Wynnefield finds fault with Unigene leadership, seeks representation on board of directors

By Lisa Kerner

Charlotte, N.C., Sept. 4 - Unigene Laboratories, Inc. investors led by Wynnefield Partners Small Cap Value, LP said they have recommended, and may continue to recommend, ways in which the company's board of directors could enhance shareholder value.

The investors intend to influence the board and Unigene management to take certain actions, according to their Aug. 29 letter to Unigene included in a schedule 13D/A filed with the Securities and Exchange Commission.

In the letter, Wynnefield, a 5.4% shareholder, highlighted what it believes are shortcomings in the ability of the board and management to grow shareholder value:

• Unigene's stock price has declined 37% since August 2005 due to the company's failure to grow the overall calcitonin market and form strategic partnerships to advance its pipeline candidates;

• The decision to partner with a small, privately owned pharmaceutical company to market Fortical;

• The failure to enter into or advance other partnering arrangements with larger, well-capitalized pharmaceutical companies; and

• The depletion of Unigene's cash position to "dangerous levels" and the Fairfield, N.J., biopharmaceutical company's failure to generate additional cash flow from existing and potential partnerships.

Wynnefield also asked the Unigene board to reduce its size to seven members from nine and immediately appoint two Wynnefield nominees in place of two current board members.

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