Tough Business

Tough Business

We’ve said it many times it really doesn’t take much talent to build an insulin pump, the real talent is the ability to run a successful insulin pump company.  This is also true for the many dumb patch pumps that are fascinating investors these days. Listen the market for real insulin pumps is tough enough, the market – if you can call it that – for dumb pumps is well – dumb.

Yet this hasn’t stop investors from throwing good money into bad ideas. We got another example of this when we learned that Unilife (NASDAQ:UNIS) has secured $10 million of additional financing. According to a company issued press release;

“Unilife Corporation (“Unilife” or “Company”) (NASDAQ: UNIS, ASX: UNS) today announced the signing of an agreement with an affiliate of OrbiMed for the provision of up to an additional $10 million in debt financing.  The material terms are described in a Form 8-K filed by the Company with the SEC today.

In addition, Unilife this week implemented an additional cost reduction initiative, including a significant decrease in executive compensation, to further reduce the Company’s operating expenses in order to maximize shareholder value in connection with the continuing review of strategic alternatives, for which Morgan Stanley & Co. LLC is engaged as its financial advisor, and to improve the Company’s liquidity position.

In September, Unilife initiated a cost reduction and business alignment plan that included a reduction in its workforce of approximately 17%.  This week, the Company implemented additional measures, including a further reduction to its workforce of approximately 20 employees, or 8% of its workforce.

Additionally, the Company will decrease its compensation to certain executive officers and some other senior management through the end of this calendar year.”

Now just in case anyone has forgotten this is the same company which noted that “third parties” had expressed interest in buying the company. To which we noted that they should sell in a hurry, run to the bank and then pray the check doesn’t bounce.

In a sign that there is some sanity in this wacky world, these “third parties” in a rare moment of using common sense came to their senses and decided not to throw good money into a very bad idea. This left Unilife on life support and looking for a lifeline which OrbiMed has provided. Now we don’t know what OrbiMed received in exchange for this lifeline and to be honest we could care less.

Even if Unilife had the best dumb patch pump in the world, which it doesn’t, they would have a tough time. As we have noted far too many times this whole fascination with dumb patch pumps is well dumb. Yet as we have seen over and over again investors continue to throw money into the space. As if we needed more proof there is no cure for stupid.