Unilife Management Discusses Q2 2013 Results - Earnings Call Transcript

Feb.11.13 | About: Unilife Corporation (UNIS)

Unilife (NASDAQ:UNIS)

Q2 2013 Earnings Call

February 11, 2013 4:30 pm ET

Executives

Todd Fromer - Managing Partner

Ramin Mojdehbakhsh - Chief Operating Officer and Executive Vice President

R. Richard Wieland - Chief Financial Officer and Executive Vice President

Analysts

Jeremy Feffer - Cantor Fitzgerald & Co., Research Division

Danielle Antalffy - Leerink Swann LLC, Research Division

Raj Denhoy - Jefferies & Company, Inc., Research Division

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Unilife Corporation Second Quarter Fiscal 2013 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Todd Fromer, Investor Relations Council to Unilife. Sir, you may begin.

Todd Fromer

Thank you. Good afternoon, everyone, and good morning to our Australian supporters. Thank you for joining us for the Unilife Corporation Fiscal 2013 Second Quarter Conference Call.

Before we begin today, I would like to remind everyone that this conference call contains forward-looking statements. All statements that address operating performance, events or developments that we expect or anticipate to occur in the future are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and not on information currently available to our management.

Our management believes that these forward-looking statements are reasonable as and when made, however, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Item 1A Risk Factors and elsewhere in our Annual Report on Form 10-K and those described from time to time in other reports, which we file with the Securities and Exchange Commission.

Ladies and gentlemen, at this point in the presentation, I would normally turn the floor over to Mr. Alan Shortall, CEO of Unilife. Unfortunately, Mr. Shortall could not be available for today's live presentation. However, he has provided me with the following prepared remarks, which I will now read on his behalf.

The following is a statement written and provided by Mr. Alan Shortall, CEO at Unilife. Good afternoon, ladies and gentlemen, I would like to apologize for not being able to join you in person for today's earnings call. As you know, I take my communications with shareholders very seriously. There are few things more important to me than being available to speak directly with investors and analysts. There is only one thing that would have ever dragged me away from today's call and that is building strong commercial relationships with pharmaceutical customers. I am currently traveling and meeting with senior executives from one of our main customers. Given the importance of these customer discussions, flight schedules and time zone differences, it was impractical for me to be part of today's call.

While I cannot go into details regarding this particular customer meeting, I've often said that my primary focus is doing deals that build shareholder value, that's what I seek to do every day and is what I'm doing at this moment.

Filling in for me on today's call is our Chief Operating Officer, Dr. Ramin Mojdeh. However, before I hand the call over to Ramin, I want to take a few minutes to make some comments about our long-term funding strategy. We expect to progressively lock in a series of contracts with multiple pharmaceutical companies during the 2013 calendar year that will generate upfront revenues.

As we move to finalize many of these contracts, it's important that we have reasonable cash reserve to support our business operations.

Over recent months, we've been exploring a range of options that will provide long-term capital financing and cause minimal dilution to our existing holders. We are currently reviewing term sheets from several U.S. institutions that allow us to borrow sufficient cash to maintain business operations for the foreseeable future. This debt financing will be repaid gradually to lenders over a number of years from a portion of the accelerating revenues generated from device sales, exclusivity fees and other opportunities.

To strengthen prospective terms for this loan, we have increased our cash position in 2 ways. First, we activated the At-the-Market or ATM facility with Cantor Fitzgerald in January, whereby we issued 3.85 million in stock to U.S. institutions during favorable trading period. We have no immediate plans to use the ATM facility again in the foreseeable future.

Second, we announced today the receipt of $9.6 million in net proceeds from a common stock offering with Creed Capital, U.S. institutional investor. This investor approached us last week, seeking to take a long-term passive position in Unilife. After consideration, we determined that the timing of such an investment was favorable and in the best interest of shareholders. Together, these financings have resulted in an additional $13.4 million in cash going onto our balance sheet. I considered the dilution to be minimal and vastly outweighed by the commercial and financial options it creates for us moving forward.

In particular, it strengthens our options as we move to finalize our long-term debt funding program and sign contracts with pharmaceutical companies in the weeks and months ahead. We are in a great position to make 2013 a great calendar year.

With those initial comments, I would like now to turn the call over to Ramin. Thank you very much. Ramin, the floor is yours.

Ramin Mojdehbakhsh

Thank you, Todd. Good afternoon, and good morning to our shareholders dialing in from Australia. My name is Ramin Mojdeh. It's a pleasure to be standing in for Alan on today's call. I'd also like to welcome our Chief Financial Officer, Rich Wieland, on this call.

Today, I'd like to address some questions Alan and I often receive from shareholders and analysts regarding our commercial pipeline. For example, how do things progress from initial customer engagements to the signing of a contract? What does a clinical development program look like? How do these clinical development programs lead to long-term supply contracts? Why do we need to invest in so much R&D? And why do all these activities create such an attractive business model?

I hope today's call will give some context to the significant scope of work that is going on behind the scenes with multiple customers in parallel. And I hope that it will serve as a beneficial prelude to some of the deals we have coming up over the coming months.

First of all, it's important to introduce our commercial pipeline and explain what it represents. At our last Annual General Meeting, Alan presented a selection of 31 active programs from our commercial pipeline. This is not a complete list. Many of our programs are not included.

For example, there are programs that are progressing rapidly, but are not quite at a stage where we would consider them imminent. There are many other programs in which we are working with customers across a number of their drugs and vaccines. Where that's the case, to be conservative in our estimates, we're only including the leading drug target under the program.

So what you see on this slide is a diversified list of programs that we feel very confident about. Out of the 40-plus pharmaceutical companies we have advanced engagement with, 20 are included in here. All the device platforms we have announced to-date have a series of active programs in place. This list of opportunities is dominated by drugs that are either approved or in late stage clinical development.

So from our perspective, our pipeline has a low-risk profile for commercialization. We expect to generate initial revenues from several of these programs this calendar year. And if you take a long-term view and add up the peak annual commercial revenues for all these active programs, you are looking at a potential recurring revenues in the hundreds of millions of dollars.

One of the most common questions we receive from shareholders is why does it take so long to sign a deal? While every deal is different, the fact is that they all require significant time, resources and a compilation of multiple pieces of highly technical information.

In parallel with these activities, the customer also needs to spend a lot of time aligning various parts of their organizations behind a program such as marketing, procurement, industrialization, quality and regulatory affairs.

There are a number of steps that are typically needed before a customer can launch one of their drugs in a Unifill syringe or one of our other devices.

On average, you're looking at a 24-month process from the time of initial engagement with a customer to the regulatory approval and commercial launch of a drug with a Unilife device.

Steps along the way include the provision of functional devices for customer evaluation, user studies with the target patient population, stability studies, compatibility studies, filling and packaging line validation and the regulatory submission and approval.

For those drugs that are not already approved, there would be an additional step of clinical trials by the drug company.

Clinical development contracts and supply contracts are typically signed in parallel with these steps. Over the last year, we announced one supply contract for Unifill and one clinical development agreement for a specialized device for target organ delivery. I'm pleased to advise that both of these are progressing well. We're also now at various stages in this process with a number of other pharmaceutical companies.

Although every deal takes a lot of time and patience, the final result makes it quite worthwhile once a customer's drug is launched in our device. Each commercial supply contract will be around 7 to 10 years in length, with increasing growth rates due to market penetration, market share increase and overall therapeutic market growth, all contributing to an accelerating and recurring stream of revenue.

I think the contracts we will find with various customers over the coming weeks and months will show just how advanced some of these programs are.

There are many active programs now underway with many pharmaceutical companies. In a number of cases, we are working with the same customer across multiple devices for use with a number of their target drugs. This all adds up to a large and sustained commitment to R&D investment.

Allow me to explain how we invest in R&D and why it's of critically importance to our success. Our investment in R&D covers many areas. First of all, we have developed a number of technology platforms, including prefilled syringes, bolus injectors, auto-injectors, drug reconstitution systems and specialized devices for organ delivery. While these platforms are now established and commercial ready, we need to be able to customize each device to specific customer and therapy needs.

Compared to the traditional model of developing rigid product offerings, our investment in platform-based technologies is highly efficient and preferred by customers. We're also developing other new platform-based technologies that will strongly complement our existing portfolio, and generate significant long-term growth. Each of these new device technologies is directly aligned with emerging unmet customer needs.

R&D investment is also directed towards increasing the capacity and operating efficiencies of our manufacturing systems and the continuous improvement of our quality assurance processes. Together, these activities make us an ideal partner to pharmaceutical companies that want a seamless integration of a customized device into their drug commercialization programs.

So without this upfront investment in R&D, none of these upcoming deals and the accelerating recurring revenues that they will generate would be possible.

One of the most important aspects of our business model is that we own the IP, and we are prolific at it. This is important not just to Unilife, but to our customers who will be leveraging our devices to enable or enhance the delivery and commercial success of their injectable therapies. So we aggressively protect our novel intellectual property in the U.S. and abroad.

As a quick update, our worldwide patent portfolio doubled in 2012, and we expect to quadruple it in 2013. We now have a total of 84 granted patents. For Unifill alone, we have 6 granted U.S. patents, and a total of 52 granted patents worldwide. These patents and the third-party freedom to operate reports give Unifill protection through at least 2028 to 2030, and we expect this timeline will be further expanded as new filings are granted.

Another 26 new patent families were filed in 2012, these are now in various stages of examination. Another 25 patent families are still pending for 2013, and it's still very early in the year.

Advanced negotiations are now underway for the signing of a series of clinical development programs with various pharmaceutical companies. The size, shape and length of clinical development programs will vary widely depending on the customer, the target drug and scope of work involved.

Under our clinical development program, we will typically be customizing the functionality, human factors and branding of the device that the customer is targeting for use with an injectable therapy. It may also encompass stability studies, user studies and the supply of devices for use in drug trials. A program can range in length between 6 and 24 months. When there are human clinical drug trials involved, the process may take longer due to factors outside of our control.

Typically, there is a $3 million to $10 million fee per clinical development program realized over the length of the program. Some of these programs may also include an exclusivity option for the use of our device, with a particular therapeutic subclass or indication with fees attached. We expect to generate initial revenues from several clinical development programs this calendar year. These opportunities are spread across all of our established device platforms.

Let me give you a few examples. In December, we announced that a U.S.-based pharmaceutical company had commenced stability and evaluation studies with Unifill for a number of their drugs. Most of these drugs will have their own clinical development program. For example, we might customize our finger flanges for one drug, so that it's perfect for easy handling by patient population that might have dexterity or pain challenges. Such a customization program might only take a few months to complete.

Stability studies are a regulatory requirement for all companies to demonstrate the integrity and potency of a drug when stored in and delivered by a device. It will typically take between 12 and 18 months, and require us to supply several hundreds of thousands of units per program.

For this particular U.S.-based customer, we expect peak annual commercial demand to range between 25 million and 35 million units per year for their initial series of target drugs. There are many such programs we will undertake during 2013 and beyond.

Last October, we advised that a global pharmaceutical company had selected our Precision-Therapy platform of bolus injection devices to enter the final stage of collaboration as its preferred choice for the long-duration subcutaneous delivery of a number of late stage drugs. Again, we are customizing our bolus injectors to address the specific formulation and therapy needs of these target drugs. This relationship continues to strengthen and we understand we remain their preferred partner.

We expect to enter into a clinical development program this year for the lead drug target under this program. Additional programs for other drugs will follow. These programs should lead to the signing of supply contracts in anticipation of the commercial launch of the first of these injectable therapies from 2015.

Based upon indicated customer requirements for the first drug candidate, we expect peak annual commercial revenues of $50 million per year under an initial supply contract. Follow-on drugs should generate peak annual commercial revenues of between $30 million and $70 million.

As another example of the clinical development program, we expect to enter into the next stage of a partnership with a global pharmaceutical company who is using one of our specialized devices for targeted organ delivery in an upcoming human clinical drug trial.

We generated $1.4 million in revenues during the first phase of this program that was successfully completed last year. We expect the upcoming stage of the program will generate higher revenues.

These are just some examples of the clinical development programs with upfront revenues that we expect to sign during the calendar year 2013. The other type of agreements that we expect to sign this year with customers is supply contracts. The scope of a supply contract can also vary by customer, device and target drug. Supply contracts can include minor customizations, stability studies and most importantly, the sale of the device for commercial use.

Given the proprietary nature of our devices and the desire of pharmaceutical customers to secure long-term supply, a contract will typically range between 7 and 10 years in length. These contracts will be easily renewable on agreement by both parties.

A commercial supply contract might have upfront fees in the range of $1 million to $5 million. In some cases, customers may also pay us for production capital to guarantee capacity. Exclusivity and royalty fees may also be negotiated on a case-by-case basis.

We expect to enter into some additional supply contracts for the Unifill syringe this year. We also expect to enter into supply contracts this year for other devices in our portfolio. For example, our EZMix drug reconstitution system was recently selected by a pharmaceutical company for use with a late stage pipeline drug. Negotiations on EZMix supply contract are now underway with that particular customer.

So our business model is very different than a standard medical device company. There is a long list of pharmaceutical companies that are active in the market for injectable drug delivery systems. We now have relationships with many of them. This list includes many of the top 20 pharmaceutical companies, as well as some of the fastest-growing biotech companies. We have assembled and continued to expand a world-class commercial team that serves the needs of these pharmaceutical companies.

Due to the increasing level of demand for our devices, I'm pleased to inform you that we have expanded our commercial team with one more senior executive appointment. Mike Ratigan, our Senior Vice President and Chief Commercial Officer, just announced that Mr. Glenn Thorpe joined his team last week as Vice President of Commercial Development. Glenn is well-known in our industry as one of the best commercial executives with a deep knowledge of the industry. When you have the top commercial people like Glenn and the rest of Mike's team join Unilife, this is a clear indication of their strong endorsement of our product portfolio and their confidence in our products being able to serve our customer's unmet needs.

I would now like to turn the call over to Rich to run through the financial results for the fiscal year second quarter.

R. Richard Wieland

Thanks very much, Ramin. As we reported in our press release earlier today, our financial results for the second quarter of fiscal 2013 include revenues of $700,000, compared to $900,000 for the second quarter fiscal 2012. Total net loss for the second quarter ended December 31, 2012, was $14.6 million, compared to a net loss of $12.9 million for the same period last year. The increase in net loss is primarily attributable to the increase in selling, general and administrative expenses of $1.6 million, which include an additional $1.3 million of noncash share-based compensation expense. We also recognized additional depreciation and amortization expense of $200,000 in the second quarter, as compared to the prior year.

Adjusted net loss for the second quarter was $9.7 million, compared to an unadjusted net loss of $9.6 million for the same period in fiscal 2012. Adjusted net loss excludes share-based compensation, depreciation, amortization and interest expense.

As of December 31, 2012, we held $8.3 million in cash. In January 2013, we activated our At-the-Market or ATM facility with Cantor Fitzgerald and raised approximately $3.8 million.

Additionally, we today closed a common stock equity transaction with a U.S. institutional investor generating $9.6 million in net proceeds. Together, these add $13.4 million onto our cash balance sheet.

During our call in July 2012, we communicated our commitment to reducing our operating expenses. I am pleased to report that we continue to make progress towards that goal as indicated by the $1.6 million or 13% of savings realized in our most recent quarter ended December 31, 2012, when compared to the operating expense, excluding noncash charges incurred in the fourth quarter ended June 30, 2012. This represents a 3.5% savings when compared against our average quarterly operating expense, excluding noncash charges during fiscal 2012.

Now I'd like to turn the call back over to Ramin.

Ramin Mojdehbakhsh

Thank you, Rich. Before I open the call to questions, I'd like to make a few closing remarks. We're very excited about the progress that is being made across all business fronts. Each of our device platforms is receiving great traction by many pharmaceutical companies. Our flagship family of Unifill syringes continues to be sought by the majority of our customers. We expect to make announcements on multiple supply contracts and clinical development programs in calendar year 2013 and beyond.

Our EZMix platform of drug reconstitution systems is now being pursued by more than 15 companies, many of which desire exclusivity within particular therapeutic classes. Several pharmaceutical companies have now selected or are ready to select a range of bolus injection devices, we're informed that many of these companies are targeting our devices for multiple drugs in their pipeline. Many of these companies have also requested exclusivity rights within targeted therapeutic classes. We're now finding that some of these companies are requesting exclusivity for the same therapeutic classes. Our targeted delivery systems for administering drugs into the eye or other parts of the body are being pursued by multiple interested parties. Again, we're seeing many of these companies express a desire to secure exclusivity for particular indications or therapeutic classes.

We appreciate your time and attention. I would now like to open up the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Jeremy Feffer with Cantor Fitzgerald.

Jeremy Feffer - Cantor Fitzgerald & Co., Research Division

If I could press a little bit further, and I know you guys don't give specific guidance but as these things, as these projects develop and you get a little more clarity, is there any sense as to a ballpark revenue run rate, either in the second half of this year as we look into fiscal '14?

Ramin Mojdehbakhsh

Thank you for the question. As you stated very well, we don't really provide guidance and I don't want to get in the habit of that, but I can give you some comments regarding that. We anticipate revenue from a combination of clinical development programs and also supply agreements in calendar 2013. We anticipate a nice ramp in that as the year progresses, and we expect that to be a trend, and we expect that trend to continue in 2014 and beyond.

Jeremy Feffer - Cantor Fitzgerald & Co., Research Division

Okay. And then following up on that. I appreciate the discussion of the new capital raise. As you now think about revenues ramping this calendar year, is this -- do you now have sufficient cash between this equity raise and the ATM? Is this going to be sufficient now to get you to a more steady-state revenue ramp that directly gets you to cash flow breakeven?

Ramin Mojdehbakhsh

Thank you for that question. As you know, Rich just mentioned the cash that we have on our balance sheet. We have also -- we are anticipating revenue, as I mentioned, from the various programs that we have incoming. And also, we have a number of options ahead of us with the debt financing, with very favorable terms in fact, that are available to us. And we are always exploring, we're always looking after, not only strategically, operationally and commercially, what is the best approach for us and how we would like to have our balance sheet, but we're also looking at all aspects of how to finance the growth that we anticipate with the customers that we are anticipating to supply. So all of that combined really is what's in the formula for us to figure out what kind of capital we need at any given time and what kind of actions we would take.

Operator

Our next question comes from the line of Danielle Antalffy with Leerink Swann.

Danielle Antalffy - Leerink Swann LLC, Research Division

I was just hoping to focus on let's say worst-case scenario as we get into the back half of the year. If you've not signed another agreement or partnership or contract or whatever with a pharmaceutical company, do you have enough sort of incoming revenue from sort of the agreement you did sign in June, and from your various sort of stability testing to sort of get you through the end of the year or will you have to go back to the market to raise more capital?

Ramin Mojdehbakhsh

Sure. Thank you for your question. First of all, we are very confident about the revenue that we have coming in this year. I can't really tell you how much, I can't tell you how many programs but I can tell you that there are several programs that we anticipate to generate both revenue and cash from in calendar 2013. Let me also tell you where my confidence is coming from. My confidence is coming from the fact that a number of these deals are actually completed negotiations and they're now in the process of the approval in our customer complex, and these things sometimes take a while to route for approvals and wet signatures and so forth and so on. There are even also cases where our customers have actually requested that we commence implementation of these contracts as they, in parallel, try to close the paperwork and deliver that to us. Certainly, I consider those deals absolutely a done deal, it's just that I can't really speak about them until after we have the paperwork completed on those. So I have great confidence in the revenue that we are going to take in, in calendar year 2013. I can't be precise about how many of these because at the end of the day, the timing of some of these things is really out of our control and often is dictated by the customer processes that we have. Having said that, we also have a number of options, as I mentioned earlier, ahead of us. And the comments that Alan had sent in at the beginning of the call references the debt financing. And we have a great number of options ahead of us and very favorable terms. I am a big shareholder in the company, as you might know, and I've invested a lot of my own money into the company and I very much like the terms that we have, and so we will take action appropriately as time goes on to make sure that we're well-capitalized and are able to serve the customers and finance the growth in capacity that we need to as the customer demand firms up.

Danielle Antalffy - Leerink Swann LLC, Research Division

Okay, that's helpful. And then you guys have quite a large various product offerings. I was just wondering if you could help us sort of give us some color as to which products are the highest margin products for you and where you see the most opportunities to drive leverage with those products?

Ramin Mojdehbakhsh

Sure, great. It really depends on how we price these products. And every deal is different and it also depends on what kind of exclusivity or royalty fees you might attach to each of these products. So it's really difficult to give you what a normal is, but I will try. So if you kind of step away from this and look at it from a 30,000 foot perspective, you would see the more advanced devices such as the reconstitution devices, the bolus injectors, the auto-injectors, particularly the LISA auto-injector that we have, which is a reusable auto-injector, and some of the specialized family members of the Unifill syringe would really have extremely attractive gross profit margins. Not to say that Unifill itself will not have or does not have very attractive gross profit margins, but those are some of the ones that, I think, in the out years, you will see to really increase the blended gross profit margins. But if you look at our operating margins, you would also see a very attractive operating margins in our business. If you look in the out years, we anticipate to have operating margins north of 40%. So the story is not just about the gross profit margins, the more important story is, I would say, about the operating margins, and that's really very attractive, as you can imagine.

Operator

Our next question comes from the line of Raj Denhoy with Jefferies.

Raj Denhoy - Jefferies & Company, Inc., Research Division

I wonder if I can ask you about the cash burn in the quarter. I think, it's $12.5 million to $13 million, something along those lines, of cash you guys burned, which is a bit of a step up from last quarter. And I'm curious what your thoughts are in terms of spending or your ability to control that cash burn as you await these deals to come online?

Ramin Mojdehbakhsh

Well, Raj, we are very mindful of the way we spend capital and we're very prudent about it. And we -- there are fluctuations depending on what kind of investment we're making to serve the customers at any given time. And also, when we finish program for customers, we stop those and their savings in those as well. I can just say that every investment that we make is directly related to products and specific customers, and we anticipate those not only generate development agreement fees, but also will result in commercial supply agreements with the customers. So we're being very judicious about selection of investments that we make and it's really guided by the direct and exact customer needs that we deal with on a daily basis.

Raj Denhoy - Jefferies & Company, Inc., Research Division

So then do you expect the cash burn here in your March quarter is going to be similar to that, call it $12.5 million, $13 million, that you did in last quarter?

Ramin Mojdehbakhsh

I think we anticipate -- there would be some fluctuations. I think, you are going to see us go down a little bit. But again, those fluctuations are going to depend on the customer needs and what we anticipate and what kind of investment we would be making to serve the customers as they come up. So yes, if you look at it across multiple quarters, I think, overall, on the average, we would stay steady.

Raj Denhoy - Jefferies & Company, Inc., Research Division

Okay. And I guess the genesis to the question I was at, as we are midway through February, and as we get towards the end of the quarter, assuming your cash burn is about the same, you're going to be left with about half a quarter of cash again. I mean, from some of your comments, it sounds like maybe the deals we shouldn't expect tremendous amount here in the March quarter, and this cash situation, I guess, continues to be a situation and I'm curious how this is playing out in terms of your ability to sign these deals or if it's having any broader ramifications in terms of actually getting the company to where you want it to go?

Ramin Mojdehbakhsh

Well, I mean, everything is working really well with our customers. If you're asking about our balance sheet, our balance sheet is serving us very well. We have a bias towards being very conservative about raising capital, particularly because we feel we have great access to capital as we need it. So we are very diligent about timing of these things. And so at appropriate time, we are able to put whatever we need to bring onto the balance sheet, whether it's from equity raise, which you just saw as an opportunistic instrument. And also the debt financing that, as I said earlier, we have a number of options available to us. And at appropriate time, we have all the right levers if we chose to pull them in case we do need additional cash, again, to ramp up to serve anticipated needs of customers.

Raj Denhoy - Jefferies & Company, Inc., Research Division

Okay. And then just last question I would spin. I think it was last year that Alan was mentioning that he expected deals to kind of close in the summer kind of timeframe, and that slipped a little bit. And here we are now in '13 and it doesn't sound like the deals are coming anytime soon, certainly a lot of things are teed up here. And as you've been living through this process, I guess I'm curious what has been the principal hold up in terms of actually getting these things over the goal line? What's been keeping these customers from signing on the guideline as it were?

Ramin Mojdehbakhsh

There's really no hold up. I mean, this is really part of the normal process of going through these things. Some of the ones that were earlier in the pipeline, I mean, as -- if there's 6 months or 12 months here or there, I mean, these are big deals that are going on and the processes are quite diligent, rigorous and complex on the part of the customers and so forth. So I don't -- I do wish that some of these deals would have materialized earlier, I'm certainly in agreement with that. At the same time, progress is great, is steady. And in fact, any of these deals that we would have anticipated 6 or 12 months ago are now dwarfed by the number of deals that we have actually in the pipeline. And in fact, as I mentioned to you, some of them I consider a done deal because we're actually -- at the customer's request, we're actually implementing the deals as the paperwork is catching up. And it's just a matter of time before you see these deals come through. And I think it will go a long way to show the stage at which all of these opportunities are in our pipeline.

Operator

Our next question comes from the line of Jeffrey Cohen with Ladenburg.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

So if you could personally, Richard, could you review the $699,000 is the remaining residual from the Sanofi deal through June 2014?

R. Richard Wieland

Yes, it's about $600,000 a quarter and it's spread through June of 2014. Yes.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Okay. So I guess I'm trying to understand and maybe you could help me a little further understand this coloration between the supply contracts and the development programs and the fact that when or if they will hit the revenue for the share, I know that you're not making any forward-looking statements on revenue, but it sounds like there's a number of programs, you're stating that a lot of these programs are $3 million to $10 million over a particular time period, so would you expect some of these during fiscal year '13 or calendar year '13 to hit as far as these revenues?

Ramin Mojdehbakhsh

Absolutely. We expect the number of these to come in, in the calendar year '13, both clinical development agreements, and also supply agreements. Many of these would have upfront fees associated with them, and also milestone payments that are associated with them. And we anticipate there would be both recognized revenue and cash from a number of these deals, in calendar 2013, again, to be very clear.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Right. Okay. So not necessarily during fiscal '13?

Ramin Mojdehbakhsh

It can, I mean, it can also be through fiscal '13. Again, I can't really time it for you. There are many of these timing aspects that are really out of our control. So I can't tell you with precision. But certainly, in calendar 2013, I think you're going to see a number of these hit. We anticipate some of them to hit definitely the next quarter. But again, I can't really guarantee that.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Got it. Could you review for me briefly the IP, the number of filed patents and issued patents for 2012 and 2013?

Ramin Mojdehbakhsh

Sure. In 2012, 84 patents issued already worldwide. We have so many in the works. In fact, we have disclosures and filings every week ongoing and these are ones that are already -- I know that have gone through our process and in the works, we have 26 new patent families that were filed in 2012. Each of those will end up with multiple grants. So that's going to be a big proliferation or footprint across many of these product platforms that we are driving. There is another 25 patent families that are being filed and pending in 2013. And as you know, this is very early in the year. And I anticipate those numbers to be staggering by the end of this year as well. We have a very keen focus on intellectual property. We have a very strong group of people who are very well-schooled and experienced in this space. And we know how critical and important our intellectual property is, not only to us but also to our customers because it allows them not only protection but also freedom to operate. So we are very prolific in this space.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Okay. So from the beginning of the phone call, this 31 programs in the pipeline, I believe you're referring to a slide, that was a slide you're speaking about from January 31 in the shareholder letter?

Ramin Mojdehbakhsh

Yes.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Okay. And Richard, so back on the 31st, in your Appendix 4C, it showed receipt from customers of $1.042 million for the current quarter, yet what you're showing today is $699,000. Could you explain that?

R. Richard Wieland

I don't know the exact or precise answer. I can certainly get it for you and give you a call. It's probably just a timing factor. The $600,000-plus a quarter from Sanofi is noncash. So that's just we've received the cash from them, so that's spreading the revenue recognition through to June of '24 (sic) ['14]. But I will look into that for you and give you a call.

Jeffrey S. Cohen - Ladenburg Thalmann & Co. Inc., Research Division

Okay. But the Sanofi money is constituting the majority of the licensing fee from this current quarter.

R. Richard Wieland

I think so. Yes.

Operator

I'm not showing any further questions at this time, I'd like to turn the call over to Dr. Ramin Mojdeh for closing remarks.

Ramin Mojdehbakhsh

Great. Well, thank you very much. As I said earlier, we're very confident about the programs that we have in place. In fact, I will say that they're moving at even a faster pace than we had anticipated and the deals that you will see coming out in the coming months will demonstrate how advanced that pipeline is. We have great confidence in being able to get revenues, and also cash from a number of these deals in calendar 2013. And our pipeline certainly continues to strengthen. We have new inquiries from pharmaceutical companies on a daily and weekly basis. And as they advance in our pipeline, they -- we get closer and closer to the real tangible deals and opportunities with these customers. And so thank you, everybody, for participating in this call, and we look forward to our next call with you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.

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