Unigene Joint Venture Breaks Ground for Global Biotechnology Park in China
   Unigene Biotechnology Co. Ltd. Facilities to Perform Research,
             Development, Formulation and Manufacturing
   First Phase of Construction to be Completed in 2008, Production
             and Validation Activities to Begin in 2009
FAIRFIELD, N.J.--(BUSINESS WIRE)--April 23, 2008--Unigene Laboratories, Inc. (OTCBB: UGNE) reported that ground has been broken for new facilities for its joint venture in the People's Republic of China (PRC). The joint venture, named Unigene Biotechnology Co. Ltd. (JV), will operate facilities for research, development, formulation and manufacturing that will occupy more than 215,000 square feet on land made available to the JV by Unigene's original JV partner, the Shijiazhuang Pharmaceutical Group Corporation (SPG) and its subsidiaries the China Pharmaceutical Group Ltd. (CPG), a publicly traded company based in Hong Kong, and NBP Pharmaceutical Company Ltd. (NBP). The location of the park is in the Shijiazhuang Economic and Technology Development Zone of Hebei Province. Ground-breaking ceremonies were held last week at the site and were attended by provincial and local government officials including the deputy mayor of Shijiazhuang, executives from the partner companies, local dignitaries and more than one hundred guests.
The joint venture is currently owned 55% by SPG/CPG and 45% by Unigene, and initially will focus on manufacturing and R&D of salmon calcitonin and parathyroid hormone and related products for the PRC and possibly other global markets. Construction of the first building, which will ultimately house the research and development facilities of the JV, is scheduled for completion by the end of 2008. The four-story building will contain facilities for molecular biology, fermentation, purification, pharmacology, analytical chemistry, formulation, pilot-scale production of biotechnology products and administrative offices. It is anticipated that construction will begin this summer on manufacturing facilities which will be designed for peptide production and manufacture of oral and nasal final products. Production and validation activities are expected to begin in 2009. All facilities will be designed and operated in compliance with U.S. FDA and Chinese SFDA Good Manufacturing Practice and Good Laboratory Practice as well as international ICH guidelines.
The total registered capital for the JV is $7 million and initially will be supplied by CPG for use by the JV. For its portion of the registered capital, Unigene will license to the JV proprietary manufacturing technology, and be responsible for a cash payment of $1,050,000 which CPG will lend to Unigene for two years from the date of CPG's deposit to the JV on an interest-free basis. In lieu of cash repayment, Unigene may elect to provide additional technologies, secure funds from third parties or reduce its ownership in the JV. In addition to contributions by the partners, the JV will seek government grants and possible third party financing. In consideration of Unigene's provision of technology, its total capital contribution will be capped at an additional $1.2 million and advanced to the JV by CPG for the benefit of Unigene under the same terms as the initial registered capital investment.
The Chairman of the JV will be Mr. Cai Dongchen, Chairman of SPG and CPG and the Vice Chairman will be Dr. Warren P. Levy, President and CEO of Unigene. Unigene's Vice President of Product Development, Dr. James Gilligan, will be one of the five directors of the JV. One Co-President and CEO of the JV will be Dr. Liu Baocheng, Unigene's employee and nominee, and the second Co-President and COO will be Dr. Li Jianqing, SPG's employee and nominee. There are approximately 40 SPG/CPG employees currently designated to work exclusively on JV projects in facilities operated by NBP that produce pharmaceutical products for conditions including pain management and the treatment of stroke. The site is expected to become a major biotechnology center in China.
The initial programs of the JV may involve injectable, nasal and oral formulations of calcitonin and injectable and nasal formulations of parathyroid hormone for the PRC market, as well as global peptide manufacturing. Other programs in blood substitutes, diabetes and osteoporosis are also being considered. Research performed by the JV will aim at the development of new drugs with substantial unmet market demand.
"We believe that this joint venture has the potential to become an important contributor to Unigene's future revenues," commented Dr. Warren P. Levy, Vice Chairman of the JV. "The PRC pharmaceutical market for Western-style pharmaceuticals in 2006 was $13.1 billion, representing year-on-year growth of 30%, one of the fastest growth rates in the world. It has been projected that the PRC will become the world's leading consumer of pharmaceutical products by the year 2020. We believe that Unigene's patented platform peptide manufacturing and delivery technologies are a perfect complement to the extensive financial resources and pharmaceutical experience of our partners, SPG and CPG. With the current cost structure in the PRC, and the current plans of the JV to endeavor to acquire other products that are either already approved in other markets or can be rapidly approved by the PRC health agencies, we believe that the venture can enjoy early financial success."
"The project will introduce advanced biotechnology from Unigene and will be oriented to the high-end global pharmaceutical market," stated Cai Dongchen, Chairman of the JV. "We selected Unigene as our partner because of our long-term relationship and because we believe that Unigene's peptide manufacturing and oral delivery technologies can provide a foundation for the development of state-of-the-art pharmaceutical products for patients throughout the world. The biotechnology industry is among the top national development priorities of the Chinese government in order to transform its growth mode and enhance global competitiveness. Biotechnological output is expected to constitute 5% of China's GDP by the year 2020. The National Development Guidelines (2006-2020) established by China's State Council attaches strategic importance to recombinant peptide and protein technologies."
About Unigene
Unigene Laboratories, Inc. is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Due to the size of the worldwide osteoporosis market, Unigene is targeting its initial efforts on developing calcitonin and PTH-based therapies. Fortical(R), Unigene's nasal calcitonin product for the treatment of postmenopausal osteoporosis, received FDA approval and was launched in August 2005. Unigene has licensed the U.S. rights for Fortical(R) to Upsher-Smith Laboratories, worldwide rights for its oral PTH technology to GlaxoSmithKline and worldwide rights for its calcitonin manufacturing technology to Novartis. Unigene's patented oral delivery technology has successfully delivered, in preclinical and/or clinical trials, various peptides including calcitonin, PTH and insulin. Unigene's patented manufacturing technology is designed to cost-effectively produce peptides in quantities sufficient to support their worldwide commercialization as oral or nasal therapeutics. For more information about Unigene, call (973) 882-0860 or visit www.unigene.com. For information about Fortical, visit www.fortical.com.
About SPG
SPG is one of the leading pharmaceutical companies in China. Through its activities and the activities of its many subsidiaries, it produces pharmaceutical products for the Chinese market and bulk pharmaceutical products that are incorporated in finished products sold throughout the world. It is one of the world's leading producers of vitamins and antibiotics, producing 30,000 tons of vitamin C and 10,000 tons of penicillin. It is the world's largest producer of 7-ACA, an intermediate in the production of the cephalosporin antibiotics. SPG was acquired last year by Lenovo Holdings in a transaction that will provide the company with capital of 5 billion RMB over 5 years.
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