Investors & Media

BOONTON, N.J.–(BUSINESS WIRE)–Nov. 10, 2008–Unigene Laboratories, Inc. (OTCBB: UGNE, http://www.unigene.com) has reported its financial results for the quarter ended September 30, 2008.

Revenue for the three months ended September 30, 2008 was $5,084,000, compared to $6,343,000 for the three months ended September 30, 2007. Revenue for both periods primarily consisted of Fortical sales and royalties, which were $4,277,000 for the three months ended September 30, 2008, and $5,771,000 for the three months ended September 30, 2007.

Revenue for the nine months ended September 30, 2008 was $14,376,000, compared to $17,390,000 for the nine months ended September 30, 2007. Revenue for both periods primarily consisted of Fortical sales and royalties, which were $12,178,000 for the nine months ended September 30, 2008, and $13,607,000 for the nine months ended September 30, 2007. The nine months ended September 30, 2007 included Fortical royalties for the ten-month period of December 2006 through September 2007 and also included $2,500,000 in revenue from Novartis under a 2007 supply agreement, consisting of $2,200,000 in product sales and $300,000 in development service fees.

Total operating expenses were $5,418,000 for the three months ended September 30, 2008, a decrease of $886,000 from $6,304,000 for the three months ended September 30, 2007.

Total operating expenses were $17,125,000 for the nine months ended September 30, 2008, a decrease of $1,141,000 from $18,266,000 for the nine months ended September 30, 2007.

Net loss for the three months ended September 30, 2008 was $687,000, or $.01 per share, compared to a net loss of $240,000, or $.00 per share, for the three months ended September 30, 2007.

Net loss for the nine months ended September 30, 2008 was $3,741,000, or $.04 per share, compared to a net loss of $1,778,000, or $.02 per share, for the nine months ended September 30, 2007.

Cash at September 30, 2008 was $14,705,000, an increase of approximately $11,027,000 from December 31, 2007. Accounts receivable at September 30, 2008 were $2,459,000.

Following are recent highlights of, and developments during, the third quarter ended September 30, 2008:

–  Sales and royalties from Fortical(R), which continue to
represent the largest component of Unigene’s revenue, were
nearly $4.3 million in the third quarter of this year, an
increase of approximately 4% compared to total Fortical
revenues for the second quarter of 2008. Fortical royalty
revenue increased by nearly 11% in the third quarter of 2008
compared to the second quarter of this year.

–  The company’s net loss for the third quarter was $687,000, a
decrease of 43% from the second quarter of 2008.

–  Unigene’s cash at September 30, 2008 was $14.7 million, an
increase of nearly $13 million compared to the end of the
prior quarter. The company’s cash position was enhanced by its
borrowing of $15 million pursuant to a $20 million financing
agreement with Victory Park Capital, a current investor in
Unigene. In connection with this borrowing, Unigene issued to
Victory Park a three-year senior secured non-convertible note
and 1,125,000 shares of common stock that are subject to
lock-up for one year.

–  According to IMS, by September 2008, Fortical had captured
more than 59% of the U.S. nasal calcitonin market, further
solidifying its position as the most frequently prescribed
nasal calcitonin product in the U.S.

–  Unigene is also developing its own oral calcitonin product for
osteoporosis based upon its improved Enteripep(R) technology.
In September the company reported on the results of its
end-of-Phase II meeting with the FDA that established the key
elements of the planned Phase III pivotal study. Unigene has
recently received a favorable response from the FDA to our
request for a Special Protocol Assessment, which confirmed the
FDA’s position regarding the final study design parameters,
including patient numbers, eligibility criteria, efficacy
endpoints and methods for statistical analysis. We are
currently preparing a response to the FDA to finalize the
process.

–  Novartis’ development partner has completed recruiting for two
ongoing Phase III studies for osteoporosis and osteoarthritis
involving 6,500 patients with an oral formulation using
calcitonin made by Unigene’s manufacturing process which
Novartis has licensed from us. A third Phase III study was
recently initiated by Novartis’ development partner for knee
osteoarthritis.

–  Last month Unigene initiated a Phase I study with its
optimized oral formulation of parathyroid hormone. The study
is ongoing and should be completed and the data analyzed
around year-end.

Unigene will host a conference call tomorrow morning, Tuesday, November 11, 2008 at 9:00 AM EDT, to discuss its third quarter 2008 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. A replay will be available for seven days after the call and can be accessed by dialing 877-660-6853 for participants in the United States and 201-612-7415 for international participants. When prompted, enter account #286 and conference ID #301594. The conference call may also be accessed via the Web at www.unigene.com and a link will be provided for listeners to join the call.

UNIGENE LABORATORIES, INC.
CONDENSED BALANCE SHEETS

September 30, 2008 December 31, 2007
—————— —————–
ASSETS                               (Unaudited)
———————————
Current assets:
Cash and cash equivalents       $      14,704,842  $      3,677,637
Accounts receivable                     2,459,227         3,142,196
Inventory                               3,799,491         3,327,289
Prepaid interest                        1,050,000                –
Prepaid expenses and other
current assets                           814,864           908,168
—————— —————–

Total current assets                 22,828,424        11,055,290

Noncurrent inventory                        664,666           627,020
Property, plant and equipment,
net                                      4,116,860         3,217,608
Patents and other intangibles,
net                                      2,167,737         1,810,987
Investment in joint venture               1,421,462            27,440
Deferred financing costs                    364,000                –
Other assets                                170,249           135,815
—————— —————–
Total assets                  $      31,733,398  $     16,874,160
================== =================

LIABILITIES AND STOCKHOLDERS’
DEFICIT
———————————
Current liabilities:
Accounts payable                $       1,627,617  $      1,328,272
Accrued expenses                        2,509,997         1,983,558
Current portion – deferred
licensing fees                         1,288,006         1,313,006
Current portion – capital lease
obligations                                5,126            40,078
—————— —————–
Total current liabilities             5,430,746         4,664,914

Notes payable – stockholders             15,737,517        15,737,517
Note payable – Victory Park – net
of discount of $1,676,250               13,323,750                –
Accrued interest – principally to
stockholders                             1,760,501           783,279
Deferred licensing fees,
excluding current portion               11,040,262        11,982,829
Capital lease obligations,
excluding current portion                       –             1,865
Deferred compensation                       382,031           374,500
Due to joint venture, net of
discount of $160,064                       814,936                –
—————— —————–
Total liabilities                    48,489,743        33,544,904
—————— —————–

Commitments and contingencies

Stockholders’ deficit:
Common Stock – par value $.01
per share, authorized
135,000,000 shares, issued and
outstanding: 90,150,520 shares
in 2008 and 87,753,715 shares
in 2007                                  901,505           877,537
Additional paid-in capital            109,336,838       105,705,387
Accumulated deficit                  (126,994,688)     (123,253,668)
—————— —————–

Total stockholders’ deficit         (16,756,345)      (16,670,744)
—————— —————–
Total liabilities and
stockholders’ deficit        $      31,733,398  $     16,874,160
================== =================

UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended        Nine months ended
September 30,             September 30,
————————- ————————-
2008         2007         2008         2007
———— ———— ———— ————

Revenue:
Product sales    $ 2,644,567  $ 4,142,635  $ 7,931,708  $11,258,044
Royalties          1,632,737    1,628,476    4,245,962    4,548,575
Licensing
revenue             314,187      280,691      942,567      859,237
Development fees
and other           492,329      291,668    1,255,534      724,098
———— ———— ———— ————

5,083,820    6,343,470   14,375,771   17,389,954
———— ———— ———— ————
Operating
expenses:
Cost of goods
sold              1,455,684    2,685,720    4,557,210    6,365,124
Research,
development and
facility
expenses          2,170,671    1,911,673    6,660,815    6,214,768
General and
administrative    1,791,593    1,706,563    5,907,367    5,685,886
———— ———— ———— ————

5,417,948    6,303,956   17,125,392   18,265,778
———— ———— ———— ————

Operating (loss)
income               (334,128)      39,514   (2,749,621)    (875,824)

Other income
(expense):
Interest and
other (expense)
income               (4,465)      91,214       36,887      240,914
Interest
expense-
principally to
stockholders       (347,922)    (285,656)  (1,028,286)  (1,058,225)
———— ———— ———— ————
Loss before income
taxes                (686,515)    (154,928)  (3,741,020)  (1,693,135)
Income tax expense          –      (85,000)          –      (85,000)
———— ———— ———— ————
Net loss           $  (686,515) $  (239,928) $(3,741,020) $(1,778,135)
============ ============ ============ ============

Loss per share -
basic and
diluted:
Net loss per
share           $     (0.01) $     (0.00) $     (0.04) $     (0.02)
———— ———— ———— ————
Weighted average
number of shares
outstanding -
basic and diluted  88,854,264   87,749,919   88,328,206   87,739,140
============ ============ ============ ============

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(R), Unigene’s nasal calcitonin product for the treatment of postmenopausal osteoporosis, received FDA approval and was launched in August 2005. Unigene has licensed the U.S. rights for Fortical to Upsher-Smith Laboratories, worldwide rights for its oral PTH technology to GlaxoSmithKline and worldwide rights for its calcitonin manufacturing technology to Novartis. 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.

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

SOURCE: Unigene Laboratories, Inc.