Unilife attracts potential bidder, hires Morgan Stanley to review strategic alternatives

Unilife ($UNIS) gained on acquisition speculation after a Sept. 2 disclosure that it has received interest from a potential acquirer and will start a process to review its options. The micro-cap has seen its share price tick up, but its valuation remains at only about $175 million.

Unilife's LISA reusable auto-injector--Courtesy Unilife

The maker of injectable drug delivery systems has hired Morgan Stanley to conduct a formal review process of its strategic alternative. Unilife expects these could include a sale of the company, as well as strategic partnerships to out-license its technology.

"We have determined at this time that it is prudent to explore strategic alternatives to determine the best opportunities for enhancing shareholder value," said Unilife chairman and CEO Alan Shortall in a statement. "Unilife management will continue to operate the business as normal during this review process to serve the needs of existing and prospective pharmaceutical customers."

The company's share price has fallen by more than half in the last couple of years as it struggles to ramp up its revenue growth. During the first 9 months of 2015, Unilife reported only $9.7 million in revenues with a whopping $56.1 million operating loss during that period. It has said the company is on track for $20 million in 2015 revenues.

Unilife's Finesse prefilled syringe--Courtesy Unilife

Unilife relies on biopharma partners to buy its injectable products. In January, it signed up AbbVie ($ABBV) to pay $5 million up front and entered into a development and supply agreement to gain exclusive access to the company's Unifill Finesse prefilled syringe and the LISA reusable auto-injector for use with the biopharma's autoimmune treatment. Its strategy is to rely upon eliciting several multi-drug, multi-device strategic partnerships with big biopharma.

The company also has been working on straightening out its financing. At June 30, it had amended its debt agreement with investor OrbiMed to remove a provision that required at $20 million in customer cash receipts during the first half of 2015. Then in July, it disclosed a $45 million commitment from Lincoln Park Capital with $5 million upfront and an additional up to $40 million over the following two years at its discretion. Unilife also secured a $25 million at-the-market facility with Cantor Fitzgerald that it can use.