Below are highlights of the recent Unilife ($UNIS) presentation by CEO Alan Shortall with David Lewis:
Alan Shortall of Unilife: Sanofi approached us back in 2003 and I think the driver, for the people in Sanofi who came to us, was recognizing when the Needlestick Prevention Act came into place in the year 2002 here in the U.S.A. which now mandates the use of safety. Those personnel within Sanofi recognized that safety could be a possible way of differentiating from competitors. Sanofi are estimatedly the largest consumer of prefilled syringes in the world, so they're very committed to prefilled syringes.
So, we were in that development program from 2003-2004, all the way through to where we actually signed two agreements with them, between 2008 and 2009, whereby they committed to provide-they'd pay us $40 million. We've actually now completed that industrialization program and let me point out, a very important point. Sanofi is a very smart company and they agreed to pay us the $40 million on quarterly payments. Those quarterly payments would only be paid upon us hitting agreed milestones from the industrialization program to bring the product in 2008, as being a working prototype, to high-volume production. This is a very complex product because of the interaction between the drug and the materials and ensuring regulatory approval process, as well, at the same time. We hit every milestone; never faltered once and we actually delivered the program nine months ahead of schedule. So when other pharmaceutical companies come to us, they know they can trust that we execute on the program.
In relation to the next step, we've started to provide validated product, as I say, to Sanofi and another global company. The regulatory approval process-and it is only a process; it's not a risk because, remember, those milestones that Sanofi put in place were to ensure that we ended up with a product that was de-risked and met all their requirements. So, in fact, the process though is that the pharmaceutical company starts stability studies and then, after about 12 months of stability to show that the drug is not affected in any way with the materials-and bear in mind, with our Unifill prefilled, its fully USP compliant. We have not introduced any new material that in any way is going to create any risk; there's no risk, it's a process.
So after 12 months stability, they would then make the application to the FDA for the drug device combination. Again, it's a straightforward process; it's about 18 months. So, we expect our device will go into the market with drugs in it in the first half of 2013. Normal process of the pharmaceutical companies was that they'll start to build inventory about six to nine months in advance of that, so about mid-next year. So in the meantime though, you will see sales for smaller quantities at higher unit pricing, obviously, to other pharmaceutical companies outside of Sanofi for them to start their stability studies. Key thing for us - and it's already started - is to get the clock ticking, moving towards that process.
Here is Unilife's CEO Alan Shortall explaining how the Company has hit all key milestones:
David Lewis of Morgan Stanley: Okay. So when will we expect a true commercial agreement with Sanofi?
Alan Shortall of Unilife: What I can say generally is that I don't expect Sanofi would be our only customer. I think you're going to start to see commercial agreements, long-term supply agreements going in place. Because bear in mind, our product is not a commodity, so once the pharmaceutical companies go to market, it's in their interest to guarantee long-term continuity of supply for us, otherwise it could cause a problem in their supply chain.
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