Unigene Laboratories, Inc. (OTCBB: UGNE) a leader in the design, delivery, manufacture and development of peptide-based therapeutics announced first quarter financial results for the period ended March 31, 2011. The Company highlighted significant progress achieved in the first quarter with the execution of its turnaround strategy.
First Quarter 2011 Financial Summary
Unigene announced net loss of $0.07 per share for the three months ended March 31, 2011. Cash at March 31, 2011 was $8.2 million. The Company's current cash position is expected to be sufficient to fund its business operations into the second half of 2012.
First Quarter 2011 Highlights
- Validated oral peptide drug delivery technology with positive top-line Phase 3 results from Tarsa's ORACAL trial of oral calcitonin;
- Dosed first patient in Phase 2 oral PTH study for the treatment of osteoporosis in postmenopausal women; and
- Accelerated the development of lead proprietary anorexigenic peptide UGP281 for obesity.
Subsequent to Quarter End Highlights
- Increased support for Tarsa in preparation for oral calcitonin NDA submission with $1.5 million investment; and
- Completed patient enrollment in Phase 2 oral PTH study for the treatment of osteoporosis in postmenopausal women and receipt of $4 million milestone payment from GSK.
Ashleigh Palmer, Unigene's President and CEO stated, "We have made significant strides advancing our strategy during the first quarter of this year, and I am thrilled with the progress we have made with our Biotechnologies and Therapeutics strategic business units. The positive top-line Phase 3 results of oral calcitonin reported by Tarsa not only validate our proprietary oral delivery and manufacturing technologies, but we believe also de-risk our ongoing development programs. During the quarter we made tremendous progress with our Phase 2 oral PTH program licensed to GSK, and the flawless execution of this study remains a priority throughout the rest of the year. We believe we have laid the foundation for multiple game-changing events over the course of 2011 and have more confidence than ever that we are positioned to realize the full value and potential of the new Unigene for all of our shareholders."
Unigene Biotechnologies Overview
The Company is expanding and exploiting its industry-leading Peptelligence(TM) platform of peptide oral drug delivery and manufacturing assets, expertise and capabilities to establish a robust portfolio of strategically partnered opportunities. The Company's business-to-business marketing and robust business development initiatives are expected to generate near-term revenue from ongoing and additional feasibility studies and service fees and establish a solid foundation for potential high-value milestone and other payments over the next 12-18 months ensuring the maximization of shareholder value in the long-term.
Unigene has already received strong validation of its recombinant manufacturing technology by way of the Company's out-licensing of its proprietary process to manufacture the active pharmaceutical ingredient in Novartis' oral calcitonin product candidate currently in Phase 3 clinical trials for osteoarthritis and osteoporosis. Unigene expects that Novartis will announce Phase 3 results in the second half of 2011.
Unigene Therapeutics Overview
Unigene is focused on advancing its own pipeline of novel, proprietary peptide product candidates focused on metabolic disease and inflammation. The Company expects to report several key events with its late-stage product development programs throughout 2011.
On December 10, 2010, Unigene entered into an amended and restated exclusive worldwide license agreement with GlaxoSmithKline (GSK) to develop and commercialize an oral formulation of a recombinantly produced experimental parathyroid hormone (PTH) analog for the treatment of osteoporosis in postmenopausal women. Under the terms of the amended and restated agreement, Unigene is responsible for the conduct of the Phase 2 study. The Company received an upfront payment of $4 million to cover costs associated with the Phase 2 study, and also is entitled to receive further payments of up to $142 million based on the achievement of regulatory and commercialization milestones. In addition, Unigene is eligible to receive tiered double-digit royalties in the low-to-mid teens on global sales.
Unigene has made significant progress with its Phase 2 oral PTH study. On March 15, 2011, Unigene announced the dosing of the first subject in its Phase 2 study of oral PTH. On April 27, the Company announced the completion of patient enrollment of this Phase 2 study and, as a result, Unigene received a $4 million milestone payment from GSK. The Company expects to announce top-line Phase 2 results before the end of 2011. Once the Phase 2 study has been completed and based on a review of the data, GSK may elect to assume responsibility for all future development and commercialization of the product.
In 2009, Unigene licensed its late-stage oral calcitonin formulation to Tarsa Therapeutics, a venture financed company founded exclusively to conduct Phase 3 clinical testing and prepare Unigene's proprietary oral calcitonin formulation for commercialization. In February 2011, Tarsa completed the Phase 3 study. On March 24, 2011 Unigene announced that the statistically significant top-line results released by its licensee, Tarsa Therapeutics, validate its proprietary oral peptide drug delivery technology. The ORACAL study achieved its primary endpoint and the results support Tarsa's plans for a New Drug Application (NDA) submission to the Food and Drug Administration (FDA) targeted before the end of 2011. The study design and endpoints were agreed with the FDA through a formalized Special Protocol Assessment (SPA) process. Tarsa also plans to submit a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in the first half of 2012. Tarsa expects that the full data from the study will be presented in a prestigious, peer-reviewed forum in the second half of 2011.
Additionally, Tarsa initiated a Phase 2 osteoporosis prevention study TAR01-201 with oral calcitonin. Tarsa further announced during the quarter that it has completed screening and has begun to randomize patients in this trial. TAR01-201 is a double-blind study comparing oral recombinant salmon calcitonin to placebo in approximately 120 postmenopausal women who have low bone mass (osteopenia) and are at increased risk of fracture. This proof-of-concept study is evaluating the ability of oral calcitonin to prevent osteoporosis and maintain bone mass in this population.
On April 8, 2011, along with the founding investors of Tarsa Therapeutics, Unigene entered into an agreement to purchase $1.5 million in convertible promissory notes and warrants from Tarsa to help fund Tarsa's business operations into the first half of 2012. Unigene also announced that Tarsa has selected Unigene to conduct the stability testing for its oral calcitonin and will pay Unigene $1.04 million for these services.
As a result of this investment, Unigene currently owns a 20% stake in Tarsa on a fully diluted basis, subject to the potential for further dilution, and is eligible to receive sales-related milestone payments and royalties on worldwide sales.
During the first quarter 2011, Unigene announced that it is accelerating the development of its lead proprietary anorexigenic peptide, UGP281, currently in advanced preclinical development. An anorexigenic peptide is one that diminishes or controls appetite and offers potential therapeutic benefit to morbidly obese patients. The Company expects to file an Investigational New Drug (IND) application with the FDA and initiate Phase 1 clinical studies in the first half of 2012.
UGP281, a potent anorexigenic peptide, has demonstrated substantial decreases in food consumption and weight in multiple in vivo preclinical studies. Unigene's "Peptelligence™" core competence should allow UGP281 to be manufactured and delivered by way of Unigene's proprietary recombinant production and oral delivery technologies. Longer term oral studies with UGP281 in dog models are currently ongoing.
Additional Financial Results & Notes
Revenue for the three months ended March 31, 2011 was $2.1 million, compared to $2.5 million for the three months ended March 31, 2010. Revenue for both periods primarily consisted of Fortical sales and royalties which have declined since the launch of competitive products in December 2008.
Net loss for the three months ended March 31, 2011 decreased approximately $9.3 million, or 58%, to $6.6 million from $15.9 million for the corresponding period in 2010. This was primarily due to loss on change in fair value of embedded conversion feature of $10 million, debt issuance cost of $2 million, and an inventory reserve of $576,000 in 2010. These were partially offset by an increase in interest expense of $1.2 million, as well as an increase in other operating expenses of $1 million and a decrease in revenue of $407,000.
Net cash at March 31, 2011 decreased approximately $4 million from December 31, 2010. This decrease includes Levy related settlement payments of $1.2 million as well as PTH Phase 2 expenditures of $1.2 million. The $4 million milestone payment from GSK for completion of patient enrollment was received in May 2011.
Unigene Laboratories, Inc.