Unilife Begins U.S. Production of Unitract Syringes Print
Wednesday, 12 August 2009 13:36

On 8/12/09, Unilife Medical Solutions (UNI.AX) (UNIFF.PK) announced that it has commenced U.S. production of the Unitract 1mL Insulin Syringe at its FDA-registered manufacturing facility in Pennsylvania. The core business segments for Unilife include pre-filled syringes for pharmaceutical companies to deliver injectable medications, sharps safety devices for healthcare facilities, and contract manufacturing of medical devices. The Company estimates that nearly 50 medications delivered by pre-filled syringes are being sold worldwide with sales of nearly $50 billion.


The news today follows the successful transfer of the automated assembly system for the Unitract 1mL Syringes into its designated clean room in accordance with previously announced schedules. Prior to transferring the automated assembly system into the clean room, it was required to pass a series of operational tests designed to validate its performance in areas such as running speeds and product quality. These tests were successfully completed, with the automated assembly system now rated at up to 90% of efficiency. Unilife will continue to work towards achieving the optimum productivity rate for this assembly system of about  40 million units per year.

Unilife will now begin to build inventory to fulfill current and anticipated orders for its Unitract 1mL Syringes, which has already received key regulatory certifications for use in major markets such as the U.S., Canada, Europe, and Australia. Commercial release of the Unitract 1mL Syringes is expected to occur during 4Q09 once product aging studies have been completed and Unilife will promote the products at key industry events in the U.S. and Europe. Unilife is currently in discussions with a number of global pharmaceutical and healthcare companies that are interested in the Unitract 1mL Syringes.

The Company's product line-up of safety syringes are sold under the Unitract brand and allow users to control the speed of automatic needle retraction through a fully integrated safety syringe to nearly eliminate the risk of needle-stick injuries and disease transmission for healthcare providers. Unilife has a fully-owned U.S. subsidiary through its acquisition of Integrated BioSciences, which is located near Harrisburg, PA, and employs the majority of the Company's staff (50) at a FDA registered manufacturing facility for the large-scale production of medical devices. This facility produces the Unitract safety syringes and also handles contract manufacturing of medical devices for healthcare and pharmaceutical companies.

The Company's strategic partner for exclusive manufacturing and distribution of sharps safety products is Shanghai Kindly Enterprise Development Group (KDL). This facility currently produces Unitract 1mL syringes and MedPro blood collection safety devices using semi-automated assembly systems developed and qualified by Unilife. KDL is the second largest medical device manufacturer in China and has two-thirds market share of the Chinese needle market, manufacturing over 5 billion needles and 600 million syringes per year.

The major business partner for Unilife is Sanofi-Aventis (NYSE:SNY), which is the largest buyer of pre-filled syringes in the world for injectable products such as the blood thinner Lovenox and influenza vaccines such as Fluzone marketed by the Company. Last July, Unilife and SNY agreed to a five-year exclusive licensing agreement for the Unilife Pre-Filled syringe. SNY paid a €10 million exclusivity fee the right to purchase the syringes over the next five years and also agreed to finance Unilife's plans for expanding manufacturing capacity for the syringes (with a first-year production target of 40 million units by early 2011).

West Pharmaceutical Services (NYSE:WST) supplies medical device components to a variety of companies in the healthcare sector. WST is a PA-based company with a market cap over $1B with over 20 manufacturing facilities on a global basis. Unilife has a development agreement with WST for the provision of specialist components such as seals for Unitract products.

The industrialization agreement with SNY for Unilife Ready-to-Fill Syringe (RTFS) announced on 6/30/09 included the following features outlined below and also allows Unilife to move forward with discussions that include other potential customers that are interested in the Company's prefilled syringes.

(1) Period of Industrialization Program: The program was originally intended to be completed by the end of 2011, but it is proceeding ahead of schedule so that both parties have agreed to bring its scheduled completion date forward to the end of 2010.

(2) Payment of March Quarterly Milestone: Following the completion of designated milestones during the quarter ending 3/30/09, Unilife received a milestone payment of A$3.5 million (€2 million). Unilife has now received a total of A$9.5 million (€5 million) in quarterly milestone payments since the commencement of the program. With the program proceeding as scheduled, Unilife has issued to SNY an invoice for the delivery of milestones attained during the quarter ended 6/30/09.

(3) Selection of Automated Assembly Supplier: Unilife has completed due diligence on potential qualified international suppliers for the development of the high-volume automated assembly system.

(4) Scheduled Production Capacities: Unilife is scheduled to commence supply of the RTFS by the end of 2010. Initial supply of the RTFS by Unilife will utilize a fully automated assembly system that will have a targeted annual capacity of more than 40 million units. The design of this first line will also be used to develop a higher-volume automated assembly system scheduled to be completed by the end of 2011. This high-volume automated assembly system is anticipated to have an annual production capacity greater than 100 million units. Unilife has a target production plan for the RTFS of about 400 million units per year beyond 2014.

(5) RTFS Production Facility: Unilife has conducted a review of opportunities within Europe for the establishment of a manufacturing facility suitable for the high-volume production of the RTFS and has decided to instead centralize its manufacturing activities within PA. The centralization of RTFS production activities within PA is expected to reduce the Company's operational costs, further optimize its supply chain activities, and place Unilife in a more favorable international location to supply the RTFS to all of its anticipated customers.

Earlier this year, Unilife announced plans to relocate its global headquarters into a building being occupied by fully-owned subsidiary Integrated BioSciences in Lewisberry, PA. The Company also appointed a U.S.-based chief financial officer, Mr. Daniel Calvert, around the same time as part of plans to apply for listing on a U.S. stock exchange and expanding the number of people at the manufacturing plant in Lewisberry (near Harrisburg) to around 100 while retaining a small R&D team in Sydney, Australia.

The rapid expansion of Unilife will soon become more apparent to U.S. investors as the Company expects to list for trading here later in the year. Also, the extensive partnership with SNY provides Unilife with the necessary capital to expand its U.S. manufacturing capacity and will provide a major source of demand for the Company's pre-filled syringes by late 2010 with a production target of 40 million units per year at that time.

Disclosure: No positions

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