Unigene secures financing to extend operations, cuts 40% of staff
Unigene Laboratories, a biopharmaceutical company focused on peptide-based therapeutics, has entered into a second amendment to a financing agreement with affiliates of Victory Park Capital Advisors (VPC), whereby VPC has agreed to purchase an additional $750,000 senior secured note, providing Unigene with additional working capital.
Proceeds from the sale of the note, which is convertible into shares of UGNE common stock at a conversion price of $0.09 per share, will be used for working capital purposes.
In an effort to conserve capital and further extend its cash runway, Unigene also announced a strategic reorganization and downsizing, which involved a reduction of approximately 40% of its workforce. The majority of employees impacted by the reduction in workforce supported Unigene's Fortical manufacturing and recombinant calcitonin production operations, which have been negatively impacted by regulatory recommendations in Europe and by an advisory committee to the FDA. Unigene also disclosed that certain of its assets, primarily related to its Fortical business, are impaired as a result of this regulatory activity and its related impact upon Fortical manufacturing revenues and royalties. The asset impairment charges will be further discussed within the Company's reported financial results for the first quarter 2013.
"We value VPC's ongoing support and willingness to continue financing the company. Unigene remains focused on our efforts to conserve capital during these adverse conditions and challenging times,” said Ashleigh Palmer, CEO of Unigene. “We view the reduction in workforce as an unfortunate, but necessary part of our path forward in continuing to explore and develop strategic options to protect and enhance shareholder value. On behalf of Unigene's management and our board of directors, we thank our many dedicated colleagues and employees whose efforts have been instrumental to the success of our Fortical business throughout the years."
In addition, VCP has declared an event of default under certain loan documents, including approximately $55.8 million in notes issued to VPC by Unigene. VPC has further declared these notes (including principal and interest) due and payable. The declaration of default is based on, among other things, VPC's determination that a material default has occurred under various provisions of the loan documents. In connection with the existence and continuation of the default, VPC has notified Unigene that, pursuant to Article 9 of the Uniform Commercial Code (UCC), VPC has initiated a public disposition of certain of Unigene's assets that constitute VPC's collateral, including the Company's peptelligence drug delivery platform and all other assets that are used or intended for use in connection with, or that are necessary or advisable to the continued conduct of, Unigene's biotechnology business (but excluding assets of the Company unrelated to such business). Such assets will be sold pursuant to public auction to be held at the offices of Katten Muchin Rosenman in Chicago on April 15, 2013.