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Why Unilife Corporation soared today

Shareholders of Unilife Corporation (ASX: UNS) are sitting on an impressive 33.3% gain today after the healthcare group announced the implementation of a new multi-faceted financing strategy. The company says this will provide it with flexibility and control to support continued business growth.

With a market capitalisation of $427 million, Unilife is a US-based business that designs, develops, manufactures and supplies injectable drug delivery systems that can both enhance and differentiate the drugs or vaccines being delivered.

The company had a cash balance of US$39.2 million as at 31 March 2015, although it raised a significant portion of this from a share issue in January, while it also remains heavily cash flow negative.

In a market-sensitive announcement made earlier today, the company said it has signed an equity purchase agreement with a Chicago-based institutional investor, Lincoln Park Capital Fund, providing the company with an initial $5 million in net proceeds.

It also gives Unilife the option to generate up to $40 million in additional proceeds over the next two years. At the same time, Unilife also implemented a $25 million at-the-market facility with Cantor Fitzgerald & Co through which it can offer and sell up to that amount of common stock, at its own discretion.

The company’s Chief Financial Officer, Mr. David Hastings said: “This multifaceted strategy allows us to prudently support the financing of our business as we seek to increase customer cash receipts and advance additional customer relationships.”

The proceeds may also be put towards future acquisitions and other business opportunities. Although the shares have risen strongly today they remain considerably lower over the last 12 months. Indeed, the shares have been hovering around a 52-week low level and are still sitting 42% below their February high. Personally, I think there are a number of better opportunities for investors to consider.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. 

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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