Hi Team,Sorry if this is repeated but I could not see it on the...

Hi Team,

Sorry if this is repeated but I could not see it on the thread. Great update from Keith with some real insights into the expansion plans. 4 lines at 200m units each plus the original test line of 70m units. So that's declared production in this step for know contracts with capacity of 870m units............. LOL also backed up with the know current use of Lovenox at 450m units !!!!!!! So gross income possible from one product line at 70c per unit ( low ball estimate ) gives us >$600m in revenue !!!!!!!

Remember the main game is now inthe pumps, and we will hopefully see those aces laid down as the ink dries on the contracts.

This finance deal allows us to start delivering commercial product in 3 months time to Hikma and rapidly expand out to 870m units.....

Nice work Alan, such an important step building that production capacity. Cash is king !!!!!!!! Bring it on

Good luck all.

https://griffin.bluematrix.com/sellside/EmailDocViewer?encrypt=5093a07b-5d85-4ddd-b591-61cec8f54047&co=griffin&mime=pdf&id=replaceme@bluematrix.com


The Company secured $60 million via a six-year debt financing with OrbiMed. The first tranche, which was paid upon signing of the deal, provided $40 million, and another two $10 million tranches will be available in December 2014 and 2015 at Unilife's option. Only interest payments are required until the principal is due on March 12, 2020. The interest rate, which is based on 6-month LIBOR, equates to 10.25% per annum presently. The terms include a royalty starting at 2.75% of sales that declines in 0.25% tiers as sales of products ramp up. The overall royalty obligation is capped, and Unilife has the option to prepay the amount at anytime in the first four years of the agreement.

Massive production capacity is being installed. Unilife is adding clean rooms and upgrading existing facilities to accommodate four high-volume syringe manufacturing lines for the Sanofi and Hikma Pharmaceuticals contracts and to prepare for automated assembly of its wearable drug pumps for the contract with AstraZeneca's Medimmune subsidiary. Portions of the equipment are being installed as the work proceeds on the clean rooms to save time. Each syringe customer is being allotted two lines with capacity of up to 200 million units per year at this time. Hikma will likely be the first to generate sales, though, since Unilife will begin shipping product produced on a smaller line that has an annual capacity of 70 million units. Sales should commence in the June-July timeframe.

The new capacity is well justified. Based on IMS data, Sanofi’s sales of Lovenox a year ago totaled 450 million units. This means that the two production lines being installed are merited and should support rapid sales growth over the initial few years of that 10-year contract. In addition, Hikma Pharmaceuticals recently reported a 14% increase in injectables sales in 2013, led by 23% growth in the United States. Finally, we note that MedImmune has 29 active clinical trials under way.

We are maintaining our BUY recommendation and our $13.50 price target. The favorable near-term outlook for sales growth and the likelihood of operations turning cash flow positive render this stock an attractive near-term investment, in our view.