillars of Unilife's ultimate success are:
Funding
Commercial Production
Regulatory Approval
As always, while acknowledging commercial constraints about what can and can't be said, there are clear indicators in the commentary.
Funding
At both Leerink and the CC it was stated that, "following the CR the company has sufficient cash to see us well past the end of Fiscal 2016. That's without a lot of deals we have coming through the programmes that are going to put, we believe, substantial amounts of cash in the system for exclusivity, and other reasons.
"We have $55 million in the bank following the CR with another $20 million to come before the end of the financial year, including $5 million from AbbVie. This cash will continue in terms of customisation, development and exclusivity fees. We will have done about $30 million this year. That will expand considerably next year with device sales coming in over the top of that."
A key component of this is AbbVie.
"The Development and Supply Agreement being negotiated will include exclusive access to Finesse and the Lisa AutoInjector for use with AbbVie's drug portfolio for treatment of Auto-Immune disease. Additional exclusivity fees are anticipated to secure long-term use of these products with AI disease. Negotiations are now underway..to enter into this development and supply agreement, as well as the receipt of associated exclusivity fees."
But the fact that Unilife has "been selected as AbbVie's preferred supplier right across the board of all our platforms and all their therapeutics, across for their entire portfolio of drugs, including - even though they won't openly acknowledge it yet - Humira, we can only anticipate the quantum of upfronts AbbVie will pay in order to secure long-term - 10-15 year - global exclusivity to use Finesse and Lisa auto-injectors in the high-growth area of Auto-Immune disease. If they are happy to pay $5 million to secure a seat at the table, I would suggest the final figures will not disappoint on the downside.
Commercial Production
Recent research reports focus on the deals currently inked. As with all things Unilife, there is much more going on behind the scenes.
So to wearables.
"Several active customer programmes are underway and rapidly advancing towards commercialisation. Most of these programmes are with customers that have not yet been announced. To support existing wearable injectors programs in fiscal 2015 we have shipped over 80,000 devices...that are being used for qualifying drug filling processes for our customers. This indicates an advanced stage nearing commercialisation."
"Since the start of fiscal 2015 we have started two new customer customization programs that we are not publicly disclosing at this stage. During the same period we have also conducted device testing with five additional drugs that we have not disclosed publicly."
"We have to-date ramped up our annual production capacity for wearable injectors to well over 500,000 units. We will continue to ramp up the capacity of this existing line. Over the next two fiscal quarters we will initiate the procurement of a high-speed manufacturing line for wearable injectors. Within the same period we will have validated the production of sub-assembly systems at Flextronics. As a result of these extra activities we expect to begin shipping clinical devices to customers for use in scheduled human clinical drug trails during the second half of calendar year 2015."
Take-out: If the clock wasn't ticking before, it is now. There are multiple commercially significant developments that are close, if not very close, to being announced.
One important aide here that seems to have been missed by observers - Keith Markey's questions at the CC re wearables, in particular the stunning revelation that Unilife wearable injectors can accommodate EZMix.
Doesn't take much research to understand that one of the key therapeutic treatment areas where lyophilised drugs are utilised is...Auto-Immune disease, which coincidentally brings us back to AbbVie. Alan was clearly surprised by the question and uncomfortable - unwilling? - to discuss it further. Why?
Regulatory Approvals
The issue of regulatory approvals is highly confidential, yet with funding sorted and production ramping up, it is perhaps THE key element the market is now looking for going forward. Without it, we are treading water to a certain extent. With it, Unilife is instantly catapulted into a different league - a fully-fledged, FDA approved producer of injectable drug devices selling commercial quantities of product.
There are several indicators of progress in this area contained in question time at the CC.
Firstly, Keith Markey asking questions about the regulatory status of Lisa and Rita auto-injectors.
Ramin: "The information about the regulatory pathway and also the timing for these devices remain confidential because these are primarily driven by the customers who have acquired them. "
Alan: "We have a very deep expertize within our organization to which the anticipated -- those anticipated programs and approvals are built into the programs to meet our customer’s timelines and we don’t see any issues in relation to them at all."
Then Raj from Jefferies:
"How close are we to these products satisfying regulatory agencies such that we could actually start to ship through commercial sales?"
Ramin: "The regulatory status for these products really depend on exactly what the customers for each of these drugs and devices choose to do with respect to what the regulatory strategy is. And each one is different and each of them is in a different stage of that process. We can't really comment on them. We're very close to it and we are very much providing regular support for our customers, those who are in the process and those who are designing the regulatory processes."
Sounds a bit gobble-gook - or as has been suggested, evasive - until you dissect it, in bold.
Key Take-out: Because of the way clients are differentiated between those who are 'in process' and those who are 'designing their regulatory process, it is clear that Unilife has several customers who have lodged requisite documentation, and are actively engaged with the FDA in seeking regulatory approval
Som the clock is ticking here on announcement(s) re regulatory approvals.
Or as Alan said: "Through the rest of fiscal 2015 and ‘16 commercial sales of products across several platforms will commence and accelerate. Our ramp plan for each product is timed to support current customer schedules for commercial launch with target therapies."
Question: what would lodgement of a 510k do to market perception of Unilife?
I know all of it is in the public domain, but seems to me when you stand back and take a look at it objectively, you can see why the SP in recent times has become far more resilient than previously.
Conclusion:
Unilife is well-funded for the next 12 months and beyond, production risk is mitigated both in-house and through Flextronics, we have a rapidly growing list of Tier 1 pharmaceutical clients wanting to secure exclusive access to our platform technologies across multiple therapeutic classes, several of whom are actively engaged with the FDA in the regulatory approval process.
I believe we are now nearing end-game as far as transitioning from an R&D development house to a commercially viable injectable drug delivery device production powerhouse.
Exciting times
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