The Unitract product line-up includes plastic safety syringes as 1mL fixed-needle + 3mL and 5mL attachable needles while the Unifill product line-up includes a glass ready-to-fill solution with both fixed needle and attachable options for medications delivered by pre-filled syringes. A strong resistance to change and high barrier to entry exists for competitors in the medical device / safety syringe market because once supply contracts are agreed upon and products receive marketing clearance; there is little incentive to change components (e.g. a pre-filled syringe) since this would require a new approval process to certify the new components being utilized.
The unique features of Unilife's fully-integrated (within the barrel of the syringe) safety syringes are outlined below and the Company has a major advantage and pending customer in the form of SNY along with a strategic plan that targets companies with new products in development that are designed for delivery through pre-filled syringes.
1.) a passive needle retraction system that is activated inside the body
2.) healthcare providers / shot administrators control the speed of needle retraction
3.) auto-disabling prevents the re-use or tampering of used syringes
The market opportunity for prefilled syringes includes over 50 medications (primary anti-coagulant / hematology medications, vaccines, and other biological agents) that are delivered by injection, including a projected 3 billion prefilled syringes in use by 2012. Unilife has a distinct advantage with a disruptive technology since there are currently no prefilled syringes to deliver medications with fully-integrated safety features so pharmaceutical companies must add these features, adding to the manufacturing and shipping costs while significantly increasing the overall packaging size (i.e. Unifill reduces packaging volume for drug products by 60% without the need for ancillary safety instruments that must be attached / assembled as with standard prefilled syringes), resulting in both waste disposal and marketing issues.
The key strategic business partner for Unilife is Sanofi-Aventis, which is the largest buyer of pre-filled syringes in the world for injectable products such as the blood thinner Lovenox and influenza vaccines such as Fluzone marketed by the Company (Griffin Securities estimates that SNY purchases 40% of all pre-filled syringes on a global basis). This key partnership provides Unilife with the necessary capital to expand its U.S. manufacturing capacity and will provide a major source of initial commercial demand for Unifill in 2011 with an initial production target of 60 million units per year.
In July, Unilife and SNY agreed to a five-year exclusive licensing agreement for Unifill. SNY is paying A$46M for the right to negotiate purchase of the Unifill RTFS (ready-to-fill syringe), consisting of fees and milestone-based industrialization payments with ongoing negotiations for exclusivity agreements by therapeutic class. While the therapeutic exclusivity agreement (expected by February) will not be disclosed to the public to protect Sanofi's R&D pipeline; blood thinners and vaccines are two major product segments for SNY that are obvious inclusions and agreements that are announced with other companies will provide this information over time.
The industrialization program was originally intended to be completed by the end of 2011, but it is proceeding ahead of schedule so that both parties have agreed to bring its scheduled completion date forward to the end of 2010 (an entire year ahead of schedule). Unilife is scheduled to commence supply of Unifill RTFS by the end of 2010. Initial supply of the RTFS by Unilife will utilize a fully automated assembly system, and the design of this first line will also be used to develop a higher-volume automated assembly system scheduled to be completed by the end of 2011.
Given the current foreign exchange ratio for the Australian / U.S. dollar, a share price of $1 for the ASX stock listing UNI' would correspond to roughly $5.50 per share for Unilife USA when it begins trading on the NASDAQ. The share price above $5 and NASDAQ listing will be key elements to increasing the Company's U.S. shareholder base and attracting institutional investors. In addition, the strong commitment to building a new facility in Central PA and over-delivering on strategic objectives adds to the bullish case for Unilife in 2010 and beyond.
Disclosure: No positions
UNI Price at posting:
$1.06 Sentiment: Hold Disclosure: Held
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