SkinBioTherapeutics
plc
("SkinBioTherapeutics" or "the
Company")
Acquisition of Dermatonics Limited for initial
consideration of £1.68 million
·
Established topical dermatological player in
skincare/woundcare space
·
Provides access to new sales channels for
AxisBiotix products and platform for SkinBiotix technology with
focus in woundcare
·
Immediately revenue and profit accretive, as
well as cash flow positive, with additional potential cost
synergies
·
Revenues of c.£1.8 million and adjusted EBITDA
of c.£0.23 million in FY23
·
Brings on board additional operational, sales
and regulatory affairs expertise
·
Consideration of up to £2.93 million
comprising £1.68 million initial cash consideration and £1.25
million earn-out over the next three years
·
Acquisition financed through £1.6 million
drawdown from new £5.0 million convertible bond facility (see
separate announcement)
25 January 2024 -
SkinBioTherapeutics plc
(AIM: SBTX, or the "Company"), the life science business focused on
skin health, announces that it has entered into an agreement to
acquire the issued share capital of Dermatonics Limited, a
specialist in innovative topical and dermatological products in the
skincare/woundcare space.
The initial
consideration is £1.68 million plus £1.25 million earn-out over
three years, in a cash-free and debt-free acquisition. Completion
will take place upon clearance of funds being drawn down from the
CLN facility which is expected to take place no later than 25
January 2024.
This
acquisition aligns directly with SkinBioTherapeutic's stated
strategy to seek accretive inorganic opportunities that provide
immediate synergies and accelerated routes to market. In addition,
the acquisition provides inorganic revenue growth and reduces
losses at a Group level.
Operational and commercial
highlights
·
Expands
SkinBioTherapeutics' product range and customer base
o Established and reputable topical and
dermatological company in the skincare/woundcare space
o Products range from heal balm, treatments for
warts & verrucas, to dry skin relief
o Dermatonics is ISO13285 registered and products
are either Class1 Medical Devices or Cosmetics
o Strong retail customer following and
testimonials [Trustpilot 4.9]
·
Provides sales platform
and new sales channels for SkinBiotix technology and
products
o Access to mainstream retailers including Boots
and Superdrug, ecommerce (Amazon) and also into specialist podiatry
clinics
o Access to new geographies in Europe and
Asia
o Opportunity for product development in the
MediBiotix pillar in woundcare
·
Immediately accretive -
Dermatonics is currently revenue generating, profitable and cash
flow positive, with the additional potential for cost
synergies
Further
details of Dermatonics are set out below.
Financial highlights
·
SkinBioTherapeutics is
acquiring 100% of the share capital for up to £2.93
million
o Initial cash consideration of £1.68
million
o Further contingent consideration of up to £1.25
million in cash, payable upon achievement of financial performance
targets over 2024, 2025 and 2026
·
Initial acquisition
funding provided through £1.6 million draw down of £5.0 million
convertible bond facility ('new Facility', see separate
announcement)
Further acquisition
The Company
is in advanced negotiations and diligence to acquire a second
company in a similar sector, with total consideration of less than
£2 million, where cash flow is positive and there are business
synergies; this acquisition is currently expected to be completed
in Q1 2024.
Stuart
Ashman, CEO of SkinBioTherapeutics, said:
"We are delighted to announce our first
acquisition as part of our ongoing consolidation strategy in the
skincare and hygiene sectors.
"As we have said repeatedly, we have
steered a careful course of finding revenue generating and
profitable companies that also provide operational synergies to our
underlying business. Dermatonics ticks all of these
boxes.
"We also gain access to a great customer
base including high street retail brands like Boots and Superdrug,
plus e-commerce, including Amazon, and more specialist healthcare
outlets. Importantly, for the longer term, we gain a platform to
back our SkinBiotix™ technology into for our MediBiotix woundcare
and skin healing pillar.
"We believe SkinBioTherapeutics and
Dermatonics are very complementary as businesses, and we are
looking forward to working with the Dermatonics
team."
Greg
Andrell, CEO of Dermatonics, said:
"We have grown Dermatonics over the past
16 years to become a well known and trusted set of brands in the
specialist skincare / woundcare market. It makes total sense to us
to combine forces with SkinBioTherapeutics who looks at skin care
in a similar way to us; we focus on natural ingredients and SBTX
focuses on the microbiome. Together, we are stronger, with a
broader range of products and an exciting SkinBio technology
platform behind them, solid financial resources and scale to enjoy
cost efficiencies and synergies. We are excited about the
opportunity to become part of the SkinBioTherapeutics
team."
-Ends-
Shareholder presentation and
Q&A
CEO,
Stuart Ashman, and CFO, Manprit Randhawa, will provide a live
presentation about the terms and rationale of the acquisition of
Dermatonics and the financing details via the Investor Meet
platform Friday 26 January at 10:00 am
GMT.
The
presentation is open to all existing and potential shareholders.
Questions can be submitted pre-event via your Investor Meet Company
dashboard at any time during the live presentation.
Investors
can sign up to Investor Meet Company for free and add to meet
SkinBioTherapeutics at the link
HERE.
Investors
who already follow SkinBioTherapeutics on the Investor Meet Company
platform will automatically be invited.
A recording
of the presentation will be available shortly afterwards on the
SkinBiotherapeutics investor relations section of the
website HERE.
The information communicated in this
announcement contains inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) No.
596/2014.
For more information please contact:
SkinBioTherapeutics plc
Stuart
J. Ashman,
CEO
Manprit
Randhawa, CFO
|
Tel:
+44 (0) 191 495 7325
|
Cavendish Capital Markets
Limited (Nominated Adviser & Broker)
Giles
Balleny, Dan Hodkinson (Corporate Finance)
Charlie
Combe (Broking)
Dale Bellis,
Tamar Cranford-Smith (Sales)
|
Tel:
+44 (0) 20 7397 8900
|
Instinctif Partners (financial
press)
Melanie
Toyne-Sewell / Jack Kincade
|
Tel:
+44 (0) 20 7457 2020
SkinBioTherapeutics
@instinctif.com
|
Additional details about the acquisition
of Dermatonics
Overview
As stated
in the FY results on 30 November 2023, the Group put in place a
strategy to accelerate growth through a dual track of organic
growth of its own portfolio and inorganic growth through the
acquisition of companies that either manufacture or sell a variety
of branded topical products for common dermatological conditions to
NHS hospitals, dispensing practices and national pharmacy
chains.
Management
was clear that any targets which the Group was interested in
purchasing would have to be accretive from a revenue and earnings
perspective from day one, and thus reduce the operating cash burn.
The overall goal of the Group was to become a cash generating
entity within 12-18 months of each acquisition.
The
Directors believe that Dermatonics' business and financial
performance fulfils all the criteria set by SkinBioTherapeutics,
and provides an accretive and synergistic growth opportunity for
the Company.
Introduction to
Dermatonics
Dermatonics
was established in 2008 and specialises in the production of
innovative topical and dermatological products in the
skincare/woundcare space, with the aim of using natural ingredients
wherever possible.
The
company's strategy has been to focus its development activities in
areas where it identifies room for improvement in products
currently available on the market, producing more effective
treatments that provide faster results and/or less
application.
The
business is based in St Ives, Cambridgeshire, employing six staff,
mainly made up of sales and operations / back office
staff.
The
business is being sold by its sole owner, Greg Andrell, who also
runs the business, supported by his Operations Manager, Tom
Waughman. Mr Andrell will remain involved post-completion in a
position to ensure performance targets are achieved as agreed in
the terms of the deferred consideration.
Within the
sales and operations team, there are Regulatory Affairs and
accounts roles which will be added to in-house capabilities at
SkinBioTherapeutics (currently regulatory affairs is
outsourced).
Sales roles
will remain in place, and there is the potential to push
AxisBiotix-Ps through these individuals and channels in
time.
Financial performance
For the
financial year ended 31 January 2023, Dermatonics reported
unaudited revenues of £1.82 million and an adjusted EBITDA of £230k
adjusting for one off items (£150k stock write off and £123k bad
debt). Financial year to date revenues and profits reflect upward
momentum with higher revenue and improved margins. As at 31 August
2023, Dermatonics had total assets of £558k.
The
acquisition of Dermatonics is expected to be immediately
financially accretive through additional revenues and
profits.
Product range
The range
of products is available at https://www.dermatonics.co.uk.
The
business is ISO 13485 registered, and products are either Class 1
Medical Devices or Cosmetics. The products are well proven in the
UK market with excellent customer following and reviews, including
a 4.9 rating on Trustpilot.
The
prescription range products are also well established and four
products are currently listed on the UK Drug Tariff set by the
NHS.
All
manufacturing is outsourced to UK third parties.
Diversified sales routes
Dermatonics
has developed five routes to market (channel or distributor) for
its products, resulting in diversified revenue streams:
·
Prescription (UK Drug
Tariff) sales (e.g. Boots, SuperDrug, +well, Cohens
chemist
·
Export (e.g.) Alliance
Health, AAH, Citysuper,)
·
OTC Pharmacy (e.g. Boots,
SuperDrug, +well, Cohens chemist, PSUK)
·
E-commerce direct to
consumer (e.g. Douylin e-commerce, Amazon, Aster DM
Healthcare
·
Podiatry clinics (e.g.
Shuropody)
Geographically, Dermatonics' products are
available in the UK, Europe (Portugal, Spain), Baltics, and
Vietnam.
Academic links
Besides a
positive customer following, Dermatonics has strong links with key
opinion leaders in the podiatry space who have been long term users
and /or have consulted on the creation of new products:
·
Professor Stuart
Baird,
Emeritus professor of Podiatry, Glasglow Caledonian University and
former Chair of Royal College of Podiatry. He is an international
leader in the implementation of diabetic footcare
services
·
Michelle Scott, Chair of The Royal College of
Podiatry
·
Rebecca Penzer, Editorial Board Member of
Dermatological Nursing and Senior lecturer in
Dermatology.
Within the
academic and clinical environment, there have been four published
studies in connection with Dermatonics's products and
technology.
Rationale for
acquisition
SkinBioTherapeutics, through its AxisBiotix
pillar, aims to develop and market systems of products which aim to
heal skin from within (Gut-Skin Axis) and heal from outside (using
a range of topicals).
Within the
R&D pipeline in SkinBioTherapeutics, are a range of programmes
and cost centres which aim to develop topicals using the
SkinBioTherapeutics technologies over the coming years as new
products / applications are launched, as well as for the current
product AxisBiotix-Ps.
SkinBioTherapeutics believes this accretive
acquisition fulfils a number of strategic, commercial and
operational goals, and is in line with the Company's stated growth
strategy.
·
Diversifies SkinBioTherapeutics' product
portfolio, and sales and distribution channels
Dermatonics
is an established and reputable topical and dermatological company
in the skincare/woundcaremarket with products classed as either
Class 1 Medical Devices or Cosmetics. It markets its products
through various sales channels globally and its products are
trusted by healthcare professionals, podiatrists and
customers.
As well as
generating additional revenues from these new products, Dermatonics
presents an opportunity to capitalise on these sales channels for
existing and new SkinBioTherapeutics products. There is also the
opportunity for product development in the MediBiotix Pillar as
Dermatonics's creams are also proven to be effective in hard to
heal skin/wounds.
·
Immediately accretive through revenues generated
and cost synergies:
Dermatonics
is revenue and profit making, and cash generative, and therefore,
would immediately add to SkinBioTherapeutics' financial
position.
The
acquisition is cash-free and debt-free.
The
earn-out has been structured to ensure Dermatonics continues to
perform as anticipated. Senior director experience is being
retained to ensure a smooth transition as well as performance
alignment on deferred consideration.
·
Additional senior, regulatory and sales
expertise
Dermatonics
has a small staff of six including regulatory affairs and
bookkeeping. These roles will add to SkinBioTherapeutics' in-house
capabilities, in particular, regulatory affairs which is currently
outsourced.
The sales
staff will be incorporated into the SkinBioTherapeutics team, and
as well as being responsible for Dermatonics products, will also be
able to take on SkinBioTherapeutics' own products and channels,
such as for AxisBiotix-Ps.
At the
senior level, the operations manager, Tom Waughman, will report
into Stuart Ashman, CEO of SkinBioTherapeutics. He is responsible
for day-to-day management of overall operations.
In summary,
the Directors of SkinBioTherapeutics anticipate that this
acquisition provides the platform for SkinBioTherapeutics to gain
access to reputable brands within the skincare/woundcare market in
the UK, access to various sales channels and revenue and
profitability with scope for future growth.
Notes to Editors
About SkinBioTherapeutics
plc
SkinBioTherapeutics is a life science company
focused on skin health. The Company's proprietary platform
technology, SkinBiotix®, is based upon discoveries made by
Professor Catherine O'Neill and Professor Andrew McBain.
The Company
is targeting a number of skin healthcare sectors, the most advanced
of which are cosmetic skincare and food supplements to modulate the
immune system by harnessing the gut-skin axis. In each area
SkinBioTherapeutics plans to exemplify its technology through human
studies. The Company's first product, AxisBiotix-Ps™, a food
supplement to address the symptoms of mild to moderate
psoriasis.
The Company
listed on AIM in April 2017 and is based in Newcastle, UK. For more
information, visit: www.skinbiotherapeutics.com
and www.axisbiotix.com.
Caution regarding forward looking
statements
Certain statements in this announcement,
are, or may be deemed to be, forward looking statements. Forward
looking statements are identified by their use of terms and phrases
such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'',
"expect", ''will'' or the negative of those, variations or
comparable expressions, including references to assumptions. These
forward-looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Group's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements reflect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors.