Sydney, Oct 13, 2007 (ABN Newswire) - Unilife Medical Solutions Limited ("Unilife" or the "Company") (ASX: UNI) announces the variation of the purchase price terms of the acquisition agreement ("Agreement") pursuant to which the Company acquired all of the issued shares in Integrated BioSciences Inc. ("IBS") in January 2007.
Under the original terms of the Agreement, the former shareholders of IBS were potentially entitled to be issued up to an additional 22 million shares in Unilife based on the financial performance of the IBS business over the period to 30 September 2008. The Board of Unilife and the former shareholders of IBS have agreed to vary the terms of the Agreement as set out below.
The revised terms of the Agreement align IBS's performance incentives with Unilife's strategic programs and aim to ensure sufficient resources are available at IBS to deliver on these key operational projects, which have been determined by the Board of Unilife to be of paramount importance to the Company and include:
- Unitract Prefilled Syringe: Unilife and its pharmaceutical partner finalised design specifications for the product during a meeting at IBS in July 2007, which also served to showcase the automation and production capabilities of IBS. Given the positive outcome of the meeting and the significant commercial potential of the project, IBS has been authorised to devote the required engineering and automation resources to the development of pilot production for the Prefilled syringe.
- MedPro: In May 2007, Unilife signed an exclusive agreement with MedPro Safety Products Inc ("MedPro") for the exclusive production under license of its safety blood collection devices. MedPro has secured an agreement with Greiner BioOne for the supply of at least 100 million units of the tube-activated version of its device. This agreement is expected to provide Unilife with estimated revenues of at least $20 million during the five-year term of the contract based upon minimum contractual volumes. Following a positive reception to the device from key Greiner customers at a recent US trade show, Unilife is now focused on the completion of the MedPro automated assembly system which is expected to occur in the third quarter of 2008 to supplement initial production scheduled to commence at Unilife's Chinese manufacturing partner KDL in December 2007.
- Unitract 1mL Syringe: IBS has recently advised Unilife that the development of assembly sub-systems are now complete. Unilife is now focusing the engineering and automation resources on completing the commissioning and tuning the production line before relocating it into the clean room for commencing the qualification process.
Under the terms of the revised Agreement, the IBS Engineering and Automation Business Unit will become a direct cost centre of Unilife, ensuring that the critical engineering and automation capabilities are directed to high-priority Unilife projects which are strategically important for Unilife.
Under the original terms of the Agreement the agreed acquisition price of up to US$6 million was to be paid to the former IBS shareholders in the form of the issue of up to 33,000,000 shares in the Company in three tranches, as approved by shareholders at Unilife's Annual General Meeting last November. The issue of the first tranche of 11,000,000 shares occurred in January 2007, following shareholder approval. The issue of the remaining two tranches totalling 22,000,000 shares were conditional upon the IBS business's performance in relation to a target EBITDA of an aggregate US$2.5 million over the two year period between 1 October 2006 and 30 September 2008. However, the total of 22,000,000 shares under tranches two and three would have been issued immediately in the event that the Board of Unilife resolved to approve an offer from a third party to acquire substantially all of the issued shares in Unilife.
Under the revised terms of the Agreement, the potential entitlement of the former IBS shareholders to be issued approximately 9.2 million shares under the third tranche has been cancelled. In place of these shares Unilife has issued a total of 7.0 million options to the former IBS shareholders which are subject to the following performance based vesting criteria:
- 3.0 million Options will vest upon execution on or before 31 March 2009 of a prefilled industrialisation/development agreement with Unilife's current pharmaceutical partner;
- 2.0 million Options will vest if prior to 30 September 2008 IBS enters into an agreement which will generate revenue in excess of US$15.0 million in its first year or if EBITDA of the IBS business for the year ending 30 September 2008 exceeds US$1.25 million
- 2.0 million Options will vest upon Unilife exceeding a market capitalisation of US$160 million prior to 30 March 2009.
All of these options have an exercise price of 25 cents each and an expiry date of 30 September 2011.
In addition, under the revised terms of the Agreement, Unilife has agreed to pay to the former IBS shareholders, in aggregate, 10% of IBS's gross profit in respect of a specific product to be supplied by IBS during the period from October 2007 to September 2009. This potential new program, which has successfully completed prototype development, if implemented, is expected to deliver outstanding returns to the Unilife group.
The original EBITDA milestones under the Agreement will continue to apply in relation to the remaining maximum of 12.8 million shares to be potentially issued to the former IBS shareholders.
Mr. Alan Shortall, Chief Executive Officer of Unilife, said: "These variations to the acquisition agreement are in the interests of both Unilife and the former IBS shareholders and are intended to ensure that the main focus of the IBS business efforts are directed towards long term gains beneficial to the Unilife group rather than just the short term EBITDA objectives. The continued integrating of our two businesses will also optimize our respective strengths in the design, development and supply of innovative medical devices. I am confident that the acquisition of IBS will continue to add long-term value to Unilife and our shareholders over the coming year."
For more information, download the ASX announcement at the following link;
http://abnnewswire.net/lnk/CV274SC3
