Unigene Announces Financial Results for Third Quarter 2009

http://www.businesswire.com/news/home/20091109005959/en

BOONTON, N.J.--(Business Wire)--
Unigene Laboratories, Inc. (OTCBB: UGNE, http://www.unigene.com) has reported
its financial results for the quarter ended September 30, 2009.

Revenue for the three months ended September 30, 2009 was $2,732,000, compared
to $5,084,000 for the three months ended September 30, 2008. Revenue for both
periods primarily consisted of Fortical sales and royalties, which were
$2,398,000 for the three months ended September 30, 2009, and $4,277,000 for the
three months ended September 30, 2008. Fortical royalties were $1,126,000 for
the three months ended September 30, 2009, compared to $1,633,000 for the three
months ended September 30, 2008. Fortical sales were $1,272,000 for the three
months ended September 30, 2009, compared to $2,645,000 for the three months
ended September 30, 2008. Fortical sales fluctuate each quarter based upon
Upsher-Smith`s ordering schedule. Fortical royalties fluctuate each quarter
based upon the timing, pricing and volume of Upsher-Smith`s shipments to its
customers. Fortical sales and royalties have declined since the launch of
competitive products in December 2008.

Revenue for the nine months ended September 30, 2009 was $10,220,000, compared
to $14,376,000 for the nine months ended September 30, 2008. Revenue for both
periods primarily consisted of Fortical sales and royalties, which were
$8,840,000 for the nine months ended September 30, 2009, and $12,178,000 for the
nine months ended September 30, 2008. Fortical royalties were $3,529,000 for the
nine months ended September 30, 2009, compared to $4,246,000 for the nine months
ended September 30, 2008. Fortical sales were $5,311,000 for the nine months
ended September 30, 2009, compared to $7,932,000 for the nine months ended
September 30, 2008.

Total operating expenses were $7,331,000 for the three months ended September
30, 2009, an increase of $1,969,000 from $5,362,000 for the three months ended
September 30, 2008.

Total operating expenses were $19,420,000 for the nine months ended September
30, 2009, an increase of $2,353,000 from $17,067,000 for the nine months ended
September 30, 2008. Increases for both periods were due to the initiation of our
oral calcitonin Phase III clinical trial.

Net loss for the three months ended September 30, 2009 was $5,834,000, or $.06
per share, compared to a net loss of $687,000, or $.01 per share, for the three
months ended September 30, 2008.

Net loss for the nine months ended September 30, 2009 was $12,569,000, or $.14
per share, compared to a net loss of $3,741,000, or $.04 per share, for the nine
months ended September 30, 2008.

Cash at September 30, 2009 was $4,171,000, a decrease of approximately
$4,412,000 from December 31, 2008. Accounts receivable at September 30, 2009
were $895,000. Neither amount includes the approximately $9,000,000 Unigene
received from Tarsa Therapeutics, Inc. ("Tarsa) on October 20, 2009 in
association with its oral calcitonin Phase III expenditures.

Although expenses will be reduced due to the elimination of our expenditures for
the oral calcitonin program, further expense reductions are being considered and
we will need additional sources of cash in order to maintain all of our future
operations. Without any reduction in expenses, we would need additional sources
of cash in the first quarter of 2010.

Following are recent highlights and developments that will be discussed during
Tuesday`s earnings call:

* In October 2009, we licensed our Phase III oral calcitonin program to Tarsa, a
new company formed by a syndicate of three venture capital funds specializing in
the life sciences: MVM Life Science Partners, Quaker BioVentures and Novo A/S.
Simultaneously, Tarsa announced the closing of a $24 million Series A financing
from the investor syndicate. Tarsa obtained the worldwide (other than China)
rights to market and sell the oral calcitonin product.

As part of the agreement, Unigene will own approximately 25% of Tarsa on a fully
diluted basis (9,215,000 shares) and will be eligible to receive milestone and
royalty payments. Tarsa will be solely responsible for all future costs related
to the global oral calcitonin program. Tarsa has paid to Unigene approximately
$9,000,000 in association with its oral calcitonin Phase III expenditures to
that date.

* The global economic recession has impacted the US pharmaceutical industry, as
fewer drugs are being sold, and pharmacy chains, wholesalers and distributors
are reducing and more tightly managing inventories. As a result, total US
pharmaceutical sales in general, and most osteoporosis products in particular,
have declined in 2009. Since December 2008, total US nasal calcitonin
prescriptions have decreased by approximately 15%. Decreased supply-chain
inventories, as well as decreases in consumer spending, may have contributed to
this result. Despite this challenging environment, data from IMS indicates that
as of August 2009, Fortical® had a 48% share of U.S. nasal calcitonin
prescriptions, down from the 53% April market share. The decrease in market
share is attributable to the December 2008 launch of two products, as well as
the June 2009 launch of a 3rd product, all of which are generic to the innovator
product, but not to Fortical. We do not yet know the long-term effect on
Fortical sales and royalties of the launch of these competing products. However,
certain providers have substituted these products for Fortical, causing Fortical
sales and royalties to decrease. Despite the availability of these competing
products, Fortical still remains the most frequently prescribed nasal calcitonin
product in the U.S.
* In September 2009, we reported that the U.S. District Court, Southern District
of New York, confirmed the validity of Unigene`s patent on Fortical® and issued
an order permanently enjoining Apotex Inc. and Apotex Corp. from further
infringement of the patent. The motion for summary judgment filed by the
plaintiffs, Unigene and its licensee Upsher-Smith Laboratories, in the case was
granted. Apotex has indicated that it plans to appeal this decision.

Unigene will host a conference call tomorrow morning, Tuesday, November 10th at
9:00 AM EDT, to discuss its third quarter 2009 financial results and to provide
a Company update. The Company invites all those interested in hearing
management`s discussion to join the call by dialing (877) 407-0782 for
participants in the United States and (201) 689-8567 for international
participants.

UNIGENE LABORATORIES, INC.
CONDENSED BALANCE SHEETS

September 30, 2009 December 31, 2008
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 4,171,288 $ 8,583,226
Accounts receivable 895,064 4,635,036
Inventory, net 3,020,234 3,180,019
Prepaid interest 101,112 525,000
Prepaid expenses and other current assets 4,648,503 1,994,077
Total current assets 12,836,201 18,917,358

Noncurrent inventory 3,829,461 1,649,690
Property, plant and equipment, net 3,824,972 4,023,434
Patents and other intangibles, net 2,324,331 2,064,182
Investment in joint venture 2,465,981 1,447,418
Deferred financing costs, net 319,957 385,787
Other assets 237,610 153,110
Total assets $ 25,838,513 $ 28,640,979

LIABILITIES AND STOCKHOLDERS` DEFICIT
Current liabilities:
Accounts payable $ 3,079,654 $ 708,134
Accrued expenses 2,839,336 2,038,902
Current portion - deferred licensing fees 1,416,256 1,256,756
Notes payable - Levys 1,573,752 --
Accrued interest 933,668 --
Due to joint venture partner, net of discount of $117,446 in 2009 1,513,804 --
Total current liabilities 11,356,470 4,003,792

Notes payable - Levys, excluding current portion 14,163,765 15,737,517
Note payable-Victory Park-net of discount of $1,551,736 in 2009 and $1,536,561 in 2008 17,985,470 13,463,439
Accrued interest - principally to Levys, excluding current portion 2,362,197 2,094,973
Accrued expenses, excluding current portion 277,908 370,544
Deferred licensing fees, excluding current portion 9,765,500 10,726,069
Deferred compensation 422,113 371,146
Due to joint venture partner, net of discount of $129,043 in 2008 -- 845,957
Total liabilities 56,333,423 47,613,437

Commitments and contingencies
Stockholders` deficit:
Common Stock - par value $.01 per share, authorized 135,000,000 shares, issued and outstanding:
90,921,706 shares in 2009 and 90,195,520 shares in 2008 909,217 901,955
Additional paid-in capital 110,497,364 109,457,677
Accumulated deficit (141,901,491 ) (129,332,090 )

Total stockholders` deficit (30,494,910 ) (18,972,458 )
Total liabilities and stockholders` deficit $ 25,838,513 $ 28,640,979

UNIGENE LABORATORIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended September 30, Nine months ended September 30,
2009 2008 2009 2008

Revenue:
Product sales $ 1,272,137 $ 2,644,567 $ 5,311,291 $ 7,931,708
Royalties 1,125,579 1,632,737 3,529,252 4,245,962
Licensing revenue 312,689 314,187 940,569 942,567
Development fees and other 21,359 492,329 438,654 1,255,534

2,731,764 5,083,820 10,219,766 14,375,771
Operating expenses:
Cost of goods sold 478,565 1,455,684 1,945,500 4,557,210
Research, development and facility expenses 4,808,718 2,170,671 10,507,692 6,660,815
General and administrative 2,043,925 1,735,593 6,966,747 5,848,724

7,331,208 5,361,948 19,419,939 17,066,749

Operating loss (4,599,444 ) (278,128 ) (9,200,173 ) (2,690,978 )

Other income (expense):
Interest and other income (expense) 29,707 (4,465 ) 106,054 36,887
Interest expense (1,298,479 ) (347,922 ) (3,525,585 ) (1,028,286 )
Loss from investment in joint venture (31,938 ) (56,000 ) (148,224 ) (58,643 )
Gain on technology transfer to joint venture 66,176 -- 198,527 --
Loss before income taxes (5,833,978 ) (686,515 ) (12,569,401 ) (3,741,020 )
Income tax expense -- -- -- --
Net loss $ (5,833,978 ) $ (686,515 ) $ (12,569,401 ) $ (3,741,020 )

Loss per share - basic and diluted:
Net loss per share $ (0.06 ) $ (0.01 ) $ (0.14 ) $ (0.04 )

Weighted average number of shares outstanding -
basic and diluted 90,739,056 88,854,264 90,394,969 88,328,206

About Unigene

Unigene Laboratories, Inc. is a biopharmaceutical company focusing on the oral
and nasal delivery of large-market peptide drugs. Due to the size of the
worldwide osteoporosis market, Unigene is targeting its initial efforts on
developing calcitonin and PTH-based therapies. Fortical®, Unigene`s nasal
calcitonin product for the treatment of postmenopausal osteoporosis, received
FDA approval and was launched in 2005. Unigene has licensed the U.S. rights for
Fortical to Upsher-Smith Laboratories, worldwide rights for its oral PTH
technology to GlaxoSmithKline, worldwide rights for its calcitonin manufacturing
technology to Novartis and worldwide rights (except for China) for its oral
calcitonin program to Tarsa Therapeutics, Inc. Unigene`s patented oral delivery
technology has successfully delivered, in preclinical and/or clinical trials,
various peptides including calcitonin, PTH and insulin. Unigene`s patented
manufacturing technology is designed to cost-effectively produce peptides in
quantities sufficient to support their worldwide commercialization as oral or
nasal therapeutics. For more information about Unigene, call (973) 265-1100 or
visit www.unigene.com. For information about Fortical, visit www.fortical.com.

Safe Harbor statements under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements regarding us and
our business, financial condition, results of operations and prospects.Such
forward-looking statements include those which express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are
not statements of historical fact.We have based these forward-looking statements
on our current expectations and projections about future events and they are
subject to risks and uncertainties known and unknown which could cause actual
results and developments to differ materially from those expressed or implied in
such statements.These forward-looking statements include statements about the
following:general economic and business conditions, our financial condition,
competition, our dependence on other companies to commercialize, manufacture and
sell products using our technologies, the ability of our products to gain market
acceptance and increase market share, the uncertainty of results of animal and
human testing, the risk of product liability and liability for human trials, our
dependence on patents and other proprietary rights, dependence on key management
officials, the availability and cost of capital, the availability of qualified
personnel, changes in, or the failure to comply with, governmental regulations,
the failure to obtain regulatory approvals for our products and other risk
factors discussed in our Securities and Exchange Commission filings. Words such
as "anticipates," "expects," "intends," "plans," "predicts," "believes,"
"seeks," "estimates," "may," "will," "should," "would," "potential," "continue,"
and variations of these words (or negatives of these words) or similar
expressions, are intended to identify forward-looking statements. In addition,
any statements that refer to expectations, projections, or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to certain risks,
uncertainties, and assumptions that are difficult to predict. Therefore, our
actual results could differ materially and adversely from those expressed in any
forward-looking statements as a result of various risk factors.

The Investor Relations Group
Investors
Erika Moran/Dian Griesel, Ph.D.
or
Media
Janet Vasquez
212-825-3210

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