On April 9, Unilife (UNIS) announced that it had inked a long-term commercial supply agreement with a U.S. pharmaceutical company related to the company’s EZMix syringe platform. The agreement is expected to generate up to $110M in revenue over the next 15 years, for an average of $7.3M in annual revenue (Unilife posted revenues of $1.4M in the first 2 quarters of fiscal 2013). Under the terms of the agreement, this unnamed pharmaceutical company will receive exclusive rights for the use of EZMix in a specific, currently unnamed indication and will pay Unilife $6M over a 12-24 month period for customization and production of EZMix syringes for this drug, which is in late-stage clinical trials as a proprietary version of a currently approved therapy. Unilife will also receive royalty payments on net sales of this drug, with a guaranteed minimum annual payment in order to maintain exclusivity over EZMix in this indication.
Shares of Unilife are rallying on the back of this news, and are up over 14% as of this writing. We last covered Unilife in January, and through Tuesday’s trading, shares of Unilife are down just under 5% since. However, this agreement should be seen as further validation of Unilife’s syringe franchise. And with the company’s balance sheet strengthened with $13.4M in new capital from several equity sales after being approached by institutional investors looking to take a stake in the company (Unilife ended 2Q13 with $5.9M in unrestricted cash & equivalents, and has $5.8 million of debt maturing within the next 12 months), the company has further strengthened its ability to expand its revenue base. As a frame of reference, consensus estimates call for profitability to be reached in fiscal 2015 (ends June 2015), with forecasted EPS of $1.25; analysts expect Unilife to lose 58 cents/share in fiscal 2013, and 18 cents in fiscal 2014.