new jefferies report - a biased view lol

Well team the report is 53 pages and hopefully it will be available ont he web site one day. What a read !!!!!

The key points are the detailed revenue projections and the detailed reference to Sanofi's Lovenox..... The words a sharholder like myself was only wishing for !!!!!

Enjoy some cuts from the report.
Thanks to RWE64..... may he RIP with love XXXXXX



Key Takeaway
Unilife has positioned itself at the intersection of injectable pharmaceuticals and medical devices. The company is poised to unlock value by optimizing
delivery of large molecule drugs and extending the lifecycle of off patent pharmaceuticals. Several contracts are close to final and the outlook is exceedingly compelling: we model revenues approaching $500mn in FY16.

The model is powerful. Success for Unilife in the coming quarters will be measured by its ability to secure development partnerships for its devices. To date, three companies have taken devices for testing and a number of commercial agreements should be inked by mid-year. Although initial development payments are modest, commercialization revenues should be significant: we conservatively model revenue in FY16 approaching $500mn.

Unilife is still considered in its development phase given limited revenue generation and accumulated losses to
date. However, with three deals already signed, including one with Sanofi for Lovenox, the company’s revenue ramp
could be substantial over the next 2-3 years. Accordingly, the stock price is likely to react to the success or failure of deals requiring its drug-device combo products
to be brought to market.

The value of unique delivery systems to pharmaceutical partners is seen in the Sanofi-Aventis (SAN FP, €57.42, Hold) agreement, which provided Unilife with approximately
$25mn in seed capital in return for exclusive rights to the Unifill syringe in several drug categories. Sanofi has already taken some final units for testing; we expect a commercial agreement will be signed by the middle of calendar 2012 for the use of Unifill with
Sanofi’s drug Lovenox.

The model is powerful and success for Unilife in the coming quarters will be measured in its ability to secure an increasing number of development and commercialization partners for its devices. As these deals come in, the revenue growth they will support is significant.
Our model forecasts roughly 30 license and development engagements over the next five years, of which we expect nearly half to transition into commercialization deals. We are forecasting gradual revenue acceleration over the short-run, as strategic partnerships are signed, and technology assessments and stability testing is completed; this is followed by dramatic revenue growth as deals move into commercialization. From a profitability
standpoint, we forecast operating and cash losses through F12-F13 and expect breakeven to be achieved toward the end of F14. We model revenues climbing to $484.7mn by F16
which drives $1.89 in earnings.

Unifill was officially branded in October ’09 after being conceptualized and developed as an extension to the Unitract line under the Sanofi-Aventis industrialization and exclusivity agreements signed in July ’08 and later modified in March ’10. Unifill production at the
company’s York, Pennsylvania, facilities later commenced in March ’11 followed by initial shipments to Sanofi for stability testing in July ’11.
Under the terms of the industrialization agreement, Unilife and Sanofi agreed to a stability ASP of approximately €4EUR or $7-$8 per syringe which we estimate will generate approximately $7mn in revenue for roughly 1mn of stability testing units. Similar to the Sanofi development cycle, many (but not all) future Unifill deals will require varying degrees of stability testing, the data from which will be used by pharmaceutical customers in the final drug device regulatory approval process. Accordingly, deals in the development phase will likely carry an ASP range of $5-$10 per unit with stability
volumes ranging from 1-2mn units depending on the amount of data needed for approval. Following approval,development deals will move into commercialization
where Unilife will supply pre-determined annual quantities of Unifill at a negotiated ASP which we expect to range from $0.90 to $1.20 per syringe. Unilife is engaged in a number of other preliminary discussions with pharmaceutical
companies for potential development and commercialization deals with Unifill in therapeutic categories not covered by the prevailing Sanofi exclusivity agreement. Over
the next four years we model several of these deals entering the development funnel and assume that Sanofi’s Lovenox and at least one additional biologic reach
commercialization by the end of the company’s F14. Below we depict our quarterly revenue projections for Unifill through F17 segmented by development and commercialization. We currently forecast commercial revenues from Lovenox sales to commence toward the end of 2013.

One alternative being utilized is the adoption of
injectable drug delivery technologies which allows for exclusivity extension on the grounds of added therapeutic benefits. Key adoption examples include Amgen’s (AMGN,
$64.21, Buy) Enbrel, Abbott’s (ABT, $56.23, Buy) Humira, and Sanofi’s Lovenox, all of which are now supplied either within a prefilled syringe or autoinjector. With the
blockbuster patent cliff coming, an increasing number of existing brands are expected to pursue sophisticated delivery technologies—which will support Unilife’s pipeline growth, product commercialization, and ultimately revenue and profits.
Sanofi’s Lovenox is good case study on the effects that branded patent expiries could have on Unilife’s business. Sanofi is the dominant player within the global heparins
market via sales of Lovenox, which accounted for approximately 90% of prescriptions generating approximately $4.1 billion in revenue. Sanofi has elected to not quantify the impact of generic competition on Lovenox now that competing products are entering the
market prior to the official 2012 patent expiry after they were deemed unenforceable in US appeals court in May ’08. Competition is likely to commence from the combination of
Momenta (MNTA, $17.39, NC) and Novartis-Sandoz initially after beating out Teva (TEVA,$40.36, Hold) as the first generic alternative. Further competition is likely to come from the combination of Watson Pharmaceuticals (WPI, $60.34, Hold) and Amphastar (private)
after the latter received FDA approval for its generic to Lovenox in September 2011. However, Watson and Amphastar were recently barred from selling its generic version of
Lovenox in the US under a federal court decision issued October 31st, 2011. The case was brought to the judge by Novartis’ Sandoz in an effort to block Amphastar and Momenta from entering the market. The injunction will certainly delay the entrance of a second generic version of Lovenox, however Amphastar and Momenta are weighing there options at the moment and cannot be precluded as potential entrants into the market overtime. While the impact is still unclear, Lovenox script trends are already under considerable pressure (see Chart 25 for IMS trends). In addition, we point to two comparable generic events impacting Sanofi, the unexpected generic competition to
Eloxatin (oxaliplatin) in the US and to Plavix (clopidogrel) in the EU both in 2009, which
drove sales down to $930mn (-37.2%) and $2.1 billion (-10.4%), respectively. The chart depicts pressure on Sanofi’s ADR shares through 2009 and following the announcement of Amphastar’s FDA approval of generic Lovenox in Sept ’11.


Our total company revenue estimates consider both license and development fees from
new pharmaceutical customers engaged with Unilife either in an exploratory phase or
within clinical trials. Based on the company’s existing prefilled syringe pipeline outside of
Sanofi we forecast one to three pre-clinical and clinical engagements per year through
F14 increasing to the high-single digits per year as interest in the company’s new selfinjection
devices increases. We estimate license and development fees to range between
$2mn and $4mn per deal, eventually translating to $20mn in annual revenue.
We model Unilife’s product revenue by considering deals per molecule and make
assumptions for unit volumes needs in stability testing where applicable (all prefilled
syringe deals) and more importantly annual unit volumes in commercialization. For
Unifill, the biggest driver is the Sanofi supply agreement where annual unit volumes in
commercialization will be substantial as a result of Lovenox’s currently dominant share of
the annual anti-thrombotic market (estimated at 80%+ prior to generic entrants). Our
model assumes that commercial units of Unifill Prefilled with Lovenox enter the market in
the beginning of 2013 (second half of the company’s F13) where we forecast a
considerable amount of Lovenox market share slippage to new generic entrants. Notably,
our model conservatively assumes Lovenox will command just 15% of the annual antithrombotic
market at the time of the Unifill commercialization due to generic competition
initially from Novartis-Sandoz and later from Watson-Amphastar, and potentially Teva
Pharmaceuticals later down the road. We conservatively assume that Unilife will
command just 20% of Sanofi’s annual Lovenox volumes in the early phases of
commercialization and gradually increase to 40% over the following three to five years.
Based on these assumptions, we estimate that Lovenox will generate approximately
$37.5mn in the first year of commercial sales increasing to $80mn in annual revenue as
Unifill commands a higher percentage of annual volumes. Our estimates could prove
conservative should the Unifill surpass 50% share of annual Lovenox volumes or Sanofi’s
market share losses are stemmed as a result of brand differentiation benefits from Unifill.
Outside of Lovenox, the company could secure deals with other pharmaceutical
companies in therapeutic areas not covered by the amended Sanofi agreement. With both
anti-thrombotics and vaccines tied up by Sanofi through 2014, we forecast unit volumes
for incremental biologic to be modest, ranging from 5-20mn units, in comparison to
Lovenox volume of approximately 80mn-100mn units. Outside of Unifill we gradually
model deals for Unilife’s remaining prefilled syringes (Unifill Select and Unifill EZMix) and
self-injection devices (Unilife Rita, Unifill Auto-Infusor, targeted organ delivery) making
their way first through the development funnel where applicable and into
commercialization.
By the end of F17, we forecast varying numbers of cumulative agreements for each
product being in commercialization—all carrying unique revenue characteristics based on
varying annual volumes and unit ASPs. The figures below depict the timing of cumulative
commercial deals and Unilife’s associated revenue trajectory