Skyline Medical Inc. (NASDAQ:SKLN) (“Skyline” or the “Company”),
producer of the FDA-approved STREAMWAY® System for automated,
direct-to-drain medical fluid disposal, today issued a press
release with the following letter to shareholders.
Dear Fellow Shareholders,
Skyline is on the cusp of entering a transition period, unlike
any in our company's history. I have therefore chosen to issue this
letter, ahead of our Annual Meeting on December 28, to lay out some
of the plans Skyline’s management team has been working toward over
the past several months and the ways in which we are expecting the
Company to evolve as we move into 2018.
We have the following objectives for 2018:
- To expand Skyline’s business to take advantage of emerging
areas of the dynamic healthcare market. To this end, management is
implementing a Merger & Acquisition strategy focused on finding
and acquiring high-growth companies that have established
operations and the ability to drive both revenue and capital
appreciation for the Company, or entering into strategic
relationships with these companies.
- To maximize the market reach of our STREAMWAY System, both
domestically and in key international markets.
To allow the Company to move forward with this strategic growth
plan to secure additional revenue streams and build value for
shareholders, the Board of Directors unanimously recommends our
shareholders vote to approve the following proposals at the Annual
Meeting:
- To approve an amendment of the Company’s certificate of
incorporation to increase the number of authorized shares of common
stock from 24,000,000 to 50,000,000.
We must leverage our current share base to expand in markets
that are expected to increase our capital returns significantly
allowing us to provide increased shareholder value.
- To approve amendments to the Company’s Amended and Restated
2012 Stock Incentive Plan to (i) increase the reserve of shares of
common stock authorized for issuance thereunder to 5,000,000, (ii)
increase certain thresholds for limitations on grants, and (iii)
re-approve the performance goals thereunder.
The company does not possess enough options in the stock option
plan to entice prospective employees and staff from acquired
companies to join our organization. We also seek to incentivize
valued employees currently working hard to bring success to
Skyline, aligning their incentives with our shareholders.
On our previous earnings calls, we have discussed the challenges
we face in our current business model, which, for the past several
years, has exclusively focused on generating sales of the STREAMWAY
System, our automated waste disposal system for healthcare
facilities. We consider the STREAMWAY to be the best solution on
the market to solve the issue of medical waste disposal, with its
cost-effective and environmentally friendly approach to providing
the answer to infection control associated with toxic waste
management. However, although we have had some success with our
strategy to commercialize the STREAMWAY, with over 100 units
installed in procedure rooms in North America, and though we are
well positioned for growth in this market in 2018, we have not
generated the rapid sales progress needed to significantly build
value for shareholders due to the product’s long sales cycle.
We are therefore exploring new opportunities to build value for
shareholders. Some of these plans are expected to support STREAMWAY
sales – such as our recently-signed international distribution
agreements, and some will serve to diversify Skyline’s offerings
into entirely new potential revenue streams. Fortunately, the
healthcare industry is undergoing major changes in its approach to
diagnosing and treating patients which is giving rise to several
exciting opportunities to enter into emerging, high-growth markets;
moreover, as a Nasdaq company, Skyline is well-positioned to
attract the attention of the producers of some of the most
innovative cutting-edge technologies in this sector, and we have
successfully formed partnerships with some of these producers in a
very short space of time.
We have identified Contract Research Organization (“CRO”)
Services as a burgeoning sector with significant growth potential.
CROs appeals to us for several reasons: a) unlike other emerging
pharma companies, they can rapidly generate revenues and do not
need to complete lengthy clinical trial phases before they can
commence commercial activity b) there are a limited number of
public micro/small-cap CROs, so partnering with high-quality CROs
creates a unique opportunity for investors in Skyline c) CROs
typically generate very high margins d) as the healthcare sector
continues to make scientific breakthroughs, and the therapy
development process becomes more and more complex, biopharma
companies are increasingly outsourcing their clinical trial needs.
For this reason, CROs act as the ‘pick and shovel’ of healthcare
investment, benefiting from overall growth in clinical trials.
To accelerate our expansion into this sector, we have formed a
joint venture with Helomics, a pioneering specialty CRO with
established operations that bridge two revolutionary areas of the
healthcare industry: precision medicine and
big data. Helomics’ competitive advantage lies in
its proprietary D-Chip™ platform, which contains data on 149,000+
tumors compiled from over a decade of clinical testing of patients
combined with its AI-powered bioinformatics engine to generate
scientific insights from the data. These actionable insights are
then used by BioPharma companies to develop new targeted treatments
for any given patient profile. Precision medicine is rapidly
emerging as a game-changing approach to medicine and Helomics’
ability to connect data collection, analysis and actionable
insights in this space, positions it as a highly-valuable partner
to BioPharma companies.
Our intention is to further build out the D-CHIP database of
patient data and ramp up commercial activities by generating new
subscriptions to the platform from Pharma, BioPharma and Diagnostic
Companies, providing Skyline with additional revenues from a
previously untapped market. Through this Skyline-Helomics
partnership, we have also partnered with GLG Pharma, a
biotechnology company focused on precision medicine, to add a
collection system to the STREAMWAY System, using GLG’s Capture,
Culture and Screening system. This will collect abdominal (ascites)
fluids from patients and test for cancer stem cells, cancer cells
and other cells, generating additional revenues for the
Skyline-Helomics venture and GLG. Although these plans are at an
early stage, we are excited by these opportunities for Skyline to
leverage the emergence of precision medicine and are proud to have
aligned the Company with two strong players in the market.
We continue to explore other opportunities partner with
revenue-generating companies and create near-term and long-term
value for Skyline’s shareholders. As another example of our ongoing
plans to diversify and strengthen Skyline’s offering, we are
currently in negotiations to form a joint venture with
CytoBioscience, a CRO services business with an established client
base and several potential business synergies with Helomics.
As we look to 2018, the management team and the Board of
Directors are intently focused on exploring these opportunities,
among others, to significantly expand Skyline’s growth potential.
To that end, as Skyline Medical enters this transition phase, it
may start to look very different than it has historically. As we
implement these exciting strategic initiatives, it's vital that we
have a strong platform in place to support this anticipated scaling
in our business. It is for these reasons, we are asking our
shareholders to approve the proposed increase in the number of
authorized shares of common stock from 24,000,000 to 50,000,000, as
well as to approve increases to the employee incentive plan. These
measures will give Skyline the ability to finance these exciting
M&A opportunities and to attract and retain the high quality
professionals it needs to take advantage of the best opportunities
in the dynamic healthcare market and to build the value of the
business.
We are excited and encouraged by the opportunities ahead of us
and look forward to implementing this strategic plan, with the
support of our loyal shareholders.
Sincerely,
/s/ Carl Schwartz
Dr. Carl Schwartz Chief Executive Officer
About Skyline Medical
Skyline Medical produces a fully automated, patented,
FDA-cleared waste fluid disposal system that virtually eliminates
staff exposure to blood, irrigation fluid and other potentially
infectious fluids found in the healthcare environment. Antiquated
manual fluid handling methods that require hand carrying and
emptying filled fluid canisters present an exposure risk and
potential liability. Skyline Medical's STREAMWAY System fully
automates the collection, measurement and disposal of waste fluids
and is designed to: 1) reduce overhead costs to hospitals and
surgical centers; 2) improve compliance with OSHA and other
regulatory agency safety guidelines; 3) improve efficiency in the
operating room, and radiology and endoscopy departments, thereby
leading to greater profitability; and 4) provide greater
environmental stewardship by helping to eliminate the approximately
50 million potentially disease-infected canisters that go into
landfills each year in the U.S. For additional information,
please visit www.skylinemedical.com.
Forward-looking Statements
Certain of the matters discussed in this announcement contain
forward-looking statements that involve material risks to and
uncertainties in the Company's business that may cause actual
results to differ materially from those anticipated by the
statements made herein. Such risks and uncertainties include risks
related to the proposed joint ventures, including the need to
negotiate the definitive agreements for the joint ventures;
possible failure to realize anticipated benefits of the joint
ventures; and costs of providing funding to the joint ventures.
Other risks and uncertainties relating to the Company include,
among other things, current negative operating cash flows and a
need for additional funding to finance our operating plan; the
terms of any further financing, which may be highly dilutive and
may include onerous terms; unexpected costs and operating deficits,
and lower than expected sales and revenues; uncertain willingness
and ability of customers to adopt new technologies and other
factors that may affect further market acceptance, if our product
is not accepted by our potential customers, it is unlikely that we
will ever become profitable; adverse economic conditions; adverse
results of any legal proceedings; the volatility of our operating
results and financial condition; inability to attract or retain
qualified senior management personnel, including sales and
marketing personnel; our ability to establish and maintain the
proprietary nature of our technology through the patent process, as
well as our ability to possibly license from others patents and
patent applications necessary to develop products; the Company's
ability to implement its long range business plan for various
applications of its technology; the Company's ability to enter into
agreements with any necessary marketing and/or distribution
partners and with any strategic or joint venture partners; the
impact of competition, the obtaining and maintenance of any
necessary regulatory clearances applicable to applications of the
Company's technology; and management of growth and other risks and
uncertainties that may be detailed from time to time in the
Company's reports filed with the Securities and Exchange
Commission, which are available for review at www.sec.gov.
This is not a solicitation to buy or sell securities and does not
purport to be an analysis of the Company's financial position. See
the Company's most recent Annual Report on Form 10-K, and
subsequent reports and other filings at www.sec.gov.
Contacts:
Skyline MedicalCarl Schwartz, Chief Executive
Officer(651) 389-4800cschwartz@skylinemedical.com
Investors KCSA Strategic CommunicationsElizabeth Barker (212)
896-1203 skln@kcsa.com
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