Unigene Enters Joint Venture for Osteoporosis Drug

Unigene (UGNE.OB) will establish a joint venture in China with Shijiazhuang Pharma that will use a biologic process to produce Fortical, a nasal spray formulation of calcitonin salmon indicated for osteoporosis. Currently, Unigen employs chemical synthesis to manufacture the drug. According to Shijiazhuang Pharma, the biologic process, using genetic fermentation technology, is much more efficient.

Unigene and Sjihiazhuang will each invest $15 million in the JV. The goal is to produce 70 million calcitonin salmon injections each year and 4 million calcitonin salmon nasal sprays. At present, Fortical is available only as a nasal spray. The value of the production is expected to reach nearly $100 million, with about half the product exported from China.

Those are lofty goals. In the first nine months of 2007, Unigene recognized just $13.6 million from sales and royalties of Fortical. Overall, Unigene’s revenues jumped from $2.6 million in the first nine months of 2006 to $17.4 million during the same period in 2007, so Fortical has found an expanding market. Fortical was approved for use by the FDA in August 2005. Still, Fortical is selling at only about one-fourth a $100 million annual run rate.

Unigene licensed US rights for Fortical to Upsher-Smith Laboratories, the worldwide rights for its oral parathyroid hormone [PTH] technology to GlaxoSmithKline (GSK) and worldwide rights for its calcitonin manufacturing technology to Novartis (NVS).

The new JV expects to begin production of Fortical by the end of 2008. It will also establish a biotech development platform to develop and commercialize other biotech drugs.

Disclosure: none.