what has changed?

Been sitting on the sidelines watching the shennagingans with no small amount of interest. Nothing like a bit of global market uncertainty and fear to bring out the worst in some peiople, and the best in others.

FWIW, here's my take on things.

Any shareholders concerned about where the company is now and where it's going should ask themselves a simple question:

Why am I invested in Unilife?

If the reason is the disruptive game-changing technology, what has changed? Answer: Everything.

We started with a concept and now have an emerging suite of products that are set to change forever the way the sharps industry operates. The Unifill is just the start. Listen carefully to the recent investor presentations given by Alan Shortall and Dr Ramin Mojdeh and you will see that not only is the Unifill about to enter the market, but the Unifill Select is gaining momentum, and there are also additional devices emerging from the product development pipleline such as auto-injectors and reconstitution devices, which complement the existing syringe portfolio.

More importantly, these are devices where Sanofi have no license claims, and which, following the Sanofi model, will in all likelihood be funded by other pharma companies through the commercialisation pathway in order for them to secure exclusivity in their selected Therapeutic Drug classes.

If the reason was because of the approx A$50 million Licensing and Industrialisation Agreements with Sanofi, what has changed? Answer: Everything.

Unilife is about to complete the Industrialisation program six months ahead of schedule, and commence initial sales to Sanofi next month, six months ahead of schedule. Think about that. How often does that happen in such a heavily regulated environment as drug delivery devices? It doesn't. Unilife are TOTALLY on their game.

Finalization of the validation process is on schedule with initial sales of the Unifill to commence shortly after completion. First sales will start from July. Initial sales will be used for a range of activities including drug stability studies, which also include ageing studies, as well as market evaluations, and validation of the product in fill-finsh systems.

As an aside, it's worth noting that drug stability studies are an essential regulatory requirement to ensure the materials in the fluid path of the primary container, the syringe, are bio-compatible with the injectable drug. That is why the barrell is made of glass. Yet, because Unilife itself doesn't introduce any new type of material into the fluid path, the company is fully USP compliant.

More importantly, the stability studies help secure Unilife's position as preferred supplier to the pharma companies. How? Because Unilife is not responsible for securing regulatory approval. It is the responsibility of the individual pharma company, at their cost, to secure approval for the drug-device combination. Unilife simply supplies the sub-assmebly component parts of barrell, seal and plunger. The rest is up to the pharma companies.

And this is the real kicker.

Once approval is granted, it is granted for the drug-device combination, not just the drug. So, because the Unfill is not a commoditised product, and because the IP is protected for many years to come, and because it is not available for purchase anywhere else in the world, the pharma is effectively locked in to using Unilife's product. This in turn means that Unilife owns a part of the IP on the drug-device combination for the life of the drug.

Think about THAT for a moment, if needs must. This applies to all drug formats - existing drugs, drugs coming off patent, pipeline drugs, generics and biologics.

So the prefill market is not just about simple unit sales, it's about product differentiation of drugs in highly competitive markets, (read exclusivity fees), and extension of drugs approaching patent expiration,( read roylaties), plus new drugs, generics and biologics.

In this respect, Unilife is perfectly positioned to capitalize on the move to biologics. Why? Firstly, because bilogiocs tend to be very complex compounds with large molecules that must be injected, and which in many cases need customized devices to deliver them into the patient.
Enter Unilife.

Unilife now has the proven expertise and technical capability to produce what the pharmas need for these new drug formats.

Secondly, and perhaps more importantly, because Unilife has achieved the Holy Grail with its technology by successfully incorporating all the safety features inside the glass barrell, something no other company has been able to do, not even the 1,000lb market gorilla, BD, with all the unlimited resources it has at its disposal, their syringe formats are the new gold-standard which have the potential to totally disrupt the existing market.

Moving right along, if the reason for investing is the management team, what has changed? Everything. We have a dynamic, visionary CEO who is taking the company to a position of global leadership, and who, when the pressure is on, doesn't take a backward step and isn't afraid to come out fighting when the likes of Cramer get it wrong....witness the interviews with Cramer.

Then look at the team he has assembled to take Unilife into the future. The best leaders hire the best talent then empower them to do what they do best. This is what Alan Shortall has dione and continues to do. If anyone doubts this, ask why top-flight executives from Becton Dickinson like Ramin Mojdeh, (former Head of Pharmaceutical Systems and Global Head of Product Development), Jack Kelly, (Head of Patient Self-Injection Devices), and Mike Rattigan, (Pharmaceutical Division - Commercial Development), would leave BD to join Unilife. They are joining Unilife because they have seen what is being put in place, and how it's going to change the market, and they want to be a part of it.

If the reason is secure long-term revenue streams, what has changed? Answer: Everything.

For those still focussed on the Unitract 1ml, yes, sales are being made, but the company is not focussed on marketing the 1ml strongly. Why? Because the market for such devices is a highly commoditised market controlled by highly commoditised companies like BD. Instead, Unilife is focussed on markets that are wide open to competition, markets where the opportunity exists for Unilife to become THE dominant player.

By way of illustration, there are literally hundreds of manufacturers of hyperdermic syringes in the world with over 40 billion syringes sold every year deriving total revenues of some $6 billion dollars. Yet the prefill market is significantlydifferent. There are only five prefill manufacturers of note, selling some 2.5 billion prefills each year, representing only 6.5% of the total syringe market. Yet these sales generate some $2 billion in revenue, which is a staggering 33% of the total syringe revenues.

Think about THAT for a momnent. As an investor, where would you prefer your company to focus its resources? In a highly competitive, highly commoditised market run by highly entrenched commoditised players, or in an emerging market growing at 12.5 % pa year on year, with only five players with me-too commoditised products, and where the biggest consumer of prefills has paid you A$50 million for the right to negotiate to purchase our products?

Now that, for me at least, is the definition of a no-brainer.

Yes, it's taken a while to reach this point, and yes recent SP performance has been frustrating, but that's as much the result of overall market sentinment as anything else. Not to mention signifcant chunks of shares being shorted out of the US. IMO thos boys need to be careful they don't get caught with their pants down.

Sales are about to commence. They will be a mere trickle to start with, but they will inevitably grow into a torrent of secure, recurring revenue streams, locked in by multi-year exclusive license agreements. Not oply that, but as we've been told, the next 6-12 months will in all likelihood see a string of collaboration and licensing agreements for existing and new products which will inevitably entail significant up-front exclusive license fees a la the sanofi model.

And then we shall see what we see.

To me at least, that amounts to a compelling short, medium and long term investment proposition.

What has changed? A heck of a lot, and we're about to find out how much.

Good luck to all.