- They released the news of another contract, this time for their Ocu-ject ocular drug delivery system. The name of the pharmaceutical company ordering this product is not disclosed, but we know that it's designed for the administration of drugs to treat really big indications like wet AMD and Diabetic Retinopathy. Even minor improvements in the treatment of ophthalmologic indications are well received by physicians, which potentially makes this a huge deal.
- The CEO released a letter that explains the company's current situation in detail. It highlights their focus on R&D and the supply contracts that are being closed with other pharma companies.
It's my understanding that most big pharmas want to be as secretive as possible, although it's certainly a good sign that Unilife and the mystery healthcare company have something in writing.
I also got a response from fellow Seeking Alpha writer Adam Gefvert, who is still short (and hence betting against) the stock. I think the article he published showed a lot of effort and polish, although the view offered on Unilife itself was heavily distorted to fit his trade thesis. The article also makes a number of very strong and pessimistic statements that are (still) not supported by hard evidence. Among these:
Mr. Alan Shortall, Chairman and CEO of Unilife said: "In tune with our commitment to address unmet needs within the pharmaceutical industry, we have created a new, significant drug delivery device category.
…yet another piddly unmet need product by Unilife. As I explained in my last article on UNIS, there is a reason why certain needs remain unmet in the pharmaceutical industry, and, in general, any industry."
This comment is talking about Ocu-ject, which is a precision injector that could play an important role in ophthalmologic indications like wet AMD. I think this comment is especially ridiculous, because this is actually a HUGE indication. There are 200k people diagnosed and treated for wet AMD each year in the United States alone. And yes, these are very serious conditions - wet AMD for example is the leading cause of blindness. Insurance companies are generous with ophthalmologic conditions, which bodes well for high-end delivery devices like Ocu-ject.
Unilife currently has never had a consistent commercial supply customer. It's revenues were under $3 million last year, yet its market cap is now over a whopping $400 million. It would take a significant amount of revenues and profits to support a $400 million market cap. The market is expecting Unilife to be a syringe supplying powerhouse with this valuation.
This comment doesn't make much sense either. Stocks - and especially developmental healthcare stocks, are supposed to be valued based on expectations of the future. Their valuations are built with models that discount and adjust for the value of future revenues and earnings. Future expectations are clearly the main driver of Unilife's valuation, as demonstrated by the trading in November.
All of Unilife's other products, even if they succeed, won't generate much revenue or profits.
This comment states with certainty that Unifill is the only product that can generate large revenues. I have already explained why this is a baseless argument, although the author provides a direct contradiction to this statement in the same article when discussing the market size for auto-injectors. As stated in that article (and this one), the market is currently about $500 million, and it should double by 2016 to $1 billion.
The Roots Analysis estimate of >$8 billion by 2022 that I referenced earlier is explained in excruciating detail in the report itself, although it is not free. The hyperbolic growth of the market is a very real and even probable outcome given that patient compliance rates are being taken more seriously by the medical community. There is also more use and need for long-term drug administration in an outpatient setting, which also drives the growth of wearables.
The Unilife wearable injector is incredibly easy to use, and it is designed to come ready-to-use. Because it's an upgrade to existing pumps in both cost and design, I think it is positioned to lead the way if this market grows to $8 billion in coming years. This is why I actually think the wearable injector could actually become Unilife's biggest product.
From my understanding, most of the investors who bet against the stock are now deeply underwater on their trades. As a result, there is a lot of incentive to drop the share price - ideally before the end of the year (to mitigate losses). The best way to do this would be to cause panic amongst Unilife shareholders, which is possible if they are not objectively well informed about the company.