Unigene Laboratories, Inc has signed licensing and clinical supply agreements with Novartis Pharma AG to provide for the recombinant production of calcitonin, the active ingredient used in various formulations for the treatment of osteoporosis. Under the terms of these agreements Unigene is eligible to receive $18.7 million, including an initial payment of $5.6 million. In addition, Unigene is eligible to receive royalties on sales of any current or future Novartis products that will contain calcitonin made using Unigene's process.

The license agreement grants Novartis a worldwide license to produce recombinant calcitonin under Unigene's patented process for manufacturing recombinant peptides. Unigene will sell calcitonin to Novartis to support Novartis' development programs. Unigene remains free to develop and commercialize its own products containing calcitonin, including its oral product under development and Fortical, its nasal product that recently received an approvable letter from the U.S. Food and Drug Administration.

"This arrangement will allow Unigene and Novartis to independently advance their commercial interests in calcitonin using the same production platform," commented Dr. Warren Levy, president and CEO of Unigene. "Our patented manufacturing process allows for the cost-effective large-scale production of peptides to support their worldwide commercialization as oral or nasal therapeutics. In addition to potentially providing a highly desirable revenue stream, the agreements provide Unigene with a potential source of supply for recombinant calcitonin that far exceeds our current capacity, thereby avoiding the need for significant capital expenditures for construction of a larger production facility. This increased supply of recombinant calcitonin will be essential to support the development and commercialization of our oral calcitonin product."