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Sanofi SA (ADR) (SNY), Biodel Inc (BIOD): Would It Be Foolish to Trust Unilife Corp (UNIS)?

Antares’ investors also have high hopes for its Otrexup treatment for rheumatoid arthritis. It could allow patients to self-administer methotrexate, a treatment taken by 70% of rheumatoid arthritis patients.

ATRS Revenue TTM Chart

Source: YCharts.

Antares’ financials look slightly better than Unilife’s, but they’re still not pretty. Its expenses are outpacing its revenue, its free cash flow is drying up, and its negative margins are keeping the company deeply unprofitable.

Just like Unilife needs Sanofi and Biodel Inc (NASDAQ:BIOD), Antares needs Teva Pharmaceutical, its primary backer. Teva is currently working on six different self-injecting drugs with Antares. Antares also has similar collaborations with Ferring Pharmaceuticals, Pfizer, Actavis, and JCR Pharmaceuticals.

Would it be Foolish to trust Unilife?

Investing in Unilife comes down to one thing — trust. If you believe that the company’s deals with Biodel Inc (NASDAQ:BIOD) and Sanofi will progress without a hitch, then this company’s stock is grossly undervalued at current prices.

However, a recent Forbes article has raised serious concerns about the company after Talbot Smith, an ex-employee of Unilife, filed a whistleblower lawsuit against his former employer alleging fraud and SEC violations. Smith also claims that Unilife falsified and excluded certain overhead expenses to boost its margins.

Investors should watch this case very closely to determine if Unilife can be trusted. If Unilife is found guilty, this company could fall apart like a house of cards as its collaborative partners head for the hills.

The article Would It Be Foolish to Trust Unilife? originally appeared on Fool.com and is written by Leo Sun.

Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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