Unilife Corporation (NASDAQ:UNIS)
Annual Shareholders Meeting
November 21, 2013 3:00 pm ET
Slavko James Joseph Bosnjak - Chairman, Chairman of Nominating & Corporate Governance Committee, Chairman of Compensation Committee, Member of Audit Committee and Chairman of UMSL
Alan D. Shortall - Chief Executive Officer, Executive Director, Member of Strategic Partnerships Committee and Chief Executive Officer of UMSL
Christopher Naftzger Esquire - Chief Compliance Officer, Vice President, General Counsel and Corporate Secretary
Slavko James Joseph Bosnjak
Good afternoon, ladies and gentlemen, and welcome to the Annual Shareholders Meeting of Unilife Corporation. I would like to welcome everybody this afternoon, and thank you for coming and for your continued support. Seems to me it was only a couple of months ago that I was up here doing this same job. And here we are 12 months later, and we can't believe how much time has gone by and how quick -- how fast it moves. Well, so today's -- my name is Jim Bosnjak, I am pleased to see you all here, and thank you for your interest and support.
I want to first introduce my fellow directors, all of whom are standing for reelection to the board meeting today. Alan Shortall; Bill Galle, second from the left; John Lund; and Mary Kate Wold. Jeff Carter, who's unable to be here with us today. He's in Australia. He sends his apologies. We also have with us today several officers of the corporation. I would like to introduce each one of those. Dr. Ramin Mojdeh, Chief Operating Officer; Chris Naftzger, Vice President, General Counsel, Corporate Secretary, Chief Compliance Officer. On my right, we have Richard Wieland, the Executive Vice President, Chief Financial Officer; Dennis Pyers, Vice President and Controller; Mark Iampietro, Vice President of Corporate Quality and Regulatory Affairs; and Stephen Allan, the Vice President of Marketing and Communications.
We will entertain questions at the end of the session, and please take opportunity during the break to talk to the executive of Unilife and to the directors, as you feel fit. And if you have any criticisms that you would like to. Also present are our auditors, KPMG, Matt Doyle, and I'd like to welcome him as well. I am sure, as many of you know, Unilife is a much different company today than when I became Chairman many years ago. In the strong management of Alan Shortall, Unilife has evolved from a small promising start-up company to a leader in a multibillion dollar global market for injectable drug delivery systems. It has been my absolute privilege for me to work with Alan and other members, it's not easy for me to say this, but anyway, and other members of the board, in establishing Unilife. Not just as a game-changing company it has become today but as a force to be reckoned in the health care industry for many, many years to come.
With this said, I have recently decided that for both personal and professional reasons, the time is right for me to step down as Chairman of the Board of Unilife. While this was a difficult decision for me and it still is, I might add, I believe it's the right decision for me and ultimately, for Unilife.
Going forward, I will assume the role of Deputy Chairman and Lead Independent Director and pass along the Chairman seat to the person that my fellow board members unanimously believe is best qualified to meet the demands of the office and that is Mr. Alan Shortall.
Alan, I congratulate you in this process, and thank you for your continued support. Alan and I and the board would like to thank your unparalleled commitment to Unilife and its shareholders. And I am certain that you will help govern this great company with the same enthusiasm, tenancy and foresight that you have demonstrated in your position as CEO.
With that, I would like to give the floor to the man of the hour, Mr. Alan Shortall, Unilife's Chairman, Chief Executive Officer.
Alan D. Shortall
Thank you. Thank you, Jim. So as they have pointed out, I'm actually taking being now the Chairman and we have a board meeting after this meeting. So just to make sure everybody understands that. So thank you, Jim. And this is difficult for me also because Jim has been a tireless supporter of me in building this company and the vision that we took. And he was unwavering in the support and never questioned -- he questioned me many times, but always listened and always helped me implement and execute.
For those of you who have been supporters of Unilife since our early days in Australia, it will come as no surprise that Jim's recent decision as to step down Chairman of the Board was an emotional one for me personally. As Jim and I have known each other personally and worked together tirelessly to accomplish what we believe are great things. I think I speak for everyone at Unilife, including the other members of the board, when I say that we were lucky to convince Jim to remain with us as Deputy Chairman and Lead Independent Director. I would also like to thank the members of the board for putting their confidence in me. And to use Jim's words today, I really do feel privileged, and I'll do everything in my power to ensure that I carry out the role with integrity in the best interest of the shareholders.
While the working dynamic between Jim and I will be changing to a certain degree, I believe that the board's decision to appoint me Chairman will have some clear near-term benefits for Unilife and its shareholders. As many of you know, I have been an active participant in the negotiations of most, if not all, of the cornerstone contracts that we have recently announced. These negotiations are intense and time-sensitive. And in every single case, they are held at the highest levels of management on both sides of the table. It goes without saying that many of our newest customers, Sanofi, MedImmune, Hikma, to name but a few, are nothing short of giants in the global pharmaceutical industry. And I fully believe that Unilife, given the business that we have already locked in today and the numerous customers in our pipeline, will soon be a giant in our own right. I truly believe and the board agrees, that my assumption of the role as Chairman and CEO can only help us in our current and future negotiations. On that note, I think it's an appropriate time to announce also that Dr. Ramin Mojdeh today is promoted to the new role of President and COO. Ramin has been a driving force behind our rapid ascend to the top of the drug delivery systems business. And his work ethic, experience and leadership have been instrumental in our success at the negotiating table. Thank you, Ramin. Congratulations. This is very well earned, and none of us have any doubt that you'll do the position proud. With that, let's get the official program started.
This is the annual stockholders meeting of the corporation. Only stockholders of record on the first of October 2013 or the duly authorized representatives are entitled to participate in the affairs of this meeting. There will be no other directors properly nominated Messrs. Shortall, Carter, Galle, Lund and Ms. Wold, and I are the only nominees for election as directors.
The Board of Directors has properly submitted Proposal 2, the ratification of KPMG as the corporation's independent registered public accounting firm for fiscal 2014, and I declared that proposal is before the meeting.
The Board of Directors has properly submitted the Proposal 3, the advisory note regarding the approval of compensation paid to certain executive officers, and I declare that proposal is before the meeting.
The Board of Directors has properly submitted Proposals 4 through 8, the approval of demands of 105,000 securities to each of the 5 nonemployee directors in consideration of their respective service as the director of the corporation on the terms and conditions set forth in the Proxy Statement, and I declare that each of these proposals is before the meeting.
The Board of Directors has properly submitted Proposal 9, the approval of a grant of 52,500 securities to William Galle in consideration for his past service as director of the corporation on the terms and conditions set forth in the Proxy Statement, and I declare that proposal is before the meeting.
The Board of Directors has properly submitted Proposal 10, the ratification of the issuance and sale of -- by the corporation of 3,512,153 shares of common stock under the Controlled Equity Offering Sales Agreement that we entered into with Cantor Fitzgerald. And I declare that proposal is before the meeting.
The proxy committee composed of Messrs. Naftzger and Wieland, appointed by directors, will vote all shares that are nominated by the proxies as directed on the proxies unless any stockholder specifically wishes to withdraw his or her proxy and record the vote in person over a ballot. Any stockholder of record on the 1st of October 2013 who is present may now hand in a proxy card or request a ballot to vote in person. Please raise your hand if you need to register your vote in this manner.
The polls are now closed for the voting of this meeting. Mr. Naftzger, is the quorum present?
Christopher Naftzger Esquire
Mr. Chairman, preliminary count show that at least 59.7% of the total outstanding shares entitled to vote are represented by person or in -- by proxy.
Alan D. Shortall
Since the quorum is present, the meeting is open for business. Mr. Naftzger, was the notice of the meeting properly mailed?
Christopher Naftzger Esquire
Yes, it was. And I have an affidavit to that effect that is available for any stockholder to inspect.
Alan D. Shortall
The documents will be filed with the minutes of this meeting. A committee of inspectors and tellers has been appointed as follows: Deborah Karlak from the corporation and Robin Mayo [ph] from Computershare Investor Services, the corporation's transfer agent. This committee is now assembled to account the stock represented at the meeting and the votes cast on the matters to come before the meeting. Before we read the votes, Alan Shortall, that's me, will update you on the state of the corporation. Before we opening the meeting for questions and comments, I'd like -- sorry, okay, so that's my first mistake as the Chairman. Okay.
So, this now the CEO presentation. I have said that we are customizing devices that will enable pharmaceutical customers to build a brand and extend product life cycles. We've shown that with Sanofi and our Unifill supply contract for Lovenox. I have said we are addressing multiple unmet needs for injectable drug delivery systems. We've shown that with the Hikma contract and products such as the Unifill Nexus to enhance the delivery of generic injectables. I have said that pharmaceutical customers will leverage our game-changing products to differentiate their drugs from competitors and build market share. That's exactly what the CEO of Hikma said in their press release yesterday. I have said that we are leading our competitors in some of the largest, fastest-growing sectors of the $12 billion market for injectable drug delivery systems. We've just proven that with our long-term agreement with MedImmune for the use of our wearable injectors.
I have said that we are in a unique strategic position, where we are becoming intertwined with our customers in the $200 billion market for injectable drugs. I do not believe that this has been yet recognized by the market. That strategic position is extremely valuable.
I have said that Unilife has a commercial pipeline that will make us one of the largest players in this industry. We've proven that with our last 2 Unifill contracts. When combined, we are instantly positioned to become the second-largest provider of prefilled syringes in the world. And we're only just beginning.
I've said that we have a commercial pipeline that is teaming with pharmaceutical and biotechnology companies. Now that you've seen a few deals come up, you can start to extrapolate the value that we have created. In my opinion, I do not believe the market fully understands the power behind our business model. We're unlike any other company in the medical device industry. Don't make the mistake of pigeonholing us as a medtech company. The financial opportunity that we have created is more like a biotech company that has developed a pipeline of blockbuster drugs.
I have said that we have passed the inflection point. I believe the recent series of deals demonstrated that clearly. So I suggest that while some things take time and the path to success is never a straight one, it's hard to argue with the results. So I therefore suggest you pay close attention to my business update today. I have said that we are -- that we we're -- are game-changers, and we are, not just our technology, but in the way we operate our business. There are 2 key requisites to be a game-changer and redefine the market like Apple or Amazon. You must create a paradigm shift. That's exactly what we do. Also, either save time or save money. And we do both, but we also save lives with our devices. We create safer, simpler delivery systems that save time, reduce health care costs and increase revenue for our pharmaceutical customers. We are game-changers.
Each of these recent contracts with Sanofi, MedImmune and Hikma is a cornerstone deal for Unilife. Given that we expect to generate hundreds of millions of dollars in future revenue of every one, we could build a profitable business on any single one of those deals. But we're not here just to be a profitable company. My belief is any fool could now run the Unilife profitably today as it is. But I am committed to making Unilife the biggest and most successful supplier of injectable drug delivery systems in the world. And it's not a job for me. It's a mission.
I have also said that I have a full hand of aces. And I said I will make tongue-in-cheek. But as you can see, I've played a few, and I'm still sitting with a full hand of aces. This time last year, I said that there would be up to 12 deals. More deals are coming by the end of this year. But I'm relinquishing my responsibility of having to deliver exactly 12. We've got more coming. Not one deal that I said we'd have this year has been lost. They're all in process. And I'm pushing hard to get them out and they will be delivered. Some may spill over to the new year, and I'm not making excuses, I'm not in control of the process but they're real close and they're underway. And you're going to see a continuous flow of deals going forward because we build these deals one over one, one over the other, we're building sequential revenue year-over-year. And our analysts are going to be able to look at 10 and 15 years and predict 10 or 15 years out what our minimum revenues are going to be.
But here and now, I am shifting the focus away from the number of deals, as I said. The focus is on the value of every deal that we put in place. It's the quality of our deal that matters. Suffice it to say, our commercial pipeline is large and growing, as I said. I expect a steady stream of additional, high-quality deals from here on. It's often difficult to keep shareholders updated as much as possible on what's going in -- going on in our commercial pipeline. We are usually restricted due to confidentiality of the contracts with our customers. Also bear in mind that we are in continuous negotiations with all our pharmaceutical customers. And talking about pending deals would be showing our hand to the competitors. And would more than likely expose us to leaving money on the negotiating table. We don't leave any money on the table. So by disclosing terms of one deal will tip off a customer that we're negotiating with and minimize the value of the deal we're negotiating. We won't do that.
Talking about pending deals, as I said, we'll be showing our hands to our competitors. So while elaborating more about the status of programs and agreements that might make my life easier with investors, I will never do it for the prudent business reasons I've just said. The road from here to global leadership will not come without future obstacles but I think we've demonstrated that we are tenacious. And that we're winners. We never give up. We never accept defeat. Like a street fighter, every time we get knocked off our feet or even get a bloody nose, we just dust ourselves off and get straight back into the fight, stronger and wiser. My confidence in our success is based upon a number of competitive strengths and large market opportunities. And it's those strengths and opportunities that I'd like to focus on in the business update today.
First of all, take a look at our product portfolio on the screen. Behind, you will see 6 distinct technology platforms, not products, technology platforms. Our prefilled syringes, reconstitution delivery systems, auto-injectors, wearable injectors, ocular delivery systems and novel drug delivery systems. No other company can rival Unilife when it comes to serving the broad injectable drug delivery needs of a pharmaceutical customer. No company in the world has such a broad, diverse portfolio of significantly differentiated drug delivery systems. And we have become the preferred partner for many pharmaceutical customers. We have everything they need and we give them everything that they desire. Each of our product platforms is a game-changer that will redefine its target market sector. So let's start with the humble Unifill platform of prefilled syringes.
Why don't I just show you the screen? I just want to show you the display case that was given to me by Jyoti Gupta last week, who is the Business Manager -- General Manager of this platform. That's our platform of Unifill products. And many of those are in serious play, including the devices we've done with Hikma and Sanofi and there are many others that are underway. The prefilled syringe market is valued at more than $2 billion and growing at more than 10% per annum. There are a few large segments in the prefilled syringe market. These include antithrombotics, vaccines and generic injectables. Okay, 3. Antithrombotics, vaccines and generic injectables.
As I will discuss next, we've aligned ourselves with the market leader for antithrombotics. And we just aligned ourselves with one of the largest and fastest growing leaders in generic injectables. That's 2 out of 3. We've just taken 2 very big chunks out of the prefilled syringe market. And as I said earlier, we're just getting started. And we're on our way already to being the second largest supplier of prefilled syringes in the world.
Each product configuration under our Unifill brand has been developed in response to specific customer needs. We can address the needs of every prefilled drug, vaccine and biologics that is either on the market or in clinical development. Our products make conventional prefilled syringes and their clip-on safety products obsolete. They can stream -- our pharmaceutical customers can streamline, filling, packaging and shipping processes. They can minimize depths of use. They can virtually eliminate the risk of infection from needlestick injuries. They can drive user preference towards a drug brand. This platform, it is one-of-a-kind, and it is best-in-class. There is a long list of pharmaceutical customers pursuing our Unifill prefilled syringes. As you have seen, giant supply contracts for Unifill products are now beginning to emerge from our commercial pipeline. In September, we signed a long-term commercial supply contract with Sanofi for the use of our Unifill syringes with Lovenox, the world's largest selling prefilled drug. The contract can extend out to 2024, with minimum unit volumes after an initial high-unit volume ramp program of 150 million units per year. As Sanofi said in a recent biopharma article, this is their spokesman, "This deal will bring added value to our customers and demonstrates an evolution in safety device syringes." This is a prime example of why we have now passed the inflection point. Customers fully recognize the value that we bring to the table, and it's all about value. We will continue to expand our wonderful relationship we have established with Sanofi. We will continue to bring value to them and their customers.
Now, let's focus on this week's big news, our entry into the $11 billion global market for generic injectables. This is one of the fastest-growing sectors of injectable drug market. And it's also one of the largest in the U.S.A. In the U.S.A. alone, 1.5 billion doses of generic injectable drugs are used every year. At least 7 out of every 10 patients who go into a hospital will receive a generic injectable. This market is rapidly converging over from vials to prefilled syringes for host of reasons. We've been working to address some very significant unmet needs for the delivery of generic injectables in prefilled syringes. In the last few years, the FDA has highlighted some significant safety concerns about conventional prefilled technology used with needleless luer access devices into an IV line. These concerns include the spontaneous disconnection, leakage or blockage of medication and the breakage of the glass syringe at the connection point. The market has also been frustrated by the lack of a prefilled syringe that offers universal attachment to any ISO standard needle hub or IV connector. We've solved these unmet needs with the development of products such as the Unifill Nexus and the Unifill Allure.
Compared to biologics, the market for generic injectables is a relatively price-sensitive market. Who would have ever believed that Unilife would have taken a major position in this low-value market space with a premium quality device? Again, it all comes down to the value that we can put on the table for our customers. So as we have announced this week, we have signed a major 15-year supply contract with Hikma to enhance the delivery of generic injectables. Hikma is one of the large -- 3 largest suppliers of generic injectables in the U.S. by volume. And they are one of the fastest-growing pharmaceutical companies in the world. Hikma will use products from our Unifill platform including the Unifill syringe and the Unifill Nexus for an initial list of 20 generic injectables. Minimum purchase volume requirements under the contract will quickly rise to 175 million units per year -- 175 million units per year minimum. This is after a very rapid, high-volume ramp program. We expect to be supplying devices to Hikma next year that will be used for commercial purposes. In addition to device sales, Hikma will pay us upfront and milestone-based payments totaling $40 million over the next 2 years. We expect $20 million of that will be paid between now and the end of next year, and the other $20 million will be paid the following year. A quote from Hikma CEO in their press release is insightful regarding the strategic intent of our products. He said, "We look forward to leveraging Unilife's innovative platform of Unifill syringes to differentiate our injectable products and to increase our market share." That's the message I've been saying for the last 3 or 4 years. Is that not a perfect description of the value proposition that we represent to our customers. We look forward to a part of Hikma's -- to be a part of Hikma's rise to becoming the largest supplier of generic injectable products in the U.S. and the world.
So let's turn to another fast-growing market sector with major unmet needs. That's the reconstitution and mixing of liquid and dry drug combinations. This is a major untapped area of -- for injectable drug delivery. There are hundreds of biologics, drugs and vaccines that could benefit from 1-step reconstitution and intuitive delivery. The supply contract we signed with Biodel earlier this year for the rapid reconstitution of glucagon is a perfect example of these unmet needs. But let me talk about a new addition to our reconstruction platform, and I don't think any of you have seen this. This is the EZMix Prodigy. So I'm actually going to -- I'm going to actually change this pace a little bit, and just stop the board and let me speak in. Many of you have probably seen this device. This is the EZMix for the reconstitution. So there's powder here and there's liquid here. So instead of normally a 14- to 18-step process for a patient to reconstitute a powder and diluent, with our device, the patient just pushes it out of that, it's reconstituted and then complete the injection stroke and you get automatic and controlled retraction. But now, the prodigy, which is also for reconstitution and could be used for different -- in a different setting for different types of biologics. Now I just want to show you -- I'm going to show you this device and how it works. The size is easier for you to see. But we actually do it down to that size. Okay? So what I'm going to show you here is actually a magic trick. And I've got to tell you, I've no aces up my sleeve, okay? Just to go in it. I'm going to put down my hand full of aces here before I do this. And I want to show you, most of you standing in the front, you can see here, there's a yellow liquid in the bottom here and then there's a seal. And then you've got blue liquid, okay? So imagine that, that yellow is powder, it won't make any difference. And in fact, this can be used for reconstituting liquid to liquid or powder to liquid. So watch this magic trick. I pull on the plunger, just like it was loading a syringe. And you see the change in color? I've reconstituted the 2 together in one fell swoop. Magic trick. And no change. It's just like loading a normal syringe and it's reconstituted. Now this would be used, say, for a high-volume dose into an IV line. So for that sake, I'll just add it to that. And then to inject, all I do is that. You can't get easier than that. That is a magic trick. We have many pharmaceutical companies that are significantly vying to get access to that product and to the EZMix as well with built-in safety. That gives you an idea how prolific we are in terms of meeting the unmet needs. This is inherent of what we've been -- of what we're doing. So that's the Prodigy.
The EZMix Prodigy has quickly captured the attention of many pharmaceutical companies. I look forward to sharing more details about the rapid progress that we are making for the EZMix Prodigy in the near future.
So in regards to auto-injectors. Unilife is the only company to offer a full platform of disposable and smart, reusable systems with true end of dose indicators and needlestick-safe disposal. I expect many customers who are pursuing Unifill syringes for use with target biologics will also be customers for our auto-injectors. In particular, I'm excited about how rapidly the LISA smart reusable auto-injector is being adopted by most of those customers.
Now, I want to talk about one of the largest market opportunities out there. And I'd really, really encourage you to pay attention with the numbers I'm going to say to you now. This is the market for wearable injectors. This is a brand-new market. There is currently no drug commercially available in the wearable injector in the world today. And yet, this market is estimated to be worth over $8 billion within 10 years, from 0 to over $8 billion. And Unilife is in the lead position in this market. As I said, this is a new market segment for injectable drug delivery. Indeed, there is no drug currently available, as I said, in the wearable injector. And that's about to change now in a very big way. Pharmaceutical companies have been investing tens of billions of dollars to develop a new generation of biologics to treat a range of chronic diseases. These are high-value drugs, high-performance, that are being targeted for subcutaneous self-injection by patients outside of health care facilities. However, the dose volume is too large to be injected with a handheld device, such as a prefilled syringe or an auto-injector. These drugs need a disposable device that can be comfortably worn by the patient for minutes or even hours, while the dose is slowly injected into the body. A recent market research report by Roots has identified over 250 drugs from more than 100 pharmaceutical companies that are expected to require a wearable injector. In 10 years time, you will all use them probably, or if not, your family members will be regularly using them. They're going to be a part of everyday drug delivery. It's estimated that more than 350 million wearable injectors will be sold annually by 2024, over 350 million a year, with an average selling price of between $20 and $35 per wearable injector. Do the math. 350 million by $20 to $35. This equates to a market sales of more than $8 million by 2024. Over the coming decade, wearable injectors will, as I said, become a part of everyday life, and it's the fastest sector the growing market. Unilife is actually in the lead position to be the largest player for wearable injectors. In the past year, we've participated in extensive due diligence and evaluation programs by several pharmaceutical companies. This due diligence often involves more than 30 competitors, and we are pleased to advise you that after this rigorous due diligence and evaluation period, we've now been selected by multiple customers. Multiple customers. Multiple programs are now underway while contracts are being finalized.
There are multiple reasons why Unilife is blitzing the competition. But let me give you a few reasons. Our ready-to-go wearable injectors will be supplied by our customers to patients prefilled, preassembled and ready to inject. It is a critical requirement for a drug device combination product to be easy to use by the patient. It must be simple and easy. With our wearable injectors, a patient does not have to do anything extra after taking it out of the packet except they just feel, stick and click. And you cannot get any simpler than that. It's highly intuitive. It requires minimal training, if any, and it's designed to maximize patient comfort during the period of those delivery. Furthermore, our wearable injectors require no terminal sterilization, and that's an extremely important benefit. Why? Because this is a major factor for pharmaceutical companies working with highly complex biologic drugs. That's because terminal sterilization can damage the molecule, and our customers want to avoid terminal sterilization. So to my knowledge, we are the only wearable injector that can meet these and other pharmaceutical requirements. Simple patient user interface and no terminal sterilization. Any of our competitors, they want easy user -- use, they've got to terminally sterilize it. If you don't want terminal sterilization, it means the patient's got to fill the device at the time of use. It's complex and it usually will fail user studies. So it's a significant step ahead of any of our competitors. So furthermore, our IP around this is a major competitive advantage. It's also our expertise. We have assembled the best expertise in the world. And we have resourced our wearable injectors team with 30 of the best pump experts in the world. They boast deep scientific knowledge in all aspects of device development and intimately understand the requirements of our pharmaceutical customers. We have been advised by several pharmaceutical companies that we have been selected for the wearable injectors programs. It's not appropriate to provide specifics about the requirements of anyone customer, but I do think that it's important to provide you with some key criteria that would help you to define, in particular -- that will define a typical customer relationship for wearable injectors. So this is just a typical customer. Typically, each customer will be targeting wearable injectors for use with a portfolio of between 3 and 8 biologic drugs. Most of these drugs are either in Phase III or Phase IIb. About 80% of biologics entering Phase III will get approval. So minimal regulatory risk. Some other target drugs are already commercial. The expected commercial unit volume for each drug is between 2 million and 5 million units per year. In each case, we will customize a wearable injector from our platform to address specific requirements of each molecule, such as the viscosity, the rate of delivery, that dose volume, the dose rate, as well as other patient requirements. The average length of these customization programs prior to commercial launch is between 18 and 36 months. Typical payments to support these customization programs are between $3 million and $6 million per year per molecule. So if we're working for 2 or 3 or 4 or 5 molecules per particular customer, we get paid for each customization of each molecule.
High-value device sales for use in clinical trials or stability studies will generate additional revenue during this period. Because our devices will be part of the label for regulatory approval, each program represents a long-term customer partnership that can extend 15 to 20 years. So when you see the recent supply agreement we've put in place with MedImmune, that's the start of possibly a 15- to 20-year supply relationship -- customer relationship.
So let's break it down. Unilife has been selected by several of the leading pharmaceutical companies for multidrug wearable injectors programs. Before each of these late stage drugs go commercial with our devices, the customer will be paying us for the customization programs. As the market research report I referred to earlier suggests, the average selling price for wearable injector is between $20 and $35. These are single-use devices. So as we continue to lock in long-term customization and supply agreements, our business becomes highly predictive with recurring and accelerating revenues. On average, we expect each drug from each customer to generate $75 million to $100 million or more per annum. So let me say that again. On average, we expect each drug from each customer to generate between $75 million and $100 million per year or even more. Assuming 4 to 5 drugs per customer are approved, and there are several customers in total, then our business opportunity for wearable injectors could go to billions of dollars per year. And as I said earlier, with the due diligence process carried out by MedImmune and the Sanofi [ph] supply contract after 2 years of due diligence, and we beat our competition hands down. We are in the lead position in this $8 billion market. So when you consider that our overall business model can generate operating margins north of 40%, as well as the strong underlying growth of biologics, it is hard to refute that there is significant unrecognized value in our wearable injector business, let alone our entire business. To be clear, that 40% I'm talking about, it's operating margins. That's not gross margin, it's operating margin. And that's on contracts that are locked in for 10, 15 and 20 years. So let me put it in another way. Where else do you get an opportunity to sign 10-, 15- and 20-year partnerships with pharmaceutical customers that will never have a bad debt problem and which locks the competition out for 10, 15 and 20 years? None. You can't take my business away from me. This is a very, very unique opportunity. I could make a strong case that our IP alone for our wearable injectors is worth more than the current market capitalization of our entire company. In my opinion, virtually none of the value of our wearable injector business has been factored in to our market capitalization yet.
So the first wearable injector programs to emerge from our commercial pipeline is MedImmune. MedImmune is the global biologics R&D arm of AstraZeneca. MedImmune has one of the richest biologic portfolios in the industry, with 120 large molecule drugs in development. This equates to half of AstraZeneca's total clinical pipeline. Under this agreement, we will customize and supply devices from it's platform of wearable injectors for use with target molecules. Several drugs may be selected for use with Unilife's wearable injectors. As with other wearable injector customers, Unilife was only selected after an extensive evaluation process. We expect -- having said that, I don't think that reads right because I'm not aware of any other wearable injector has been selected by any other pharma that has been locked in for supply. We're the first and only one that's locked in a full-supply agreement, so I want to clarify that. We expect revenue to begin being generated in the first quarter of fiscal 2014. So it's already started.
Last but not least, there are our device platforms for ocular delivery systems and novel delivery systems. I think we will need to leave a detailed discussion about these platforms for another day. I'm running out of steam. But suffice it to say, these products have significant traction with many pharmaceutical companies. We look forward to sharing some news with these activities in the near future. Unilife now has well over 100 granted patents. 100. And more than 200 more in process. These patents provide the basis for nearly $1 billion in annual revenue on the basis of contracts signed to date alone. All of these investment in R&D and product innovation has created an amazing commercial pipeline. It takes time for deals to get completed and the marriage from the pipeline. But you are now starting to see the value of what we have created. From here on in, you can expect a steady flow of new customer contracts. I believe yesterday's press release announcing our entrance into the multibillion dollar market for generic injectables under long-term supply agreement with Hikma is transformative for Unilife. Together with other announcements made in the last few months, including Sanofi and MedImmune, this latest agreement with Hikma solidifies our financial future and instantly positions us as leader within the multibillion dollar fast-growing market segments for many years to come. If we were never to sign one other contract, we have already locked in billions of dollars of future revenue. As I said at the start of this presentation, given what we have today, we could cut back our investment in R&D and say, "You know what, we've got enough products. We don't need anymore. Let's cut back our R&D." And we'd have a very profitable business than what we have now. But that's not what our game plan is. That's not what my mission is. Just like Apple, just like Amazon, we will continue to invest in our business growth and continue to drive home the enormous advantage that we have established over our competition. We're going to drive it and ram it straight home. We won't rest until we have completed our mission of being the largest and fastest growing company for injectable drug delivery with operating margins north of 40%. We can test -- justify such an attractive operating margin because our business model is business-to-business. So our sales and marketing costs will only ever be a fraction of 1%. That's why we can deliver great value for our customers and at the same time, operating margins north of 40%.
Over the coming months, we will continue to build our accomplishments, build our accomplishments -- build upon our compliments -- accomplishments, I like compliments, but accomplishments. I am running out of steam. And we expect most of these will also include upfront cash and recurring payments. That is why Unilife has now passed its inflection point. Moving forward, we expect sequential quarterly growth in fiscal year 2014. Let me repeat that. We expect sequential quarterly growth in revenues in fiscal 2014 and significant annual growth year-over-year for fiscal year 2014. That's annual revenue growth year-over-year beyond 2014. And that wraps up my presentation for today. Thank you for your patience.
Okay. So before opening the meeting for questions and comments, I'd like to explain the procedure -- I thought it was finished. Who wants the Chairman's job? I'd like to explain the procedure to be followed by any stockholder who wishes to be recognized. Only stockholders of record on October 1, 2013 or their duly authorized representatives are qualified to speak. If you have a question or comment, please wait to be recognized, then state your name clearly, state whether you are stockholder of record or holder proxy from a stockholder of record and then ask your question or make your comment. We request that questions or comments be stated in not more than 2 minutes, and I will not recognize any shareholder for more than 2 questions or comments, unless they're compliments, during the meeting.
Are there any questions or comments? None? That was easy. Okay, so we will now consider and vote on the matters set forth in the Proxy Statement. The number of shares voted for each nominee and for each proposal will be displayed on the screen behind me and will be recorded in the minutes of the meeting. With respect to the first proposal, the board has nominated all 6 incumbent directors for a 1-year term expiring at the next Annual Shareholders Meeting.
Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Mr. Chairman, having received votes by over 1/3 of the outstanding shares, the proxy committee votes in excess of 89.6% of the total votes cast for the directors named in the Proxy Statement.
Alan D. Shortall
I declare the nominees elected. They will serve until the next annual meeting of stockholders and until their respective successors are duly elected and qualified. The second manner for action by the stockholders is Proposal 2 in the Proxy Statement, the ratification of the appointment of KPMG as the corporation's independent, registered public accounting firm for fiscal year 2014. Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Mr. Chairman, having received the votes on this proposal by over 1/3 of the outstanding shares, the proxy committee votes in excess of 97.4% of the total votes cast on the proposal to ratify the appointment of KPMG.
Alan D. Shortall
I declare the appointment ratified. The next matter for action by the stockholders is Proposal 3 in the Proxy Statement, the advisory vote regarding the approval of compensation paid to certain executive officers. Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Mr. Chairman, having received votes on this proposal from over 1/3 of the outstanding shares, the proxy committee votes in excess of 85.2% of the total votes cast on this proposal to approve the compensation paid to certain executive officers.
Alan D. Shortall
I declare the proposal approved. The next matter for action by the stockholders is Proposals 4 through 8, the approval of the grant of 105,000 securities to each of the 5 nonemployee directors in consideration for their services to the corporation. Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Mr. Chairman, having received votes on this proposal from over 1/3 the outstanding shares, the proxy committee votes in excess of 71.3% of the total votes cast on the proposals to approve the grant of securities to each of the 5 nonemployee directors.
Alan D. Shortall
I declare the proposal approved. The next matter for action by the stockholders is Proposal 9 in the Proxy Statement, the grant of 52,500 securities to Mr. Galle in consideration for his past service as a director of the corporation. Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Having received votes on the proposal from over 1/3 outstanding shares, the proxy committee votes in excess of 71.7% of the total votes cast on the proposal to approve the grant to securities to Mr. Galle.
Alan D. Shortall
I declare the proposal approved. The next matter for action by the stockholders is Proposal 10, the ratification of the issuance and sale by the company of 3,512,153 shares of common stock under the Controlled Equity Offering Sales Agreement that we have entered into with Cantor Fitzgerald. Mr. Naftzger, how does the proxy committee vote?
Christopher Naftzger Esquire
Mr. Chairman, having received votes from this proposal from over 1/3 outstanding shares, the proxy committee votes in excess of 94.1% of the total votes cast on the proposal to ratify the issuance in sale of the shares by the corporation.
Alan D. Shortall
I declare the proposal ratified. Is there any other business to properly come before the meeting?
And just before we close, I'd just like to say, again, we reiterate that I really appreciate the faith the board have put in me by putting me in the position of Chairman, CEO. And, as I said, I'll work hard as I can to make sure that it's a good one for the shareholders. So if there's no further business, thank you for coming. And I declare the meeting adjourned.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!