When Will Unilife Earnings Go Positive?

Unilife (UNIS +0.00%) will release its quarterly report on Tuesday, but investors already have reason to believe that the company won't make a profit. The maker of injectable drug-delivery systems has seen its shares lose more than two-thirds of their value in the past three-and-a-half years, but Unilife earnings have remained negative throughout the past decade, and based on figures that it has already filed with the SEC, that doesn't appear to have changed this quarter either.

Unilife has aimed to redefine its industry. Specifically, it's trying to go beyond what it sees as the traditional "one-size-fits-all" approach to injectable drug delivery by seeking to provide more individualized solutions to focus more on patients and Unilife's pharmaceutical-company customers. With products ranging from prefilled syringes and auto-injects to wearable injection systems, Unilife hopes to woo more drugmakers to collaborate with it toward mutually successful ends. Let's take an early look at what's been happening with Unilife over the past quarter and what we're likely to see in its report.

Stats on Unilife

Source: Yahoo! Finance.

Why won't Unilife earnings grow?
Analysts have marked down their views on Unilife earnings in recent months, widening their June-quarter loss estimates by $0.02 per share and their full-year fiscal 2014 projections by twice that amount. The stock has continued to slide, falling another 15% since early June.

Unilife has had a mixed past recently. In May, shares doubled after its previous quarterly report, which included positive news on several fronts. The company said it expected to complete an agreement with a major life-science company to provide financing, helping to strengthen Unilife's balance sheet. Furthermore, Unilife said it would expand its Unifill platform of prefilled syringes to address specific needs specific to the high-viscosity biologic drug market.

Unilife has already filed a preliminary report for its 2013 fiscal year ending in June, and it didn't paint a rosy picture of the company's past. Revenue fell by half, with losses growing more than 20% to $63.2 million. As a particularly scathing article from Forbes noted last week, its most lucrative collaboration with Sanofi (SNY +0.87%) is almost complete, calling into question its ability to produce future sales growth.

Still, Unilife has promised big progress over the coming year. In a letter to shareholders at the end of July, Unilife said that "[s]everal pharmaceutical companies have selected Unilife for major drug programs that we expect will be progressively announced and generate upfront payments during this calendar year." Investors remain skeptical, however, with more than 21% of the company's float having been sold short as of mid-August.

Part of what sent shares rising in May was the fact that Unilife got small biopharmaceutical company Biodel (BIOD +0.00%) to agree to a 15-year supply agreement with Unilife in connection with its planned glucagon rescue product for treatment of severe hypoglycemia. The agreement will cover a customized device from Unilife's EZMix platform, and Unilife believes the agreement could generate $110 million in sales. But with Biodel only at the beginning of its anticipated process to seek FDA approval, the drugmaker doesn't even expect to file a New Drug Application until 2015. That could push any anticipated revenue bump for Unilife well into the future.

In the Unilife earnings report, watch to make sure that the company's results are consistent with its preliminary estimates. Until Unilife starts making good on its promised potential, it's hard to see its extensive losses reversing themselves in the near future.

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