Regenerative technologies company, Alliqua Biomedical, Inc. (NASDAQ:ALQA), announces signed agreement to acquire the business of Soluble Systems, LLC.
YARDLEY, Pa., Oct. 05, 2016 (GLOBE NEWSWIRE) — Alliqua BioMedical, Inc. (ALQA) (“Alliqua” or the “Company”), a regenerative technologies company committed to restoring tissue and rebuilding lives, today announced that the Company has signed a definitive agreement to acquire the business of Soluble Systems, LLC (“Soluble”) through a series of transactions. As part of the transactions, Soluble will contribute and transfer substantially all of its assets into a newly formed subsidiary of Alliqua (“New Alliqua”) and Alliqua will complete a holding company reorganization resulting in New Alliqua becoming the new public parent of Alliqua. New Alliqua will remain publicly traded and change its name to “Alliqua BioMedical, Inc.”
Under the terms of the agreement, Soluble will receive consideration with a total value of approximately $35 million, plus warrants to purchase 4 million shares of New Alliqua common stock at an exercise price of $1.07. The transaction consideration consists of the issuance of approximately 17.6 million shares of Alliqua common stock, valued at $0.89 per share, the assumption of $12.4 million of senior debt, the cash payment due at closing of $5.4 million to retire Soluble’s subordinated debt, $1 million of cash payments by Alliqua to Soluble prior to closing, and $500,000 of other consideration. In addition, Soluble will have the right to appoint one new director to the Company’s board of directors. The transaction is expected to close in the first quarter of 2017 and is subject to certain closing conditions that are described below.
Soluble is a privately held company with 60 employees, formed in 1999 and headquartered in Newport News, Virginia. Soluble markets and distributes a human skin allograft with living cells under the brand name, TheraSkin®. Soluble employs a direct distribution model supported by approximately 40 selling resources that primarily target hospital and wound care customers in outpatient facilities, and generated end-user revenue at an annual run-rate in excess of $18 million during the six months ended June 30, 2016.
“We could not be more excited to announce this transaction, as we believe the combination of Alliqua BioMedical and Soluble Systems will enhance our competitive position with a world-class portfolio of regenerative solutions,” said David Johnson, Chief Executive Officer of Alliqua BioMedical. “I believe this transaction offers the opportunity to combine two strong regenerative technologies companies where the sum of their parts should be greater than the parts themselves.”
Mr. Johnson continued, “The combination of these companies presents many strategic and financial benefits, and I would like to highlight a few that I believe are the most compelling:
“Financially, the benefits from this combination are powerful. The organization’s commercial scale will increase dramatically, as the combined selling infrastructure will nearly double the size of Alliqua’s existing direct salesforce. We expect that broader U.S. direct sales coverage will drive rapid additional market penetration for all Alliqua products with the potential for cross-selling opportunities over time. Post-closing, the combined company’s financial profile should improve with a 2016 annualized revenue base estimated to be between $36 and $38 million, gross margins in excess of 70% and significant operating margin benefits from synergies. Clearly, we believe this financial profile positions us with the requisite scale, a clear path to profitability and improving returns for our stockholders going forward.
“Strategically, this transaction allows Alliqua to enhance both our portfolio of regenerative technologies, and our executive leadership team. Soluble’s TheraSkin is a cryopreserved human skin allograft, composed of living cells, fibroblasts, keratinocytes and a fully developed extracellular matrix. Mist Therapy, Biovance, Interfyl and now TheraSkin, will allow Alliqua Biomedical to offer clinicians a variety of clinically efficacious regenerative technologies for the treatment of challenging wound and tissue repair. Importantly, each of these solutions is supported by a compelling economic value proposition. In addition, I am pleased to announce that Allan Staley, the CEO and Co-Founder of Soluble Systems, and Woody Staub, the President of Soluble Systems, have each accepted management positions in charge of Alliqua’s Reimbursement and Payor Policy group and Alliqua’s new specialized surgical sales force, respectively, effective upon the closing of the transaction. Allan’s expertise in the regenerative technologies space is exceptional, as evidenced by the success to-date of TheraSkin. Similarly, Woody’s experience in the medical device and surgical sectors, with the likes of KCI, Mitek and J&J, should prove immensely valuable as we look forward to rapid market share growth of our regenerative technologies portfolio in the surgical market.”
“Soluble Systems is excited to combine its excellent products and passionate employees with Alliqua to grow a great company together,” said Allan Staley, Chief Executive Officer of Soluble Systems.
Shares of Alliqua Biomedical, Inc. (NASDAQ:ALQA) are actively moving +5.95% thus far today on the news and have traded in the range of $0.85 – 0.95 during the session. A number of research firms have recently weighed in on the stock, providing future price targets. The covering firms currently have a consensus one-year price target of $2.67 on the stock. This is according to brokerage analysts polled by Thomson Reuters First Call. This is the average number from the individual targets provided by the firms. Analysts are projecting earnings per share of $0.00 for the next fiscal quarter. For the current year, analysts are predicting earnings of $-0.72 per share according to First Call.
In looking at where the stock is trading on a technical level, the stock is trading -2.66% away from its 50-day moving average of $0.91. Based on the most recent available data, the equity is -76.94% off of its 52-week high of $3.86 and +27.14% away from its 52-week low which is $0.70.
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Today, the stock opened at $0.95 and the last bid at the time of writing stood at $0.89. During the session thus far, the equity dipped down to $0.85 and touched $0.95 as the high point. Alliqua Biomedical, Inc. (NASDAQ:ALQA) has a market cap of $26.41M and has seen an average daily volume of 68066 over the past three months.
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