BOONTON, N.J., May 14, 2013 /PRNewswire/ -- Unigene Laboratories, Inc. (PINK: UGNE) today announced financial results for the first quarter ended March 31, 2013 and provided a corporate update on the Company's financial status and strategic initiatives.
Ashleigh Palmer, Unigene's Chief Executive Officer, commented, "2013 has been extremely challenging for Unigene. The FDA advisory committee recommendation against calcitonin containing products, followed by an Article 9 sale of our Biotechnologies strategic business unit (SBU) assets to affiliates of Victory Park Capital (VPC), has had a materially negative impact on the Company."
Palmer continued, "Nevertheless, we continue to pursue the limited strategic options available to us. In particular, we continue to try to monetize the therapeutic assets that remain within Unigene, in particular, our oral PTH program, and UGP281. We also recently announced an equity transfer and exclusive license agreement with Nordic Bioscience and its affiliate, resulting in $1.0 million in proceeds that were used to pay down VPC debt. VPC has since re-loaned $500,000 of these proceeds back to us. Our mission going forward is to seek similar opportunities to infuse cash into the Company to maximize our lender and shareholder value."
"However, as previously stated, unless there is a near-term restructuring of the debt owed to VPC and the Company's founders, we will no longer have the ability to continue as a going concern. Regardless of whether VPC and the Company's founders arrive at a settlement to resolve Unigene's debt situation, the $500,000 re-loaned by VPC following the Nordic transaction will only be sufficient to finance the Company through mid-June, 2013."
FIRST QUARTER 2013 FINANCIAL & OPERATIONAL SUMMARYUnigene generated net income of $1.98 million for the three months ended March 31, 2013 or $0.02 per share as compared to a net loss of $3.2 million or $(0.03) per share in the three months ended March 31, 2012. This was primarily due to an increase in the non-cash gain on change in fair value of an embedded conversion feature of $8.93 million, partially offset by an increase in operating expenses of $1.52 million as a result of impairment charges, a decrease in revenues of $1.14 million and an increase in interest expense of $1.65 million.
Revenue for the fiscal quarter ended March 31, 2013 decreased $1.14 million, or 65%, to $614,000 from $1.75 million in the comparable period in 2012. This was primarily due to a decrease in Fortical sales and royalties from Upsher-Smith Laboratories ("USL") due to increased competition in the nasal calcitonin market, as well as to a decrease in licensing revenue. Fortical sales to USL were zero in the three months ended March 31, 2013 as compared to $646,000 for the three months ended March 31, 2012 as USL advanced purchase orders from the first quarter of 2013 into 2012. Due largely in part to the United States Federal Drug Administration ("FDA") advisory committee recommendation on March 5, 2013, the Company has not received and does not anticipate receiving additional orders for Fortical in the near term and has ceased all related production activities.
Development fees and other revenue decreased 46% to $266,000 in the first quarter of 2013 from $494,000 in the first quarter of 2012, primarily due to a reduction in development work performed on behalf of Tarsa Therapeutics. On April 25, 2013, the Company's oral drug delivery assets were acquired by Enteris BioPharma, Inc. an affiliate of Victory Park Capital ("VPC"), via an Article 9 sale pursuant to the Uniform Commercial Code. As a result, the Company will no longer benefit from revenues associated with development work, feasibility studies or the potential related licensing and milestone revenues.
Cash and cash equivalents at March 31, 2013 totaled $353,000, a decrease of $3.46 million from December 31, 2012. On May 9, 2013, the Company announced it entered into an equity transfer and exclusive license agreement with Nordic Bioscience resulting in a payment of $1.0 million. Pursuant to the terms of the forbearance agreement with VPC announced on September 26, 2012, the proceeds received from the transaction were required to be remitted to VPC to be applied to the outstanding senior secured notes. VPC has agreed to re-loan $500,000 of the proceeds to help extend the Company's runway and has indicated a willingness to re-loan the remaining $500,000 of proceeds if an agreement can be reached between VPC, Unigene and the Company's junior lenders, in regards to a possible conversion of Unigene's remaining debt into equity on terms that are acceptable to VPC.
Despite the $0.5 million net cash infusion resulting from the equity transfer and exclusive license agreement with Nordic Bioscience, the Company's financial resources remain limited due to the decline and potential elimination of Fortical sales and royalties and the sale of the Company's Biotechnologies SBU and loss of the associated revenues. As a result, the Company will require additional financial resources in order to avoid the cessation of operations. The Company's ability to capitalize on such potential opportunities is contingent upon, among other matters, its ability to restructure its existing VPC and founders' debt.
FIRST QUARTER HIGHLIGHTS
UPDATES SUBSEQUENT TO QUARTER END
Additional Financial Results and NotesResearch and development expenses decreased $408,000, or 32%, in 2013 to $851,000 from $1,259,000. This decrease in 2013 was primarily due to the capitalization of a significant portion of the research and development expenses incurred in the three months ended March 31, 2013 related to the production of UGP302 materials pursuant to the joint venture with Nordic.
Cost of goods sold increased $1,388,000 in 2013 to $1,636,000 from $248,000. The 2013 charge represents the cost associated with the reduction in the carrying value of certain inventories to zero as a result of the cessation of production of Fortical and the lack of purchase orders from USL. The uncertainty regarding future Fortical production requirements also resulted in asset impairment charges of $675,000 and $309,000, to fixed asset and patent assets, respectively.
CONFERENCE CALL AND WEBCAST
Unigene's senior management team will host a conference call and webcast on May 14, 2013 at 11:00 a.m. ET.
Interested participants and investors may access the conference call at 11 a.m. ET by dialing (866) 543-6403 (U.S./Canada) or (617) 213-8896 (international); participant code 42263674. An audio webcast can be accessed by logging on to the Investors & Media section under the Events tab of the Unigene web site, http://www.unigene.com.
A telephonic replay of the call will be available for two weeks beginning at 1:00 p.m. ET on May 14, 2013. Access numbers for this replay are (888) 286-8010 (U.S./Canada) and (617) 801-6888 (international); participant code 90089598. The webcast replay will remain available in the Investors & Media section of the Unigene Laboratories web site for 30 days.
ABOUT UNIGENE LABORATORIES, INC.
Unigene Laboratories, Inc. is a leader in the design, delivery, manufacture and development of peptide-based therapeutics.
Safe Harbor statements under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements, including statements relating to the Company's path forward in continuing to explore and develop strategic options to protect and enhance shareholder value; Unigene's ability to monetize oral PTH, UGP281 or any other asset; Unigene's ability to infuse cash into the Company; any restructuring of debt; the Company's ability to secure additional opportunities is dependent upon resolving the debt position; and the Company's leadership in the design, delivery, manufacture and development of peptide-based therapeutics. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various risk factors. These known and unknown risk factors include, but are not limited to: the delay in obtaining or the failure to obtain regulatory approvals for our products and the products of our licensees that may generate royalty and milestone payments to us, our ability to achieve product sales and royalties, competition, our dependence on other companies to commercialize, manufacture and sell products using our technologies and our ability to enter into favorable new agreements with such companies, our ability to cut expenses and maintain efficiencies, our ability to enter into new financing arrangements, the ability of our products to gain market acceptance and increase market share, the uncertainty of results of animal and human testing, the risk of product liability and liability for human clinical trials, our dependence on patents and other proprietary rights and the risks associated with patent litigation, dependence on key management officials, the availability and cost of capital, the availability of qualified personnel, changes in, or the failure to comply with, governmental regulations, general economic and business conditions, our history of losses and ability to achieve profitability, litigation and other risk factors discussed in our Securities and Exchange Commission ("SEC") filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "potential," "continue," and variations of these words (or negatives of these words) or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. In addition, any statements that refer to expectations, projections, contingencies, goals, targets or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements and are not statements of historical fact. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements after the date of this release.
UNIGENE LABORATORIES, INC.CONDENSED BALANCE SHEETSMARCH 31, 2013 and DECEMBER 31, 2012March 31, 2013December 31, 2012ASSETS(Unaudited)Current Assets:Cash and cash equivalents
3,813,492Accounts receivable96,06376,255Inventory, net699,872898,042Prepaid expenses and other current assets681,453848,573Total Current Assets1,830,6115,636,362Noncurrent inventory, net--1,063,633Property, plant and equipment, net1,853,8532,651,819Patents and other intangibles, net1,621,9701,920,574Other assets40,51340,513Total Assets
11,312,901LIABILITIES AND STOCKHOLDERS' DEFICITCurrent Liabilities:Accounts payable
731,359Accrued expenses2,149,4362,244,830Accrued interest 17,197,34114,618,402Current portion – deferred licensing revenues1,514,1821,648,515Current portion – deferred gain on sale/leaseback116,760116,760Current portion – capital lease obligations39,55838,566Embedded conversion feature liability16,850,00028,700,000Notes payable – Victory Park, net of discount of $4,030,959 and $5,894,361, respectively43,785,65041,922,248Notes payable – Levys14,437,51814,437,518Total Current Liabilities96,549,341104,458,198Capital lease obligations, excluding current portion17,70627,975Deferred licensing revenues, excluding current portion4,787,8505,050,539Deferred gain on sale/leaseback, excluding current portion486,533515,723Total Liabilities101,841,430110,052,435Commitments and ContingenciesStockholders' Deficit:Common Stock – par value $.01 per share, authorized 275,000,000 shares; issued 95,978,952 shares at March 31, 2013 and 95,586,644 at December 31, 2012959,790955,866Additional paid-in capital117,194,551116,932,088Accumulated deficit(214,648,824)(216,627,488)Total Stockholders' Deficit(96,494,483)(98,739,534)Total Liabilities and Stockholders' Deficit
11,312,901 UNIGENE LABORATORIES, INC.CONDENSED STATEMENTS OF OPERATIONSTHREE MONTHS ENDED MARCH 31, 2013 AND 2012 (Unaudited)Three Months Ended March 31,20132012Revenue:Product Sales$
646,147Royalties84,960348,744Licensing Revenue262,689262,689Development Fees and Other203,573165,628Tarsa Revenue62,550328,075Total Revenue613,7721,751,283Operating Expenses:Research and Development850,5181,258,659Cost of Goods Sold1,635,818246,357General and Administrative1,975,1872,093,172Unallocated Facility Expenses529,250859,113Asset Impairment Charges983,990--Total Operating Expenses5,974,7634,457,301Operating Loss(5,360,991)(2,706,018)Other Income (Expense):Interest and Other Income10,53880,433Interest Expense(4,520,883)(2,867,002)Change in fair value of embedded derivative11,850,0002,920,000Loss on Investment in Tarsa--(650,571)Income (Loss) Before Income Taxes1,978,664(3,223,158)Income Tax Benefit--26,757Net Income (Loss)$
(3,196,401)Net Income (Loss) Per Share:Basic$
(0.03)Weighted Average Number of Shares Outstanding:Basic 95,950,23495,314,825Diluted507,998,04595,314,825
|SOURCE Unigene Laboratories, Inc.|
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