ZURICH, Switzerland and FAIRFIELD, New Jersey, March 13 /PRNewswire/ -- "The new Stonegate Report about Unigene confirms that we are uniquely positioned as the only biopharma company that manufactures peptides by recombinant techniques, while also having oral and nasal delivery systems to administer the peptides. Since the launch of "Fortical" in 2005 with partner Upsher-Smith Laboratories, "Fortical" has captured a near dominant 49% market share of the U.S. nasal calcitonin market that is estimated to be in the $200 million range."

Stonegate Securities, Inc. Unigene Laboratories Inc. (WKN 875852, ISIN US9047531002, UUL, OTCBB: UGNE)

Price $1.80 52-Week Range $1.50 - $2.70 Market Capitalization 157,952,000 Enterprise Value 166,734,000 Primary Shares Outstanding 87,751,000 Float 83,190,000 Insider Ownership 5% Institutional Ownership 15% Daily Volume (3-Month Avg.) 94,000 Industry Biopharmaceuticals Website http://www.unigene.com Corporate Headquarters Fairfield, NJ

Company Description

Unigene is a biopharmaceutical company that focuses on the research, production and delivery of therapeutic peptides. Its initial focus is on salmon calcitonin (sCT) and other peptides for the treatment of chronic bone and joint disorders. Unigene received FDA approval for Fortical(R), a sCT-based product that addresses the osteoporosis market, in 2005. Upsher-Smith Laboratories licensed the rights to Fortical(R). In addition, Unigene has developed a patented manufacturing process for the efficient production of peptides and patented technologies for the oral and nasal delivery of peptides. The Company has also licensed the worldwide rights to its oral parathyroid (PTH) technology to GlaxoSmithKline (NYSE: GSK) and the worldwide rights for its calcitonin manufacturing technology to Novartis Pharma AG (NYSE: NVS). Unigene is headquartered in Fairfield, NJ, with manufacturing facilities in Boonton, NJ. The Company currently employs 100 people.


- Strong sales growth from Fortical(R) - Since its 2005 launch with partner Upsher-Smith Laboratories, Fortical(R) has captured a near-dominant (49%) share of the U.S. nasal sCT market that is estimated to be in the $200 million range.

- Safety concerns in the osteoporosis market - Bisphosphonate-based therapies, the leaders in the $7 billion osteoporosis market, have come under scrutiny following reports of links to multiple serious side effects. The FDA is in the process of reviewing the safety profile of bisphosphonates, and the agency should issue a decision over the next 6-12 months. If the FDA expresses concerns, the medical community will likely begin to consider safer alternatives to bisphosphonates. Given calcitonin's excellent safety profile (over 30 years of proven safety), Unigene could stand to benefit substantially.

- Blockbuster potential - Unigene's partner, Novartis, has initiated a Phase III trial to evaluate oral calcitonin's disease-modifying properties against osteoarthritis, a disease that affects over 21 million Americans, for which there is no curative treatment. Novartis has also initiated a Phase III trial evaluating oral calcitonin against osteoporosis, which utilizes UGNE's manufacturing process. A positive outcome in either of these trials could catapult sCT to blockbuster status.

- UGNE's oral sCT program is progressing favorably - Apart from Novartis, Unigene is developing its own version of oral sCT utilizing tablets in an improved solid dosage form (patent applied for by the Company). The Company just announced the initiation of a Phase I/II trial, with dosing to be completed by the end of February 2008. Given the favorable market opportunities surrounding an oral sCT product, we anticipate the announcement of a partnership during the first half of 2008.

- Strong positive momentum - For the quarter ended September 30, 2007, revenues rose by 34% sequentially, reflecting a 71% increase in sales and royalties relating to Fortical(R). UGNE exhibited positive operating income for the third quarter and positive cash flow from operations for the nine months ended September 30, 2007. The cash balance grew significantly during the nine-month period, increasing by over $3.6 million to over $7 million.

- Valuation - With Fortical's imminent dominance in its market, an advancing pipeline targeting large markets, a dramatically improved financial position, and huge upside potential, we believe Unigene represents a compelling risk/reward opportunity.

Investment Summary

The commercialization of peptide-based therapeutics has been hindered by various technical challenges, and peptides have historically taken a backseat to small molecules as active pharmaceutical ingredients (APIs) for drug therapies. The advent of recombinant technology and recombinant protein production in therapeutics has facilitated the development of novel delivery systems and opened the door to new commercial opportunities for peptide-based therapies. According to Frost and Sullivan, peptides are poised to become "the products of the future", and the market for peptide-based active pharmaceutical ingredients is expected to grow at nearly double the growth rate for APIs overall.

Unigene has spent the last 20 years focusing on research, manufacturing and delivery technologies for peptides used for medical purposes. That unwavering focus has uniquely positioned Unigene as the only biopharma company that manufactures peptides by recombinant techniques, while also having oral and nasal delivery systems to successfully administer the peptides.

Top-tier partnerships and a portfolio of patents validate UGNE's technology platforms - Both of Unigene's technology platforms can be applied to products addressing a large variety of diseases. The Company has been awarded multiple patents to validate its technologies. Further validation for Unigene's products and technologies comes from partnerships with some top-tier names in the pharmaceutical industry. Partnerships are in place with Upsher- Smith Laboratories, Novartis Pharma AG, and GlaxoSmithKline, and collaborations are in place with world-renowned universities including University of London and Yale University Medical School.

Fortical(R), UGNE's first U.S. product, is in near-dominant position of its market - Fortical(R), Unigene's nasal calcitonin product that was launched in 2005 with partner Upsher-Smith, has exhibited substantial growth, and it currently holds 49% of the nasal sCT market estimated to be in the $200 million range. Because the market leader, Miacalcin(R) (Novartis), is approximately 50% more expensive and contains a nasal irritant (benzalkonium chloride) that is absent from Unigene's product, and because there appears to be no other near-term competitors, Fortical(R) is well positioned to continue growing sales and garnering market share to become the leader in this market.

New indication could catapult calcitonin sales to blockbuster status - Novartis is conducting a Phase III trial investigating the effectiveness of oral calcitonin on osteoarthritis (OA), a painful disease of the joints. Conventional therapies address the reduction of pain and the suppression of inflammation; however, no disease modifying therapeutic is available for OA. In addition to a well-established body of evidence regarding calcitonin's effect on bone resorption, both in vivo and in vitro clinical studies suggest that calcitonin may have chondroprotective qualities (counter the acceleration of cartilage degradation), while at the same time, mitigating pain. With 21 million people suffering from this disease in the U.S. alone and with no curative treatment available, a positive outcome in this trial could open an enormous opportunity for Unigene.

Long-term positive industry outlook in the osteoporosis market - The majority of Unigene's pipeline is focused on finding a more efficient delivery of current products that address the osteoporosis market. The osteoporosis market is poised for solid growth over the long-term. Datamonitor has valued the market at $8.7 billion in 2007. Fueled by pipeline products and an aging population, the market is projected to increase to $11.1 billion by 2016. The osteoporosis market is experiencing significant change that can be described as transitional rather than revolutionary. Products that improve bioavailability, tolerability and/or provide more efficient and convenient delivery methods of current drugs are projected to be significant growth drivers in this market over the next ten years. Successful products will have the potential of producing blockbuster revenues. Unigene is positioned at the heart of this high-growth segment of the osteoporosis market.

Safety concerns could dramatically increase sales of calcitonin-based products - Bisphosphonate therapies and selective estrogen receptor modulators (SERMS) are the current market leaders in the osteoporosis market; however, both therapies have been associated with serious side effects. Since 2003, medical journal articles have suggested that long-term use of bisphosphonates could lead to osteonecrosis of the jaw (ONJ). More recently, researchers have reported a possible link between bisphosphonates and increased brittleness in the bones leading to tiny fractures. Additionally, the New England Journal of Medicine has reported a possible link between SERMs and increased risk of heart attack and stroke. Also, the FDA is currently seeking additional data to allow for an in-depth evaluation of reports of atrial fibrillation in patients who take bisphosphonates. The evaluation should be completed in the latter half of 2008, at which time FDA will communicate the conclusions and any resulting recommendations to the public. At this point, most physicians have determined that the benefits of these therapies outweigh the side effects; however, if there is a documented increase in long-term complications associated with these therapies, we believe physicians will seek safer alternatives. Because calcitonin has shown an excellent safety profile over its 30+ years of use, we believe that sales of calcitonin-based products, such as Fortical(R), could dramatically increase.

New study by the AHRQ shifts the risk/reward argument in the favor of lower risk - In December 2007, the Agency for Healthcare Research and Quality (AHRQ) published the results of an important study that compared the effectiveness and risks of osteoporosis therapies including bisphosphonates, estrogen, calcitonin, calcium, vitamin D, testosterone, parathyroid hormone and selective estrogen receptor modulators (SERMs). The results indicated that bisphosphonates are not more effective than alternative osteoporosis treatments. With this AHRQ study revealing that potencies of the various treatments are indistinguishable, the risk/reward argument clearly shifts in favor of seeking safer alternatives. The timing of this study could not be more optimal for Unigene, as reports of negative side effects associated with bisphosphonates continue to garner media coverage.

Unigene's broad pipeline of potential products addresses therapeutic areas with large underserved patient populations - The Company continues to expand its pipeline with innovative peptide-based potential therapies. In addition to products for osteoporosis, Unigene's pipeline contains products that address inflammation, diabetes, cancer and other diseases. The Company has co-invented an exciting technology that could grow natural bone in targeted areas of bone fractures and weakness. Unigene has recently licensed two therapies from the University of London. One peptide-based therapy could potentially minimize damage caused by cardiac reperfusion (rapid influx of blood) in heart attack and stroke patients, and the other is a combination therapy for the treatment of inflammatory diseases.

Patented recombinant DNA manufacturing technology - Unigene's efficient recombinant DNA technology that has been validated by Big Pharma leaders including Novartis and GlaxoSmithKline, is capable of producing active pharmaceutical ingredients (APIs) in quantities that could address global markets. Although the current focus is on the osteoporosis market, this platform can be applied to hundreds of APIs in multiple large markets, including obesity, osteoarthritis, and diabetes

Recent developments - Unigene recently announced plans to broaden its activities with its joint venture partner, Shijiazhuang Pharmaceutical Group (SPG), a China-based company controlled by Lenova (LNVGY.PK) and Goldman Sachs(NYSE: GS). The intent is to upgrade SPG's technology capabilities and dramatically broaden its pipeline. This will enable the joint venture to capture a larger share of the enormous market potential for biotech products in China. UGNE's share of joint venture is 45%.


Unlike many of its biotech brethren, Unigene is not another developmental company with plenty of promise, but no sales. The Company not only has product sales, but based primarily on the strength of Fortical's sales, UGNE's most recent quarter (Q307) showed an operating profit. Going forward, we have modeled Fortical(R) sales to provide a slight net profit beginning in Q108, and continuing throughout the year.

We believe there are two very viable scenarios that could quickly elevate this company's success, and both are in the relatively short term. The first scenario occurs in the latter part of 2008 and involves the FDA's evaluation of reports of atrial fibrillation in bisphosphonate patients. After a series of serious side effects linked to long-term use of bisphosphonates, we believe this could be "the final straw" in tipping the risk/reward scale toward patients and physicians seeking osteoporosis therapies with proven safety profiles. The second scenario, which would have a huge impact on the sCT market, is FDA approval of oral calcitonin as a therapy for osteoarthritis. If clinical data is positive, we believe oral-sCT could become the first disease altering therapeutic available for the 21 million osteoarthritis sufferers in the U.S. We estimate this market launch could be as early as 2010. And notably, this launch could be followed by the launch of a Novartis oral calcitonin product. Both of these potential products are in Phase III trials.

Our model projects the majority of revenue to come from Fortical(R) sales over the next two years with 2007 revenue ending at slightly under $24 million, and an EPS of ($0.02). We have modeled 2008 revenue to total approximately $29.2 million, with an EPS of $0.01. We expect to see increased efficiencies in the manufacturing process over the next several quarters, adding to the bottom line as well. We have projected R&D to increase, but to remain relatively flat as a percentage of revenue. General and administrative costs should show minimal increases for the last quarter of FY07 and throughout FY08.

Importantly, Unigene restructured its loan obligations earlier this year in May 2007 and eliminated its "going concern" status. The loans are primarily from officers and total approximately $16 million. They are now recast over eight years at 9 percent interest with no payments due (interest will accrue) for the first three years and no prepayment penalties.

With Fortical gaining market share, an advancing pipeline targeting large markets, a near-term positive bottom line, and huge upside potential, we believe that Unigene represents a significant opportunity for investors.


UGNE currently has only one product on the market. Any changes in market demand, USL's ability to market the product, any regulatory changes, or any delays in production would have a significant negative impact on the Company.

UGNE has products in its pipeline in various stages of development; however, Unigene may never develop another product that receives regulatory approval.

Unigene has incurred significant operating losses since its inception. The most recent quarter (September 2007) showed an accumulated deficit of $121.6 million. UGNE is dependent on partnerships and collaborations in the development of its pipeline. The Company's inability to establish new partnerships and to maintain current corporate partnerships and licensing arrangements would negatively impact the progress of the Company.

The pharmaceutical industry is extremely competitive in general, and with the aging population swelling the ranks of osteoporosis sufferers, competition in this market has heated up. Unigene competes with large companies with established products and other therapies that may emerge and displace calcitonin.

Indication: The complete report including tables and pictures can be downloaded free of charge as a pdf-file under http://www.presseportal.ch/de/pm/100014716/?langid=2

For further information please contact: Stonegate Securities, Inc. Laura S. Engel Tel.: +1-214-987-4121 E-Mail: Laura@Stonegateinc.com Warren P. Levy President and CEO Unigene Laboratories, Inc. 110 Little Falls Road Fairfield, NJ 07004 Tel.: +1-973-882-0860 Fax: +1-973-227-6088 E-Mail: wlevy@unigene.com Gerhard Zellweger Zurich Tel.: +41(0)43-497-34-25 Mobile: +41(0)79-408-57-01 E-Mail: garyzell@gmx.ch

For further information please contact: Stonegate Securities, Inc. Laura S. Engel, Tel.: +1-214-987-4121, E-Mail: Laura@Stonegateinc.com; Warren P. Levy, President and CEO, Unigene Laboratories, Inc., 110 Little Falls Road, Fairfield, NJ 07004; Tel.: +1-973-882-0860, Fax: +1-973-227-6088, E-Mail: wlevy@unigene.com; Gerhard Zellweger, Zurich, Tel.: +41(0)43-497-34-25, Mobile: +41(0)79-408-57-01, E-Mail: garyzell@gmx.ch