As the future of medical device technology evolves, one company at the industry forefront likely to make major waves this year is UNILIFE (UNIS). Specializing in customized medical injectable devices, UNIS is already working with over 40 pharmaceutical companies and healthcare providers in pairing drug products with customizable applications for injection and administration. Yet where UNIS is trumping its competitor's is in regards to their proprietary technology which enables them to customize their product's automatic timing of delivery, and unique design. This technology makes it so that a patient can wear one of UNIS's injectable products on their body and it will remember when they have to receive their medication, inform them when and administer the medication injection for them automatically. Due to the company's high cash burn rate, the short interest in UNIS has more than doubled since this time last year. This in my opinion provides new investors with an extremely attractive entry price to a company at the cusp of a inflexion point.
The Likely Short Squeeze
The majority of shorts taken out on UNIS appear to be based on the rationale that company would have to do another offering as a means to raise capital. Yet unfortunately for those with a short interest this clearly does not appear to be the case. In the company's last earnings call this May, CEO Alan D. Shortall stated:
"With so many transformational agreements generating revenue immediately, we have no intention of doing any secondary stock offering that would cause dilution to existing shareholders. We have, therefore, agreed to terms with a major U.S. life science financing firm for a debt funding program, which we expect to finalize later this month. This program sufficiently strengthens our balance sheet during this period in which we transition to a strong and accelerating revenue growth."
New Deals Coming In Waves
While most of UNIS's up and coming business deals are confidential and not yet publicly disclosed, what we do know is that the company is expecting to ink out 10 more contracts with pharmaceutical and healthcare companies before the year's end. In response to a question by Landenburg Thallman analyst Jeffrey S. Cohen in regards to the companies upcoming deals, UNIS's CEO responded with the following:
"I believe we will meet the target we put out at the annual general meeting. I think that number is around 12(deals). We've put 2 already… Some of these deals will be very, very large deals. And we know we've been selected. We know there's no doubt…"
Per the company's last earnings call I expect public information regarding new deals to be announced progressively through summer and fall of this year.
Insider Buying And Institutional Investment Increasing:
In terms of the golden rules of investing in companies, a personal mandatory requirement I have is the need to see management putting their money where their mouth is. That means insiders buying stock voraciously, the more the better. In terms of UNIS we can see just this. In the past year and a half UNIS CEO Alan Shortall has purchased roughly 992,921 shares on the open market with a price range of $3.68-$4.07. This is a clear signal in my opinion that the CEO believes his company's shares will be increasing at a significant level in the near future. In addition to this it appears that top financial institutions are following Mr. Shortall's lead in accumulating UNIS shares. The top 6 institutional holders which collectively own over 25% of the companies outstanding shares and have all increased their positions since the beginning of 2013. These institutions include JP Morgan (JPM), Black Rock (BLK), Fidelity, Vangaurd Group, Frontier Capital Management and Schroder Investment Management.
A Piece of The Drugs As Well
As part of Unilife's business model the company is inking out certain deals which entitle them to not only to profit from the sale of their medical device systems, but also ensures them a percentage of drug sale profits as well. This fact merges UNIS into not only a medical device systems company, but also a part pharmaceutical company as well. With a short interest peaking all time highs for UNIS and a large number of significant deals expected to be announced this year, a cascade of fireworks is likely to ensue in the next several months. Keep an eye out for UNIS as one of the next big names in the biotech pharma space, as it appears things are about to swiftly change for this up and coming company.