Unassociated Document

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MP8lc0kXStvlztE17PA4gbf0OIufSudjo+4OrIpeEuZGkFsJaNfqcHfgXC/faOwf 9SaqyNSFQ9yzui0YL7smpQ== 0001144204-08-051297.txt : 20080904 0001144204-08-051297.hdr.sgml : 20080904 20080904172521 ACCESSION NUMBER: 0001144204-08-051297 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20080904 DATE AS OF CHANGE: 20080904 GROUP MEMBERS: JOSHUA LANDES GROUP MEMBERS: NELSON OBUS GROUP MEMBERS: WYNNEFIELD CAPITAL MANAGEMENT, LLC GROUP MEMBERS: WYNNEFIELD CAPITAL, INC GROUP MEMBERS: WYNNEFIELD PARTNERS SMALL CAP VALUE L.P GROUP MEMBERS: WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: UNIGENE LABORATORIES INC CENTRAL INDEX KEY: 0000352747 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] IRS NUMBER: 222328609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-39337 FILM NUMBER: 081057058 BUSINESS ADDRESS: STREET 1: 110 LITTLE FALLS RD CITY: FAIRFIELD STATE: NJ ZIP: 07004-2193 BUSINESS PHONE: 9738820860 MAIL ADDRESS: STREET 1: 110 LITTLE FALLS RD CITY: FAIRFIELD STATE: NJ ZIP: 07004-2193 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WYNNEFIELD PARTNERS SMALL CAP VALUE LP CENTRAL INDEX KEY: 0000899083 IRS NUMBER: 133688497 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: SUITE 4720 CITY: NEW YORK STATE: NY ZIP: 10119 BUSINESS PHONE: 2127600814 MAIL ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: SUITE 4720 CITY: NEW YORK STATE: NY ZIP: 10119 SC 13D/A 1 v125638_sc13da.htm Unassociated Document

CUSIP No. 904753100

13D/A

Page 1 of 14

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

(Amendment No. 1)

Under the Securities Exchange Act of 1934

Unigene Laboratories, Inc.

‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾

(Name of Issuer)

Common Stock, Par Value $0.01 Per Share

(Title of Class of Securities)

904753100

(CUSIP Number)

Wynnefield Partners Small Cap Value, L.P.

450 Seventh Avenue, Suite 509

New York, New York 10123

Attention: Mr. Nelson Obus

Copy to:

Jeffrey S. Tullman, Esq.

Kane Kessler, P.C.

1350 Avenue of the Americas, 26^th Floor

New York, New York 10019

(212) 541-6222

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

August 29, 2008

(Date of Event which requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box o

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1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Partners Small Cap Value, L.P. 13-3688497
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 1,247,924 shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 1,247,924 shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,247,924 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.4%
14	TYPE OF REPORTING PERSON PN

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13D/A

Page 3 of 14

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Small Cap Value Offshore Fund, Ltd. (No IRS Identification No.)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 1,727,527 shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 1,727,527 shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,727,527 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.9%
14	TYPE OF REPORTING PERSON CO

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1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Partners Small Cap Value L.P. I 13-3953291
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 1,850,400 shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 1,850,400 shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,850,400 shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%
14	TYPE OF REPORTING PERSON PN

CUSIP No. 904753100

13D/A

Page 5 of 14

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Capital Management, LLC 13-4018186
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF (SEE ITEM 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 3,098,324 (1) shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 3,098,324 (1) shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,098,324 (1) shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.5%
14	TYPE OF REPORTING PERSON OO

(1) Wynnefield Capital Management, LLC holds an indirect beneficial interest in these shares which are directly beneficially owned by Wynnefield Partners Small Cap Value, L.P. and Wynnefield Partners Small Cap Value, L.P. I.

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1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Capital, Inc. 13-3688495
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF (SEE ITEM 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 1,727,527(1) shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 1,727,527(1) shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,727,527(1) shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.9%
14	TYPE OF REPORTING PERSON CO

(1) Wynnefield Capital, Inc. holds an indirect beneficial interest in these shares which are directly beneficially owned by Wynnefield Small Cap Value Offshore Fund, Ltd.

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Page 7 of 14

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nelson Obus
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF (SEE ITEM 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 4,825,851(1) shares (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 4,825,851(1) shares (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,825,851(1) shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%
14	TYPE OF REPORTING PERSON IN

(1) Mr. Obus may be deemed to hold an indirect beneficial interest in these shares, which are directly beneficially owned by Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I and Wynnefield Small Cap Value Offshore Fund, Ltd, because he is a co-managing member of Wynnefield Capital Management, LLC and an executive officer of Wynnefield Capital, Inc. The filing of this Statement and any future amendment by Mr. Obus, and the inclusion of information herein and therein with respect to Mr. Obus, shall not be considered an admission that he, for the purpose of Section 16(b) of the Exchange Act, is the beneficial owner of any shares in which he does not have a pecuniary interest. Mr. Obus disclaims any beneficial ownership of the shares of Common Stock covered by this Statement.

CUSIP No. 904753100

13D/A

Page 8 of 14

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Joshua Landes
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS AF (SEE ITEM 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 4,825,851(1) (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 4,825,851(1) (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,825,851(1) shares (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%
14	TYPE OF REPORTING PERSON IN

(1) Mr. Landes may be deemed to hold an indirect beneficial interest in these shares, which are directly beneficially owned by Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I and Wynnefield Small Cap Value Offshore Fund, Ltd, because he is a co-managing member of Wynnefield Capital Management, LLC and an executive officer of Wynnefield Capital, Inc. The filing of this Statement and any future amendment by Mr. Landes, and the inclusion of information herein and therein with respect to Mr. Landes, shall not be considered an admission that he, for the purpose of Section 16(b) of the Exchange Act, is the beneficial owner of any shares in which he does not have a pecuniary interest. Mr. Landes disclaims any beneficial ownership of the shares of Common Stock covered by this Statement.

CUSIP No. 904753100

13D/A

Page 9 of 14

This Amendment No. 1 (the “Amendment”) amends the Statement of Beneficial Ownership on Schedule 13D originally filed with the Securities and Exchange Commission on January 25, 2008 (the “Schedule 13D”) by the Wynnefield Reporting Persons with respect to shares of common stock, par value $0.01 per share (the “Common Stock”) of Unigene Laboratories, Inc. a Delaware corporation (the “Issuer”), whose principal executive offices are located at 81 Fulton Street, Boonton, New Jersey 07005. Unless specifically amended hereby, the disclosures set forth in the Schedule 13D shall remain unchanged. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Schedule 13D.

Item 3. Source and Amount of Funds or Other Consideration.

The response to Item 3 of the Schedule 13D is hereby amended and restated in its entirety as follows:

The securities reported in Schedule 13D as directly beneficially owned by the Wynnefield Reporting Persons were acquired with funds of approximately $12,479,746 (including brokerage commissions). All such funds were provided from the working capital or personal funds of the Wynnefield Reporting Persons who directly beneficially own such securities.

Item 4. Purposes of Transaction.

The response to Item 4 of the Schedule 13D is hereby amended and restated in its entirety as follows:

The Wynnefield Reporting Persons acquired the shares of Common Stock reported in Item 5 below for their own account, and for investment purposes, with no intention of changing or influencing control of the Issuer or as a participant in any transaction having that purpose or effect. However, as stated in greater detail below, the Wynnefield Reporting Persons have recommended, and from time to time may continue to recommend, to the Issuer's Board of Directors (the “Board”) and its management various strategies designed to enhance shareholder value.

The Wynnefield Reporting Persons intend to influence the Issuer’s Board and its management to take certain actions designed to enhance shareholder value, and in furtherance thereof, on August 29, 2008, WCI, on behalf of the Wynnefield Reporting Persons, delivered a letter (the “August Letter”) to the Issuer’s Board describing the recent failures of the Board and management of the Issuer in growing shareholder value. The August Letter highlighted, among others, the following shortcomings in the Board’s and management’s ability to grow shareholder value:

- since the FDA approved Fortical® in August 2005, Fortical® has captured 57% of the U.S. nasal spray calcitonin market, yet the Issuer’s stock price per share has fallen by 37%, due to the Issuer’s failure to grow the overall calcitonin market, and its failure to consummate strategic partnerships with which to advance its other pipeline candidates;

- management’s decision to partner with a small, privately owned pharmaceutical company with limited financial and marketing resources to market Fortical®;

CUSIP No. 904753100

13D/A

Page 10 of 14

- management’s utter failure to enter into or advance other partnering arrangements with larger, well-capitalized pharmaceutical companies; and

- the depletion of the Issuer’s cash position to dangerous levels and the failure to generate additional cash flow from existing and potential partnership arrangements.

For these reasons, among others, the Wynnefield Reporting persons stated in the August Letter that the Board’s tolerance of management’s inability to expand the market for calcitonin, in the face of increased health and safety concerns associated with the leading class of drugs that compete with Fortical®, was unacceptable. In addition, the Wynnefield Reporting Persons called upon the Board to reduce its size from nine members to seven, and to immediately appoint two well-qualified nominees of the Wynnefield Reporting Persons to the Board in place of two current members of the Board.

A copy of the August Letter is filed herewith and attached hereto as Exhibit 1 and is incorporated herein by reference. Any description herein of the August Letter is qualified in its entirety by reference to the attached Exhibit 1.

The Wynnefield Reporting Persons will continue to evaluate, on an ongoing basis, their investment in the Issuer and the Issuer's financial condition, business, operations and prospects, the market price for the shares of Common Stock, conditions in the securities markets generally, general economic and industry conditions, conditions affecting the Issuer's operations and other factors including, without limitation, management's ability to maximize shareholder value, and to the extent permitted by law, may seek to engage in discussions with other shareholders and/or with the Board and management of the Issuer concerning the business, operations or future plans of the Issuer. The Wynnefield Reporting Persons reserve the right to change their plans and intentions at any time as they deem appropriate. In particular, based upon their ongoing evaluation of the Issuer, the Wynnefield Reporting Persons may purchase shares of Common Stock, or may sell or otherwise dispose of all or a portion of the shares of Common Stock, in public and private transactions and/or may engage in short-selling of or any hedging or similar transaction with respect to the Common Stock, or take any other action with respect to the Issuer or any of its securities in any manner permitted by law or change their intention with respect to any and all matters referred to in paragraphs (a) through (j) of Item 4. Any such transactions may be effected at any time or from time to time, subject to any applicable limitations imposed by the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and applicable state securities or "blue sky" laws.

Depending on factors deemed relevant by the Wynnefield Reporting Persons, including but not limited to changes in the Company's business, governance or financial situation, the Wynnefield Reporting Persons reserve the right to formulate other plans and/or make proposals, and take such actions with respect to their investment in the Company, including any or all of the actions set forth in this response to Item 4 and any other actions as the Wynnefield Reporting Persons, or any of them, may determine.

Except as set forth in this Item 4, none of the Wynnefield Reporting Persons has any present plans or intentions that would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

CUSIP No. 904753100

13D/A

Page 11 of 14

Item 5. Interest in Securities of the Issuer.

The first paragraph, the table immediately below such paragraph and the sixth paragraph of the response to Item 5 in the Schedule 13D are hereby amended and restated in their entirety as follows:

As of September 4, 2008, the Wynnefield Reporting Persons beneficially owned in the aggregate, 4,825,851 shares of Common Stock, constituting approximately 5.4% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 88,977,676 shares outstanding on August 4, 2008, as set forth in the Issuer’s most recent quarterly report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the U.S. Securities and Exchange Commission on August 11, 2008). The following table sets forth certain information with respect to shares of Common Stock beneficially owned directly by the Wynnefield Reporting Persons listed:

Name	Number of Shares	Approximate Percentage of Outstanding Shares
Wynnefield Partners	1,247,924	1.4%
Wynnefield Partners I	1,850,400	2.1%
Wynnefield Offshore	1,727,527	1.9%

Beneficial ownership of shares of Common Stock shown on the cover pages of and set forth elsewhere in this Schedule 13D for each of the Wynnefield Reporting Persons assumes that they have not formed a group for purposes of Section 13(d)(3) under the Exchange Act, and Rule 13d-5(b)(1) promulgated thereunder. If the members of the Wynnefield Reporting Persons were deemed to have formed a group for purposes of Section 13(d)(3) and Rule 13d-5(b)(1), the group would be deemed to own beneficially (and may be deemed to have shared voting and dispositive power over) 4,825,851 shares of Common Stock, constituting approximately 5.4% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 88,977,676 shares outstanding on August 4, 2008, as set forth in the Issuer’s most recent quarterly report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the U.S. Securities and Exchange Commission on August 11, 2008).

Item 7. Material to be Filed as Exhibits.

Item 7 of the Schedule 13D is hereby amended to including the following:

Exhibit 1 Letter to Issuer's Board dated August 29, 2008

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Page 12 of 14

SIGNATURE

After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct.

Dated: September 4, 2008

WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P.

By: Wynnefield Capital Management, LLC,

its General Partner

By: /s/ Nelson Obus

Nelson Obus, Co-Managing Member

WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P., I

By: Wynnefield Capital Management, LLC,

its General Partner

By: /s/ Nelson Obus

Nelson Obus, Co-Managing Member

WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD.

By: Wynnefield Capital, Inc.,

its Investment Manager

By: /s/ Nelson Obus

Nelson Obus, President

WYNNEFIELD CAPITAL MANAGEMENT, LLC

By: /s/ Nelson Obus

Nelson Obus, Co-Managing Member

WYNNEFIELD CAPITAL, INC.

By: /s/ Nelson Obus

Nelson Obus, President

/s/ Nelson Obus

Nelson Obus, Individually

/s/ Joshua Landes

Joshua Landes, Individually

EX-1 2 v125638_ex1.htm Unassociated Document

CUSIP No. 904753100

13D/A

Page 13 of 14

WYNNEFIELD CAPITAL, INC.

450 Seventh Avenue, Suite 509

New York, New York 10123

August 29, 2008

The Board of Directors

Unigene Laboratories, Inc.

110 Little Falls Road

Fairfield, New Jersey 07004

Attention: Jay Levy

Chairman of the Board

Dear Sirs:

As one of the largest shareholders in Unigene Laboratories, Inc. (the “Company” or “Unigene”), we have become increasingly disturbed by a number of recent events that strongly suggest that the Board has failed in its responsibility to grow shareholder value.

In August 2005, the FDA approved Fortical®. At that time, Unigene shares were trading at $1.91. Since that time, Fortical® has captured 57% of the U.S. nasal spray calcitonin market, yet the price of Unigene’s shares has fallen by 37% to a current price of $1.20 due to the Company’s failure to grow the overall calcitonin market, and its failure to consummate strategic partnerships with which to advance its other pipeline candidates. Management’s decision to partner with a small, privately-owned pharmaceutical company to market Fortical®, combined with that company’s limited financial and marketing resources, has proven to be the wrong combination for Unigene. This, together with Unigene management’s utter failure to enter into other partnering arrangements with larger, well-capitalized pharmaceutical companies, while we read almost daily of new arrangements between big pharma and companies similar to Unigene, highlights the shortcomings of both management and the Board. Your tolerance of management’s inability to expand the market for calcitonin, even with the impetus of increased health and safety concerns associated with the leading class of drugs that compete with Fortical®, is unacceptable.

In November 2007, Unigene’s management announced to investors that a partnership to advance its internal oral calcitonin program was hopefully weeks, not months, away. It is now August 2008 and we are still waiting.

Although the Board has allowed the Company’s cash position to be depleted to dangerous levels, and has failed to generate additional cash flow from existing and potential partnership arrangements, it nevertheless determined to increase the salary of the Company’s CFO, ostensibly for having a good relationship with the auditors and complying with Sarbanes Oxley matters—in other words, for doing his job. Did the Board even consider aligning management’s interests more closely with those of the shareholders by increasing the equity component of management’s total compensation, thereby reducing the cash burden on the Company and providing management with added incentive to grow shareholder value?

And, if all of this were not enough, we understand that, in lieu of finalizing negotiations to obtain a much needed line of credit, the Company is considering an equity raise which, given current market conditions, the Company’s weakened financial position, and its decimated share price, will be highly dilutive to existing shareholders. As one of the Company’s largest shareholders, we can no longer sit idly by as our investment in the Company erodes further. We urge the Board to consider all possible sources of financing, and avail itself of other alternatives, before proceeding with an equity raise that will punish the Company’s long-term shareholders who have supported the Company through its many dark years of frustration and disappointment.

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We demand that, until the Board has carefully considered and evaluated other financing alternatives, it take no action with respect to any equity raise that would dilute existing shareholders without further discussions with the Company’s largest investors.

Furthermore, since it is apparent that the current Board is either incapable or unwilling to fulfill its obligations to the Company’s shareholders, we call upon the Board to reduce its size from nine members to seven, and to immediately appoint two well-qualified Wynnefield nominees to the Board in place of two current members of the Board. We believe only in this manner will the interest of all shareholders be protected.

We welcome the opportunity to discuss our proposal with the Board. However, do not underestimate our intention or resolve. We are prepared to consider all of our options in the event that our concerns and proposals are not appropriately addressed.

		Very truly yours,


	By:	/s/ Peter Black
		Peter Black

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