Ok. We are now a couple of days out from the recent quarterly report and conference call. The shorts have continued their push toward getting this stock to reach new lows but to no avail. But we really need to forget about the shorts for a moment and focus on the story. What was said and what wasn't said is very important to the future of this business. The company was able to raise $14 million, which provides them with some wiggle room. By making some adjustments to their overall cost structure this should last more than 1 quarter. This has made some folks quite nervous. If you were listening to the call you would have heard that they have several proposals for refinancing using non-dilutive debt. This new debt would give the company a long runway to continue its current path toward full commercialization of its broad product line. The improved stability that new debt and the additional equity provides is immeasurable. This will give the company more room to negotiate better deals.
Speaking of deals, where are they? Its the question everyone asks and unfortunately is the hardest question to answer in many respects. First you have to understand the mind set of the pharmas and biotech's and their decision making process which Dr. Mojdeh described in finite detail. They can spend upwards of $1 billion to get a drug to market. This takes an average of about 10 years. How quickly do you think they will move when making a change? These are organizations that understand that slow and steady wins races in their markets and rushing into something will usually lead to disaster. The fact is, as mentioned by Dr. Mojdeh on the conference call, the company is very close on a number of fronts. The deals being contemplated and worked on are a range of different types, from up front exclusivity fee agreements, to development deals to outright supply deals. These have been in the works for months and months. While to you and me this seems like an extraordinarily long time, for the pharmas it isn't. Once these deals are signed and competitors see that they are being left behind, they too will come knocking on the door.
So while the negative element is stating that company is going to have to further dilute shares, because of the high burn rate, what will be their story when the company completes a debt deal? They'll quickly change the negative position to the company has not signed any deals. We've all been pretty much told we are at the tipping point on a number of different fronts as far as deals go. When these start to happen this year, where will the negative element turn.
The fact of the matter is that the company in two years time has developed a suite of products that not only help the pharmas extend their selling cycle, but also allow for them to deliver drugs more effectively and conveniently. More convenience means higher sales. The beauty for Unilife is that these are premium priced products. Unlike their competitors which offer me too type and commodity products, Unilife offers customizable products that are tailored to what is being delivered. They don't have to sell hundreds of millions of units of each item to become very profitable. This innovative spirit also endears them to their potential pharmaceutical customers because they aren't simply saying, "here you go." Its a long process that involves planning and understanding that clinical trials can be a slow undertaking, doing stability studies takes time, utilizing current inventories, making sure that current suppliers don't know that they are being switched out all require cooperation from a partner like Unilife. All of these factors play into why there seems to be such secrecy surrounding who and what they are talking about. In the end the names will be known and the business will be secured. Its been a bumpy ride and the company has weathered some stormy seas, but the hard work in training their people, the dedication to get through this storm is what will bring this ship into the quiet port of success.
