Unilife Corp. (NASDAQ: UNIS)
With almost all of the S&P 500 plummeting, because of Shanghai’s big 7% sell-off, UNIS still managed to rally. Following news of negotiations and a potential licensing deal with Amgen (NASDAQ: AMGN), Unilife stock rose. Unilife returns were disappointing in 2015 but the impending agreement heralds positive change for 2016. Unlife had previously entertained dalliances with various other potential strategic partnering alternatives, but has now rejected its other prospective suitors in order to get into bed with biotech giant Amgen. The agreement, which should be finalized by the end of January, stipulates that UNIS will provide AMGN with exclusive global rights to its wearable injector devices.
UNIS/AMGN Agreement
The agreement states that UNIS will endow AMGN with the exclusive rights to develop, produce and supply wearable injector devices for use with large volume drug products as well as a 1ml wearable injector designed for use with small volume drug products. Unilife will be entitled to a fixed sum for each device it manufactures for Amgen, based on annual volumes and device features, albeit Amgen will be able to outsource up to 20% of the production, nevertheless it will have to pay a royalty to Unilife on each device.
Unilife will also receive a payment of roughly $15 million in exchange for granting Amgen with the exclusive rights to this technology. Furthermore AMGN has consented to purchase up to 19.9% of Unilife’s outstanding common stock. Unilife has until the end of January to fine-tune all the minutiae of the agreement with Amgen.
Unilife Outlook
Currently UNIS is trading at 65 cents per share, which is far from its high of $4.47 in January 2015, so one might well wonder why the markets are so bullish. There are various reasons why UNIS looks likely to soar much higher. To begin with, should Unilife sign the agreement with Amgen, it will obtain a monumental capital injection which will allow the company to expand its operations. Additionally once the agreement takes place, we should see a substantial purchase of UNIS shares. This will soon send the stock skyrocketing. Moreover with a well-established biotechnology company aiding to steer its helm, Unilife should have access to much needed guidance which will allow it to determine which directions it needs to explore to achieve growth.
Nevertheless UNIS has been tumbling down a steep declivity since April 2015. Therefore it is important to note that whilst the stock should definitely see some delicious gains in the short term, it is likely that in the months to come we will see a correction in the stock price which will fall back to a normalized value.
About UNIS
Unilife is a U.S. based company that designs, develops, manufactures and supplies injectable drug delivery systems. The biotech firm was established in 2002 and NASDAQ-listed as UNIS since 2010.