LEWISBERRY, PA--(Marketwire - December 16, 2009) - Unilife Medical Solutions Limited (Unilife
or the Company) (ASX: UNI) (PINKSHEETS: UNIFF) today announced the signing
of agreements for the construction of its new global headquarters and
commercial production facility in York, Pennsylvania. The world-class
medical device production facility (New Facility) will be situated at 250
Cross Farm Lane in York and the 165,000 square foot development is
projected to be ready for operations by late 2010
As previously announced, the Company has been exploring a number of
potential opportunities with respect to the development of a new global
headquarters and manufacturing facility for the Unilife Group in
Pennsylvania in order to accommodate the Company's projected pharmaceutical
demand for its Unifill™ range of ready-to-fill (prefilled) retractable
syringes. The Company has now decided, after carefully considering the
advantages and disadvantages (including from a financial and operational
perspective) of leasing and retrofitting an existing logistics warehouse
facility or developing its own custom built facility, to proceed with the
development of its own custom-built facility.
The New Facility will be developed on a 38 acre parcel of industrial land
with an expected total project cost of US$26 million, which will be funded
by a combination of debt and cash reserves. The land was purchased by
Unilife Cross Farm, LLC (Unilife CF), a subsidiary of Unilife Corporation,
Stage one of the New Facility is designed to accommodate Unifill™
automated assembly lines with a combined annual capacity of 360 million
units per year, as well as the Unitract™ 1mL automated assembly line and
other contract manufacturing systems currently situated at Unilife's
Lewisberry facility. It will also include a 54,000 square foot office
section that will function as Unilife's global headquarters and support
administrative, marketing, new product development, quality laboratories
and other operational functions of the Company.
The New Facility has been designed to allow for an additional 100,000
square feet of contiguous production space to be readily constructed at a
later date by the Unilife Group. Upon this additional expansion occurring,
it will provide the Unilife Group with the necessary space to produce up to
one billion syringes per annum via installation of additional Unifill™
assembly lines. Although this additional expansion of the New Facility
forms part of the current planning approvals that have been received by the
Unilife Group, it is not part of the current development activity and it is
not covered or included in the current contracts that have been entered
into in respect of the New Facility.
While the potential development of a new manufacturing facility was
referred to in the Information Memorandum dated 27 November 2009 (sent to
shareholders and optionholders in relation to the proposed transaction to
redomicile the Unilife Group in the US), as a result of the commitment now
being made by the Company to proceed with the development of the New
Facility and to enter into construction and related contracts, a
Supplementary Information Memorandum explaining the development of the New
Facility will shortly be despatched to shareholders and optionholders of
the Company in accordance with relevant legal requirements.
Design and Functionality of New Facility
The New Facility has been custom-designed to meet Unilife's requirements by
L2 Architecture (L2), a Philadelphia-based architectural and engineering
design firm that specializes in the pharmaceutical and medical device
sector and which has some of the leading global companies in that sector as
its clients. The design created by L2 incorporates the latest innovations
in personnel and material flow dynamics to maximize the industrial
productivity of the site while adhering to the highest standards in good
Development of New Facility and Development Costs
Unilife CF has appointed Keystone Redevelopment Group LLC (Keystone) to
manage the development of the New Facility, and HSC Builders and
Constructions Managers (HSC) to undertake the construction of the New
Facility. Keystone is a Pennsylvania based real estate company specialising
in large scale redevelopment and complex economic development projects.
Clients of Keystone have included a number of Fortune 500 companies. HSC is
a Pennsylvania-based company that specialises in building custom-designed
facilities for biotech, academic, healthcare, pharmaceutical and technology
companies. Its clients include some of the largest pharmaceutical and
healthcare companies in the world.
Under the Development Agreement entered into between Unilife CF and
Keystone for the development of the New Facility, Keystone will, in return
for a US$754,000 development fee to be paid over four tranches spanning the
course of the project, work with Unilife to obtain favourable public and
private financing, and assist in securing all necessary approvals,
licenses, permits and certificates from government authorities.
Under the construction contract with HSC, Unilife CF is required to pay for
the cost of construction (as defined in the construction contract) (Cost of
Work), together with HSC's fee, subject to a Guaranteed Maximum Price (GMP)
as described below.
HSC's fee for constructing the New Facility will be an amount equal to
1.25% of the Cost of Work (HSC Fee). The GMP has been established at
US$21,700,000 (comprising HSC's fee and the Cost of Work). Except for
certain items beyond the control of Unilife CF or HSC, or items changed at
the option of Unilife CF, any construction costs which exceed the Cost of
Work will be the responsibility and liability of HSC. Unilife CF has also
agreed to pay HSC a performance bonus of 15% of the HSC Fee if it achieves
completion of the utility rooms for equipment installation at the New
Facility by 15 April 2010 and another 15% of the HSC Fee as a bonus if it
achieves Phase 2 (see below) of the construction by 10 December 2010.
L2's fee for the agreed architectural services it will be providing to the
Company in respect of the project will be US$1.56 million.
Key Development Timelines
To support the scheduled completion of the Unifill™ syringe
industrialisation program in late 2010, Unilife has fast-tracked the
development of the New Facility with the aim of having it ready in time to
receive the first Unifill™ assembly line currently being developed by
Mikron. Initial site work for the New Facility has been commenced with the
footings and concrete being poured this month.
The projected timetable for the construction of the New Facility to be
undertaken by HSC is as follows:
-- By the end of October 2010 Completion of clean rooms for equipment
installation (Phase 1)
-- By the end of October 2010 Temporary occupancy permit for
-- By the end of December 2010 Unrestricted occupancy permit for
manufacturing/warehouse (Phase 2)
-- By the end of December 2010 Unrestricted occupancy permit for office.
Unilife is currently projecting that it will progressively transfer and
ultimately consolidate all of its US-based staff and production systems
from its current Lewisberry facilities into the New Facility in early 2011.
The New Facility is located approximately 9 kilometres from the Lewisberry
Financing of the New Facility
Unilife intends to fund up to US$9 million of the development costs of the
New Facility out of existing cash reserves and will seek external financing
for up to a further US$17 million from a commercial bank or other lending
institution in the US as well as from the Commonwealth of Pennsylvania and
other US federal and state bodies.
As at the date of this announcement, the Company is in discussions with a
number of banks, government agencies and other interested parties in the US
with respect to the required financing for the New Facility. The Company
has received term sheets from two US banks and the current indications are
that the Company will receive financing terms that it considers appropriate
and favourable within the timeframe required. The Company will select the
party or parties to provide the financing after a careful review of the
proposed financing terms and other factors such as the relevant party's
Compared to original quotations to lease and internally retrofit a suitable
logistics site, Unilife estimates that it will save approximately US$2 to
$3 million in upfront development costs to develop its custom-built New
Facility. In addition, Unilife estimates that loan repayments for the New
Facility will be approximately US$400,000 per year less than equivalent
annual lease commitments.
Statement from Unilife CEO Alan Shortall
"Unilife is committed to becoming a global leader in the fast-growing
pharmaceutical market for prefilled syringes. Given the competitive
advantages of our Unifill™ ready-to-fill syringes, the current status of
our industrialisation program and the strong relationships we are building
with pharmaceutical customers, it is essential that we have the operational
capability to support significant levels of market demand. Given the level
of this pharmaceutical interest and our desire to stay ahead of schedule in
the industrialisation of the Unifill™ syringe, we are now fast-tracking
the development of a new facility.
"Our new global headquarters and production facility that is now being
developed in York, Pennsylvania will give us the required flexibility to
rapidly expand our business as we move towards a NASDAQ listing, commercial
production and the signing of supply agreements with current and future
"This world-class facility now under construction has been custom-designed
to meet the highest standards of the international pharmaceutical industry.
The operational efficiencies and material flow dynamics that have been
incorporated into the design of this facility will facilitate the
production of our products to the highest quality standards. This will
enhance our industry credentials and our position to become a reliable and
trusted supply partner to global pharmaceutical leaders.
"The development of our own custom-built facility makes sound, financial,
operational and logistical sense for Unilife. By comparison, a leased
warehouse site would have required a significant investment to internally
retrofit the building to meet our specific operational requirements, and
would have been substantially more expensive for annual lease payments. We
are pleased with the strong interest this project has received from private
financing groups as well as Federal, Commonwealth and local government
agencies within the US. As a result, we are confident that this US$26
million project will be financed in a way that best meets the short and
long-term interests of shareholders. This is another indication of Unilife
taking advantage of its strong market position, preparing for its rapid
business expansion, and building long-term shareholder value."
Statement from Unilife Senior Vice-President of Operations Bernhard Opitz
"Upon completion of stage one of the new facility, it will have the
capacity to support the production of 360 million units of our proprietary
syringes per annum. When we decide to proceed with the 100,000 square foot
extension to the facility, we will then have the ability to increase our
production capacity to up to one billion syringes per year.
"Unilife has aligned itself with respected US leaders in the design and
development of world-class pharmaceutical and medical device facilities.
These development partners for our new facility are committed to its rapid
construction so that the site is ready to accept the scheduled delivery of
the first commercial assembly line for our Unifill™ syringes during the
third quarter of 2010."
Statement from Keystone Manager Robert Ventresca
"As a result of the current economic slowdown, the US construction industry
has been hit especially hard. This dynamic in the construction market puts
Unilife in a very strong position to build its new facility at this time.
Recent trends indicate construction costs are as much as 25% to 30% below
equivalent price levels from two years ago.
"With a corresponding slowdown in the financial markets, lending
institutions, while remaining very cautious, also still need to originate
new loans and are doing so very selectively. Unilife is in a strong
position to take advantage of the current environment and secure a
competitive financing package for the construction of its new facility with
high quality developers that will leverage an optimal blending of private
bank financing with Federal, State and local financial incentives."
Correction of Information Memorandum despatch date
It was stated in the announcement made by the Company on 10 December 2009
that the Information Memorandum in respect of the proposed transaction to
redomicilie the Unilife Group in the US had been despatched to shareholders
and optionholders of the Company on that date. However, the Company would
like to confirm that despatch of the Information Memorandum to shareholders
and optionholders actually occurred on 11 December 2009, rather than 10
December 2009 as stated in the initial announcement.
Unilife Medical Solutions Ltd is an ISO 13485 certified company that
designs, develops and supplies innovative safety medical devices. Listed on
the Australian Securities Exchange (ASX: UNI) since 2002, Unilife has
FDA-registered manufacturing facilities in the US State of Pennsylvania and
a proprietary portfolio of clinical and prefilled safety syringes designed
for use within healthcare and pharmaceutical markets.