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Unilife Corp. Reports Operating Results (10-Q)

May 17, 2010 | About:
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10qk

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Unilife Corp. (UNIS) filed Quarterly Report for the period ended 2010-03-31.

Unilife Corp. has a market cap of $350.94 million; its shares were traded at around $6.67 .

Highlight of Business Operations:

Revenues. Revenues decreased by $1.7 million or 41.7%. Revenues from our industrialization agreement with sanofi-aventis decreased from $2.9 million to $1.2 million due to the nature and timing of milestones achieved during both the three months ended March 31, 2010. Revenues from our exclusive licensing agreement with sanofi-aventis were $0.6 million during the three months ended March 31, 2010 and 2009. We have recognized and will continue to recognize the revenue from the exclusive licensing agreement on a straight-line basis over the remaining term of the agreement. Revenues from product sales of our contract manufacturing business were $0.6 million during both the three months ended March 31, 2010 and 2009.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $4.5 million or 142.9%. During the later part of fiscal 2009 and the beginning of fiscal 2010, we increased the workforce at our Lewisberry, Pennsylvania facility, and as a result, we incurred payroll expenses and recruiting fees during the three months ended March 31, 2010 of $2.5 million, an increase of $1.3 million compared to the same period last year. Additionally, during the three months ended March 31, 2010, we incurred legal and consulting fees of $1.6 million, an increase of $1.1 million compared to the same period last year. The increase was due primarily to the expenses we incurred related to our redomiciliation and Nasdaq listing. Additionally, during the three months ended March 31, 2010, we recorded $1.7 million in share-based compensation expense, an increase of $1.3 million compared to the same period last year. This increase was due to the issuance of options to purchase common stock and the issuance of restricted stock to employees, directors and consultants during the three months ended March 31, 2010.

Revenues. Revenues decreased by $3.5 million or 28.5%. Revenues from our industrialization agreement with sanofi-aventis decreased from $7.3 million to $5.0 million due to the nature and timing of milestones achieved during the nine months ended March 31, 2010. Revenues from our exclusive licensing agreement with sanofi-aventis increased from $1.8 million to $2.0 million. We have recognized and will continue to recognize the revenue from the exclusive licensing agreement on a straight-line basis over the remaining term of the agreement. Since these revenues are based in Australian dollars, the variations in revenues from the exclusive licensing agreement between the nine months ended March 31, 2009 results from fluctuations in foreign currency translation rates. Revenues from product sales of our contract manufacturing business decreased from $3.1 million to $1.7 million principally because most of our efforts have been devoted to the development of the Unifill syringe in fiscal 2010.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $8.1 million or 74.8%. During the later part of fiscal 2009 and the beginning of fiscal 2010, we increased the workforce at our Lewisberry, Pennsylvania facility, and as a result, we incurred payroll expenses and recruiting fees during the nine months ended March 31, 2010 of $6.3 million, an increase of $3.3 million compared to the same period last year Additionally, during the nine months ended March 31, 2010, we incurred legal and consulting fees of $4.6 million an increase of $3.1 million compared to the same period last year. The increase was due primarily to expenses we incurred related to our redomiciliation and Nasdaq listing. Additionally, during the nine months ended March 31, 2010, we recorded $2.5 million in share-based compensation expense, a decrease of $0.2 million compared to the same period last year. Our share-based compensation expense during the nine months ended March 31, 2009 included $1.5 million recorded in December 2008 for the issuance of 1.7 million shares of common stock to our Chief Executive Officer.

To date, we have funded our operations primarily from a combination of equity issuances by UMSL prior to the redomiciliation, borrowings under our bank term loans and payments from sanofi-aventis under our exclusive licensing and industrialization agreements. As of March 31, 2010, cash and cash equivalents were $24.8 million, short-term investments in certificates of deposit with original maturities of greater than 90 days were $9.2 million and our debt was $2.8 million. As of June 30, 2009, cash and cash equivalents were $3.6 million and our debt was $3.1 million. Since July 1, 2009, we have raised approximately A$50.9 million ($47.1 million), net of issuance costs, in equity financing. We also expect to receive $5.2 million in assistance from the Commonwealth of Pennsylvania as described under Recent Business Developments and 4.0 million Euro of additional milestone-based payments from sanofi-aventis under the industrialization agreement during fiscal 2010. We believe that our cash on hand, together with the amounts described above will be sufficient to fund our operations and business expansion activities (other than the full development of a new manufacturing facility) through the second quarter of fiscal 2011.

Net cash provided by financing activities during the nine months ended March 31, 2010 was $49.1 million compared to net cash used in financing activities of $3.2 million during the nine months ended March 31, 2009. During the nine months ended March 31, 2010, we received $47.1 million from the issuance of common stock related to our private placement and share purchase plan, and $1.8 million upon the exercise of stock options. During the nine months ended March 31, 2009, we elected to terminate a licensing agreement that we determined was no longer consistent with our business strategies, and, as a final settlement, we repaid $2.3 million of the $3.0 million that we had originally received in 2008 under the licensing agreement, while retaining $0.7 million to cover related legal fees.

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