Skyline Medical Merging with Texas Biomedical Firm
After 15 years in business, Eagan-based Skyline Medical Inc. has nominal revenue and has never turned a profit. But the publicly traded Skyline is now looking to boost its revenue by merging with the privately held CytoBioScience Inc., which is based in San Antonio, Texas.
The pending deal will also bring Skyline into a new line of business.
Skyline produces the Streamway System, an FDA-approved device that provides automated disposal of potentially infectious medical waste. CytoBioScience makes instruments used in human cell research for drug development.
Skyline first disclosed signing a letter of intent with CytoBioScience on August 1 and then announced on August 9 that the companies had signed a definitive merger agreement. The deal is expected to close by September 30. CytoBioScience shareholders will receive Skyline common stock equal to 19.8 percent of the company’s outstanding stock. Skyline’s current market capitalization is approximately $9.8 million.
In a statement Dr. Carl Schwartz, Skyline’s CEO, characterized the deal as “transformative” and said it would bring “immediate and meaningful revenue” for the Minnesota medical device company. According to the company’s announcement of the deal, CytoBioScience has a “current order backlog is $6 million primarily in contract research work.”
CytoBioScience was founded in Germany and relocated to the U.S. in 2015. As part of the deal, CytoBioScience CEO Dr. James Garvin will be named president of Skyline Medical and will join its board of directors. Dr. Schwartz remains CEO and will continue to serve as a director.
On Monday, Skyline reported its second quarter results. The company reported revenue of $106,822 for the quarter ending on June 30. While that marked a 25 percent increase from a year ago, it was only $21,400 more than Skyline reported in the second quarter of 2016. Skyline also reported a net loss of $2.5 million for its latest quarter.
The company was incorporated as BioDrain Medical Inc. in 2002 and changed its name to Skyline Medical in 2013.
For its full year results, Skyline previously reported a net loss of $6.5 million on revenue of $456,000 for 2016. Skyline’s stock closed at $1.53 per share on Tuesday; the stock is down 45 percent this year. At the end of 2016, the company reported an accumulated deficit of $47 million.
Skyline faced potential delisting from the NASDAQ exchange in 2016. But the company announced in February that it was in full compliance with all NASDAQ requirements and would remain listed.