Unilife Slashes Workforce and May Not Have Enough Cash to Survive Beyond This Week
April 5, 2017
By Alex Keown, BioSpace.com Breaking News Staff
YORK, Pa. – Things are not looking good for struggling medical device maker Unilife Corporation . Shares plunged more than 63 percent in premarket trading after the company announced it lacked the financing to fund operations past April 7. As a result, the company terminated 51 percent of employees at two Pennsylvania sites.
In an April 4 filing with the U.S. Securities and Exchange Commission, Unilife disclosed that at of the end of March 2017, the company has an unaudited cash balance of $6.3 million, which includes $2.4 million of restricted cash. With dwindling finances, Unilife said it will likely fall below the minimum cash and restricted cash balance requirements of $5.1 million under its debt agreements. If the company falls under that financial threshold, then Unilife will be in default under its debt obligations, unless it is able to obtain waivers from its lenders.
Because of its financial situation and inability to so far secure funding, Unilife said it was seeking bridge financing alternatives. In the filing, the company said it may obtain such financing from a division of OrbiMed Advisors. Unilife said financing was not guaranteed and if it is offered, it may not be favorable to the company. If no bridge financing is available, Unilife said it may be forced to begin bankruptcy proceedings. Any “reorganization, sale, or liquidation is unlikely to result in funds being available to the Company’s stockholders or to creditors of the company other than its secured creditors,” Unilife said.
Not only that, but Unilife also announced it received a notice from one of its key wearable injectors customers that the client was placing a program with Unilife on hold for reasons unrelated to the product. Unilife did not name the customer in its announcement, but the company has had a number of collaborative deals for wearable injectors with companies like Sanofi and MedImmune , a subsidiary of AstraZeneca .
“Given the relative importance of such program, such delay may negatively impact the company’s ability to obtain financing or the amount of financing the company may be able to obtain,” Unilife said in its filing.
With a grim financial outlook, Unilife said it has notified all remaining employees as well as state and local government officials, that if the company is not successful in securing any kind of financial support, then it will be forced to permanently close its York and King of Prussia, Pa. locations. If no financing is available, Unilife said those sites will be shut down by June 4, 2017.
This is the second round of layoffs in the last year. In July, the company terminated 40 percent of its employees as part of a new business strategy. And again in October 2016, the company made additional cuts as part of a comprehensive cost measure. In addition to job cuts, Unilife said in October it had sublet a “significant portion” of its office space in King of Prussia.