Alliqua Biomedical Sells TheraBond 3D Antimicrobial Barrier Systems Product Line

Alliqua BioMedical Inc., a regenerative technologies company committed to restoring tissue and rebuilding lives, has sold all assets associated with its TheraBond 3D Antimicrobial Barrier Systems product line to Argentum Medical LLC, a manufacturer of metallic silver-based, antimicrobial wound dressings and portfolio company of Shore Capital Partners, a private equity firm focused exclusively on the healthcare industry. Alliqua will use the proceeds from the sale for working capital purposes and to reduce its outstanding debt balance. As a result of this transaction, the company’s lender has agreed to defer all principal payments until Jan. 31, 2018. 
 
“We are excited to announce the sale of our TheraBond product line to Argentum, which we believe represents an important strategic decision for our enterprise for two primary reasons,” said David Johnson, CEO of Alliqua. “First, this transaction provides support to our balance sheet with an influx of capital to fund our operations. Second, the sale of our TheraBond product line aligns with our goal to focus on our core capability as a regenerative technology company and execute on our targeted sales and marketing strategy for our regenerative products, Biovance, Interfyl and UltraMIST. We have updated our fiscal year 2017 financial outlook to reflect our business on a continuing operations basis. Alliqua’s products revenue growth profile is stronger as a result of the strategic transactions we have announced over the last year with our Sorbion and TheraBond product lines. Specifically, we expect our fiscal year 2017 guidance will reflect product revenue growth—on a continuing operations basis—in a range of 21 percent to 27 percent year-over-year.”
 
The aggregate purchase price for the TheraBond product line was approximately $3.8 million, subject to customary holdbacks for indemnification obligations and earn out payments due upon performance of certain transition services. Net of payments to Alliqua’s senior secured lender of $1.65 million, Alliqua received proceeds of approximately $1.65 million at the closing. 
 
“Alliqua has done an excellent job establishing the TheraBond products as reliable, high-quality solutions for managing burns and other advanced wound care applications,” said Raul Brizuela, president and CEO of Argentum. “We are excited to add the TheraBond products to Argentum’s existing Silverlon silver plated nylon product portfolio, further strengthening our offering for clinicians and patients in all advanced wound care settings.”
 
The company is updating its revenue guidance for the fiscal year 2017 period, which was last updated on Aug. 10. For the fiscal year ending Dec. 31, 2017, the company expects total revenue on a continuing operations basis of $18.4 million to $19.3 million, representing growth in the range of approximately 13 percent to 19 percent year-over-year.
 
The company’s total revenue guidance on a continuing operations basis assumes product sales of $17 million to $17.9 million, representing growth in the range of approximately 21 percent to 27 percent year-over-year compared to product sales, on a continuing operations basis, of $14.1 million in the fiscal year ended Dec. 31, 2016.
 
Revenue from continuing operations for the fiscal year ended Dec. 31, 2016, excludes TheraBond revenue of approximately $2 million and excludes Sorbion revenue of $1.7 million, which was recognized during the first six months of 2016. The company’s previously stated guidance assumed approximately $2 million of TheraBond revenue for the fiscal year ending Dec. 31, 2017. Revenue from the sale of TheraBond products was approximately $900,000 during the first six months of 2017.
 
Contract manufacturing sales was approximately $1.4 million, compared to $2.2 million in the fiscal year ended Dec. 31, 2016.
 
For the fiscal year 2017 the company still expects cash burn from operations to be approximately $12 million, representing a decrease of approximately $6.3 million year-over-year, compared to $18.3 million in fiscal year 2016. This guidance implies an average operating burn of approximately $2 million per quarter for the last two quarters of 2017.
 
The TheraBond product line includes contact dressings, island dressings and wraps. Based on a proprietary and patented manufacturing process, silver is bonded to the entire surface of all fibers of the TheraBond dressing. When TheraBond products are placed on the wound, bioactive ionic silver is released in the dressing at a controlled rate, promoting an optimal wound healing environment by creating an antimicrobial barrier that helps protect against infection. With its one-piece construction and unique struts between the contact and outer layers, TheraBond also enables efficient transfer of fluid and exudate away from the wound and into an outer absorptive dressing, while providing rapid, sustained antimicrobial protection. Alliqua acquired the TheraBond product line in connection with its purchase of the outstanding equity interest of Choice Therapeutics Inc. in May 2014.
 
Alliqua is a regenerative technologies company committed to restoring tissue. Through its sales and distribution network, together with its proprietary products, Alliqua offers solutions that allow clinicians to utilize the latest advances in regenerative technologies to bring about improved patient outcomes. Alliqua currently markets the human biologic regenerative technologies Biovance and Interfyl. The company also markets its UltraMist Therapy System, which delivers painless, noncontact low-frequency ultrasound below the wound bed to promote the healing process. The company has locations in Yardley, Pa.; Langhorne, Pa.; and Eden Prairie, Minn.

Founded in 2001 and located in Geneva, Ill., Argentum manufactures and sells wound care products across a wide number of clinical applications, including the Silverlon brand, its proprietary range of silver-based antimicrobial products. The core platform technology in Silverlon is a uniquely designed silver-plated nylon matrix that provides the powerful antimicrobial properties of silver ions in the dressing without staining the skin and without increasing bioburden. Silverlon dressings are used today by surgeons and other healthcare professionals around the world on surgical wounds, burns, chronic wounds, IV catheter-related wounds, and for negative pressure wound therapy. Argentum sells Silverlon’s products in the North America, South America, Middle East, Africa, and Western Europe.